Robin McAlpine – Is ‘disaster capitalism’ why no-one is taking Scotland’s economic crisis seriously?

Many of you are probably wondering why BRAVE NEW EUROPE keeps posting these articles about Scotland? Who cares about Scotland, it is not even a nation? The reason is that Scotland is a microcosm of the EU and the analyses by the Scottish Think and Do Tank Common Weal are spot on like no one else’s. This is how the political system functions. What they write applies for most EU nations. So we shall keep posting these articles and few people will read them,  as was the case earlier with the Green New Deal, Modern Monetary Theory, and the Gig Economy, but the day will come in the not too distant future that people will recognise the importance of these articles.

Robin McAlpine is the director of the Scottish think and do tank Common Weal.

Cross-posted from Source


There’s a question that has been at the back of my mind for a while now, but it’s being dragged into the foreground. Have Scotland’s powerful political, economic and administrative players – call them ‘the establishment’, if you like – made peace with the idea that Covid will devastate Scotland’s economy?

I ask this because there is now clearly no credible plan for the economic crisis ahead, and yet there is a disconcerting national silence about it, as if a psychological accommodation has been achieved.

I’m not going to list the factors that should give you real fear about the economy, partly because there are too many. But I think we can now rule out ‘V-shaped recovery’. The bottom end of that V will therefore be a kind of valley in which we must exist for a while. It is uncompromising terrain for people who live in a state like the UK.

There is an assumption that the people who will suffer at the bottom of the V are the usual suspects – the poor, the vulnerable, minorities. This is Britain and you can be reliably sure that they will suffer horribly. But this is not a crisis that ends there.

A few years ago, we at Common Weal did some rough modelling of what would happen if there was a moderately substantial interest rates rise. The UK is not only a welfare hell-hole; it is an extremely over-mortgaged country. The number of house repossessions resulting just from a moderate interest rates rise could easily have been in the thousands.

Many, many households can’t sustain an extended period of reduced hours or lower pay. Even more would be in major trouble if one income is lost. And of course many of those second incomes will be in sectors which are much less secure than first incomes – service sector, tourism, hospitality. (Again, that’s what happens if you live in Britain’s economy.)

When we produced Resilient Scotland, a mortgage-to-rent initiative to keep families in their homes was one of the first things we wrote down. I’ve just spoken to someone who has looked at modelled Covid-driven house repossessions and it was described as ‘terrifying’.

But Scotland is the ‘adult in the UK room’, right? This is being taken seriously up here, right? Which means Citizens’ Advice Bureaus were not a PR-driven afterthought, and serious policy discussion on home ownership was set out in the Programme for Government this week? Or perhaps I shouldn’t be sarcastic about such a life-destroying issue.

In fact, I can’t think of any kind of public discussion of this in Scotland so far. And I only pick this as one issue – would you believe me if I told you that there aren’t any measures in the Programme for Government on hospitality, tourism and entertainment (up to 15 per cent of the economy, depending on how you count it)?

Yet the Programme for Government is absolutely loaded with words (many adjectives) and a fair spattering of numbers. If you’ve got time to write all those words, should there not have been more thought dedicated to why they’re necessary?

You will probably be aware that I think this is because the Scottish Government is much more interested in how it looks than how it performs (which to be fair is hardly unique among governments) But this is now day three since the Programme for Government was published and other than Common Weal and Source (as seen here, here and here) I can’t find anything else which suggests anyone else thinks it’s important enough to merit analysis.

I find that petrifying. It leads to only three interpretations I can think of. One is that the establishment doesn’t really think this crisis is as bad as all that and V-shaped is still a possibility. That could be an explanation, but there aren’t many economists left holding to that idea so it’s hard to know what that faith could be built on.

A second option is that they think it’s just an impossible task in Scotland and we’ll need to wait for the ‘big guns’ of Westminster to ‘save us’ – i.e. no-one cares what the Scottish Government is doing because it can’t cut taxes or give massive subsidies. I’m sure there is an element of that, but people can’t really be banking on the Johnson administration. Can they?

The third interpretation is that, like the 1980s, they assume massive pain is inevitable or even necessary – so the question is what they can get out of it in the meantime. This is the explanation I fear most, and its the one I’m tending to find most persuasive.

This is really small-scale ‘disaster capitalism’. If there’s one thing we must all know by now it’s that there really isn’t anything that can happen in Western economies that doesn’t make more money for people who have money. If bank corruption can crash the housing market, someone else with money can start buying up houses at well below their value and make a nice profit on it.

This was the establishment response after the last financial crisis – they lobbied hard against any accountability or tax rises, lobbied for austerity and then (collectively) got a lot richer on the back of a recession.

The pattern looks to be repeating in Scotland. If you look at the Programme for Government, almost all the ‘new’ money is being put into initiatives which are basically a pipeline straight to vested interests.

Forget the name of these funds for a second – the tenant hardship fund isn’t for tenants but landlords, the green jobs fund isn’t for people who need jobs but for big business, the oil transition fund isn’t about reducing oil reliance but subsidies to a struggling industry.

The ‘Green New Deal’ isn’t an environmental and social project but a grant-harvesting bonanza (expect more cold calls from people telling you you can get your loft insulated for free – it’s a business model that simply skims public money for service companies that extract entirely unnecessary fees).

Many won’t really be familiar with the mechanisms through which this is done. Scotland has a host of public agencies which are really about money-funnelling to vested interests. The public stumps up the money, it all ends up with corporations of financiers with good lobbyists, and in between is a system of ‘public agencies which leak money into the right bank accounts.

Don’t get me wrong – none of this is illegal. All of those Glasgow Aleos which pay commercial dividends to private individuals for the discharge of public service are legal (and the councillors get paid directorships to keep them cushty too). It does’t mean it’s not corrupt.

And that is small scale when you look at things like Scotland’s interminable PFI scandal. It doesn’t matter how many times reputable bodies like Audit Scotland highlight the rampant profiteering, nothing ever changes. I mean, Common Weal spent a long time getting a PFI-replacement system (our Scottish National Infrastructure Company proposal) onto the public agenda. But we can only work democratically because we don’t have insider access and big money. So we can get it passed unanimously as SNP policy – but the Scottish Government can then set up an ‘infrastructure commission’ to overturn the policy as if democracy never happened (which it did).

So the conveyor belt trundles on, the financing of infrastructure remains a scam, schools fall down, the local authority promises an inquiry when the public anger is fresh and then quietly makes it disappear again because officials are complicit.

Government is filled with secondees from the corporations designing policy, the only external advice ever sought is from the big accounting firms which are openly facilitators of corporate profit, certain think tanks and certain journalists help to network the whole murky system and the politicians don’t seem to think any of this is sexy enough to care.

Or of course they could be keeping their gobs shut because this is the system where the post-politics payday can be found. The movement in and out of the lobbying and corporate sector by politicians and officials should be a scandal but has been normalised – as if it is not a threat to democracy.

If you know who Scotland’s most powerful lobby interests are (don’t waste your time with the lobbying register because it will tell you little) and you look at the Programme for Government you’ll note they are basically the same thing. Big Oil, Big Landlord, Big Housing Developer, Big Landowners – there’s barely any spend here which doesn’t end up in their pockets.

And then there is Big Care Homes, who know they have absolutely dodged any risk of real reform because the Scottish Government has just kicked this out past the election through another bloody review at which point they hope the issue will just die away – like all those care home residents. No wonder the big care home owners couldn’t hide their delight – this is not a path to a public service.

But no-one is bothering to pretend that this is going to scratch the surface of the crisis ahead. A serious country would be filled with voices this week screaming out about the woefully inadequate governmental response to the biggest crisis of our lives. Instead there is silence – even the Fraser of Allander Institute couldn’t be bothered to so much as blog about it.

I now fear that the post-referendum strategy of the establishment has succeeded. Government officials, public agencies, lobbyists, local authorities, some big charities and parts of the media (through advertising and ‘informal networks’) were already made complicit in this whole sorry show by stuffing their mouths with gold.

But now it looks like the Scottish Government and the independence movement have been swallowed up too. The first minister is Facilitator in Chief and her representative in corporate Scotland (Andrew Wilson) ensures she is showered with praise she has not earned.

Meanwhile, the independence movement is so desperate for its bloody referendum that it’s activists hold its noses and tell people like me in private that they too are horrified and want something to be done about this Universal Basic Corruption as soon as we win the referendum. The referendum that is never coming.

No, I’m not a nihilist – we spent most of this year explaining how you can actually achieve the goals expressed in this programme. In fact, we even set out a detailed economic explanation of the theory behind why it only works one way (public service delivered in public ownership) and not the other (a fragmented privatisation-fest of skimming and crossed fingers).

Want green jobs? Well, to paraphrase something you might have heard, ‘It’s Scotland’s Wind’ – not the landowners, not a foreign corporation. They’ve had 20 years and failed to deliver jobs. And yet the words ‘public’ and ‘ownership’ do not appear in the same sentence in the Programme for Government. When will we wake up?

So if Scotland’s establishment is now resigned to letting the nation burn to the ground in an economic crisis while scavenging and looting what they can amid the flames, if government is facilitating this, if the media is mostly silent and if the political opposition is pitiful, if too many big civic organisations don’t want to rock the boat and if small ones get ignored, is there a path out of this?

I really don’t know. But if this goes the way I think its going to go, Scotland is going to be ripe and ready for a populist insurgency. I hope that it will be a progressive, reforming insurgency, and that there will be a hard reckoning for all those who have been complicit in turning Scotland into ‘Little Malta’ (though with barely an investigative journalist to assassinate).

But who takes over might not be that; it might be the other thing. Then we’ll be sitting among the ashes and taking aim at immigrants. Disaster capitalism is a lucrative game, but its a dangerous one. I really hope its players pay the price they so richly deserve to pay.

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