Scottish Government advisers can be both wrong and create mischief

Scottish Government advisers can be both wrong and create mischief

by Eben Wilson
article from Friday 25, May, 2018

SCOTLAND has awaited with bated breath for the delayed publication of the report of the SNP’s Growth Commission – a body tasked with finding some way of improving our wee nation’s lacklustre economic performance. One hopes that its recommendations are not now assessed as being as anodyne or confused as those of previous papers on independence, Brexit, inequality and other things.  The committee effect does tend to take over too often in the outflow of aspiration from our SNP-led government. 

There is, however, a larger issue about these landmark publications that has become part of our political culture; what I call their credibility of purpose.  This is not simply to say that they are merely attractive but have no real value –it is more that the Scottish Government has rather boxed itself in with respect to its observers in eliciting the response of “they would say that wouldn’t they?”

I fear the Growth Commission might fall once again into this trap.  Its members are drawn from the usual senior figures in big business and academia, purportedly from across the political spectrum.  But we all know that big business tends to be corporatist and academics in Scotland tend to be statists.  The SNP government have always tended to recruit advisers from among their own kind; Keynesians and interventionists. 

You have to ask yourself whether advisers, acting for a left-of-centre party in government, in a nation with a populist hard-left strand of thinking – are likely to be listened to with any sense of objectivism? The left will love anything that smacks of interventionist collective endeavour, while those on the right will just raise their eyes at more of the same old socialist tosh and ignore the work done.  That is not good for extending our national debate. 

Aside from the Growth Commission we have had Naomi Eisenstadt,  a social policy academic from Oxford University and focussed on public sector activism, advising on Poverty and Inequality, and Mariana Mazzucato (pictured), the doyen of the liberal left statist thinkers and an economic adviser to John McDonnell and Jeremy Corbyn has had some say in the new National Investment Bank.

And that’s the point. For example, while Mariana Mazzucato claims not to be a leftist herself, she is admired by the left for what she articulates; she is an academic with a strong record of empiricism in her studies, but her conclusions tend to be slanted to a particular position in which government action is seen to offer more good value than bad value. 

She may or may not be correct in her conclusions, but the news and comment machine will echo their political prejudices while Scotland struggles on with low growth and little change.  Such is the nature of contemporary public policy debate; where advisers can end up creating more mischief than progress. 

Does it need to be like this?  Well, liberalism at least offers one particular approach to the development and growth of the economic world that differs from statism driven by interventionist champions; it champions the individual, and builds in change that is consumer driven by default.  Central policy making and advisers need not apply. 

In the context of running a technical business I see what this might mean every day. Scotland is replete with a honed machine dedicated to making innovation happen and help create new wealth; one of Ms Sturgeon’s stated goals. In my experience, however, all of these people are at one or more layers removed from the actual real world of the factory, machine room or laboratory.  There is simply no way that they have managed to engage with the reality of building efficient supply chains, and the nested contractual relationships that modern technical innovatory business requires.  They don’t know enough about the details.  In fact, they can’t. 

What Hayek would call the “tacit knowledge” of those who engage in economic action is hidden to these people – once again they become mere advisers, great for networking, but hopeless at helping add value by turning a dollar into thousands of dollars. Their agendas are akin to that of the Growth Commission, how they can create wealth for us. Well, that can create real mischief, because who decides how to be right about things; certainly not the great and the good in big business and academia; for Scotland what we need is to increase the number of possibilities through which the best way of creating wealth can be discovered by accident. 

In this, I would return to one particular thing that I am noticing ever more acutely in my work within the technical industries where the knowledge and talents of individuals is paramount; the drag that high payroll taxes create on any early-stage economic growth.  After that, I detect that high corporate taxes are a seriously deterrent to expansion through reinvestment of cash flow.  Economic growth is everywhere a discovery process; these state interventions get in the way of that. 

To return to the advice that the Scottish Government obtains from those like Mariana Mazzucato; she has been known, for example, to say that cutting taxes does not increase business investment. But that claim has raised eyebrows in various places within the economics profession.  If we are objective, we can only say that she may or may not be right; the point is that the state cannot actually really know, although the evidence suggests that we should be deeply sceptical of such a claim. Advice from commissions is not likely to be very useful in such an arena of ignorance. 

The problem is that such scepticism does have to come in concert with some humility about what we may or may not know. I have a deep concern that the overt stance of confidence embedded in nationalist aspirational politics, and its use of advisers to induce certainty, is no way to stay humble and discover ways of making an economy grow, through the efforts of the many, not the few.  

Low taxes and liberty matter to that achievement. 

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