“Stiglitz: Only Independence Will Let Scots Tackle Income Divide”. That’s the headline for today's report in the Herald about the contribution of Nobel prize-winning economist Professor Joseph Stiglitz to the independence debate.
Amidst the detailed economic analysis published by the Scottish Government’s Fiscal Commission this week was a powerful economic argument that would surprise few people in Norway or Denmark – but might cause something of a stir in the corridors of power at Westminster. The expert Commission set out succinctly why policies which tackle inequalities are not harmful to economic growth.
On the contrary – it is the countries that are most equal that are best placed to boost growth.
Professor Stiglitz, a member of the commission, concludes that countries which are more unequal do not do as well, do not grow as well and are less stable. He argues that a concentration of income can restrict the economy in the long-run by limiting the potential of people to contribute in a productive way; whilst inequality may also restrict government investment in infrastructure, education, and technology that is required by a modern economy.
This is advice that successive UK Governments have ignored. As the commission points out
“since 1975 income inequality among working age people increased more quickly in the UK than in any other OECD country”
The OECD estimates that the UK ranks 28th out of 34 OECD countries in terms of a key income equality measurement.
In contrast, the report points out that Denmark and Norway are ranked second and third most equal. Significantly, those two countries also both feature in the OECD top ten richest countries in terms of wealth per head of population – unlike the UK.
Scotland’s wealth per head of population – including a geographical share of oil and gas revenues – would also put us in the top ten wealthiest countries, between Norway and Denmark. That might feel somewhat unreal to us in Scotland – but it wouldn't feel unreal to the Norwegians and Danes.
All of which goes to show - the problem we have is not that Scotland isn’t wealthy. It’s how that wealth is shared. That holds us back both in terms of fairness, and in terms of growth.
But as the commission concludes –
“without access to the relevant policy levers – particularly taxation and welfare policy – there is little that the Scottish Government can do to address these trends”.
And that’s why the argument that an independent Scotland can be a driving force for sustainable growth and a fairer society will be absolutely central to the Yes campaign.