Concentrate on the real problem of our economy

ACCURACY and precision are not the same, as an old university tutor of mine often noted. These wise words have come back to me frequently reading some of the criticisms of the report of the Sustainable Growth Commission, on which I was privileged to serve.

Many of these criticisms have been almost limited to arguing about the assumptions made in the report, in particular about an independent Scotland’s notional deficit. Intricate reverse engineering of the figures used has been attempted in order to “prove” that the case put forward was flawed, that the choice of small advanced economies adopted in the analysis was inappropriate, and that the projections we set out were wrong.

The precision with which these arguments have been made is almost impressive. But like many precise quantitative takes on complex qualitative problems they miss the point. They do not address the fundamental question of why Scotland consistently underperforms compared with similar countries in our ability to generate and distribute wealth. The commission was well aware that the choice of comparable small countries could have been different.

We might, for example, have included Luxembourg in the peer group, making Scotland’s wealth gap appear even bigger. Austria or Sweden could have been excluded to alter the statistical variance across the 12 countries examined, but this would have been odd given the policy lessons to be learned from these places. We could have chosen a different start year for our projections, or a different time period over which to make comparisons. As students of comparative analysis are well aware, there will always be a credible alternative choice to be made about which data to look at, but this does not invalidate the choices eventually made.

Criticising the report on the basis that other comparative choices could

What is undeniable is that Scotland is under-performing

have moved the headline numbers makes for an extremely thin argument. There is a huge pool of academic research and evidence on economic performance. The authors of these analyses do not always agree with one another on how to interpret the specific findings they make. It is by considering this range of deeper analysis in the round that it is possible to construct an accurate depiction of how different countries have faced up their own distinctive economic problems, and what lessons might be transferable to Scotland.

The commission’s report put forward the view that on balance, using the wide range of available evidence from many places and in many forms, the conclusion that Scotland under-performs in the interrelationship between wealth generation and distribution is unavoidable.

There is nothing intrinsically different about Scotland that points to why it lags behind on a range of indicators, ranging from GDP per capita to productivity to innovation and gender pay equality. Statistical uncertainty inherent in specific (openly acknowledged) assumptions applies whether we consider the prospects for an independent Scotland or to Scotland’s future under the current constitutional arrangements.

What is undeniable is that Scotland is currently under-performing, and there is little reason to doubt that this will continue to be the case unless change is made. No less an authority than former Treasury Minister Lord Jim O’neill recently described Britain’s woeful performance on income per head, productivity and regional inequality as “bog standard stats” that should surprise no one. We can dance merrily on the head of a pin debating precise details of various forecasts but we should not avoid accurately diagnosing the problem in the first place, which is the relative under-performance of the Scottish economy and its damaging impact on Scottish society.

Agenda is a column for outside contributors.

Contact: agenda@theherald.co.uk