My First Mistake

In my early posts I expressed a desire for this blog to try to stay non political. Half way through the Sustainable Growth Commission report, after short reviews of the Common Weal and Business for Scotland web-site and now tracking (with alarm) the emerging Modern Money theory narrative this is not going to be possible. The Sustainable Growth Commission report, at first sight, is singularly short of ideas, save for setting up a series of quangos who they trust will supply ideas for growth. I don’t share that faith. The report is a very traditional one and has achieved the distinction of being disliked by almost everyone – me because it reads like a tired old re-hash of a middle of the road, faith based growth strategy largely devoid of ideas, and to Nationalists because it lists some “home truths” about economic realities, specifically about deficits (and the need to reduce them) and currency (their suggestion is sterlingisation in the short term). Sprinkled liberally throughout the report is a “I wouldn’t start from here” narrative, particularly in regard to the E.U. Because of the political constraints the Commission completely ignores any possible changes which could be made in Scotland in respect of E.U. exit, e.g. tearing up E.U. Procurement regulations to provide State Aid.

So the Sustainable Growth Commission report seems to be dead in the water. Many Nationalists (although interestingly not yet most of the SNP leadership), obviously do not like the report because there is no “silver bullet”, indeed it makes the case that Scottish Independence will require expenditure cuts in the short run and heroically promises that this will be fine because of the growth that will be achieved. That’s a policy platform that has been many times rejected, so Nationalists need another narrative, and like any group desperate to justify their view of the world they are, increasingly, reaching for the lifebelt that is Modern Monetary Theory. A selective (very) review of MMT allows Nationalists to cling onto two key themes that they pray will prove to be “silver bullets.” and comments on this are beginning to seep out into the mainstream. These themes are (1) Deficits don’t matter and (2) Government can spend anything it likes once having established their own currency. I don’t agree with this but, to be fair, economics is not a science and theories and practices change (improve?) over time. MMT is a lot more complex than all this, and certainly has some interesting thoughts on fiat currency, the requirement NOT to join the E.U. and the concept of “real resources”. At all events some of what it says is what Nationalists want to hear so you will hear much more about it, including in this blog. Interesting times.