Tuesday, November 10, 2015

Full Fiscal Autonomy for Smarties

A guest post by Andrew Morrison

Anybody who follows the online continuation of the Scottish referendum debate could not help but notice the ever greater prominence of Mr Kevin Hague. He is becoming the poster boy of the unionist Twitterati who appear dazzled by his relentless pursuit of truth through rigorous economic analysis. Celebrity and media endorsements have come his way, prominent but shy economists back his work, and there has even been praise from someone who actually did Economics at Cambridge.

So, as a Yes-minded follower of the debate, I decided to bite the bullet and have a look over his work. Given the triumphalist fan club and his own assertive confidence, I didn’t expect to enjoy the read. There will undoubtedly be errors and approximations in the GERS figures, they do estimate only the economic situation whilst under UK management, and by focusing solely on government flows they are an incomplete analysis of the Scottish economy. However, I wasn’t going to learn anything about that from reading Mr Hague’s work – I just wanted to see what he had done with the numbers GERS gave him.

I was stunned. They say that evidence given under duress is usually unreliable and these poor numbers have been tortured to death. I can’t fully understand why he felt the need since the figures for the last couple of years will readily confess that this is not the brightest ever period for Scotland’s public finances. Perhaps he needed to show that this was a longer term pattern. Whatever the motive, the analysis appears that of an enthusiast who started with a preferred outcome in mind.

Now, I have some training in Economics but I would hesitate to present myself as some unimpeachable source of wisdom. I believe that what I am about to present is correct but I am happy to engage with anyone who can persuade me otherwise.

Can the United States afford fiscal autonomy?

This is an exact reproduction of Kevin Hague’s analysis of Scotland’s finances. The United States has government expenditure of $10953 per capita and Mexico just $2862 per capita. The US must fund this gap through raising higher revenue per capita. And indeed they do – US government revenue is $9425 per capita and Mexico just $2471 – an extra $6954 per capita.

That though is not enough to cover the extra spending of $8091 per capita. There is a shortfall of 8091 – 6954 = $1137 per person.

Multiply this figure by the US population of 321.4 million and you get a shortfall of around $365 billion. This is Mr Hague’s ‘deficit gap’ although the term, as he defines it, seems to lack any coherent meaning. He does at times describe it as how much ‘worse off’ a country would be, but I think deep down he knows that it is not. The headline message would certainly be that the US would have a $365 billion dollar ‘black hole’ if they don’t ‘pool and share’ their resources with Mexico.

That doesn’t sound right, does it? Yet, if our hero were to apply his GERS methodology that is exactly the conclusion he would reach. Something must be wrong and I see at least 2 important flaws. The innocent reader might be surprised to hear that both impact negatively on Scotland’s apparent position.

Error 1: Snow White’s ‘black hole’

Snow White and the 7 Dwarfs each pay £20 tax = £160

Snow White gets £27 of expenditure and the Dwarfs £19 each = £160

Income and expenditure are equal so there is neither surplus nor deficit. How much worse off would Snow White be if she left the family?

Surely she is £7 worse off. To maintain her current expenditure she must run a £7 deficit – she pays £20 into the pot but takes £27 out.

Kevin Hague thinks she is £8 worse off. To get this figure he compares her spending of £27 with the average for the rest of the family only (just the dwarfs) which is £19. This is a fundamental mis-understanding of the decision facing the young lady.

She is not choosing between being Snow White or being a Dwarf (in which case the £8 difference between the 2 options would be relevant). Instead her options are to be Snow White alone or part of ‘Snow White and the 7 Dwarfs’ – she can have a £7 deficit or no deficit at all.

Likewise, the US would be deciding between being an independent state or becoming part of the Amexican Union. The comparison should be between the US figures and the combined figures for both countries as that reflects the economic situation for the 2 possible outcomes. They are not deciding whether to be America or Mexico.

Mr Hague always manipulates Scotland’s additional public spending upwards by changing the comparison to one with the rest of the UK only (rather than compare with the UK with Scotland still in it). At times he openly ponders why others such as the IFS don’t make this adjustment. I have yet to see him question whether perhaps they are right and he is wrong.

Error 2: The 3 million zombies solution

We are challenged to explain how a fiscally autonomous Scotland could meet this artificially inflated ‘deficit gap’. Well how about we get invaded by 3 million benign zombies?

Now, generally speaking, your methodology is less than robust if it shows economic problems being solved by zombie invasions. The much-admired Mr Hague fails this test.

Consider Country X with a deficit of £1200 per capita and in a union with Country Y which has a deficit of £1600 per capita and a population of 7 million. Some people in Country Y would like greater control of their own finances but are told that they would have to overcome this ‘deficit gap’ of £2800 million (£400 per head times the 7 million people – I have left in the ‘Snow White error’).

Then the zombies arrive. They amble around quite harmlessly and life otherwise continues as normal – they don’t do any work but nor do they place any demand on state services. Country Y’s total deficit is 11,200 million (1600 per head x 7 million people). This has remained the same but the population has now grown to 10 million so the deficit per capita is now just £1120. This is a lower deficit than Country X so the problem appears to be solved – certainly Kevin Hague would no longer identify his ‘deficit gap’. (Indeed, if we now looked from the Country X point of view they have a ‘black hole’ in their finances.) But nothing of any economic substance has changed. There must be a methodological error.

The flaw is that we should not compare deficits in terms of ‘deficit per capita’ since this tells us nothing about the ability of that population to generate sufficient wealth to cope with the deficit. It matters who the 10 million people are and what they do. Some will be children, some retirees, others might be unemployed, perhaps the majority are low-skilled and earn low wages, and occasionally some are zombies. The number of people is no measure of how manageable a deficit is – it’s about how much income they generate. A £1000 per head deficit might be no real problem to a wealthy nation but catastrophic to a poorer one.

For this reason, no reputable comparison of national deficits will use ‘deficit per capita’. Instead the deficit will be compared to the annual value of economic output i.e deficit as a percentage of GDP.

This measure passes the zombie absurdity test. The total deficit didn’t change and the value of economic output (GDP) didn’t change. The arrival of the zombies didn’t change the economy and the ‘deficit as percentage of GDP’ metric confirms this.

This also now explains another huge chunk of the $365 billion that the US appeared, albeit implausibly, to be losing by not uniting with Mexico.

From the earlier figures, the US had a deficit of $1528 per capita and Mexico $391 per capita. This gave a ‘deficit gap’ of $1137 per person for the Americans to overcome in a Hague-style analysis (endorsed by the economics editor of the Sunday Times and the editor in chief of Moneyweek). It feels rash to dispute such authority but surely some recognition is needed of Mexico’s much smaller GDP per head of $10539 as compared to US GDP per head of $54206.

This would give us Mexico’s deficit as a percentage of GDP as 3.7% ($391/$10539) while the equivalent figure for the US is just 2.8% of GDP. All other things being equal, the US deficit is more affordable than that of Mexico. The Amexican Union would actually result in a slightly higher deficit, in this much more meaningful sense, for the combined state than the United States currently experiences. That might not be the case in every time period, but we can say with certainty that they would not be dodging some fantastical $365 billion ‘black hole’ by pooling and sharing with Mexico.

Scotland’s GDP per capita is higher than that of the UK as a whole and so, other things being equal, a slightly higher per capita deficit should be sustainable. The difference is not of United States/Mexico proportions but it is persistent and significant. By conducting his analysis in terms of ‘deficit per capita’, Kevin Hague removes that advantage. He treats a £200 per capita deficit as equally significant for both parts of the UK. This ignores that the meaningful measure (% of GDP) would show this as a lower deficit for Scotland than for the UK as a whole.

Taking a look at GERS

By this stage I had resolved to recreate Mr Hague’s favourite graph with the 2 corrections that I felt necessary. I would compare Scotland with the UK as a whole and analyse in terms of deficits as percentages of GDP rather than on a per capita basis.

So I opened up the GERS report 2013-14 fully expecting that I’d have to search around for the relevant figures and then perform whatever calculations would be needed to apply my improvements. There were no calculations needed. Absolutely none. The graph that Kevin Hague should have drawn is the very first thing in Chapter 1 of the GERS report. It compares Scotland with the UK as a whole, and it measures deficits as percentages of GDP. It is shown both in terms of current spending only and in terms of total spending. The GERS people knew what was needed for a relevant analysis.

He must have seen this – as I say it is the absolute first thing in the very first chapter of the report . Perhaps he didn’t like the news. It is certainly less conclusive than what he produced by taking the data from that perfectly good graph and distorting it with poorly justified ‘improvements’.

As I’ve said, I could be wrong and it certainly gives pause for thought that the other side of the debate don’t seem troubled by any such self-doubt. However, I am confident enough to propose a wager. My proposal is that we submit both this piece and Mr Hague’s ‘Full Fiscal Autonomy for Dummies’ to the economics department of every university in Scotland and invite comment. If there is a decisive outcome (say 2 to 1 or more) the loser would pay £50 to a political organisation of the winner’s choice.

In the event that I lose, I’ll still console myself with the knowledge that it’s a £50 loss as opposed to the £100 ‘deficit gap’ that Kevin Hague thinks he would be risking.

* * *

Click here for the Scot Goes Pop fundraiser : closes on 16th November.

118 comments:

  1. This is one of the most difficult articles to post a comment on that I have ever read.
    I know I couldn't make any meaningful comments on it but I sure their will be plenty of others who are capable of dooing this

    ReplyDelete
    Replies
    1. You don't need to be an expert in economics to know that Scotland has the potential to do far better with self -government. Just compare with similar countries.

      The recently published 2015 Legatum prosperity index shows 4 out of 5 top ranked countries in the world are small to medium sized nation states in Europe.

      1: Norway
      2: Switzerland
      3: Denmark
      4: New Zealand
      5: Sweden

      http://uk.businessinsider.com/legatum-institute-prosperity-index-top-countries-2015-10

      Delete
    2. And be careful with the NZ example. NZ has no land borders with anyone, a land area slightly bigger than the entire British Isles to exploit and a Ginormous 200mile marine territory (far offshore islands help this but being long and thin does too). So despite only 4million people it is fairly easy to generate good GDP per head from such a land area, despite fully 1/3 of it being gazetted national parks (no extractive industries or farms) or other reserves.

      That no land border thing is both cheap and expensive. You man the airports and monitor foreign yachts for compliance, done. But your exports cost a lot to ship. The very first shipment of frozen meat left Port Chalmers (Dunedin's deep water port) in 1882 bound for Britain and arrived successfully. Isolation breeds innovation and risk taking.

      The European nations in the list provide a much better comparator for Scotland. All other than Switzerland have offshore islands to provide transport for and regions where agriculture is marginal but also large sea areas and innovative populations (Scotland's innovation is mixed up with the UK's).

      Delete
    3. Yes, Scotland has many advantages over New Zealand for business. They are in the middle of nowhere. We are part of Europe.

      Delete
  2. I'm certainly no economist and would not profess to be one but everything I read at the beginning of the referendum process (to arrive at my decision for a yes) in terms of economics, pointed to the importance of GDP per capita as the ultimate test of how healthy or unhealthy an economy was.
    Going on the then GERS figures at that time it was apparent that Scotland was more financially viable than the rUK was even with the limited picture it painted.
    Everything else was just smoke and mirrors designed to confuse.

    I look forward to the outcome of this wager if it's ever taken up.

    ReplyDelete
  3. Should the US expenditure per capita be $10953 and not $109531 as shown in the text (para 5)?

    ReplyDelete
    Replies
    1. Yes, thanks for spotting. The extra 1 at the end should have appeared as a superscript reference to a footnote giving the source of the data.

      Delete
  4. Looks like this amount is wrong for US Gov't expenditure: $109531. Extra 1 at the end.
    Think it should be $10953. ie ten thousand and 953 dollars.
    Can you confirm?

    ReplyDelete
  5. Aye, snap Calum, ya fast-typing cybernat! :)

    ReplyDelete
  6. Thanks for pointing that out - corrected now.

    ReplyDelete
  7. Kevin Hague is a sad little racist who is only ever quoted by other racists. If you see any comment online with a link to chokkabolllockspot then you know the person is a racist turdeater and can be safely mocked as such.

    ReplyDelete
    Replies
    1. Your evidence for Mr Hague being a racist is? As if there is any, then why did you not put your name to your post, instead of hiding behind an anonymous profile?

      Delete
    2. Did you know, comments such as this actually make Kevin MORE correct?

      Delete
    3. MORE correct? Crikey, is that arithmetically possible?

      Delete
    4. James, this sort of comment does you and your blog no favours. Having morons spouting anonymous vile bile should be deleted.

      Delete
    5. Thankyou, Toby, but I decide my own moderation policy. In my view it's superior to the moderation policies of most unionist blogs, which delete dissenting comments as a matter of routine. (For example, if this was Adam Tomkins' blog, the comment you have just made would never have got through moderation.)

      Delete
  8. 1. Why no numbers from GERS in your post?
    2. I've shown the %gdp graphs in my blog - very similar profile
    3. You say you went to replicate the graphs on %gdp and vs UK not rUK basis - where are they? If you ever get round to it you'll see they show a very similar picture.

    I genuinely appreciate the effort you've taken here but in I'm afraid it's a swing and miss

    Kevin

    ReplyDelete
    Replies
    1. If it's that far out Kev, take up the bet.
      After all, what *have* you got to loose?

      (Buk, buk, buk, bukaaw)

      Delete
    2. I explained that I didn't have to replicate the graph - it is the very first thing in GERS. Anyone interested enough should be able to use Google. You don't seem to be justifying your methodology. Can you confirm that the adjustments you made were favourable to your case?

      Delete
    3. Here, Kev, have a look at this ;
      http://wingsoverscotland.com/the-limitations-of-gers/

      Delete
    4. Andrew, did you mean the graphs at the top of this page? http://www.gov.scot/Publications/2015/03/1422/4

      Delete
  9. Joke. Not a great one. However, you gave a good attempt at rebuttal, fair enough. But would be more impressed if you moderated comments by people like the brave "Anonymous" above off your page.

    ReplyDelete
    Replies
    1. I know this is probably a baffling concept to a unionist, but I have what is known as an open moderation policy. I only delete comments in extreme circumstances. As you'll see if you browse through the last few threads, there are two extremely irritating unionist trolls on this blog, and I don't delete their comments either.

      Delete
    2. Well, fair enough, that's up to you. It's not baffling to me. Just sick of hearing nationalist bile, and it lowers the tone of a decently written post. I'll check out these unionists you speak of.

      Delete
    3. The main problem on most sites such as this are the unionist trolls they are they ones who scupper sensible debate.

      Delete
    4. And you are brave Cam Who might I ask? And the same Q to another fool with 64 in their name who criticised Anonymous from the safety of a nom de plume. Do you fools not realise how stupid you are?

      Delete
    5. Glasgow Working ClassNovember 10, 2015 at 10:37 PM

      Anon. I do not recall you debating anything recenty. I know you like cereal.
      James I have listened to so called economic experts for around fifty years and their various opinions and disagreements. You do not have to be an expert because experts have caused numerous recessions. I did mention the Darien Scheme recently, now they were experts and we have the Union.

      Delete
    6. Glasgow Working ClassNovember 10, 2015 at 11:54 PM

      James, name and shame those irritants.

      Delete
    7. Eat your cereal.

      Delete
  10. Hey, Kev: give us ONE good reason why the Tories in London would want to subsidise the Scots at the expense of the people in England who actually vote for them.

    Ta.

    ReplyDelete
    Replies
    1. Because perhaps they care about Scotland more than you allow yourself to believe. Your prejudices aside, the numbers speak for themselves Pantone.

      Delete
    2. Caring Tories? As Kevin himself would say : rofltastic.

      Delete
    3. Are you suggesting that the Tories care less about England than they do about Scoltand then, Cam? Bwahahahahahahaha!

      Delete
    4. You need to look at the variable economic performance of the whole of the UK. Being in a united country means transfer payments from more affluent areas to less affluent areas, which in the UK context means from London and the SE to the rest of the country. The same is true within Scotland, of course - and would be in iScot. Does your logic mean that Aberdeenshire shouldn't transfer revenue to the poorest bits of Drumchapel?

      Delete
    5. Haven't the Tories in London been saying that the people of England have been subsidizing every country that sought to control their own destiny. The u.s., Canada, Australia, India,south Africa, etc. Guess what, they all survive and thrive and have THEIR OWN debt and struggles, just like the Tories in London and the people in England always have and always will. Germany has debt.

      Delete
    6. No fucking way I'm ever voting Tory. Lying bastards. I though they were for people who wanted to pay less tax.

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    7. (that was in response to cam's hilarious comment which really put a smile on my face)

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    8. Whitehall and surrounding area do not give a toss about Scotland! I've had the pleasure of working in many overt and otherwise departments in that locality and there's no sense of loyalty to Scotland at all. None. I moved back home and Scots simply don't realise how much we are "unconsidered".

      It turned me from a navy suited gentleman up & coming mandarin to a loony leftwing nat that even funds ratbags like Wings.

      Delete
    9. There is a simple reason why the Tories in London would want to retain Scotland regardless of the economics and its because they believe in the union and value our nation-state. Your argument is like saying "Why do the SNP would want to subsidise the highlands and islands when they cost more to manage?"...They are not small minded little bitter people who are full of hate!

      Delete
    10. Glasgow Working ClassNovember 10, 2015 at 11:30 PM

      Skier. I reckon I asked you previously if you wanted to pay more tax and never got an answer. So gies an answer.

      Delete
  11. My work here is done for tonight.

    If Mr Hague returns I have some simple questions:

    - did his 'improvements' to GERS work in favour of his case?
    - do they total many billions of pounds?
    - am I wrong?
    - and again, would you like to take the bet? The same offer has been made to the very confident sounding Mr Lovatt.

    ReplyDelete
    Replies
    1. Neil Lovatt seems to be backing away from the wager, Andrew. He said on Twitter that he started writing a rebuttal of your article, but gave up because it was "too easy"!

      Delete
    2. Andrew, I'll write a critique. Some questions for you:

      1. Is the Scottish deficit (in GERS) high or lower than rUK?

      2. If Scotland was independent now (and we'll assume, wrongly, that it is in a Eurozone Mk 1 CU with the UK), what size would the deficit be?

      3. What interest rate differential would iScot pay (either with or without a population share of UK debt)?

      4. Assuming Q3 is higher than the UK would pay (it would be) what impact does that have on iScot fiscal position?

      5. Given that iScot would *not* be in a CU with rUK (not in rUK's interests) what would the additional fiscal hit on iScot be?

      6. Given that iScot would start life outwith the EU, how much will EEA market access and replacing EU subsidies cost iScot?

      I could go on, but that should be enough for starters. Answers to all of these questions can be found here: http://centreforum.org/index.php/mainpublications/626-scottish-independence

      Delete
    3. Loaded questions and answers to suit your viewpoint, we can all do the same. The real question is who allowed it to get like this(if that's what you believe)? A second question to you would be, is it worth keeping the same people in charge?

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    4. I'm all for no currency union as that means no UK debt. You can't pay debt issued in a fiat currency (Sterling in this case) unless you can print said currency.

      I LOL'd until I almost peed my pants at the EU thing given Scotland we are facing an EUref with it looking like Scotland will clearly vote 'In' and the rUK possibly out. That really was a cracker.

      Delete
    5. It doesn't mean no UK debt. Osborne said he would underwrite it to calm the markets but do you not think we would end up in an international court. This is the problem with the internet. Nuggets can offer their opinions to readily!

      Delete
    6. Alan, please explain how you can pay debt issued in Sterling by the UK government (there are no bonds out there issued by Holyrood on the international markets) unless you are able to print Sterling. Jeez, a huge whack of UK debt is owed to itself. Scotland could pay the UK 1 billion $almonds and George could just bank that in foreign currency reserves while printing off £'s out of nowhere to pay Scotland's share.

      Under a currency union however, Scotland gets a share of all £'s printed and can pay Sterling to London to help finance UK debt.

      Delete
    7. Alan, why should iScotGov debt be higher than rUK's?

      1. We have a higher GDP per head, so we are a safer bet in terms of paying it back.

      2. We have OIL! All ScotGov has to do is issue petrobonds, backed by the oil and gas reserves until things settle down.

      3. International investors/pension funds are hard nosed people and they look at more than the witterings of doom-mongers online before deciding whether an interest rate is reasonable or not. They look at things like GDP per head and national resources.

      4. Scotland has a positive balance of payments. We sell more than we buy. The UK's is negative, -7% of GDP negative. IF Scotland leaves the Sterling Zone that balloons to -9% of GDP and a Portugal style run on Sterling and a driving up gilt interests are a certainty. So how will rUK with it's current woeful record, stimulate several % points of export earnings pretty much overnight?

      Delete
    8. [Paying off debt when unable to print sterling]

      Wouldn't iScotland need to buy Sterling on the open market and pay it back that way? iScotland would need a big pile of foreign currency reserves.

      https://muddywatermacro.wustl.edu/dollar-denominated

      Delete
  12. Listen to this, folks. I was over on twitter and someone asked Kevin Hague what he thought about Andrew's wager. Kev didn't have a clue what they were talking about, he was like, what wager?

    Can you believe it, Kevin Hague on this threat commenting on a post that he hasn't even read properly. What a laugh. He's just proved to us that he opens his mouth and spouts guff without even knowing what he's spouting about.

    You couldn't make it up. LOLZ

    ReplyDelete
  13. Andrew, thanks for your post. It is welcome to see another write about KH's views but you've fallen short.

    I'm OK with your US/Mexico scenario and with the two flaws (Snow White and Zombie) and I am prepared to accept that as presented by KH they have a negative effect on Scotland's fiscal position.

    What is really important is to know how large the negative effects are.

    If the effects are small (albeit negative) then, in terms of your analysis, KH's results stand relatively untouched. If, however, the effects are large KH's results are damaged goods.

    Only by letting us see the size of the effects can we come to our own judgment about KH's data.

    Can you append this to your post?

    ReplyDelete
    Replies
    1. Thanks for acknowledging the substantive points Calum. Everyone can reach their own judgement about the size of the effects. They are not overwhelming but any statistician would consider them significant.

      Open GERS chapter 1 page 1 and compare with KH.

      Look at 2010-11 for example - that's about a billion pound difference.

      Delete
  14. Hi there, can you share this crowd funder please? https://www.indiegogo.com/projects/how-the-bbc-stole-the-referendum-the-documentary#/

    ReplyDelete
  15. The challenge at the end of this article is very straightforward. Andrew has made it and Kevin is aware of it. Time to do it, surely.

    ReplyDelete
  16. Two comments

    1. I've told you to go ahead with the bet - but I'm not helping you gain publicity for your rather confused blog post

    2. If you actually *did* replicate my analysis on %gdp and vs UK basis (disaggregating oil, onshore tax and spend factors as I do

    a/ you'd have some credibility
    b/ you'd be showing the same result as the IFS did - a big deficit gap

    If you really need me to tell you why comparisons with US/Mexico and Snow White are not relevant then I'm afraid - to coin a phrase - "I'm out"

    ReplyDelete
    Replies
    1. There are only two possibilities. We, (the Scottish residents) are either subsidised by the rest of the country, or we are not. There is no middle
      ground.

      That means we, (the Scottish residents) are either parasites or morons.

      Which are you Kevin, a parasite or a moron?

      Delete
    2. Neil Bruce. There is no parasites or morons. Does that mean everyone outside Aberdeen, Glasgow and Edinburgh are parasites within Scotland as they have less economic activity. In the 80's and part of the 90's we have more than paid our way due to oil. However it is payback time and we will put in far less and take out far more for the next couple of decades. Thats how it works. We helped out the Welsh, the Northern Irish and the North of England in those days and now London can help us out and keep us stable as oil industry declines

      Delete
    3. "now London can help us out and keep us stable as oil industry declines"

      Yes, that's how it works. The oil workers sitting firing off CVs all over the place can relax in the knowledge that the tax the help they and we gave the financial sector will be reciprocated.

      Socialism for London. Capitalism for everyone else.

      Delete
    4. Well said, Alan. The subsidy junky / parasite argument is nationalism at its most pathetic unfortunately.

      Delete
  17. Genuine question, but who is Kevin Hague? Is he a blogger?

    I spend way too much time in Scottish political discussions; have done for years and I think I visited just about every remotely relevant site on the topic at some point, but this was the first time I'd ever heard the name Kevin Hague.

    ReplyDelete
    Replies
    1. Yes, he's a blogger. From what I can gather, he's conceded that he's not an economist and therefore can't claim any special authority beyond the force of his arguments. As we've just seen, he seems very unwilling to engage seriously when challenged.

      Delete
    2. Kev says "If you really need me to tell you why comparisons with US/Mexico and Snow White are not relevant then I'm afraid - to coin a phrase - "I'm out" "

      OMG! What kind of intellectual argument is that? "Snow White isn't relevant, just because. And I'm not telling you why she's not relevant, she just is, so there, it's enough for me to just declare it isn't relevant, I'm right, you're wrong, if you don't believe me then I'm not playing any more."

      Wowsers, the unionists must be desperate if this is this what they're pinning their hopes on, haha. Pure wiffle waffle. Come on Kev, we're all waiting for you to say something impressive, don't let us down.

      Delete
    3. Glasgow Working ClassNovember 10, 2015 at 11:47 PM

      Anon, I am still waiting for you and others to say if you are willing to pay more tax towards helping the poorer in our society. Dead easy Anon, Yes or No you did it last September. No more cereal now answer the question.

      Delete
    4. Eat your cereal like a good little agent provocateur.

      Delete
    5. @ Our Pet Troll

      How much tax? To help how many people? By how much? And how much will get clawed back by Whitehall making it pointless?

      Give me numbers, not SLAB style waffle without worked answers other than "Big Boy John Swinney will find the money and we'll use that"

      Delete
  18. Seems pretty straightforward.

    Go ahead with the bet, submit both opinions/findings to neutral academic authorities and lets see the results.

    Hague is revered by Unionists as some sort of paragon of truth - let's see if he is due that epithet.

    Get on with it.

    ReplyDelete
  19. Must say - having read the latest updates on Hague's blogsite and noted the headline - "The Power Of Being Consistently Right", I was honestly left wondering if he has completely succumbed to his own hype.

    Time will tell - but, I seriously suggest that No-one is Consistently Right.

    Not even wee Nicky!

    ReplyDelete
    Replies
    1. Thanks David, it's beyond ridicule. His disciples are telling me tonight that sometimes he was right - but he calls his piece "The Power of Being *Consistently* Right. And don't even start me on the irony of calling another fumbling 'Stop Getting GERS Wrong'.

      Delete
    2. Visited his twitter site and marvelled at some who were shocked, appalled and disgusted at a few sweary words on a few tweets - but seem to be absolutely mute , not at all shocked, not at all appalled and not at all disgusted by the very polite way the WM Tory Govt is "shredding" the Welfare State and is probably responsible for quite a few Deaths recently, under IDS's fit-for-work policies.

      Funny how, to some, swearing is more heinous than causing human misery by dictat.

      We all know how partial and incomplete GERS is - but Hague would appear to distort it even more.

      Delete
  20. Looking at oecd data for last 7 years., helpful chart shows that only 2 of 30 countries shown had a surplus each year.. The Norse and Swiss. 12 regularly hit over 7% deficit gap and they are doing fine as independent countries.

    All his work means little when so many countries are doing fine in similar or even worse positions and that's based on things staying as they are without any changes in policy in iScot.

    The point is choosing our own path and not being dragged along by others. It's just the usual too wee, too poor, to stupid, though they can never answer why only Scotland can't do it.

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    1. Dezcore this is all very well quoting nations who have been independent for 100 years or more. The white paper picked the top 6 growing wee countries who exist and picked the timeline of 1977 - 2007 and suggested they grew around 1.2% per decade faster than scotland over that period. Are you suggesting with Barnett being equal to 16% of our economy we could use powers and levers for 160 years to catch up to where we could have been. Doesnt make sense for even your grandweans grandweans never mind people alive just now

      Delete
    2. Under the Union, Scotland is now in worse state than rUK.

      Are you endorsing the Union for its "beneficial" effects on Scotland?

      Really?

      How, exactly?

      Delete
    3. Glasgow Working ClassNovember 11, 2015 at 1:46 AM

      Scotland was in a bit of a state before the Union. But the English were to blame, do you agree?

      Delete
    4. The only thing to be agreed upon is that you should eat your cereal.

      Delete
  21. For a reasonably long article, this seems to have a single premise - that using deficit as a percentage of GDP is a superior measure than using deficit per capita. Fair enough. I guess there are advantages and disadvantages to both and you could have a reasonable argument for preferring the former.

    Unfortunately, you then argue that Kevin's analysis is defunct as it focuses solely on the per capita measure - a blatant misrepresentation as anyone who has read chokkablog will have seen the %gdp figure also referenced repeatedly.

    Your argument is further weakened by failing to include the deficit figures that you refer to. Why suggest that something is a better measure and then fail to present the data? The answer, of course, is that the %GDP data is very similar to the per capita data and still shows that Scotland has a higher deficit than the rest of the UK.

    You even refer to the GERS graphs without reproducing the data or providing a link to them (here - http://www.gov.scot/Publications/2015/03/1422/4). It seems that you are just hoping that people will assume that the results are different without checking for themselves. If not, then why not include the data?

    Incidentally, it's worth pointing out that the "black hole" term originated from IFS analysis (http://www.ifs.org.uk/publications/7652 & http://www.ifs.org.uk/publications/7722) which, as you can see for yourself as I have provided a link, uses your preferred %GDP measure.

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    1. There have been a few such comments. And for the benefit of those who would like a link - you should go to a thing called 'Google' and type 'GERS 2013-14' - my graph is there (I choose not to distort it in any way). It's really not hard to find: Page 1 Chapter 1

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    2. To look at expenditure without considering income is surely partial. It is only half of the balance sheet (they taught us bookkeeping at School in NZ). That is what Hague is doing. Andrew Morrison and anyone sensible compares expenditure to income when calculating deficits which is where the GDP figures come in. Then you have a balance sheet.

      I can put it no simpler than that. If you cannot see the flaw in Hague's method then I'm sorry for you.

      Delete
    3. @Andrew Morrison - a snarky comment about google. Very good.

      It's been noted by others, and apparently some who would like to agree with your point of view, that your 'point' would be supported by presenting some data as corroboration. The fact that this data is missing tells us all we need to know.

      I note that you aren't denying that the %GDP data would reveal a near-identical result to the per capita data.

      I'm afraid that this article appears to be nothing more than another misguided, desperate attempt to undermine any inconvenient analysis of GERS. That you need to misrepresent Kevin's analysis and pretend that he doesn't use %GDP figures tells us everything - if there was actually something to attack then you wouldn't need to fabricate in this way.

      @muscleguysblog - seriously, what are you talking about? In what way does chokkablog "look at expenditure without considering income"? Have you even looked at it?

      The only contention in the article is that deficit as a percentage of GDP is a better measure than deficit per capita. The article pretends that Kevin only uses the latter. What part of that has convinced you that Kevin doesn't consider income? A truly bizarre comment on your part.

      Delete
  22. So, let me get this straight...

    This Hague guy - that nobody I know has ever heard of - is arguing that Scotland's economy is shafted within the union so people should vote for the union? I though Scotland's economy being damaged by the UK was a nationalist argument?

    He might be better looking into constitutional referenda.

    If people vote for independence and economics is a factor at all (which normally it is not, playing only a minor role at most), it is because their economy is being screwed as part of a union / empire.

    If a people are happy and economically prosperous as part of a union / empire, they are far less likely to vote for independence. Kinda obvious why. Jeez, if you are doing really well, why leave?

    In contrast, is it a surprise 74% voted Yes to devo in 1997 when Scotland was economically on its knees after 20 years of Tory destruction? Mass unemployment...economic emigration...oil at $20 a barrel having crashed from double that... If we'd had an iref then, polls said a comfortable Yes to indy would have been over 60% like devoref Q2 at 64%.

    So this Hague dude is basically encouraging people to vote for independence by arguing diligently that being part of the UK has damaged Scotland? I thought he was supposed to be pro-union?

    Why is anyone even arguing with the guy? He seems to be selling reasons to vote Yes.

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    1. The man is known for his blog and his relentless use of spreadsheets to prove that Scotland is bust within the UK. His problem is that he is obviously determined to prove that this is the case so his views are largely discounted by all except the rabid end of the Yoon spectrum.

      You just know that if one day GERS came out and proved conclusively that Scotland wasn't screwed financially he'd set about burying the news.

      Delete
    2. The man is telling the Scottish people what the first 50-100 years of independence is likely to look like fiscally. Would you rather we voted blindly and our kids had to grow up in a country with an economy half the size! He isn't saying the economy is bad he is saying we would have to cut our cloth and try to grow faster to catch up to where we would have been over a couple of hundred years.

      Delete
    3. Tell me......how accurate are forecarets generally, ror the next 5 years - let alone the next 50-100?

      Their track records are absolutely atrocious.

      Your point is.................?

      Delete
    4. Erm Alan, you seem to just be repeating what this unknown Kev guy is saying; i.e. that being in the UK has been detrimental to Scotland, if his arguments are true.

      I'm struggling to see how this is a pro-union argument. Historically, it is exactly these type of situations (economic damage) that have pushed countries towards independence.

      As I said, if a country is prosperous, it is much less likely to seek independence. Kev would be better arguing that Scotland is very prosperous within the UK and could be prosperous as an independent nation, but why vote to change what works already?

      Delete
  23. Are benign zombies related to Labour MSP's?

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  24. https://docs.google.com/document/d/1gHkxksDWYybFm83G0SmL7uOe7PaLO9ADwNt6XptPDsU/edit

    I've shredded this article here. It's an appalling piece of analysis riddled with errors and inaccuracies and is frankly embarrassing that it was described as a forensic dismantling of Kevin Hague.

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    1. Neil, Neil, Neil. Your forgot your trademark maniacal cackle of "Eet vos a pleasure to shhhhhhred eet!"

      Delete
    2. LOL!

      YOU have "shredded" the article?


      And???????????


      Who the hell are YOU, anyway?


      Qualifications, if any??

      Or is the fact that you are just a Unionist blogger sufficient, in your little mind?

      Do you use a snorkel to breathe up there?

      Delete
    3. "Who the hell are YOU, anyway?"

      He'll ask the betting markets and let you know.

      Delete
    4. Ahhh - remember him now.

      Another Labour loser who backed Smurphy and got albumen all over his visage as well.

      Didn't he take The 56 well?

      Does anybody even bother with him any more?

      Bit of a has-been loser, ain't he?

      Delete
    5. Glasgow Working ClassNovember 11, 2015 at 1:38 AM

      Pity the 56 are inept and the Nat si strategy was to have the Tories in power and condemn them. It will unravel. So David do you want to pay additional tax to help our fellow Scots?

      Delete
    6. You used to be just a Twat.


      Now you are a caricature of a Twat.

      Congrats, McGibbon.

      Delete
    7. Glasgow Working ClassNovember 11, 2015 at 1:55 AM

      And you are a miserable deceitful Scot that has sewed up his pockets and wants the English to pay the bill. Actually you are a crawler tae the English like those during the 1690s.

      Delete
    8. Yeah, whatever - ya wee prick.

      Nite nite - don't forget to change yer wee nappy before getting into yer wee cot.

      Delete
    9. Glasgow Working ClassNovember 11, 2015 at 2:22 AM

      And pile yer ha'pennys under yer pillow ya miserable auld gitt.Choke oan yer red biddy....Och Aye

      Delete
    10. Eat your cereal, agent provocateur.

      Delete
    11. You do realise that your 'shredding' has described Kevin Hague's methodology as 'ridiculous'?

      Who were you trying to shred?

      Delete
    12. No but it delightfully showed that you don't understand that there is a difference in the deficit gap between indy and FFA.

      Delete
  25. Glasgow Working ClassNovember 11, 2015 at 12:35 AM

    After the Darien Scheme that failed and Scotland was bankrupt did Scotland have any other alternative than to ceawl to England for a bail out. And was it the English to blame that Scotland failed economically?

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    1. You are an agent provocateur. Eat your cereal.

      Delete
    2. It was only the nobility who lost monies in Darien. Scotland was not bankrupted, only few rich parasites. Economists have calculated that, providing they do not get too numerous or megalomaniacal economies can carry elites pretty much neutrally. Even ancient Egypt with the pyramid building was tolerable since they employed people in the dry season to build them, economic activity.

      So this idea that 'Scotland' was bailed out by English gold does not hold water. The economies of the Northen Isles who exported salt fish and seaweed products to the Low Countries and Baltic were devastated by the Union as they were barred with trading with them. Westminster was having a contretemps with them which Scotland had to join in regardless. There were other economic activities that similarly fell foul. Domestic farms struggled to compete against cheap English imports of food.

      So the Union screwed our economy, not Darien.

      Delete
    3. It is also worthy of note that England was the driver for the 'incorporating union', for reasons of national security, not the other way around.

      Delete
    4. Glasgow Working ClassNovember 11, 2015 at 8:29 PM

      Pity for my great grand chidren if you lot of Stalanist Nat sis are left to teach history.

      Delete
  26. James,

    I get no pleasure from saying Andrew's article is weak and incomplete (see my earlier comment at 7.50pm 10 Nov) and is an easy 'knockdown'. An expanded and revised post might have stood up to scrutiny.

    Unfortunately, this post reflects poorly on your judgment in letting it see the light of day in its current form.

    Hopefully, a better version will follow.

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    1. I might allow you 'incomplete' although I've clearly told everyone where to find the information. 'Weak' is an odd description since you conceded the substantive points last night.

      We'll see whose judgement is ultimately vindicated.

      Delete
    2. Re your substantive points. I said that I was OK with them in as much as I could see they would have an effect on how Scotland's fiscal position is viewed. I made the point in my initial comment that the size of the effect was crucial.

      The weakness and incompleteness in the article comes from making no mention of the size of the effect. It isn't enough to tell us where we can find the info. Show us the size and then let us decide. That is the normal process online.

      By omitting this you give your critics an easy time and make life difficult for those who would otherwise be supportive.

      Delete
  27. Is the challenge going ahead?

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  28. Hardly a surprise that there are a number of comments which say something along the lines of "well the union has screwed our economy if we're in such a bad state". It seems to be the go-to get out when the veracity of the data becomes apparent and the inconvenient truth is undeniable.

    Of course, this argument is also bogus. If you accept the analysis and the data in GERS (using %GDP deficit figures if you prefer) then what should be apparent is that the deficit is created from additional spending, not because our income or revenue is too low - the latter of which would indicate a failing economy.

    As the Yes campaign and the SNP were at pains to point out repeatedly, Scotland has produced more revenue per capita (oops but it's the SNP using per capita now so it's fine) than the rest of the UK for each of the last 35 years. Scotland was also, according to the SNP, the 14th richest country in the world based on our GDP per capita (oops again).

    So to claim that the union has somehow buggered us is an attempt to desperately ignore the data.

    Our current exceedingly high deficit comes from the additional spending within the union, higher than rUK. Forgive me if I fail to see the "failure" in a system which enables us to maintain a higher per capita and %GDP public spend.

    I'm not one for pretending that the union is perfect, nor that an independent Scotland would be impoverished; but let's not pretend that everything bad that's happened in Scotland since 1707 has been the fault of "the union" and that everything good would have happened regardless of it. Frankly, it just makes you look pathetic.

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    1. I don't think anyone is saying that.
      Economically, it comes down to whether we would be relatively better off or not.

      For me personally, it's not about the economics - although I do think we would have the chance to do far better.

      Self-Government is mainly about the dignity of running our own affairs as a nation - not shirking from the responsibilities and opportunities and challenges.

      Using a sense of dependency to promote a union is unhealthy, and breeds a national sense of weakness that manifests in the famous cringe and a perception of Scotland as a backwater.

      Delete
    2. There are plenty saying that, you only have to read the comments above.

      I can completely understand and accept that, for many people, the economic argument may be secondary, at best. Fine, that's an entirely subjective decision for people to take on priorities. But many will think the economic argument is crucial, for obvious reasons.

      I don't subscribe to the "dependency" arguments. It relies on a narrow view of "we" that I don't subscribe to. Similarly around any spurious arguments of "dignity". These types of base, emotional claims just don't have any impact on me. I don't recognise any "cringe" and I have never met anyone other than Scottish nationalists who genuinely has a perception of Scotland as a backwater.

      Delete
    3. "Self-Government is mainly about the dignity of running our own affairs as a nation"

      Presumably this rules out "ever-closer union" within the EU. Will you be voting to leave the EU then?

      Delete
  29. I grew up in the boom decades of North Sea Oil/Gas - when an Independent Scotland would have been in the top half dozen richest Countries on the planet - and distinctly remember the patronising and totally condescending tone/phrases employed by Westminster Unionists and the entire MSM, regarding Scotland's tiny "place" in the bigger scheme of things.
    A "Backwater" would have been the very mildest of them - and I met huge numbers of people up here, who used exactly that expression on a regular basis.

    To them, Scotland was a great wee Country/Region - as long as it remembered who was REALLY the boss in this Union and basically kept its trap shut and did as it was told from that place on the banks of the Thames.

    That attitude, unfortunately, was all too evident again, during the Referendum Campaign - as many neutral observers have commented on.

    In my experience, therefore, during the time of Scotland's fiscal superiority over rUK, we were told it would not last, we were told that the oil boom was much, much smaller than it actually was (confirmed recently by Denis Healey and borne out by the burying of the McCrone Report for 30 years) and so any thoughts of going it alone, were nothing more than childish rantings by the poor wee Scots, who did not really understand these things as well as the Grown Ups down south.

    Then I watched as most of my family were adversely affected by Thatcher's decimation of Scottish heavy industry and the mines, when Scots were told that they would just need to accept that times had "moved on" and that their industrial communities were simply casualties they had to accept.

    Now, we Scots are told that the "figures/projections/predictions" show that we would be falling off a cliff if we even consider Independence.

    Seems pretty clear to me, that it does not really matter to Unionists WHAT state Scotland is in - better-off than/equal-to/worse-off-than rUK - there simply will NEVER be a time when they will admit that the great little Country of ours should dare to be Independent/break their precious Union.
    Never.

    Happily, more and more Scots seem to be agreeing with my opinion and are deserting most of the Unionist Parties in droves.

    Economics are cyclical and will no doubt improve - particularly in respect of Oil.

    Independence - when (not if), in my opinion, it does happen, will be driven by many, many important things and NOT just by the fiscal aspect alone.

    Anyone who honestly cannot see hat, has paid no attention to the history of the vast majority of Independent Countries in the world.

    ReplyDelete
  30. Glasgow Working ClassNovember 12, 2015 at 12:21 AM

    David, Your comment is based on greed. We were and still are part of the Union therefore the oil is British. The Nationalists tried to capitalise on the oil being discovered as leverage for Independence and it did not work. You should be arguing on the merits of your case and not money. What if the oil was not there, what would you be saying?
    Should Scotland take its share if the Falklands oil turns out to be a bonanza! Or should we give the revenue to Spain.
    If we had not as a Union fought Nazism together then it would be German oil. If Scotland does become independent do not have any illusions about prosperity. The Scottish working class will gain nothing.

    ReplyDelete
  31. McGibbon. I have reached the point with you, that I no longer see the need to engage.

    Whether you are just another BritNat Unionist Troll or a pretend-Scot who sometimes forgets that pretence - it does not really matter.

    You are a vacuous waste of space, pal and I do not intend to give you the oxygen of a response.

    From now on, just consider yourself invisible to me and I will do the same.

    Your inane ramblings can be dealt with by others and I continue to be amazed that James does not just delete everything you post - I certainly would.

    You contribute absolutely nothing on this site, apart from a few puerile quips which only you find amusing.

    Life is too short to waste on trash like you.

    You and your fellow Unionists are losing every single argument up here now - your Parties are bleeding voters like hemophiliacs and they show no signs of coming back.

    Unionism is dying and it will not recover.

    Time to accept it and move on.


    Cheers - we will not be speaking again.

    ReplyDelete
  32. Glasgow Working ClassNovember 12, 2015 at 12:58 AM

    That is a rather senile attitude to adopt. Mature senior citizen throws teddy oot the pram. Fine with me. Enjoy yer red biddy.

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  35. For anybody who still hasn't worked out why this blog post is fatally flawed, please read my calm and constructive response linked below

    --> FFA for dummies methodology

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