{"id":44877,"date":"2019-04-24T08:25:29","date_gmt":"2019-04-24T07:25:29","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=44877"},"modified":"2019-04-24T08:25:29","modified_gmt":"2019-04-24T07:25:29","slug":"the-case-for-an-investment-led-economy","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2019\/04\/24\/the-case-for-an-investment-led-economy\/","title":{"rendered":"The case for an investment led economy"},"content":{"rendered":"

I have written a fair few NGO reports in my time; some of them on economic policy. I have some idea just how hard this is to do. You need to be precise, but not too technical; passionate, but overwhelming; coherent without being verbose; and most of all you need to have a vision. That combination is rare. To be original as well is an even harder objective to achieve. But I think Common Weal in Scotland has achieved all that in their new report, entitled\u00a0'An investment-Led Economic Development Framework For An Independent Scotland', which can be downloaded\u00a0here<\/a>.<\/p>\n

\"\"<\/a><\/p>\n

I am aware that the description that this is for Scotland may be off-putting. Please don't be deterred: this is about rejecting neoliberalism and building a sustainable alternative. As a result the report argues that the economy should serve society, not the other way around and the success of an economy should not be measured merely in terms of its size or its rate of growth.<\/p>\n

Instead, the report lays down a series of eleven social impacts which, report argues, make for better indicators of the health of a nation\u2019s economy than GDP. These impacts are; sufficiency, security, wellbeing, opportunity, sustainability, equality, development, stability, democracy, civicness and internationalism.<\/p>\n

In these, the report argues that the UK\u2019s economy fails to a great and growing degree as it is based on a limited range of unproductive sectors \u2014\u00a0financial speculation, asset value inflation, debt-fuelled consumption, and concentration and monopoly. This attitude favours economic concentration, \u201cPooling\u201d the benefits of economic growth with only a few people and in only a few geographic areas \u2014\u00a0London and the South East\u00a0of England and only begrudgingly \u201cSharing\u201d with the rest of us. Not only does this mean that London captures a disproportionately large proportion of the UK\u2019s national wealth, it means that the other regions cannot develop an economic strategy that is responsive to their needs. Tbhis is true for Scotland, but much of the rest of the UK as well, of course.<\/p>\n

And what the report does is go to the core of a key issue for this moment, noting that most conventional economic commentators still measure the success of a national economy based on its size and on its rate of growth. In more recent years, there have been attempts to sanitise this approach by adding qualifiers such as \u201cinclusive growth\u201d or \u201csustainable growth\u201d but the basic foundation of growth-based economics remains. The report does instead argues that as a servant of society, an economy should be measured against\u00a0a broader range of metrics and lays out 12 key pillars: stability, monetary policy, fiscal policy, infrastructure, energy, connectivity, human resources, natural resources, finance and investment, research, development and innovation, capital and productivity, and trading environment.<\/p>\n

From here, the report examines the UK economy in this light and finds that its approaches over the past 40 years \u2014\u00a0particularly with policies such as \u201ctrickle down\u201d economics and privatisation \u2014\u00a0have failed to properly account for the externalities of trade and so is scientifically illiterate in the face of climate change.<\/p>\n

To this end, the report goes on to lay out ten packages of actions that Scotland (and in my opinion, the rest of the UK) could undertake that would help move to an investment-led economy.\u00a0 These packages are all compatible with and would form the foundation of such a Green Deal.<\/p>\n

The plans of action are (and some are Scotland specific, but are entirely adaptable):<\/p>\n

Create a monetary and fiscal environment conducive to investment.<\/strong>\u00a0During the development phase of Scotland\u2019s independence, it will be recognised that an\u00a0independent currency and strong monetary institutions\u00a0are vital and that cutting deficits suppresses\u00a0the economy and pushes deficits onto private and household sectors.<\/p>\n

Strengthen the foundational economy.<\/strong>\u00a0Scotland should prioritise core public needs such as energy, transport, infrastructure, and postal and communication services and should tackle growing problems in housing and food sectors with a much more interventionalist approach.<\/p>\n

Build a public investment model.<\/strong>\u00a0Led by the Scottish National Investment Bank, Scotland should set up a series of National Companies tasked with driving investment in a strategic way across public, civic and private sectors. A public stock exchange would support businesses seeking equity and local banking networks would support small and local businesses.<\/p>\n

Produce an industrial strategy.<\/strong>\u00a0Scotland\u2019s industrial strategy would be designed to boost, develop and stimulate the productive economy and rebalance away from low-pay sectors. Key also would be anchoring strategies to maintain businesses in Scotland for the long term.<\/p>\n

Invest in human capital.<\/strong>\u00a0From industrial democracy and collective bargaining, through workers\u2019 rights and social security, a Universal Basic Income and more recognition of unpaid labour, encouraging entrepreneurialism and creating a welcoming immigration strategy not solely based on economic reasons there is much that Scotland could do to focus attention on how well we live in this country rather than just how much we produce for our employers.<\/p>\n

Implement a resource management strategy.<\/strong>\u00a0Scotland\u2019s resources are vast but many are exploited unsustainably or are being used in ways which benefit too few. Much better use of our land and marine assets would be prioritised.<\/p>\n

Decentralise economic policy.<\/strong>\u00a0Though not on anywhere near the magnitude of the UK as a whole, Scotland still suffers from regional economic inequalities. Development Councils \u2014\u00a0a radical form of local government \u2014\u00a0would be used to boost\u00a0local ownership of development policy and help to stop over-concentration of economic activity within Scotland.<\/p>\n

Reorient business support.<\/strong>\u00a0Scotland should take a more strategic, value based approach to business support. Diversification of ownership models should be encouraged and the public sector should take an \u201centrepreneurial state\u201d approach in many areas of the economy.<\/p>\n

Do no harm.<\/strong>\u00a0Scotland must take climate change seriously. Small tweaks to the current system or delaying action beyond the next election is no longer tenable. A Green New Deal should be developed and enacted. Instead of debt-fuelled consumption, a sharing economy with a much more circular approach should be built. \u201cReduce, repair, re-use and recycle\u201d should replace \u201ctake, make, use and dump\u201d.<\/p>\n

Start with a boost.<\/strong>\u00a0Setting up a new country will take a lot of work and will require a large sum of money invested to create the new services and infrastructure that Scotland currently lacks entirely or needs to vastly expand. A new country should not start life with a decade of deficit reduction at a time when the need for transformational investment will be at its more vital.<\/p>\n

Common Weal has written this report to boost the case for Scottish independence: the rest of us would be wise to take note.<\/p>\n","protected":false},"excerpt":{"rendered":"

I have written a fair few NGO reports in my time; some of them on economic policy. I have some idea just how hard this
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