All posts by thomas

What to do about oil prices

Oil rigs, North Sea oil, Scotland
Oil rigs, North Sea oil, Scotland, UK.
The drop in global oil prices has all sorts of annoying consequences (apart from the problems it causes an oil-producing country like Scotland). For instance, renewables are suddenly bad value for money (which is causing investment in them to drop), and recycling of plastics is now dearer than producing new stuff from oil (which again kills off recycling companies).

At the same time, it’s not like we’ve suddenly found a lot of new oil in the ground or have discovered a way to use it without causing even more global warming. At some point in the future, oil will run out or get banned, and before either happens, prices are likely to skyrocket.

Oil prices might of course rise again well before then. The current drop is caused by a combination of factors, including a drop in Chinese demand, an increase in supply (caused to a large extent by the advent of marginal producers that are only in business because oil prices were so high for a while), and a plan by Saudi Arabia to get rid of the marginal producers by lowering prices to a very low level for a few years. We’re not living in a world where prices have dropped to a new and permanently low level.

Anyway, the sensible course of action for Scotland (and the UK until we gain our independence) would be to subsidise renewables and recycling during the years of low oil prices. Unfortunately, income from oil production falls at the same time, which means there’s less money to do this with.

So here’s an idea: Why don’t we create an inverse fuel duty, whereby the price at the pump is practically constant because the duty goes up when the price goes down, and vice versa? If a large part of this fuel duty was used to subsidise renewable energy, plastic recycling and similar projects, their subsidy would increase when oil is cheap, which is exactly what you want. At some point in the future, oil will get so expensive that the subsidy would drop to zero, which would again be perfect because at that point they wouldn’t need it any more.

Sadly, we aren’t independent, which means we’ll have to convince the English Tories to introduce it, but they don’t seem to care about renewables and such things. We really need independence more than ever!

The Law of Jante and the Lad o Pairts

'Murder Victim' in the Basement
'Murder Victim' in the Basement.
A term that is often used to describe Nordic culture is the so-called Law of Jante:

Generally used colloquially in Denmark and the rest of the Nordic countries as a sociological term to negatively describe a condescending attitude towards individuality and success, the term refers to a mentality that de-emphasises individual effort and places all emphasis on the collective, while discouraging those who stand out as achievers.

There are ten rules in the law as defined by Sandemose, all expressive of variations on a single theme and usually referred to as a homogeneous unit: You are not to think you’re anyone special or that you’re better than us.
The ten rules state:

  1. You’re not to think you are anything special.
  2. You’re not to think you are as good as we are.
  3. You’re not to think you are smarter than we are.
  4. You’re not to convince yourself that you are better than we are.
  5. You’re not to think you know more than we do.
  6. You’re not to think you are more important than we are.
  7. You’re not to think you are good at anything.
  8. You’re not to laugh at us.
  9. You’re not to think anyone cares about you.
  10. You’re not to think you can teach us anything.

Although there are differences, I tend to think Scottish culture can be similar to this — people tend not to brag about their own achievements (perhaps even to the point of self-deprecation), and they tend to strive to fit in. The Scottish cringe is at least partly a consequence of this, because it is often the result of people standing out by being too Scottish compared to the consensus level. Perhaps the hatred many people feel towards Alex Salmond can also best be explained as a consequence of the Scottish Law of Jante.

However, in the Scottish version there has historically been an outlet for people who wanted to pursue their dreams, namely becoming a lad o pairts (I’ve seen it defined as “the young boy from humble origins who demonstrates academic talent and is able to achieve success, often in London or in the colonies, owing to the historically superior Scottish educational system”).

Of course some Scandinavians have also “escaped” to other countries — for instance, the Norwegian playwright Ibsen was absent from Norway for 27 years, and the Danish poet Henrik Nordbrandt has spent most of his adult life in Greece and Turkey.

However, one of the consequences of the British Union is that it has always been extremely easy for anybody talented to have a career to London — in many cases probably easier that achieving the same in Scotland.

Of course, in today’s globalised world talented people from everywhere flock to London, New York and other global hotspots, and indeed talented Scandinavians seem to emigrate much more than they used to.

The Scottish lads o pairts therefore don’t depend on the UK any more, and it would probably be much better for the Scottish economy if it was easier to have a successful career without having to leave Scotland.

Update (15/01): See also Gerry Hassan’s article about the Scottish Tut.

Short-termism and a lack of introspection

RAF Regiment Casualty Evacuation Training Cyprus
RAF Regiment Casualty Evacuation Training Cyprus.
Like practically all independence supporters, I’m deeply unhappy about the Syria bombings. My concerns are two-fold:

Firstly, I believe bombings without ground forces are directly linked to suicide bombings and the rise of Daesh. I have no evidence for this other than introspection. Basically, I was wondering of how I’d feel if a soldier from another country walked up to my house and killed my kids. I’d want to shoot back, and if I couldn’t do that in any other way, I’d join my country’s army. If they were shot by a tank driving past, I’d want to become a tank operator. But if they were shot by a fighter jet (or worse still, by a drone) and I couldn’t do anything about it, I’d be a ready target for radicalisation.

(I’d hope it’d turn me into a pacifist instead, like my uncle who at the age of 10 was shot at by an RAF plane while walking along the road carrying a bucket full of milk for the family, but I can completely understand why some people will conclude that blowing themselves up is the best way forward.)

In other words, I think it’s incredibly dangerous for us to conduct a war in a foreign country without providing people there with something or somebody to shoot back at. And if we aren’t willing to commit plenty of ground troops (and willing to pay for the care of the physically and mentally wounded veterans afterwards), we should never engage in the war in the first place.

Secondly, does nobody pay any value to strategy and long-term planning any more? The way I see it, we should start out by discussing what we want the Middle East to look like in the long term (e.g.: Should Iraq remain as one country, or should it be divided into two or three states? Would Saudi Arabia remain a source of money for fundamentalist groups in this set-up? And what about Israel?); we should reach an agreement with the other great powers of the World whether they’d accept this outcome (and if not, we should revise it). We should then figure out a sequence of events that would lead to this preferred scenario, and we should then act of them. If it then turned out that bombing Raqqa was a necessary stepping stone, I can imagine supporting it.

I guess the current bombing campaign has been started out of a desire to do something, but I fear it’ll lead to more suicide bombings in the West, not fewer.

The fiscal trap

sometimes it's worth
sometimes it's worth.
Lots of people have been writing about how the new powers for Holyrood effectively constitute a fiscal trap. As Alistair Davidson said:

The Scotland Bill is terrible. We are being given the power to top-up existing benefits, but not control of the benefits system. That means we don’t save money by getting people into work, and we can’t change the system to make it more humane or more efficient. Top up benefits will be expensive or in some cases impossible to administer.

Oh and taxes – we are getting more power to vary taxes, but not power to define them. Rich people can choose to take their income through shares or capital gains, taxes not devolved, so we can tax the middle class more but we can’t tax the rich. And the Tories will still be cutting the Scottish block grant every year. A well-constructed trap, all round.

In the old days — before the advent of austerity — being able to vary a variety of taxes and benefits might have been moderately useful. However, I’m starting to think it’s going to be an even bigger disaster than people realise because the powers are insufficient to maintain a welfare state in Scotland if the Tories abolish it in England.

Imagine the Tories decided to cut public spending drastically, for instance by getting rid of tax credits altogether, and to use the money saved on something that didn’t affect Scotland directly, for instance on lowering property taxes in England. Because tax credits aren’t devolved, Scotland wouldn’t get anything out of abolishing them (the block grant is based on English spending in devolved areas, so this wouldn’t change anything), and property taxation is devolved, so Scotland would to some extent be expected to mirror this move. A majority of Scots might want to introduce Scottish tax credits to keep things unchanged up here, but there wouldn’t be any money to pay for it. To make things worse, if Scotland decided to reduce property taxes here, too, that would cost even more money. As a result, Scotland would be facing two new expenses and no new income. It’d be an absolute nightmare.

Of course Scottish Labour are making things even worse by pretending the new powers are sufficient to allow Scotland to maintain the welfare state. And why shouldn’t they? After all, they have practically no chance of getting into power in Scotland any time soon, so it’s all just a game to them now.

I just don’t understand why the Scottish Government isn’t doing more to show that it’s all a trap. I guess the hope is that people will suddenly realise what the problem is in a few years’ time, and hopefully they’ll then turn to independence. I just fear that a lot of the welfare state will be irrevocably damaged before the scales finally fall from the voters’ eyes.

What EVEL have the Tories done?

Evil Pumpkins
Evil Pumpkins.
I’m completely in agreement with the idea that English affairs should be determined by parliamentarians elected in England. Why should Scottish MPs be able to vote on laws relating to education or health in England, when these areas are fully devolved to Scotland? However, the way to achieve this would be to create an English Parliament and an English Government separate from the UK institutions, not the EVEL plan that the Tories have put in place.

As Lallands Peat Worrier has argued, EVEL really doesn’t implement English Votes for English Laws but English Vetoes against but not for English Laws. This sounds rather innocent, but EVEL has evil consequences for all MPs representing non-English seats and any parties that rely on them.

The purpose is to give the Tories a perpetual veto at Westminster. The consequences might be minor during this parliament. However, as Iain Macwhirter has pointed out, EVEL will suddenly become important once a (possibly Labour-led) government relies on non-English MPs to pass its legislation: “It would leave UK Labour ministers for health, education and justice unable to implement the policies on which the government was elected. How could any prime minister pretend to govern when he or she can’t implement their manifesto pledges over 85 per cent of the UK population?”

A useful way to think about it might be so say that we currently have Tory governments in both England and the UK so there are no conflicts; however, if after 2020 we have a Tory government in England but any other government in the UK, EVEL will suddenly spring into action. (Holyrood politics was also a bit boring while Labour was in charge both there and in the UK and only really got interesting after the SNP got into government.)

It is now unrealistic for MPs from Scotland, Wales and Northern Ireland to reach the top. Positions such as Prime Minister, Chancellor of the Exchequer, the Secretaries of State for Health and Education and the Home Secretary will now require the holder to represent an English seat, as pointed out by Wings over Scotland. The problem is that most politicians move up through government by advancing to a more important post from time to time, so it becomes almost impossible to create a reasonable career path if you are restricted to military and foreign affairs.

It might also shut non-English MPs out of a lot of the committees (where a lot of the real law-making happens) — see for instance this story about Tommy Sheppard’s seat in the fracking regulations committee. This is all a bit odd because English MPs don’t seem to have been removed from the Scottish Affairs Committee, which has plenty of members not representing Scottish seats.

Of course, there’s also the worry that EVEL will be extended in the future. Currently it’s just implemented through a Commons standing order, which a future government can easily change. It’ll be interesting to see whether the current government after a couple of years tries to make it much harder to change by putting it into law once the dust has settled.

It will also be interesting whether the Tories will try to lump together legislation to make it impossible for Scots to block. For instance, English fox hunting legislation is now subject to an English veto, but Scots can still take part in blocking it in the final stage if it’s a close vote (i.e., if a lot of Tories rebel). Might the Tories add a Scottish sweetener to the bill to make it unattractive for Scottish MPs to do this?

It’s also worth bearing in mind that EVEL isn’t a symmetrical response to Scottish devolution. The way to determine whether something is devolved to Holyrood isn’t to ask whether it only affects Scotland but to check a long list of reserved matters. For instance, broadcasting is reserved to Westminster, so Holyrood cannot simply create a new Scottish TV channel; on the other hand agriculture is reserved, so Westminster cannot pass a UK-wide law in this area without Holyrood’s consent. It would have been straight-forward enough to attach a similar list of reserved matters to the EVEL standing order (which is surely what they would have done if they had set up an English Parliament), but instead it’s been left to the discretion of the Speaker.

It’s hard not to get the impression that the Tories have made the first version of EVEL deliberately vague so that nobody gets too bothered about it yet, and by the time people really realise what it was all about, it will already have been part of the UK’s uncodified constitution for years. That’s EVEL.

Back to the Future: Scottish Independence

"You and Jennifer turn out fine. It's Scottish independence, Marty! Something's gotta be done about independence!"
“You and Jennifer turn out fine. It’s Scottish independence, Marty! Something’s gotta be done about independence!”
Because today is Back to the Future Day, I’ve been having some fun with fellow tweeters discussing how we’d achieve a Yes in the 2014 referendum if we could go back in time to 2012 or so.

It’s actually quite an interesting question. To formalise it a bit, imagine you could go back to any point in 2012, and you could speak to one person for an hour. You could show them evidence such as photos, newspapers or videos, but they wouldn’t be able to keep it. Who would you choose to talk to, and what would you tell them?

Would you try to convince Alex Salmond that his currency stance wasn’t credible and that he needed to publicise a Plan B?

Or would you try to convince him that Blair Jenkins shouldn’t be made the head of Yes Scotland? (I presume he was chosen because of his links to the BBC and STV in order to achieve favourable media coverage for the Yes campaign, but of course this didn’t work out.)

Or would you convince him to step down and hand over to Nicola Sturgeon much earlier? That could have backfired badly, however, if it was seen as a sign of weakness.

Perhaps you would instead talk to Angus Robertson and show him his own advice, namely to “harness the powers of younger voters to persuade grandparents and grandmothers that it was not just about an older generation but about future generations and voting for the future of the country”.

However, I think I’d go back to early 2012 and talk to Douglas Alexander. I’d show him a video of his concession speech from May 2015. I’d explain to him in no uncertain terms that practically all Labour MPs were going to be kicked out if they campaigned against independence together with the Tories. Although Douglas Alexander wasn’t the leader of either UK or Scottish Labour, I believe he was influential enough in both that he would have been able to change things. Perhaps he would even have been able to save Scottish Labour, but I believe a Yes vote would have been a consequence of this.

Would would you do?

Tax credits and the self-employed

22nd Sept: Taxing
22nd Sept: Taxing.
When challenged about the cuts to tax credits, the Tories typically reply that most people will be compensated by a higher minimum wage. This is not entirely true (as far as I can tell, the minimum wage isn’t going up enough to fully compensate workers), but the biggest problem with it is that it assumes everybody is paid a salary.

However, there are a lot of self-employed people (either freelancers or owners of one-person companies) whose income depends on what they can sell (whether services or products) and who cannot simply increase their prices to compensate for falling tax credits.

Some politicians and economists have been wondering why productivity hasn’t been rising in the UK when employment has appeared to be doing rather well. I believe the answer can be found in a large rise in under-employed self-employment.

One shouldn’t forget that the job-seeker’s allowance (JSA) is in effect a working-class benefit, because recipients typically also get their rent paid; if a potential JSA claimant has a mortgage, on the other hand, there’s no help to get with that, and there’s therefore hardly any reason to apply for it. (It’s instructive to compare this with other countries like Denmark, where unemployment benefits are much higher but don’t include free rent, which means the system also works for people with mortgages.)

If you’re paying a mortgage, it makes much more sense to apply for Working Tax Credits (WTC) than JSA. You might only get £1,960 p.a. instead of £3,801, but you’re then free to do freelance work to top it up, and making at least two grand a year shouldn’t be too hard. (If you have kids, you’ll can also get Child Tax Credits, but let’s leave that aside for a moment.) Furthermore, you won’t be assigned silly jobs without pay by the Job Centres, and they won’t sanction you for missing a meeting, so you’ll have much more time to either make freelancing pay off or to apply for a real job elsewhere.

In other words, tax credits have to a large extent functioned as an unemployment safety net for people with mortgages, providing a certain amount of financial safety during the beginning of a freelance career or during bad years later on. (See also this article for some examples of the ways self-employment has simply become a way to hide unemployment.)

So what will happen now that the Tories cut the tax credits down to a very low level? The consequences won’t be felt by people in full-time minimum-wage jobs. Instead, it will be the large number of middle-class people who lost their jobs during the recession and who have been struggling to make ends meet by a combination of freelance work and tax credits that will potentially now have to throw in the towel, sell their house and go down to the Job Centre.

Another problem is that the way child tax credits will be limited to two children for new claimants. That will make it unattractive for people with more than two kids to accept temporary well-paid employment, because they can’t run the risk of not getting their tax credits back afterwards.

This will be a disaster for the Tories in many ways. Not only will many of the people affected be Conservative voters (at least in England), but it will also mean that the unemployment figures will start rising again (although it might be good for productivity).

Unfortunately, many of the people affected aren’t saying very much because it’s hard to come across as a successful professional or consultant or whatever if you’ve just told the world you didn’t manage to make more than three grand in the past year. It’s easier to keep shtum, grit your teeth and try even harder to find more work.

It’s interesting that whereas the problems with zero-hour contracts and salaries lower than the living wage are well-known, the hurdles facing the self-employed often get overlooked. Perhaps it’s because the issues are really hard to solve. You can’t simply legislate that freelancers and small businesses have to sell their products and services at specific prices — the consequence would often be a drop in earnings rather than a rise. In fact, tax credits are probably the single best way to help this group of people.

The Tories are going to regret this for a very long time. The SNP and the other pro-independence parties should already start to outline how they’ll solve it after independence.