tag:blogger.com,1999:blog-1603438996450817644.post7005055651523681854..comments2024-01-12T01:56:21.933-08:00Comments on chokka blog: With Great Fiscal Power Comes Great Fiscal ResponsibilityKevin Haguehttp://www.blogger.com/profile/14587343060415859159noreply@blogger.comBlogger27125tag:blogger.com,1999:blog-1603438996450817644.post-39254471669469131852015-05-30T23:43:50.269-07:002015-05-30T23:43:50.269-07:00I see in this morning's Scotsman (31/5/15) tha...I see in this morning's Scotsman (31/5/15) that a senior Westminster SNP spokesperson (Angus Robertson?) is reported as saying that FFA is off the immediate SNP agenda. It appears that the SNP's fear is that an FFA amendment to the Scotland Bill might be accepted by the UK Government, leaving the SNP with devomax but no Barnett money. If there is no pro-FFA amendment moved by the SNP, expect a lot of hot SNP air around the inadequacy of the devolution contained in the Scotland Bill; but nothing that would seriously jeopardise Barnett money. Sooner or later, it will become obvious that the SNP's policies can only be supported by voodoo economics, where there is a substantial cross-border subvention from rUK.David GREENnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-90652361555844107942015-05-28T04:47:54.027-07:002015-05-28T04:47:54.027-07:00I have looked again at earlier comments about whet...I have looked again at earlier comments about whether holding the line at Smith would be feasible, and suggestions in your Blog responses that it would not be, because of the size of SNP vote at Westminster. My sense of current English views is that, following the Queen's speech, both Conservatives and Labour feel they have to protect the Scots from themselves; that the consequences of FFA or Devomax would be so damaging to ordinary families in Scotland, because of the loss of Barnett, that the responsible English course is not to let it happen. The compromise is to have some devolution (i.e. Smith), and some readjustment of Barnett, to see how the Scottish like it. Withholding FFA may display high-handed self-interest by the English, and it may be paternalistic. But the self-interest could reasonably be viewed as the English wishing themselves to be free of the economically disastrous consequences of FFA north of the Border. It really doesn't help the English to have a failed state on their boundary.David GREENnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-82496544513832395832015-05-28T03:43:17.073-07:002015-05-28T03:43:17.073-07:00My previous comment about the SNP at Westminster w...My previous comment about the SNP at Westminster wasn't correct in every detail, but it was right when it came to attacks on SNP fiscal policy. Cameron made it absolutely clear that FFA means no Barnett money, and this was confirmed by Labour. Cameron told the Commons that the SNP wanted to impose a £5000 a year burden on every Scottish family. The only difference with Labour was that Labour thought the SNP shouldn't be allowed to beggar Scottish families by giving into the SNP, an interesting form of Labour maternalism (given that it came from Harriet Harman). Simon Jenkins, in the Guardian, implied this morning that Sturgeon fully expected London to carry on funding Scotland under Barnett even as tax powers were devolved, and was taken aback to find a month ago that that was not the case. Certainly, Cameron's statement yesterday gave no room for misunderstanding. The SNP response? Angus Robertson was irrelevant bluster.David GREENnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-21577241187073361442015-05-21T07:35:54.039-07:002015-05-21T07:35:54.039-07:00The SNP's rhetoric is now completely incoheren...The SNP's rhetoric is now completely incoherent. On the one hand anyone who claims Scotland would be worse off as an independent country is derided as a heretic. On the other hand the SNP themselves are acknowledging we'd be worse off, but that's ok because, er...<br /><br />We have people out campaigning on the streets, fighting an ideological war over independence, yet the party at the head of the movement is tacitly admitting even if we were offered independence it would be a bad idea to accept it.Wilfriednoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-75503832666646884902015-05-19T06:49:27.039-07:002015-05-19T06:49:27.039-07:00First of all, why did Cameron go to Scotland to me...First of all, why did Cameron go to Scotland to meet Sturgeon? Simple, from an English point of view. First, it makes clear he is the UK Prime Minister. Remember, Scotland has two Governments from Cameron's point of view, and by going to Edinburgh, Cameron is emphasizing his writ runs to Scotland. Second, it is in his interest to reinforce Sturgeon's position, in the short term. Why? Because Cameron knows, as do many others south of the Border, that the 56 SNP MPs at Westminster are largely toothless. They face 5 years of boredom and irrelevance. Wait for PMQ's. I wouldn't mind betting that Cameron responds to some SNP questions by saying that the matter, whatever it is, is under discussion with the First Minister, and it would be premature to disclose anything. It makes it look cosy between Sturgeon and the PM, possibly causing some unease in the SNP, and makes the 56 in London look silly and irrelevant. As for the Robertson/Sturgeon threat to attack austerity at Westminster, it surely is only a matter of time before someone at Westminster tells the SNP that austerity is nothing of the sort, mere the avoidance of fiscal incontinence of extravagant proportions. I have no idea what Scottish nightly TV bulletins look like, but the SNP runs the risk that they will contain serious attacks on SNP's understanding of economics by others who are more intelligent. No wonder Salmond wants control of the BBC in Scotland. I am sure Cameron told Swinney and Sturgeon last week that he will be Mr Nice Guy if they keep themselves and their troops moderately in check. But if the gloves do come off, then Barnett is up for withdrawal. And that will be incredibly popular in England. In the mean time, Osborne pursues his Northern powerhouse idea. I have been unable to discover whether it extends north of Hadrian's Wall, but my instincts tell me not. Osborne is preparing for a northern border at the Wall that will leave England performing even better, getting rid of duff Scottish assets on the way. Sooner or later, the Quebec effect will kick into the Scottish independence debate. It will be cheaper to service the English market from England, and disinvestment will start, both in services and goods. The brightest will soon follow.David GREENnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-85888008732156621142015-05-18T13:00:55.553-07:002015-05-18T13:00:55.553-07:00@Maguro "I don't think holding the line a...@Maguro "I don't think holding the line at the Smith Commission recommendations is politically feasible in the wake of the SNP landslide"<br /><br />Yes - I'd definitely agree with you there!<br /><br />The other problem of course is how we manage to recreate some kind of consensus around this, rather than it just becoming the focus for mutual recrimination. I'm hopeful that the dust will gradually settle over the next couple of years.Tim in the kitchenhttps://www.blogger.com/profile/05816929080530633507noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-91908034970488022482015-05-18T12:11:42.508-07:002015-05-18T12:11:42.508-07:00Are there Barnett style fiscal transfers in the US...<i>Are there Barnett style fiscal transfers in the US?</i><br /><br />The US Federal government takes in and redistributes a staggering amount of money, but there is no unified Barnett-style formula that determines social spending of $_ per head. Instead, you've got a complex patchwork of social programs and wealth transfers that involve either direct payments from the Federal government (Social Security, SSI) or block grants from the Federal government to the states (SNAP, TANF, Medicaid). Federalism can make things complicated and what the US does is probably less efficient than social spending arrangements in centralized states like the UK and Japan. On the other hand, Federalism lets local governments adapt to local conditions and preferences. What makes sense in San Francisco may be horrible policy in Midland, TX and vice-versa. So there are tradeoffs to be considered.<br /><br /><i>I'd still argue that corp tax reduction is an inevitable wealth transfer to business and higher min wage is a hindrance to entrepreneurial activity. I'm in favour if higher min wage but only if UK level playing field.</i><br /><br />You could be right on the economics - reasonable minds can differ on what the ideal minimum wage and corporate taxation rates are - but I don't think holding the line at the Smith Commission recommendations is politically feasible in the wake of the SNP landslide. The minimum wage is one thing that I think can be safely devolved without causing too much harm. They'll probably just set it a bit above the rate in England to prove they're more compassionate than the bloody English and hardly anyone will even notice it. Corporate tax rates are a little trickier, especially if the SNP wants a lower rate than rUK. Have to give that one some more thought.Automatic_Wing https://www.blogger.com/profile/10174899673368042634noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-46216338019843867232015-05-18T09:44:49.735-07:002015-05-18T09:44:49.735-07:00This comment has been removed by the author.Kevin Haguehttps://www.blogger.com/profile/14587343060415859159noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-43341351033133898402015-05-18T09:41:58.975-07:002015-05-18T09:41:58.975-07:00@maguro - they are reasonable points.
Are there B...@maguro - they are reasonable points.<br /><br />Are there Barnett-style redistributions between states in the US? I think that's relevant particularly if those redistributions allow (for example) one state to compete against another on corp tax.<br /><br />I would still argue that corp tax differences is a transfer of wealth to corporations and given entrepreneurial activity is one if Scotland's challenges a higher minimum wage is a material hinderance to that (I am in favour of higher min wage but only if UK level playing field)Kevin Haguehttps://www.blogger.com/profile/14587343060415859159noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-40146787133057610652015-05-18T07:18:19.846-07:002015-05-18T07:18:19.846-07:00@Kevin - I don't think there is as much differ...@Kevin - I don't think there is as much difference in "social justice" (I assume we are talking about wealth redistribution and social programs) between the US and UK as many would think. For instance, in 2013 the US had a Gini coefficient after taxes and redistribution of .42 vs .41 in the UK. Of course, social justice is one of those things that is very much in the eye of the beholder, so perhaps there are other measures by which the UK is spectacularly more just.<br /><br />In any case, the overall level of social justice (however you want to define it) is not really central to my point, which is that there is room for adjacent jurisdictions to differentiate their tax and minimum wage policies without causing severe problems. If you think the UK is already a lot more socially just (i.e., redistributive) than the US, then Scotland can be even a little more socially just than the rUK without causing substantial ill effects. Yes, there will be effects at the margins, but nothing the average voter would likely notice.<br /><br />The reason I bring this up is that it seems to me that the whole Scottish issue is not really driven by economics or policy, but rather identity. The Scots would like to differentiate themselves from the English and letting them raise the minimum wage and corporate taxes would let them do that without all risks of independence. So the SNP raises the minimum wage from £6.50 to £7.25 or something, it's not the end of the world. The economic effects would be small and politically, it would give the Scots tangible evidence that they have a say in their own affairs. Which I think is pretty important right now.Automatic_Wing https://www.blogger.com/profile/10174899673368042634noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-17527697134148790952015-05-18T03:41:16.254-07:002015-05-18T03:41:16.254-07:00@Maguro
A couple of points regarding the US situa...@Maguro<br /><br />A couple of points regarding the US situation.<br /><br />Firstly, state minimum wages are additional to the federal one. The equivalent in Scotland would be the power to increase but not lower the min wage.<br /><br />Secondly, in the US, local corporation tax liability is classified as an allowable expense, so if a state or other local entity levies zero local corporation tax, the result is that the company has a higher federal corporation tax liability. This offsets at least some of the "beggar thy neighbour" effect of tax competition. Nobody is proposing this for Scotland, as far as I'm aware.Tim in the kitchenhttps://www.blogger.com/profile/05816929080530633507noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-77648899462226685822015-05-18T00:27:20.842-07:002015-05-18T00:27:20.842-07:00M62 Scot
Disagreement is good - if everybody agre...M62 Scot<br /><br />Disagreement is good - if everybody agrees with everything I write this would be pointless (I know it is kind of pointless anyway but humour me).<br /><br />If you're arguing we should be given FFA and made to suffer I have a lot of sympathy with that view (I've been there). My worry is that would fuel further grievance and lead to independence - after all take away pooling & sharing and you lose an advantage of Union.<br /><br />We are certainly not on the territory of some of my "economic staring point" blogs where I feel I'm asserting obvious truths - with "more powers" we're dealing with a series of complicated, nuanced and uncertain interrelated judgement callsKevin Haguehttps://www.blogger.com/profile/14587343060415859159noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-55469704558184930122015-05-18T00:22:08.495-07:002015-05-18T00:22:08.495-07:00Maguro
I have considered the US example. How woul...Maguro<br /><br />I have considered the US example. How would you assess the quality of "social justice" delivery in the US? I'd argue it's pretty poor and their lack of UK style country-wide pooling and sharing is a significant factor there.Kevin Haguehttps://www.blogger.com/profile/14587343060415859159noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-11960063548575977992015-05-17T16:12:40.692-07:002015-05-17T16:12:40.692-07:00Interesting as ever, but probably for the first ti...Interesting as ever, but probably for the first time I disagree with Kevin here. His previous piece, 'it doesn't matter' outlines where Scotlnad has arrived at where slightly over half of the population will believe anything the SNP assert on any subject. <br /><br />The SNP are a grievance machine, the saddest aspect in their GE performance is that the feed at least half the Scots nation's appetite. I am a Scot living in N England and for every naive lefty nitwit signing petitions about wanting to join SNP Scotland I'll show you a 1,000 who'd see Barnett repatriated to fuel the Northern Powerhouse. <br /><br />Those of you who live in Scotland are clearly better placed to comment on whether the SNP's grievance machine will ultimately self destruct. From what I've seen they are merely feeding a demand from an increasingly self interested population many here find no common cause with.<br /><br /><br />M62 Scotnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-58120240675327530242015-05-17T14:59:26.118-07:002015-05-17T14:59:26.118-07:00I am gutted Cameron wont give Scotland the 7bn ext...I am gutted Cameron wont give Scotland the 7bn extra cuts. Would have been something to watch for entertainment value. Anonymoushttps://www.blogger.com/profile/17598264505112322207noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-82537628223923981612015-05-17T14:49:41.682-07:002015-05-17T14:49:41.682-07:00I don't think there's too much harm in dev...I don't think there's too much harm in devolving the min wage and corporate taxation rates. Every US state, and lots of jurisdictions below the state level, impose their own minimum wage laws and corporate taxes without it becoming too big of an issue. I live in Illinois, about 20 minutes from the Missouri border and there are a bunch of differences in the tax codes as well as a different minimum wage, but driving from one to the other, you'd hardly notice the diffrence.Automatic_Wing https://www.blogger.com/profile/10174899673368042634noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-31383097287717019682015-05-17T14:36:38.412-07:002015-05-17T14:36:38.412-07:00Excellent - thanks. Living in a cave, what's a...Excellent - thanks. Living in a cave, what's a flag's for if it cannot keep a person warm.bucksboyhttps://www.blogger.com/profile/08666422208089564579noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-70711258277961971332015-05-17T13:17:46.816-07:002015-05-17T13:17:46.816-07:00Had Scotland voted to become Independent last Sept...Had Scotland voted to become Independent last September we would almost certainly have had a massive exodus of businesses and people moving south to England and further afield. I know this because I personally know businesses and people who were getting all ready to go had the referendum went the "wrong" way. <br /><br />It is quite ironic that the SNP is against an EU referendum for economic reasons but in favour of another Scottish Independence referendum citing the opposite economic reasons. Scotland has far more to lose by leaving the UK than the UK has to lose by leaving the EU. <br /><br />The SNP has always argued that nothing material would change regarding the rUK had we left. We would still trade as normal. Negotiations would be cordial and suit both parties and we would reach an amicable separation. <br /><br />HELL NO WE WOULDN'T. Negotiations would have been torturous and full of recriminations. We, as the smaller country would get battered and bruised. Business confidence would collapse alongside house prices. Where would we be then? <br /><br />Considering the hostility between the yes and no sides Scotland would have been a dangerous place to be. The collapsing oil price has shown that the numbers the SNP put up were patently false. How would the people in council estates react when the money didn't arrive due to the collapsing economy? <br /><br />I'll leave that to your imagination. <br /><br />In September 2014 Scotland dodged a bullet. Let's all work hard to make sure that that gun is never loaded again and show that the SNP has been overselling their case for years. It is thanks to the work of Kevin Hague and many others that we can now challenge the case that the SNP makes for taking us down this road to oblivion. Anonymoushttps://www.blogger.com/profile/13644182561334208262noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-15467548578713354972015-05-17T12:27:13.015-07:002015-05-17T12:27:13.015-07:00@carl31 "If SNP were to get FFA and sooner or...@carl31 "If SNP were to get FFA and sooner or later get a bailout frm WM, would it not simply be internal accounting within the sovereign state?"<br /><br />Check out this earlier post, which is very clear on this topic:<br /><br />http://chokkablog.blogspot.co.uk/2015/05/guest-blog-neil-lovatt-on-n56.html<br /><br />@Paul "How about FFA/FFR but with an explicit transfer mechanism enshrined in legislation?"<br /><br />All countries have fiscal transfers - some explicit (typically in federal countries such as Germany and the US) some less so (through the funding of services such as health and education, non-contributory benefits, infrastructure spending etc). What is a bit peculiar in Scotland is the mismatch between the reality of fiscal transfers to Scotland and the rhetoric about Scotland getting a poor deal from membership of the UK.<br /><br />Replacing the Barnett formula with something more transparent should provide clarity, but I wouldn't hold your breath waiting for the SNP to recognize that this is actually a generous arrangement from which Scotland benefits. And if a transparent replacement of Barnett led to a reduced level of support, you can be sure there would be plenty of people crying foul.Tim in the kitchenhttps://www.blogger.com/profile/05816929080530633507noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-43610889530041224722015-05-17T11:13:07.584-07:002015-05-17T11:13:07.584-07:00How about FFA/FFR but with an explicit transfer me...How about FFA/FFR but with an explicit transfer mechanism enshrined in legislation? Meaning Scotland gets fiscal transfers when things are bad/oil is cheap, but send money out when things are good/oil is expensive?<br /><br />Involve the SNP/Scot Gov to be involved in the definition to avoid anyone saying it's an MI5 accounting trick. <br /><br />Then at least it's clear who is subsidizing who.<br /><br />How do other countries manage this anyway?<br /><br />Paulnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-45175168309403600972015-05-17T09:49:14.674-07:002015-05-17T09:49:14.674-07:00If SNP were to get FFA and sooner or later get a b...If SNP were to get FFA and sooner or later get a bailout frm WM, would it not simply be internal accounting within the sovereign state? <br /><br />After all, devolution is simply administration of the powers of the UK by an entity without sovereignty, located in the relevant part of the UK, not centrally at WM. In the same way that an indy Scotland outside of the Pound could use the Pound, but it would remain the UKs Pound, the powers exercised by Holyrood dont actually belong to them. These are UK powers so long as we are part of the UK.<br /><br />In this (and other) respect Scotland cant be Greece as Greece is Sovereign. carl31https://www.blogger.com/profile/05597198917050760755noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-36917152372905825742015-05-17T08:08:52.011-07:002015-05-17T08:08:52.011-07:00Load o pishLoad o pishAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-42153216125537442002015-05-17T06:23:00.925-07:002015-05-17T06:23:00.925-07:00Another great article.
Since the election I'v...Another great article.<br /><br />Since the election I've been mulling over what might form the basis of a stable medium-term compromise that would satisfy some of the aspirations of the various parties and their supporters.<br /><br />My own personal preference would be for the Smith Commission to be implemented and for us to take it from there, but I can also see a strong case for going further (the maximum amount of devolution that would be consistent with continued pooling and sharing) in order to recognise the aspirations of SNP supporters.<br /><br />What makes the situation much more difficult is that, for any such compromise to be stable, the SNP would have to accept that the referendum really was once in a generation. Only this week, in addition to the EU vote, I have seen the Human Rights Act, Trident renewal and even poor performance of the UK economy all cited as potential grounds for a future referendum. In other words, even if the UK votes Yes in the EU referendum there is an open-ended list of pretexts for a further referendum if the SNP deems the time to be right.<br /><br />Perhaps even more important, we need to know what the SNP really want in the meantime. It appears that they don't want FFA, while saying that they do, and that they do want the Smith Commission (with some add-ons), while saying that they don't.<br /><br />A compromise solution lying somewhere between the Smith Commission and devo Max while maintaining pooling and sharing of resources will only work if all parties openly endorse it, instead of seeking to undermine it by constantly sniping at it for not being enough, raising the possibility of a 2nd referendum, or denying the benefits that Scotland derives from the pooling and sharing of resources in the UK.Tim in the kitchenhttps://www.blogger.com/profile/05816929080530633507noreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-47028512541127784482015-05-17T06:14:41.598-07:002015-05-17T06:14:41.598-07:00To me the most pertinent item in this excellent ar...To me the most pertinent item in this excellent article is the Civil Servant's statement about John Swinney being happy to live in a cave as long as he was 'free'. Given Mr Swinney's current financial and social profile I would question the validity of this statement; but, it underlines the reason why so many financially literate Scots support the SNP. If you ask them to define what comprises this 'freedom' that they feel denied of, they invariably struggle to provide a logical answer. Today is Sunday. I'm free to stay in bed, get up, go to Church, stay at home, worship where I please if I please, cut my grass, go to the pub (but not smoke in an enclosed public space), shop on line or in stores, voice political opinions; and all manner of things that a normal person would consider as 'freedoms' of choice or conscience within the law. What I am not free to do without the risk of judicial sanction, is to assault strangers in the street, sexually molest women, vandalise property, commit arson, torture animals, racially abuse people, groom children for evil purposes, sell drugs, etc, etc, all these things being freedoms I would not want anyway. Perhaps I'm living too sheltered a life.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1603438996450817644.post-67706361481946309962015-05-17T06:09:35.995-07:002015-05-17T06:09:35.995-07:00"The aims of the party shall be (a) Independe..."The aims of the party shall be (a) Independence for Scotland [..] (b) the furtherance of all Scottish interests'"<br /><br />If at least one of the interests of Scotland in (b) is to be economically prosperous, then (a) and (b) are demonstrably mutually exclusive. carl31https://www.blogger.com/profile/05597198917050760755noreply@blogger.com