Was Mark Blyth wrong about an independent Scotland's economy?

This issue was highlighted by comments made by political economist Professor Mark Blyth at the Scotonomics conference last weekend. As the National reported, he said:

“If you're a small, open economy, you need to have things you can sell to everybody else to get the stuff that you don't make.”

“Scotland doesn't make very much. Cars, phones, drugs, MRI scanners. All that shit is going to have to be bought with other stuff that you sell.”

When it boils down to it, Blyth’s argument was quite simple. It was that Scotland does not make enough stuff to export to cover the cost of what it needs to import. As a result, he implied that Scotland could not survive as an independent country.

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He framed his comments within the context of the economic idea of Modern Monetary Theory (MMT), which I support. But in reality, that makes no difference. Whether you believe in that economic argument or not is irrelevant if, as he claims, Scotland would be unable to support itself on the basis of what it makes.

The problem for anyone wishing to respond to Blyth’s comment is that no one knows if he is right. Equally, no one can be absolutely sure that is wrong. The real issue is that whilst the UK’s Office for National Statistics suggests that Scotland runs a trade surplus, implying that it exports more than it imports, this ignores trade across the border with the rest of the UK.

Most people think that Scotland’s trade across this border is bigger than Scotland’s trade with the rest of the world. Again, though, the trouble is that no one knows for sure.

Similarly, many people would argue that Scotland’s imports from the rest of the UK exceed its exports to England, Wales and Northern Ireland. However, again, we simply do not know.

The UK Government would argue that there is no reason to collect data on this issue at present, mainly because no taxes are due on the transfer of goods and services between Scotland and the rest of the UK. But, as a consequence, we are all in the dark.

It also so happens that I think that Mark Blyth’s comments fall suspiciously close to the “too wee, too poor, and too stupid” argument against independence for comfort – especially when they come from somebody who I know to be as intelligent as he is.

His embarrassment about that fact might explain his angry comments in response to those on his remarks. It is, however, undeniable that he exploited a commonplace trope when making his claim. Unionists really would have us believe that Scotland is utterly dependent upon handouts from Westminster to survive.

I do not believe that. I am quite sure that throughout the oil era Scotland did, most definitely, export more by value than it imported. I could be persuaded otherwise at present because we are in a transition between energy production eras right now. But, when the new era of Scottish renewable energy generation really swings into action, as I am sure that it will, I am quite certain that Scotland’s balance of trade will, once again, become strongly positive.

I am, in fact, so confident about this that I see a very good reason why the Scottish pound will be valued more highly than the pound of the rest of the UK after Scottish independence.

Saying that, I have to acknowledge that I am working on the basis of hunches. There is nothing particularly untoward about this. Absolutely everything that we say about the future is based on speculation and incomplete data. The one thing that you can guarantee about any forecast concerning the future is that it is always going to be wrong in some way. Everyone campaigning for independence has to accept that fact.

But, that said, it still astonishes me that as yet the Scottish Government, controlled as it is by the SNP, has not done more to create better data on how the Scottish economy really works.

As many readers of this column will know, I am a long-standing critic of the SNP government’s continued publication of the Government Expenditure and Revenue Scotland (GERS) statement, which is close to being accounting nonsense when it comes to explaining the size of the government deficit within the country. Why this Unionist construct is not just scrapped and replaced by better information defeats me.

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More troubling, though, is the absence of such important information as the level of trade between Scotland, the rest of the UK, and the rest of the world. The Office for National Statistics might have made some progress with regard to the letter, but just what crosses that border at the south of the country is a great unknown.

My argument is, in that case, straightforward. If the SNP is serious about securing independence, they have to better understand the economy that they want to manage. In that case, they should be creating the data now to support their arguments for independence.

Some NGOs, like Common Weal, have done good work making the case for the creation of better Scottish statistics. I support their cause. But now it is time for the SNP to step up and deliver.

If they truly believe in Scotland, they need to support their case with some solid data, and that requires that they take the steps whilst in government to create it.