Tuesday, June 23, 2015

Saying “Thanks” and Following Up

     It has been a week since the post on Bastardized Federalism was published on this blog, and I must confess to being deeply amazed and humbled by the response to it so far.

     There have been just over 820 views as of Tuesday morning on June 23rd, which is quite astonishing considering that the second-most viewed post (on the need to save the RMS Queen Elizabeth 2) currently has 395 views, and has been available since June 7th.

     However, this is where another aspect of this post must be mentioned, and that is the role of social media, and I must thank everyone who shared, liked, tweeted and retweeted the post on Facebook and Twitter.

     It was on Twitter that Kevin Hague (@kevverage), the writer of chokka blog (which has been doing its bit to refute the economic claims of the SNP and pro-independence supporters) read the post, and with his following, got the ball rolling on getting it shared and read by great numbers of people. Many other individuals – some of whom I consider very good friends – also tweeted, retweeted, and shared the post around in the course of the last week, and along with this were mostly positive and supportive comments for which I am extremely grateful.

     Such comments came from people who are frustrated by the SNP and its supporters in the media who attempt to the peddle the notion that a fully fiscally autonomous Scotland could still benefit from fiscal transfers as part of the United Kingdom, in order to cover for the fiscal gaps that would in all likelihood be caused with the implementation of full fiscal autonomy (FFA).

     This is part of an problem for the SNP & Co., which has attempted to find ways to answer the difficult questions regarding FFA, as journalist and commentator David Torrance pointed out in the The Scotsman last week.

     First, they attempted to dismiss the fiscal gap of £7.6 billion and total deficit of £14 billion highlighted by the independent Institute for Fiscal Studies (IFS) by claiming that such figures represented merely a “snapshot” for one fiscal year. However, “there existed several such snapshots all the way up to 2020” which if anything, showed the figures getting worse.

     Then some members attempted to go another route where they did not deny the existence of the gap and deficit, or play them down. Instead, they spoke of how there would be a “fiscal framework” to accompany FFA – also known in more emollient terms as “Home Rule” – in which Scotland would still benefit from the pooling and sharing of resources within the UK, despite not having skin in the game (because after all, not a pound of Scottish tax revenue would go the the UK Treasury).

     In his column, Torrance points out that George Kerevan (a former executive and columnist with The Scotsman, and now the SNP MP for East Lothian) was “quite explicit” on this topic:

“For Scotland to accept fiscal autonomy without in-built UK-wide fiscal balancing”, he wrote, “would be tantamount to economic suicide.” All federal systems, added Kerevan, possessed “mechanisms for cross-subsidising regions in economic need by regions in surplus”, thus to “deny” something similar (ie the Barnett Formula) to a fiscally autonomous Scotland would in his view “derail any move to Scottish Home Rule in the UK”.

     Like Iain Macwhirter in the Sunday Herald last week, Kerevan states something that comes off as entirely reasonable and has truth in it, but leaves out the critical detail that in federal systems, the constituent parts are not fully fiscally autonomous, and indeed as Torrance adds, none have claimed this constitutional/economic status within their respective federations. To do so would be an act of stupidity and irresponsibility, not only because it is not true, but more critically, because making such claims fatally undermines the existence, purpose, and meaning of the federation.

     Would the residents of New York, California, or Texas be content with their money going to programs and services in Mississippi, Kentucky, or West Virginia when those states claim full fiscal autonomy for themselves? No, and such a set-up would break the shared compact between the states that they agreed to when signing on to the Constitution of the United States, which provides Congress with broad powers of federal taxation that apply to the residents and businesses of all 50 states. Thus, the tax revenues that go to Washington come directly from the taxpayers throughout the Union, and is then spent throughout the Union.

     But of course, the principle aim for the SNP – their raison d’etere – remains breaking up the United Kingdom, and even though they may talk about doing what’s in the best interest of the whole UK whilst Scotland remains part of it, demanding FFA with continued mechanisms for fiscal transfers is a sure-fire way to stoke up the kind of resentment that will drive the rest of the UK to end the Union themselves – probably without a referendum.

     As I have said, this is probably what some Nationalists want since they could not achieve their ends through the referendum last year. They may complain about Unionists attempting to give Scotland rope to “hang itself” should FFA be delivered without “in-built UK-wide fiscal balancing” in the hope that it will force Scots to turn away from full independence. But arguing for these things seems an odd way extol the sentiments of solidarity – economic, political, and social – with the rest of UK, and indeed, if it leads to the break-up of the UK, then I suspect that some Nationalists will welcome it.

     However as Torrance said, making the case for fiscal transfers is a part of a series of intellectual contortions owing to the fact that the SNP cannot concede the disadvantages of FFA, for doing so “would also be accepting that independence (under which there would be no fiscal transfers) would leave Scotland worse off.”

     Even more confusingly, FFA is something that few on either side actually want, but it is something from which the SNP – some of whose fervent supporters (and even MP’s) believe was promised as part of The Vow (when it was not) – cannot afford to even appear to be climbing down. The party certainly cannot afford to admit that taxes would have to be raised substantially, lest it loses “Middle Scotland”, who according to David Torrance in The Herald, are the source of its “modern electoral support” with popular and easy policies such as the Council Tax freeze and “free” university tuition, which disproportionately benefit the middle classes, and which would almost inevitably come under pressure with the implementation of FFA.

     Thankfully, FFA was defeated in Parliament, but Scottish Finance Minister and Deputy First Minister John Swinney is once again attempting to “push” for this concept – with the SNP government in Holyrood even submitting to Downing Street the powers it believes ought to be devolved as a priority and with the aim of eventually attaining FFA. This is a variant of what the SNP MP’s were attempting to do last week with an amendment that would effectively allow Holyrood to choose what powers it wanted at a time when it is most convenient (i.e., when oil prices are higher), so as to not scare the horses, if you will.

     At the end of the day however, if the people of Scotland really want FFA, that’s totally within their prerogative, but not under a false prospectus which the SNP cannot deliver on – the premise that this is a form of federalism in which the rest of the United Kingdom will continue along with fiscal transfers to Scotland, even though Scotland’s residents would no longer directly contribute to the UK Treasury like everyone else throughout the United Kingdom.

     The SNP cannot have it both ways on FFA – its bastardized version of federalism – and actual federalism which retains features that bind a federation together, including a strong central government and federation-wide taxation. Either Scotland is fully fiscally autonomous or it’s not, and the SNP cannot have its cake and eat it too. They and their allies must be confronted on this point at every turn, and they cannot be allowed to get away with passing off FFA as federalism.

No comments:

Post a Comment