5 Biggest No Campaign Economics Scare Stories Debunked: cherry-picking easy targets to attack so as to look good

Gordon MacIntyre-Kemp / Business For Scotland, “5 Biggest No Campaign Economics Scare Stories Debunked” (September 2014)

At this time of writing, there remain just a few days to go until Scotland has its independence referendum and already the pro-independence and the anti-independence camps have escalated their war of words across the UK media to a shrill intensity. To counter some of the fear tactics and scare stories concerning how an independent Scotland will cope and thrive economically, Business For Scotland’s Chief Executive Gordon MacIntyre-Kemp has come out with guns blazing in a series of short videos, all of which can be viewed on Youtube, to explain how Scotland can pay its own way and fulfill its independence dreams. He concentrates on five scare stories that the No Campaign has been drumming up and which various Business For Scotland speakers and campaigners have had to confront the most in meetings and interviews, and demolishes the objections the No Campaign has raised. All the videos in which MacIntyre-Kemp takes apart the scare stories are very brief, running for less than three minutes each. They can be viewed at this Business For Scotland link.

In Video 1, MacIntyre-Kemp addresses the issue of bank bail-outs and points out that the two major banks in Scotland, the Royal Bank of Scotland and HBOS, were bailed out in the cities where they are headquartered or registered; that is, in the City of London and New York City. He ends his talk by suggesting that banks headquartered in Scotland should be nationalised and regulated so that they are not allowed to rack up huge debts and require massive multi-billion pound bail-outs.

Video 2 deals with the issue of who subsidises Scotland: MacIntyre-Kemp turns that assumption on its head by pointing out that Scotland contributes more in tax revenues to Westminister than it receives back. In Video 3, he tackles the issue of how Scotland will be able to prop up public services like pensions and asserts that Scotland will lock in increases  to pensions which will be based on increases in average weekly earnings. He argues that a revitalised economy will be able to arrest a brain drain of young qualified professionals away from Scotland and at the same time attract skilled immigrants and together these groups will provide a substantial tax base that will support pension payments to the elderly and the needy.

Currency is the focus of Video 4 as for the time being Scotland expects to continue using pound sterling after independence. MacIntyre-Kemp suggests the confusion over the issue of currency has been stirred up deliberately by Westminster to persuade people to vote No. Should Scotland opt for independence, the most likely scenario will be that the Bank of England will support currency union between Scotland and the rest of the UK to help stabilise the economies of the two states. In the final video, MacIntyre-Kemp explains how Scotland will be able to pay its way as an independent country, pointing out that among other things it will not need a large defence force and will commit itself to creating a society with sustainability as a core value. He rounds off his series of videos by declaring that the issue of Scottish independence isn’t about the economics but about seizing a once-in-a-lifetime opportunity to strike out and create a fairer and more just society that could serve as an example for others including the rest of Britain to follow.

The videos are easy on the eye – they just feature MacIntyre-Kemp against a white background over which figures and facts float temporarily to illustrate what he says.

I admit to surprise that in all of these videos MacIntyre-Kemp doesn’t mention the issue of North Sea oil and how much oil really is within Scotland’s maritime territories to its north. This is significant if Scotland plans not only to adopt Scandinavian-influenced social welfare policies which in themselves would cost a fair few cool hundred billion pounds a year but also to invest in renewable energies and eventually wean itself off fossil fuels. Even if there were enough oil to last Scotland several decades (let alone some of the more optimistic claims that the oil could last a century!), there is the problem of how Scotland will finance exploration and drilling for the oil and how it will be able to control revenues and direct the bulk of them into a sovereign wealth fund and away from unproductive financial transactions such as property speculation (which drives up real estate prices in cities and towns), various debt bubbles and ingenious but ultimately harmful financial engineering schemes that make money disappear into tax haven black holes or unscrupulous scamsters’ bank accounts. Even before all this, there’s the problem as to whether Scotland will be able to claim the oil resources in its waters on behalf of its people before the US or UK pressures the country’s government through under-handed tactics: in this context, for Scotland to assume that currency union will ensure stable economies on both sides of Hadrian’s Wall might be naive in the least.

Another big problem is that an independent Scotland cannot rely completely on oil resources whose market prices can vary from one year to the next depending on what other oil exporters are able to sell and the levels of global demand for oil. The country could rely on providing financial services and inviting foreign companies to establish factories (Scottish manufacturing having declined over the last half-century or so under Westminister rule) but at a cost of offering subsidies, tax relief and other incentives (like low wages, importing Third World labour and waiving or ignoring OHS regulations) to compete against the rest of Britain and Ireland. This could well pull funding away from building up a social welfare net for citizens, a sovereign wealth fund and renewable energy projects and into the coffers of foreign firms.

There is a very real possibility also that the EU will not accept Scotland as a member unless and until its government imposes an austerity package on its citizens and conforms to other EU, World Bank and IMF requirements. Even if Scotland were to agree to undergo austerity, forgo developing a social welfare net and to restructure its institutions according to EU, World Bank and IMF guidelines, full EU membership cannot be guaranteed.

The assumption that small European countries are wealthier than larger European countries is lazy: Greece, Ireland and Portugal are being squeezed by their crippling debt and austerity programs, and several EU member states in eastern Europe (Hungary, Latvia, Lithuania, Slovakia, Slovenia) are not exactly thriving either. About 1 in 5 people in Lithuania are living at near-poverty levels or below and similar proportions of the populations in Estonia and Latvia are also living close to near-poverty levels. Latvia is said to be losing 30,000 people a year as young adults are voting with their feet in search of employment. As for the wealthy small European countries, Luxembourg derives a considerable part of its wealth from being a tax haven as does Switzerland: hardly worthy examples for Scotland to follow.

Even so, in spite of what I have just said, I do realise the September 2014 referendum is a unique opportunity for Scotland’s citizens to decide on the future direction of their country. It will be a momentous event, one that may have flow-on consequences for what remains of the United Kingdom: it may well start conversations within England, Wales and Northern Ireland themselves as to their futures and devolving more power to the public away from their elites. As Gordon MacIntyre-Kemp says at the end of Video 5, independence isn’t just about economics, it’s about starting anew with a new set of values that stress fairness, justice, equality and sustainability.

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