Yes would progress if Humza Yousaf articulated UK's economic reality

SUGGESTING Liz Truss’s upcoming book “Ten Years To Save The West” should come with crayons was very funny.

The SNP’s leader at Westminster, Stephen Flynn, needed only a few words to sum up the idiocy of Trussonomics. But the SNP’s economic plan for Scottish independence does not stray so far from the neoliberalism that underpins Truss’s core views.

Let’s start with some clarity.

The SNP leadership, including Flynn and Humza Yousaf, were correct to round on Truss’s economic “plan” laid out by the former PM during her 44 days in office.

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At its core was a huge reduction in tax for the already wealthy. SNP are more progressive.

Similarly, the leadership’s consistent messaging that Brexit was a terrible idea has been a dividing line between them, Labour, Conservative and the LibDems at Westminster.

The new Scottish Government cabinet secretary for finance, Shona Robison, speaking at our Festival of Economics in March, made a strong argument for progressive ideas at the heart of government.

But we will argue these differences sit at the margin. The current SNP leadership is generally as supportive of neoliberalism as the three mainstream political parties.

In this short article, we hope to continue a constructive discussion already playing out in and outside the SNP and even in the SCOTONOMICS team.

These are my views (William), not Kairin’s. Many people will be quite comfortable with this description of the administration as neoliberal.

Others will rile just at the idea. But the debate must continue. At its heart, the argument taking place across Scotland can be summed up by the question: If neoliberalism isn’t the answer for an independent Scotland, what direction should it take?

The discussion has to start with a definition of neoliberalism and its policies.

Neoliberalism is a belief that the state should create and support markets as the institution guaranteed to deliver the efficient allocation of resources.

Efficiency is more important than justice or effectiveness. It is underpinned by a neoclassical approach to managing the economy that considers monetary policy in support of economic growth as its driving feature. No economy in the world follows this doctrine more than the United Kingdom.

Neoliberalism is like any other paradigm.

Paradigms are sets of assumptions, concepts, values and practices that constitute a way of viewing the world. Almost all mainstream political parties in Western Europe have shared this paradigm for the last few decades.

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Closer to home, this way of seeing the world underpins the Sustainable Growth Commission, still the weightiest economic prospectus for an independent Scotland, last year's National Strategy for Economic Transformation and Building a New Scotland: A stronger economy with independence.

A shared paradigm across our political parties has created a “policy quagmire,” say authors of ‘When Nothings Work’, who highlight that “techno centrist parties”, like the SNP, “form a policy establishment which unanimously agrees on the policy objectives of economic growth and higher paid jobs but noisily differs on how to get there”.

SNP shares the sinking ship neoliberal paradigm. And seeks to re-arrange the deck chairs.

Flicking peas at a charging rhino

We would make significant progress towards independence if our First Minister and other members of the leadership were able to articulate the economic reality within the UK.

Humza Yousaf’s support for a tax relief scheme on mortgage payments is a fine example of getting this all wrong.

The problem is not the lack of tax relief for those struggling to pay their mortgages.

It is the economic paradigm which says that a neoliberal-led Bank of England should set a policy rate to deliberately slow down the economy. This high rate feeds through to other rates in the real economy, making life hard for people.

So they cut back on spending. An economic slowdown is desired. This often leads to a recession.

The paradigm suggests that this short-term pain is worth it to control inflation. Job losses are also a price worth paying. Your job, not theirs.

The paradigm states that inflation reacts in a predictable way to interest rates as monetary policy does its natural job of controlling the economy.

Under this paradigm, tax credits might indeed help hard-pressed homeowners, but this is tweaking a system that doesn't work. It is flicking peas at a charging rhino.

The discussions taking place across the country are an attempt to persuade our policymakers to develop an economic understanding that helps them address the real issues and break with the neoliberal paradigm. Here is an example of what this would look like.

The Scottish government would call for a lower policy rate. MSPs and MPs would draw attention to the £50 billion in interest payments that have been paid to the already wealthy. Since January!

The SNP must shun the conventional wisdom as it is so clearly failing an entire nation

During a conversation we had with Stewart Hosie, the former Economic Spokesperson at Westminster, it was clear that stability is the defining concept of the administration’s economic policy. Stability above everything else.

The current paradigm provides this stability because it is so familiar. It doesn’t seem to matter that it is nonsense. Stability. Not rocking the boat. Rearrange those deck chairs.

“It is far, far better and much safer to have a firm anchor in nonsense than to put out on the trouble seas of thought”, said American Economist J.K Galbraith.

Independence for Scotland opens up the possibility of a very different type of economy that is not based on nonsense.

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But to do that, our policymakers have to reject the neoliberal paradigm and “put out on the troubled seas of thought.”

Otherwise, we inherit a kind of UK-light. God help us.

We have started to make the argument in our articles in this newsletter that a different paradigm will be needed to make Scotland a successful, small, independent nation.

Like many others, we believe that continuing neoliberal policies would lead to a disastrous destination for a newly independent nation.

The conversation needs to continue.

Join us to discuss housing issues in Scotland on September 27 on our monthly LIVE Q&A on YouTube.