Scottish GDP: are we really as wealthy as the Yes campaign claim?

by Scott Nicholson

The Scottish National Party (SNP) and Yes campaign cannot stop telling us that Scotland is one of the world’s wealthiest nations. Every year the Organisation for Economic Co-Operation and Development compile data regarding international gross domestic product (GDP) per capita. Based on this the Scottish Government in March 2014 published a ranking of the world’s wealthiest countries, placing Scotland as the 14th richest nation, way ahead of the rest of the United Kingdom in 18th place.[1]

The Yes campaign also relishes the fact that the countries placed number one and two in these types of ranking are also geographically small or have small populations. Norway has a population of around 5 million while Luxembourg has a population closer to half a million.

All this self congratulating is fine but do we in Scotland actually have a better standard of living than people in England, Wales and Northern Ireland? In the run up to this referendum we have all listened to a lot of quotes from Nobel Prize winning economist Joseph Stiglitz but this one I think is based on common sense: “One of the reasons that most people may perceive themselves as being worse-off even though average GDP is increasing is because they are indeed worse-off”.

GDP is an excellent measure of the size of our economy yet does not tell us about our standard of living and includes wealth that does not stay within Scotland. Gross national income (GNI) is a better measure for this purpose, as where GDP shows the total output of the economy, GNI differentiates between home and internationally owned enterprises.

This is important as the Scottish Government’s corporate statistics show that in the last decade, we have experienced a startling change in ownership of the Scottish economy. The decade has seen the share of large enterprises in overseas ownership rise by around 40 per cent.[2,3]

The SNP appeal for political power but have already lost economic power. In Business Insider’s Top 500 companies in Scotland in January 2014, we see a top 20 dominated by wholly-owned subsidiaries of foreign multinationals and London Stock Exchange quoted corporations.[4] Even the “Scottish-owned” companies are actually joint stock companies, with little stock owned or controlled within Scotland.[4]

My point is that Scottish GDP reflects an arbitrary valuation. Wages, salaries and purchases of goods and services used by these companies are great for Scotland. However, how much of the global sales value of these products and services end up in our pockets and how much they benefit the Scottish economy are vital questions to ask?

I personally think these are questions that Alex Salmond should be asking. This is why GNI is important as it focuses on earnings retained by the residents of Scotland and allows us to make informed decisions regarding, the level of future contributions to an independent Scotland that multinational companies should make through Corporation Tax. I for one believe that if the SNP lower Corporation Tax to 3 per cent below the rest of the United Kingdom, this will only exaggerate this issue.

Perhaps more importantly than that, we all remember the Starbucks and Amazon tax avoidance scandals, so I feel that we really need to think carefully about whether this overseas ownership would actually help an independent Scotland or even Scotland as part of the United Kingdom. It is important to remember that multinational companies are answerable primarily to shareholders, mostly outside Scotland and act to maximise profits, not benefit the people of Scotland. In addition to this, I really dislike the way business investments in Scotland are presented by multinationals as gifts or favours to the people of Scotland and not merely the day-to-day of doing business.

I do not think Scotland is as wealthy as some claim and I would ask people to critically analyse these claims when presented. I also think it would be useful to have a set of Scottish GNI figures to be produced by a neutral, independent body. However, the SNP’s level of debate is notorious and we all know that if we are wealthy, the SNP will claim it as a reason why we need independence and if we are not wealthy, we know that the SNP will claim it as a reason why we need independence.

 

References
http://www.scotland.gov.uk/Resource/0044/00446013.pdf
http://www.scotland.gov.uk/Publications/2005/11/2485808/58107
http://www.scotland.gov.uk/Topics/Statistics/Browse/Business/Corporate/table3sic07
http://www.dailyrecord.co.uk/business/business-news/insider-top-500-3110644

3 thoughts on “Scottish GDP: are we really as wealthy as the Yes campaign claim?

  1. Can’t see the point of this paper. As a 75 year old ILP socialist and life-long Labour voter who supports Scottish Independence I often click on to the Red Paper website to try and understand the independence question from a different working class perspective and to see if there are some insights in this debate that I am missing.

    The question of current GDP and the SNP manifesto seems to me to be an irrelevance and totally unilluminating. The referendum being about the future of Scotland and whether or not independence would provide an opportunity for a better life for all of its people?

    And whatever one’s political perspective on the independence vote what we do know is that Scotland is populated by people of enormous talent, skills, ingenuity, creativity, pride and compassion, not to mention political savvy, and administrative and governmental expertise. The land itself has abundant natural resources and, anyway, when it comes to nation states, small can be beautiful.

    It is also important to note that 9 of the 10 most financially successful nations (USA being the odd on out) have populations of five million or less. Also that the size of nations and the spread of wealth is correlated insofar as large nations tend to be grossly unequal, while smaller nation have less of a wealth gap between rich and poor. There is also strong evidence that countries with the widest dispersal of power and wealth are usually the most prosperous, innovative and socially cohesive and happy.
    And while there is no guarantee that that there will be fundamental change, for the better, within an independent Scotland and the SNP manifesto is a long way short of social democracy and democratic socialism, it is nevertheless significantly more progressive than anything on offer from those in the Better Together camp, including the Labour Party which sometimes talks the language of change with its ‘One Nation’ philosophy, but has a shadow cabinet overflowing with unrepentant Blairites and neoliberals wedded to the idea of light touch regulation.

    This is likely to mean business as usual should they come to power – public sector cuts, privatisation, austerity and a small ‘c’ Tory agenda pursued by Labour politicians whose primary motive seems to be more managerial and career-driven than a desire for fundamental change and a new social compact. Wanting change and getting change are two very different things. Westminster politicians who when they leave office will trot off into the welcoming arms of the city, big money and the antiquated and undemocratic House of Lords

    In this regard, it is important not to listen to some of Alistair Darling’s nonsense about a Yes vote being an SNP vote. The Scottish people are not voting for the SNP, nor for any other party, in the September referendum. It is a vote on Scottish independence. The issue of who will govern an independent Scotland, and how, will be delayed until 2016.

    What we do know however, is that a vote for the Union and the status quo is a vote for Trident, Nuclear weapons, the bedroom tax and more neoliberal austerity, social exclusion, the bedroom tax and the status quo.
    Why would any socialist and progressive trade unionist want to support a continuation of more of that ?

  2. I note that the Red Collectives preamble says

    “The answer to the real problems facing people in Scotland is not to be found in a flag, a border or even a list of powers in Edinburgh and London. It is “WHAT YOU INTEND TO DO WITH THOSE POWERS” and for what purpose.”

    Well … I would have hoped that an intellectual powerhouse like the Red Collective might have pondered that the first step is to get CONTROL of those powers! They presently reside with a millionaire establishment in Westminster supported by a tweedledum opposition, both of which are steadily drifting rightwards in response to the UKIP electoral threat. Do you guys SERIOUSLY believe that even a Milliband Westminster would be more progressive than we are capable of achieving in an independent Scotland? Do you take pessimism pills or something?
    Watching the timidity of old socialists reminds me of the song “How do I know my youth is all spent, my get up and go has got up and went.”
    Is challenging GDP/GNI figure might not accurate really the best you can do?
    Come on comrades! Where is your ambition? We have the opportunity to fashion a new state. It is exciting! Lets grab it and try to shape it! We can make it our own. …. “our task is to change it”

  3. Scotland = 1% Europe’s population,
    60% Europe’s oil and gas reserves.
    60% Europe’s wind and tidal resource.
    25% Europe’s Fish stocks.
    Scotland independent = No WMD, no illegal wars, no House of Lords.

    I would suggest to Scott Nicholson that he does a bit of home work e.g. Read The McCrone Report (commissioned and suppressed by a Labour Government under Jim Callaghan) but what’s the point. Mr Nicholson has made his mind up on Scotland’s future and as with this article is twisting the facts to suit his prejudices.

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