Ever since my visit to the battery laboratory I have had an increased focus on ‘it’s not what you do, it’s the way that you do it’. If you want to get the basics on why battery science is easily as much engineering (how you do it) as it is chemistry (what you’re trying to do), check the link. This is something that people who are close to the delivery of government think about a lot. Politicians? Less so.
This is very heavily on my mind as I plough my way through the economic pitches which have come rushing to the forefront of the domestic political debate in Scotland this week. What I’m looking for is some sense that those involved don’t only realise that things aren’t working, but why they’re not working.
And I’m really struggling. Basically the three main contenders all take a single, simplistic approach to why Scotland’s economy isn’t working – and it’s ‘the other guy’. All three (SNP, Scottish Labour and Scottish Tory) have at their heart the same basic proposition.
That proposition is that the only thing wrong with the economy is that they’re not in charge. If they were in total charge they’d do the thing that they are ideologically committed to do and by doing that they would deliver economic success. Obviously they’re selling themselves as solutions to be chosen in elections, but I’m struggling to get beyond their sense that ‘lack of them’ is the problem. I can’t see any real vision.
But first, in reality these aren’t actually economic strategy papers but ‘speech props’. They exist to put out enough material to sustain a speech by the party leader rather than because you could hand them to someone and they could realise them. You need to piece them together with other pronouncements from the party concerned. In the case of the SNP they’re not so much speech prompts as word salads there to justify what they’re doing anyway. None are anything other than pretty vague.
So let’s kick off with what is basically identical. What is identical is the outcome. Every one of them is going to achieve a revolution in a series of existing industry sectors, like energy or financial services or tourism. All of them are going to achieve this revolution through the power of ‘economic growth’. All of them claim that the way to achieve economic growth is by ‘listening’.
So all off them (in varying ways) want the economy to be run by various committees of business people. Different committees, their own committees, but basically the only difference is who they’ve persuaded to go on their committees.
All three see a key part of this as education-driven growth (‘if we train them, they’ll create growth’) and all three believe that somehow this will all be better as a result of ‘regional clusters’. Even more than that, all three see regional development as the key, with words such as ‘repopulation’ sprinkled around the place.
So what exactly is different about them? Not an awful lot, and it’s all very ‘three bears’. The Tories want to reduce the state a lot, Labour either a little bit or keep it exactly the same, the SNP keep it exactly the same or grow it a little. All claim that their version of how big the state should be will eventually enable a lot of better public services (by doing the opposite things).
Likewise there are variations on how they see regulation, and the pattern is the same – Tories slash regulation, Labour surgically scalpel regulation into greater efficiency, SNP make regulation more efficient but keep it coming (for ‘the environment’ or ‘human rights’).
Predictably, their attitude to UK-wide cooperation also varies, but not exactly as you might think. Here (though I suspect it’s just tone) the Tories seem to be more ‘make devolution work through joint committees’ and Labour seems to be more about ‘get Holyrood to know its place in Starmer’s palace coup’. The SNP is like a kid saying he’ll share his toy but clinging to it like a limpet.
Otherwise, everything in these plans is pretty well exactly what you’d expect to be in the economic plans of the three main Scottish parties. (The Greens don’t do economic strategies and instead favour slogans, while the Lib Dems don’t really pretend to be that relevant.) And what that means is that all of these plans are basically ‘continuity Scottish economic development strategy’.
In the end, Trussite economics, Blairite economics and EU economics are barely different from each other
So how can they be different but the same? It’s fairly easy – one believes the Laffer Curve is real so is Trussite, one believes that ‘stakeholder capitalism’ works so is Blairite, and one thinks ‘corporate domination with protection for citizens’ works so is EU Orthodoxy. And in the end, Trussite economics, Blairite economics and EU economics are barely different from each other.
All assume that government is there to incentivise or disincentivise markets, seldom to intervene and only in event of a crisis. Otherwise, the markets must do all the work. All believe that productivity is a product of education, that all investment is good investment and that everyone in the economy has the same interests.
But above all it assumes that economic growth makes things better. All of these assumptions have been pretty roundly discredited in the last two decades. It is corporate leadership which has led to low productivity. The markets have not followed the public interest, or worked particularly well. Lots of current investment is the problem, not the solution. And after 50 basically straight years of economic growth, things didn’t really get better.
It’s a failed ideology. And it is so because everyone’s interests are not the same. This is perhaps most laughably highlighted by the Sarwar speech. He excoriates the government for not doing more on the ‘cost of doing business for small businesses’. Which caused me to laugh out loud because the responsibility for that lies with the energy corporations to which he’s handing the economy.
He does it again when he praises the growth potential of the financial sector while screaming blue murder about the damage done by the banking crisis. Which is it? Virtuous corporations operating in a free market for the good of all or predatory bastards the public (and other businesses) need protected from by government? It’s can’t be both.
Meanwhile, if all it needs is good incentivisation in free markets, what did Labour get wrong when it was in power, bequeathing Cameron’s Tories with a pretty failing economy? Or what did the Tories get wrong to be handing over another basket-case economy back to Starmer? And if the SNP is the answer, why does there appear to be barely a businesses of scale left owned in Scotland?
More to the point, since there isn’t really a new thought or practice among the lot of it, what on earth would make us think that doing the same thing is going to result in different outcomes? I mean, regional economic clusters? That was the most significant part of the economic agenda in the 1990s. How long is this going to take to work?
This isn’t economics, this is politics. No-one in business seems to trust the SNP administration in the slightest and so the opposition parties have hammered out some PR material to try and take advantage. And they’re all promising the same thing anyway – an energy-housing-financial-services-driven future which funds great public services, all by doing variations on more of the same.
I’m slightly underplaying some of the differences (on granting oil licenses for example), but this still all amounts to the claim that if the SNP was running everything and didn’t have Tories sharing power, or if it was a Labour-wee-Labour share, or a Tory-Tory share then all would be fine. By doing what they always do, but better.
The economic model we are following is an extractive model which uses long, complex ownership structures to enable powerful players to take the most possible out of the economy while putting the least possible back in
But the most useful thing in all of this comes from the Scottish Tories. The other thing they all do is extrapolate – ‘if we were like…’ then pick EU/UK or ‘the olden days’ as the metric to come up with the spoils to be won. It’s because the Tories do this most ineptly that they are the most useful.
They make the straightforward claim that if this all works, we could be more like the UK (it would work out basically the same if it was the EU). And what would that look like? It would create 53,000 more Scottish businesses employing 54,000 extra Scots.
But hold on, that’s basically one employee per business, no? And with that, the Scottish Tories reveal the problem with the lot of them. The economic model we are following is an extractive model which uses long, complex ownership structures to enable powerful players to take the most possible out of the economy while putting the least possible back in.
We’re not ‘nearly there’. We won’t generate new industry sectors (which we need) by handing the keys of the economy to the existing industry sectors (which will look after their own interests). We won’t create valuable jobs through either deregulation or inward investment. Skills training doesn’t create productivity gains in an economy which can’t use the skills. Growth is creating poverty. Cutting regulation doesn’t improve productivity.
If you’ve run an economy in one way for 50 years and literally everyone argues that there is something really wrong with that economy, proposing to do it all over again is surely actual madness. Yet that’s your lot if you’re Scottish.
We all want a flourishing renewable energy industry in Scotland. The economic merits of that are easy, well known, well tested. Like the chemistry of a battery. The problem is that we don’t have that industry sector despite all the promises. Doing the thing again which failed won’t ‘fail better’ this time.
Repeat for the rest of the economy and, if you’re lucky, you turn into desperate mess Britain or all-system-failure France or Italy (Germany and Spain going the same way). Britain is failing. Europe is failing. Scotland needs an industrial strategy if we are to re-industrialise.
It requires intervention, not market signal tweaking. Again. So until we have something better on offer, just prepare for a future which looks like the past. Again.