Zombies. Can Scotland escape the economy of the living dead.

Like me, you probably don't pay too much attention to the monthly unemployment figures, since they don't seem to be going anywhere in particular. In fact, something quite extraordinary is happening, which is transforming the world of work, making a nonsense of government policies, like the much criticised Work Programme and turning a once prosperous and relatively secure society into one driven by insecurity and debt. It also poses a very serious question about Scotland's future.

You see, unemployment - 2.5million - is a lot lower than it should be. Indeed, the numbers out of work have been falling even as the country heads into triple dip recession. Unemployment rose to 8% in November 2011 and has been falling more or less ever since. Yet in the recession of the 1980s, which was mild compared to this one, unemployment rose to 12% and stayed there.

Stranger still, unemployment in Scotland has been running at a lower rate than in the UK. This month, 7.7% of Scots were out of work, against 7.8% for the UK. In the 1980s, unemployment in Scotland soared to 15% - almost double what it is today and far ahead of the rest of the UK. Indeed it was nearer 18% in the West as Scotland's industrial heartlands were ripped out and thrown on the scrap heap. So, although this recession has lasted twice as long as the 1980s and is far deeper, unemployment is falling when it should be rising.

This is all exceeding strange, because I defy anyone to look around Scotland today and regard it as a country in economic recovery - despite the claims made by the Scottish government, who can't seem to decide whether Scotland is being dragged down by the UK Chancellor, George Osborne's austerity or being held aloft by Alex Salmond's Plan Mc B.

What has happened is something we haven't seen in Britain since the 19th Century: a productivity recession, in which the economy is going back in time. The reason unemployment hasn't increased is largely because people are accepting lower wages. Pay (except of course for bankers) has been falling by 1% a year, in real terms, which may not sound like much, but equates to around £1500 in reduced income for average households so far, and earnings will continue to fall until 2018 at least. This is unprecedented.    Firms are are using cheap labour instead of new machines - which is why productivity is falling in Britain. We're getting poorer by making ourselves less efficient. This is why those high street shops have all been closing and why Britain isn't recovering through exports, despite the fall in the value of the pound.

This only sounds counter-intuitive because our political culture is still essentially neo-liberal and assumes that if you hold down wages the economy must do better. In fact, quite the reverse is the case. Low wages breed economic stagnation because worker/consumers lack money to buy goods and firms have no incentive to apply new techniques and machinery because labour is so cheap. That's why this depression is unlike any this century. You have to go back to the 1870s to find a recession as long and as deep - though even then industrial output continued to grow through the application of new technologies. Coalition policies today are taking us back to the days when people wore top hats and the government was run by ex public schoolboys. Oh - I forgot, it already is.

Independence warning: the lights will go out if Scotland votes yes.

There are many things that I don't understand. Like why a day return rail ticket between Edinburgh and Glasgow costs £22 when we are trying to get people to stop using their cars. Or why a cup of coffee costs £2.50 when its ingredients cost 0.5p. But nothing puzzles me more than energy prices. They have doubled in five years even though Scotland is sitting on a mountain of power. Yesterday, we were warned by Alistair Buchanan, the chief executive of Ofgem, the energy regulators, that energy prices are going to soar again because of something called a "gas crunch". We haven't seen anything yet. The lights will go out.

Now, every six months or so there is a scare about lights going out (LGO). The most recent - inevitably - was a warning that independence for Scotland would lead to LGO because England wouldn't continue to subsidise Scottish power generation. This seems utterly baffling since Scotland has a vast surplus in electricity generation at the moment and is sending the surplus south.

Ah, but that's only because of those nasty fossil fuel stations like Cockenzie that are being closed down. And nuclear power stations like Torness that are coming to the end of their unnatural lives and will not be replaced because, according to Labour, the SNP is irrationally biassed against nuclear power. Labour have for years been predicting LGO without more nuclear power stations, which the Scottish government has ruled out on the grounds that they would be hugely expensive, dangerous and surplus to requirements.

At present, Scotland has total energy generating capacity from all fuel sources of just over 12 GigaWatts - or so I am told. By 2020, we will have the capacity to produce 100% of electricity demand from renewable sources like wind. Scotland supposedly has wind, wave and tidal energy potential of 60GW - six times current capacity. We have 25% of Europe's wind and tidal and 10% of wave energy potential - a colossal comparative advantage in green energy.

And these aren't fantasy figures from some environmental pressure group. 20 GW are already in the pipeline, according to the Scottish government, which is nearly twice what we have now. We already provide nearly 40% of the UK's renewable energy output - which is why the UK government has been helping subsidise the development of the Scottish renewable energy, so that Scottish wind can help England meet its climate change targets.

So, lights going out? I don't think so. Unless this is all garbage. But assuming ministers are not lying, we seem to have rather a lot of energy. Indeed, we still have a trillion pounds worth of oil in the North Sea, prodigious amounts of Scottish coal and a lot of the latest fad - shale gas, which is supposed to be worth £5nb a year in Scotland alone if fracking (that's a method of extraction not a term of abuse) turns out to be safe. Germany would love to have our renewable energy sources - they are turning green and phasing out nuclear powers stations at the same time. But they are of course German, and their lights do not go out.

Banks and horses. Food and financial products contaminated by greed.

There are striking similarities between the horse-burger affair and the international banking scandal that broke in August 2007. The financial crash was caused the sale of toxic financial products called Collateral Debt Obligations that were composed of mortgage bonds that had been "sliced and diced" into new products that were then marketed as cheap and safe. They were the financial equivalent of mince meat, which of course was itself invented as a means of disguising poor quality meat.

In theory CDOs spread the risk and diminished the likelihood of a price crash, because the dodgy mortgages were bolstered by the sound ones. So, for every "liar loan" handed to an unemployed single parent in Detroit, there was supposed to be a solid and dependable loan on a substantial sandstone property in Edinburgh. Unfortunately, it didn't quite work out that way - the duff mortgages ended up contaminating the good ones and the whole system perished. These financial products had been sliced and diced so often and had been swapped back and forth between the offshore subsidiaries of international banks that no one knew any more what was in them.

The issue was one of trust - the most essential commodity in any financial system, or indeed, in any food chain. When you examine the extraordinary circuitous route by which processed meat is marketed, it is hardly surprising that it becomes contaminated. Findus ready meals were found to have horse meat that came from Romanian slaughterhouses, via a Dutch food trader, who sold the stuff to a Cypriot dealer who sold it on to a French firm, Comigel, that sold it to some of it to the Netherlands, and some to UK supermarkets, which ended up being tested in Ireland. Once a product has been passed through half a dozen intermediaries, it is impossible to know where it is headed or what the hell is in it. We know that horse meat ended up in cottage pies sold to children in England. The Scottish government insists that no horse has been flogged - if you'll excuse the inevitable pun - to Scottish schools, but who really knows?

Cameron's legal expert endorses independence timetable. Are the Unionists trying to lose?

     Is there a nationalist mole in Whitehall, an evil genius undermining the case for the Union?    On Monday, the UK Coalition published its legal advice on the status of Scotland after independence.  Scotland would be a new state, the government lawyers concluded,  after also identifying the religious leanings of the Pope.  There would be a lot of renegotiation to do, which is great for the legal profession, who stand to make a fortune disentangling the strands of union. 

   Better Together pronounced the death knell of independence.  "This shreds to pieces" declared a UK Coalition spokesman, "Alex Salmond's fantasy that Scotland would be waved through into every international institution on a 'no questions asked' basis".  The fantasy being the SNP's 18 month timetable for transition to independence published last week.  But the UK Coalition's own legal adviser, Prof. James Crawford of Cambridge University, seems to be living in fantasy land also, because on Tuesday, the co-author of the Coalition's legal advice,  admitted on BBC Radio that Scotland already fulfilled the requirements and the Scottish government's timetable for EU renegotiation was “realistic”. The headlines about Scotland having to negotiate 14,000 separate treaties also turned out to be the usual concoction of speculative half-truths. They could all be wrapped up in around 18 months.  So much for this weeks' scare.  

Aliens in warning against independence. SNP needs to lead constitution debate, not follow it.

    Things fall apart. The SNP has got the right question, but it isn't getting the right answers.   The Nationalists have been on the defensive for the last six months over relatively obscure procedural issues about relations with Europe, currency union and the mechanics of transition to independence.  The Yes for Scotland campaign has failed to make a significant impact.   The momentum from the 2011 election landslide has largely spent and the Nationalists are turning into their old embattled and defensive selves.   They need to think carefully now about how to combat all this and get off the back foot. 

   The problem is partly the sheer weight of the forces against them.  Better Together have the UK Government, the three unionist parties in Westminster and Scotland, the UK Treasury and civil service and the Scottish and UK press on their side, plus fellow travellers like Jose Manuel Barroso, the President of the European Commission. The Nationalists have Alex Salmond and a few loose cannons. 

       On the morning when the Scottish government's fiscal commission reported that monetary union was a perfectly sensible option, a leading Scottish daily's front page read:  "Legal experts in warning on independence".  The press coverage of the referendum has been reduced to a kind of pro forma  "..........in warning on independence" (subs to fill).    This kind of thing infuriates the SNP who insist, rightly, that you can find legal experts who will say practically anything. They don't understand why the Scottish press is so hostile to independence.  But the fact is that they are.

    The SNP can't change the weather, so they will have to find ways to stop getting soaked. They have to stop being on the defensive.   They need to be realistic about the climate of opinion among Scottish voters, and the difficulty of persuading a country that lacks confidence in itself to go it alone. That means working back to where the voters actually are, rather than where the SNP would want them to be.  I means going back to the multi-option referendum Scottish voters sought but are being denied.  The SNP needs to recreate, and lead the home rule coalition,just as Alex Salmond originally wanted. 

   This isn't going to be won by a brilliant campaign as in the 2011 Scottish parliamentary elections where the SNP came from ten points behind Labour to winning a landslide.  A referendum is very different from a general election. It is for keeps - and that is scary.

  The unionists press can always be relied upon to pour cold water on any suggestion that the Scots are capable of managing their own affairs.  The howls of derision that greeted the Scottish government's document on the transition to independence, were entirely predictable too. And the criticism was not without some justification, since it did rather look as if Alex was going to create the universe in six days.

The truth is that a the Nationalists themselves have only recently begun to think in practical terms about things like negotiating a constitution and are uncomfortable with the mechanics of instant nation building. The SNP has been a brilliant vote-winning machine, but it has never been anywhere near winning independence, and under Alex Salmond it has always pursued a gradualist, incremental approach to self-government, rather than a big bang. And any way you look at it, independence is a leap of faith. They need to bridge the Scottish confidence gap, the psychology of national defeatism.

RBS/Libor. If Iceland can prosecute bankers why can't we?

If you're shopped by your ex-wife for point switching on a speeding ticket you face prison; if you are in charge of a department responsible for one of the biggest financial scandals in history, you get a £700,000 pay off. Well, that's what has happened to the Royal Bank of Scotland executive, John Hourican, who has agreed to step down over the Libor fixing scandal. Step down, mind you, not accept responsibility, let alone admit to any wrong-doing. RBS insists that Mr Houlican had no involvement in, or knowledge of any manipulation of Libor interest rates.

So, er, why is he stepping down? What kind of justice allows companies to nominate someone to shoulder the blame who is blameless in order to divert blame from those who are guilty? Why couldn't Chris Huhne just nominate his driver to take taking the rap for his speeding ticket, while of course making clear he had no knowledge of any wrong-doing and therefor isn't responsible.

The RBS scandal is another nail in the coffin of British - and Scottish - banking. This omni-scandal is giving us all indignation fatigue. It's hard to remain apoplectic with rage month after month, year after year, as bank criminals are allowed to hide behind presentational resignations and get fines that are paid out of tax payer's money.

Oh, sorry, I forgot. Vince Cable, the business secretary said yesterday that RBS bankers will pay the £390m Libor-fixing fine from their bonus pool. But where exactly did this bonus pool come from? Yes, the profits of the STATE OWNED Royal Bank of Scotland. This fine isn't being paid by the bankers but by us. It is an insult to tax payers that these executives are earning bonuses at all when they owe us for the £65bn for the recapitalisation -  plus interest on two hundred billions of public money used to underpin the value of Royal's dodgy loan book in 2008/9.

Let us remind ourselves of what banks like RBS, UBS and Barclays have been up to.

Independence - it's whatever you want it to be.

Sunday Herald 3/2/13

    The Scottish Electoral Commissioner, John McCormick, caused a parliamentary row last week by suggesting that both the Unionists and Nationalists should get together and make a “joint statement” on what a yes vote would mean in practice. You might as well try to get the Professor Richard Dawkins and Cardinal Keith O'Brien to agree on what happens in the afterlife.

The SNP's Nicola Sturgeon called on the David Cameron, to convene pre-referendum talks on the handover, which the PM rejected at Prime Minister's Question time, saying he wasn't prepared to “prenegotiate Scotland's exit”.    Lip-readers in the twittersphere thought he also said a very rude word, now immortalised in the Guardian's Steve Bell cartoon. Though if he had he would've been expelled from the chamber.

Language aside, the Electoral Commission was only reflecting the views of Scots in their focus groups. Scotland has only very recently begun to contemplate the possibility leaving the UK. There has been no century of nationalist agitation here as there was in Ireland before its departure in the 1920s. And since that involved civil war, it's not a history anyone would want to repeat. There is of course no reason why the disintegration of a union should necessarily involve conflict. Exactly 20 years ago, the Czech Republic and Slovakia decided to go their separate ways peacefully in the Velvet Divorce. A whole raft of new states were formed after the disintegration of the Soviet Union without much fuss.

If Scotland decided to leave the UK, the Scottish Government insist the divorce would be similarly silky smooth. The Queen would remain as head of state and Scotland would retain the pound, so no one would notice the transition.   Of course,  the Queen could in theory refuse, though I don't believe she would. England could refuse to let Scotland use the pound after independence, but that also seems unlikely since it would cause needless trouble for banks and businesses that straddle the border.  But one or other of the governments could, despite their commitment in the Edinburgh Agreement, get nasty though there would be nothing really to gain from falling out.

This does not mean, however, that independence would be easy. 

And the Question is: what does independence mean?

From Herald 31/1/13

At last, we have a question: "Should Scotland be an independent country?". Well, you have to agree it's short and to the point, unlike some other independence referendums.

  In Quebec, the independence question in 1995 asked: "Do you agree that Quebec should become sovereign after having made a formal offer to Canada for a new economic and political partnership within the scope of the bill respecting the future of Quebec and of the agreement signed on June 12 1995?". No, I don't know what it means either. And that was considered a model of clarity compared with the 1980 Quebec referendum question which ran to 108 words. So, don't knock it: this simple, clear Scottish question is a considerable achievement.

Was it a defeat for Alex Salmond, who unionists said had tried to lure Scots into voting Yes by subtle psychological marketing? No, the Electoral Commissions amendment, effectively changing "agree" to "should" is not significant enough for that claim to stand up. I suspect the Scottish Government's formulation: "Do you agree that Scotland should become an independent country" was drafted precisely so that the Electoral Commission would have something to take out to justify its intervention and confirm its independence. Taking out "agree" makes it marginally less leading, but doesn't alter the question.