This is why classical economics could help Scotland in its independence bid

To our national leaders, economics is no longer the dismal science. On the contrary, it might be a path to happiness, if the voters will only now follow the lead being given them from on high at Westminster. It can be summed up in a conviction that economic growth is the key to everything else. Get growth and all other policies will fall into place.

This change of heart is most obvious in the Tory Party. For nearly half a century since Mrs Margaret Thatcher took charge of it, austerity had been, in practice, its guiding principle. In 1979 it inherited the UK of the welfare state, where public spending only ever went up.

From then on, public spending only ever went down – at least in the terms most voters understood from the numbers that appeared in headlines. In real terms, in sums of money adjusted for inflation, the performance was less impressive, and the expenditure usually stayed about level over the longer term.

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All the same, the message was clear enough and played a part at least in policy-making, before the real world impinged on the offices in Whitehall where the lamps burned late. In Boris Johnson’s Tory party, however, everybody has gone home before the sun sets.

The one UK institution that escaped the old austerity was the National Health Service, which even Mrs Thatcher would not touch so long as it occupied its prime place in popular mythology as an ideal for the UK when doing things right. Over the post-war decades, real spending on it has increased 10 times over, while more humdrum, yet still important, public services like education and welfare have seen seven-fold growth.

Figures like this show that while it is important for us to have fierce political arguments about how much of our national income to spend on one thing or another, the size of national income is all the same more important. If our voters and their elected representatives concentrated not on absolute claims for schools and roads, but on where each item might fit into the national economy, they would have a truer picture of the whole.

They would also gain a better idea of how to achieve steady growth. This should be an aim of policy because it combines making ourselves richer with sustainable standards for public services. The arguments otherwise about the quality of the services, about how much national income to spend on this or that, tend to lose sight of the basic questions of how to finance them all – especially if we want to finance them more generously. Nicola Sturgeon is an expert on the Scottish NHS, having kept a close eye on it ever since running it in her first big ministerial job. But it has stopped making Scots live longer.

For instance, scarcely worth a place in our public debates is how much UK growth has been squeezed in the last 20 years. When I was learning economics we were told to assume the economy grew by an average three per cent a year. In fact, in the last quarter-century the rate has dropped to about 1.25% a year, and ideas on how to improve it do not abound.

Boris apparently hopes to do it by shouting. Up to now, so far as I know, he has made no attempt to find out what ideas Nicola has for pursuing the same purpose. On the contrary, this pair are only ever rude to each other, which cannot help anybody. The topics at issue are more important than that. When an economy has weak growth or none at all, improvements to one person’s income or the services enjoyed must come at the expense of somebody else. Politics inevitably becomes angrier, and angry politics is what we have now got. So far from mounting deeper debates in Scotland, I’m not even sure we have an adequate understanding of the contributory arguments, inside or outside the Government.

A history of Scottish nationalism might be written as the history of our efforts first to match and then to keep up with England’s standard of living. This was achieved at the end of the 19th century and remained a realistic aim up to the middle of the 20th century. Since then Scotland has flagged. The emergence of the SNP could be interpreted as an effort to redress the failure.

That was certainly visible in Alex Salmond’s politics, but today I doubt if it is true also of Nicola Sturgeon’s politics. When Alex became First Minister in 2007, his Cabinet aimed to match England’s growth rate, and in a period of major projects fed from high capital expenditure it more or less succeeded. Since then the momentum has been lost.

Nicola lacks all interest in growth. Her big speech at the coming climate summit in Glasgow will concern “delivering on our promise to end our contribution to climate change within a generation, putting a just transition and wellbeing at the centre while taking the big and difficult decisions that will create a net zero, climate-resilient and fairer future”. With hopes so high for idealist victory, not much room is left for material progress.

And now Nicola is in quasi-coalition with the Greens. What they think about growth can be stated succinctly. They are against it altogether. In other words, they wish our economy to become smaller, with even less to go round for single mums and scruffy kids. We do not seem to be doing a good job of making them equal members of our society, and the easiest way to alter that would be for us to make our country richer, not poorer.

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The only remedy Nicola proposes for the economic drift unleashed by coronavirus is what she chooses to term socialism – though again, it is obscure what she means by this, the least successful political doctrine in the history of the world. If, despairing of any words from her, we turn to look at actions, we find efforts at nationalisation and praise for the concept of it.

But in reality the performance has been woeful. The Ferguson shipyard at Port Glasgow remains a disaster in its commercial history and finances. The North Sea oil services company, Burntisland Fabrications, has just failed to win a contract designed for it, and seen the prize carried off by competition from the Far East. About the history of Prestwick Airport, it is pointless to elaborate. Here, and in other cases too, is the Scottish public sector taking the lead.

The Government of Scotland is not alone in finding classical economics inadequate for aims it wants to pursue. But I doubt if anybody is ever going to dispense with solid figures for income and expenditure, which offer a universal (because so simple) measure of human achievement.

If we had profitable industries, I don’t think independence would be long delayed. If not, we will wait a long time.