These were my speaking notes for the meeting I addressed this morning:
SNP fringe meeting: Scotland's economic future
Richard Murphy
- The problem is not finding the money
- A government with its own currency creates money when it spends.
- The constraint is not money but available resources.
- Does Scotland have the people, skills, materials and capacity to deliver what it needs?
- Government's task is to identify priorities and organise resources to meet them.
- The challenge is finding the projects and resources, not finding the money.
- Scotland needs its own currency
- Independence without monetary sovereignty is incomplete independence.
- Using sterling means remaining dependent on decisions made in London.
- Scotland needs its own currency, central bank and payment system from day one.
- This would give Scotland the power to pursue its own economic priorities.
- A Scottish currency is essential to making independence work.
- Taxation and inflation
- Government spending creates money; taxation withdraws it.
- Tax controls inflation, redistributes wealth, changes behaviour, reprices economic activity and gives money its value.
- Inflation arises when demand exceeds the capacity to supply.
- Managing inflation is an everyday responsibility, not an exceptional crisis response.
- Taxation is a more effective and equitable instrument for managing demand than interest rates.
- The limit to government spending is inflation, not an arbitrary financial rule.
- What Scotland should do
- Identify the unmet needs of Scottish society.
- Prioritise housing, healthcare, education, social care, renewable energy and infrastructure.
- Invest in skills and productive capacity to overcome resource shortages.
- Use public investment to deliver public purpose rather than private profit.
- Measure success by wellbeing, sustainability and economic security.
- Scotland needs an economic plan, not a fiscal straitjacket.
- A wealth transaction tax
- Scotland needs to tax wealth and financial activity more effectively.
- A tax on bank account financial flows could replace National Insurance.
- It could broaden the tax base and reduce the tax burden on work.
- It could also provide a flexible instrument for managing inflation.
- Tax the movement of money more fairly, rather than concentrating taxation on earned income.
- The politics of care
- The purpose of economics is to meet human needs.
- Care is fundamental to every society but systematically undervalued.
- Government must care for people, communities and the environment.
- Public services are investments in collective wellbeing.
- Care should be the organising principle of Scottish economic policy.
Conclusion
- Scotland has the potential to create a prosperous, fair and sustainable economy.
- It needs its own currency, an understanding of money creation and a fair tax system.
- Above all, it needs a government willing to use its powers.
“Independence should not simply change who governs Scotland. It should change what government believes it can achieve. The question is not whether Scotland can afford a better future, but whether it has the courage to create one.”
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EDITOR NOTE:
This felt like trolling. So, I checked your URL. This is your 12th identity here.
Your URL is now blocked
Agree with all.
Observation: Scotland has the largest renewable resource in Europe, by a country mile. The problem is that the delivered cost of a kWh of elec is, for the most part, defined by the cost of debt (which is how renewables are funded +/- 80% debt vs 20% equity). Interest rate rises raise the cost of a kWh – substantially. If Scotland controlled its own currency, it could define what interest rate is appropriate to fund a given renewable project. Keep in mind, low interest rates (& perhaps money supplied by a gov) are not subsidies – they are simply ensuring that a public good (energy) is delivered at a reasonable cost. In the case of gov loans for RES, this disintermediates banksters (the usual funders of RES projects). Which is a good thing. Banksters (& by extension the finance sector) need to go on a diet and direct gov funding of projects (via a gov owned bank) is the way to do it.
Thanks, Mike. As I am inclined to say, much to agree with:
And pending independence in Scotland we need to invest in ourselves by harnessing local government pension funds and citizens savings for productive investments in our own economy. A step forward was achieved at SNP conference on Thursday when a motion was passed committing the SNP to halting the bond programme and instead issuing SG and LA bonds as retail bonds. It also commits the SNP to setting up a Local Authority Bonds Unit Qustion is whether the SNP leadership will ignore the party membership yet again.
Jim
Great work.
But if I were a gambling man, I’d put quite a lot on them ignoring the motion.
Richard
I’m not a member of the SNP. It was a member, who picked up on the work that me (for the SCG) and William Thomson have been doing on “Investing in ourselves”, who took the lead on drafting the motion and getting it through. Tim Rideout helped him with drafting the motion and preparing the speech. Bizarrely The National which has been covering the conference have failed to report on this significant party policy decision. Tim knows very well about SNP leadership ignoring policy decisions taken at conference.
Jim
Can you keep monitoring that? As you know, I can change that.
Richard
Up until recently was a member, I hope they listen.
Richard, would some countries in the eu have been better off keeping their own currencies ?
Yes, all of them.
Oh aye Richard, we’ll be keeping a close eye on them! Likely we’ll now contact the key ministers to see what they are going to do to implement the policy change
Thanks
Your notes make good sense. If an independent Scotland followed your advice then they would have a better chance of success. So too would the other nations of the UK if they did the same. 🙂
Undoubtedly Scots should decide their own future, independent or not. But what I don’t fully understand is why it might be a good thing for Scotland to separate from their immediate neighbour and largest trading partner, with whom they have a lot of common culture and shared history. But many people think it was a bad idea for the UK to separate from the EU, our neighbour and largest trading partner with whom we share a lot of culture, history and many shared interests.
Am I missing something?
Yes.
National identity.
And the dislike of a presumptuous, arrogant, extractive colonial power.
Open your eyes, Tim, or you are the problem.
I agree with your viewpoint, and yet feel that it supports the idea of breaking up the UK. The same logic would apply to Wales, Northern Island, and even Cornwall if we were to go down this route. I would appreciate supporting a ‘united kingdom/society that really did have the economic understanding you advocate, though is the word kingdom an issue. I believe we have much to appreciate in the different cultures, capabilities and needs of the people who occupy these territories when they come together, as we have in the past. Surely the real issue is that politics has been corrupted with so few at every level ignorant of economics, identifying needs and creating a unifying vision for the benefit of all, not just the wealthy. What we really need are visionary people with sound support from economists, educators and social/health care leaders who can inspire a move in that direction.
Scotland, Wales and Ireland are not England.
Ignore the economics. They want to be independent countries. The economics follows from that.
Please try to understand the core issue. Few in England do.