Happy GERSmas day

The annual GERS figures are due out on Wednesday 21 August, but I am off to Dundee to speak at a Roadshow event for The National.  I published a version of this blog post last year, but since we’re going to go through the exact same thing this year as we did the year before that, and the year before that, and the year before that, I thought there was no reason not to publish it again – albeit with some minor revisions. It’s not like anything will have changed, the exact same arguments will be trotted out, the same graphs flourished on social media with a Cringing glee.  GERS day is the groundhog day of Scottish politics.

It’s GERS Day, Government Expenditure and Revenue Scotland, the Scottish version of Groundhog Day. It’s the day when a certain anti-independence blogger goes around on social media showing off his graphs. It’s the day when the BBC misleads the public by telling us that the Scottish Government has a deficit of £13.4 billion, when in fact much of the deficit that we’re told we have is due to spending decisions made on Scotland’s behalf by a Westminster government which resolutely keeps a vice like grip on most of the levers of taxation and allocates us a share of spending on stuff we don’t want, which borrows and allocates us a share of its debt.

It’s GERS day, the day when a series of British nationalist politicians pop up in the media to gloat about how poor they’ve made Scotland, like that was a good thing.  The GERS figures don’t provide a crystal ball about the likely performance of the Scottish economy after independence, they’re really crystal meth for British nationalists.

It’s GERS day. It’s the day when the rest of us should declare a national public holiday and bugger off to a beach in Largs, in the rain. Cos poking out your eyeballs with a rusty knitting needle while sitting on pebbles in the cold and the wet as the tide comes up the Firth of Clyde and threatens to drown you is infinitely more productive than arguing on social media about the GERS figures with opponents of independence who think that the figures are Holy Writ and questioning them makes you a heretic.

It’s GERS day, when the UK Government’s spending in Scotland and spending which is (supposedly) for Scotland are conflated together to produce a humungous deficit.  Scotland is given the bill for expenditure which we’re told is spent on Scotland’s behalf outwith Scotland, but is credited with none of the revenues or economic activity which that spending generates.  This accounting trick inflates Scottish expenditure at the expense of decreasing Scottish revenues.  It’s one of the reasons why the political economist Professor Richard Murphy said that GERS is “not a meaningful account [of Scotland’s true financial position], but is just a political stunt.”

So the next time some opponent of independence claims that an independent Scotland would have the largest deficit of any European nation, remind them that no independent nation spends a large proportion of its annual budget outside its own territory and doesn’t generate any tax revenues from it, nor benefits from the economic activity which that spending creates.  That is precisely what the GERS figures claim for Scotland within the UK.

Wee point here, the GERS figures are not science. You can’t equate questioning them with questioning climate change. They are estimates of economic activity which are based upon the financial policies of the British government. It has been well documented that they are decidedly political in their conception. http://www.heraldscotland.com/news/12432586.Gers_was_conceived_as_a_political_exercise/ Unlike science. GERS was designed by Ian Lang when he was the Conservative Scottish Secretary of State back in 1992 as a political tool to be used against those arguing for greater Scottish self-government, a role they have continued to fulfil ever since.  Lang wanted a tool he could use to “undermine the other parties”, who were then arguing for a Scottish Parliament which the Tories opposed.  According to Ian, the GERS figures were “an initiative which could score against all of them.”

So instead, in this blog post, I’ll just leave you with a few wee things to ponder. Like this quote from the British nationalists’ favourite Scottish economic think tank, that one that sounds like a knitwear college in Pitlochry and a leading provider of rusty knitting needles. Yes, it’s the Fraser of Allander Institute. Here’s what they had to say about GERS.

If the very purpose of independence is to take different choices about the type of economy and society that we live in, then a set of accounts based upon the world today will tell us little about the long-term finances of an independent Scotland.

https://www.scotsman.com/news/opinion/fraser-of-allander-what-the-gers-report-tells-us-about-independence-1-4787843

Here’s some other proper economists, Jim and Margaret Cuthbert, who also cautioned against using the GERS figures to make predictions or claims about the economic performance of an independent Scotland as is so beloved of our media and anti-independence commentariat. They say,

The temptation … is for users to take the results of this type of analysis [ie GERS] and then to generalise the implications, either through time, or to different possible constitutional arrangements. Such a generalisation however, should not be attempted without examining how robust the results are likely to be in the face of changing circumstances. In particular, how robust are the conclusions of GERS likely to be in the face of major constitutional change.

It seems to us that the results of a GERS type analysis are highly conditional on specific constitutional arrangement, and are therefore unlikely to be generalisable in the face of constitutional change.

https://pure.strath.ac.uk/portal/files/41840524/FEC_24_1_1998_CuthbertJCuthbertM.pdf

Here’s the key fact to bear in mind about GERS. At best, flawed and political as they are, they give some indication about where Scotland’s economy is starting from. They tell us nothing at all about where the economy of an independent Scotland can go.

What the GERS figures do reflect is the mess that successive British governments have created of Scotland’s finances. At best, the GERS report tells us where we’re starting from as a part of the UK. If that starting point is poor, that’s not an argument against independence. Instead it’s an argument that we need to get out of the mess.

You could ask some of your favourite anti-independence campaigners what their plan for getting out of the mess is. Where’s their Growth Plan report, where’s their equivalent of the How to Start a New Country book. You’ll be waiting for a long time for a reply, because the only thing that they have to say is that independence is baaaaad. All they can suggest is that Scotland continues to be reliant on the kindness and generosity of Conservative governments which we haven’t voted for, which is rather like expecting the eunuchs in the court of the Chinese Emperor to start a sperm bank.

Then there’s the peculiar fact that Scotland, according to the GERS figures, has a notional deficit of £13.4 billion annually, whereas according to the most recent equivalent figures for Wales and Northern Ireland that I can find, Wales has an annual deficit of £14.7 billion (source https://www.walesonline.co.uk/news/wales-news/15bn-tax-deficit-heart-wales-11131738 ), while Northern Ireland has an annual deficit of £9.85 billion. (https://www.bbc.co.uk/news/uk-northern-ireland-40014685 This page gives the figure per head of population, which can be multiplied by the 1.811 million population of Northern Ireland to give the total annual deficit.)

This means that the three of the four parts of the UK which aren’t England are collectively responsible for £37.95 billion of a UK annual deficit which according to the Office for National Statistics is £46.9 billion. Scotland, Wales, and Northern Ireland together contain a population of 10.3 million, as compared to the UK population of 66.5 million. England on the other hand, with a population of 56.2 million, is apparently responsible for the rest of the deficit, a mere £8.95 billion. Which means that according to the published figures, 15.5% of the UK population is supposedly responsible for 80.9% of the deficit.

There are only two possible explanations for this, either the economic and financial decisions of successive UK governments have over the decades reduced the Celtic parts of the UK to penury. As far as Scotland is concerned they have left us reliant on handouts and subsidies despite the massive economic potential that Scotland possesses. This is not an argument making the case for the good government of the UK, and for the life of me I will never understand why opponents of independence believe it to be their best argument against Scottish independence. Stay with us Scotland! We’ve screwed you up and pauperised you! It’s not a great slogan. Or alternatively the figures are not giving us an accurate picture of what’s really happening. You decide.

Neither I nor your average anti-independence blogger are actually economists, but only one of us pretends to be one. So finally, I’ll just leave you with the words of a proper economist, someone who does actually know about these things.

Many thanks to Phantom Power for the video.

And finally, here’s a wee carol for GERSmas day:

It was a GERSmas morning, and all through the land
the scare stories were tickling the naysayers’ glands.
Doom and gloom was published by the papers out there,
to get the wee Scots and Nicola into a scare.
The britnats were nestled all snug in their twitter,
while visions of penury made them all titter.
And yer maw in her Facebook, and Yes Scotland tap,
had just debunked and dismantled all the newspapers’ crap,
When on the Twitters there arose such a clatter,
I sprang to my laptop to see what was the matter.
Away to the screen I hurriedly sped,
I launched the app and opened the thread.
The blue light shone with an ungodly sheen
and lit up the text that appeared on my screen.
Then what to my rolling eyes did appear,
but a graph and a bankrupt GERS deficit sneer,
and a Scotland secretary so crabbit and thick,
I knew in a moment he’d sold his soul tae Auld Nick.
More rapid than vultures the cringers they came,
and GERS whistled, and shouted, and called them by name:
“Now, Ruthie! now, Richard! now Wullie and Rosser!
On Beeb! on Herald! on Hootsmon! ya tossers!
To the top of the newsfeed! to each Facebook scrawl!
Now cringe away! cringe away! cringe away all!”
Pursed lips that believe the wild Daily Mail cries,
they can only see obstacles, they won’t even try;
So off to the redtops the naysayers they flew
Nae toys for you Scotland, or that Nicola too—
And then, predictably, I heard on the telly
The Proud Scot whose spine has turned into jelly.
He talked Scotland down, going straight to his work,
and trashed any hope; then turned with a smirk,
and laying his finger aside of his nose,
said you’re poorer than Greece, everyone knows.
He brandished a think tank, gave a Tory dog whistle,
another year’s work of crushing the thistle.
But I heard him exclaim, as he drove out of sight—
“Rotten GERSmas to all, cos if it’s Scottish it’s shite!”

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