Under the headline, today, of:
‘The economy: inclusively stalled’
Douglas Fraser, Business/economy editor, Scotland, tells us:
‘Scotland’s been in recession. You may have missed it. It was as shallow a recession as it’s possible to have. But in 2015, we had two quarters of economic output contracting.’
The headline should of course have ‘in 2015’ added. However, this claim is based on the fact that ‘mining and quarrying’ which includes producing oil and gas, contracted by 10% in 2015. Douglas reminds us that actually pumping the oil into tankers or pipelines doesn’t count but that laying or maintaining pipelines does. It seems we just have to accept that daft rule even if it artificially generated a recession in the Scottish economy back in 2015.
So, gleefully, Douglas is able to remind us, in 2018 that:
‘So, for the record, in the second quarter of 2015, there was a 5.2% drop in that “mining and quarrying” sector, followed in the third quarter by a 4.1% drop. As a result, the economy as a whole contracted by 0.1% in the second quarter of that year, and by the same amount in the third quarter, before picking up. Two consecutive quarters of contraction equals recession.’
Yeah, I’ve found a recession! Is this a news column or a history column Douglas? So, the news for Scottish readers, in April 2018, is that there was a sort of recession, in 2015, which we didn’t notice but, don’t worry, Douglas is there at the BBC to remind us of it.
Wait a minute, what about 2016, 2017 and 2018? Shouldn’t ‘the news’ cover at least the latter part of this period? Shouldn’t it also be based on current thinking about how you measure the strength of an economy?
We’ve had so many objective indicators of a robust economy, in Scotland, I lose track of them. See these, again:
With only 8% of the population, Scotland’s maritime sector accounts for 25% of the UK maritime sector’s (GVA) contribution to the economy and is 17.5% more productive than the UK marine oil and gas sector. Once more, too wee, too poor?
And, despite the apparent 2015 recession in oil and gas production, which Douglas reminds us of, why have we had then had this recent boom? See:
Writing in April 2018, why didn’t Douglas tell us about the massive finds and the boom in value over more than a year now so that we can put his little recession, more than two years ago, into a bit of historical perspective? Has he been asleep or is he hoping we have been?
Finally, once more, real economists have long since ditched GDP as a satisfactory or meaningful measure of the health of an economy. For the umpteenth time, see this:
According to the latest GDP figures, Scotland’s economy only grew by 0.8% in 2017 while the UK figure was 1.8%. The Scotsman and the Herald responded with:
‘Scots growth lags behind UK with fears of no U-turn’
‘Scotland’s economy continues to lag behind the rest of the UK, as critics take aim at SNP’
Even if Scotland’s GDP figures were accurate, they’d still tell us very little about the health of our economy and I suspect the critics know this, but GDP remains a convenient stick to beat the SNP with so there’s no way they’re putting it down.
First, even the DAVOS elite have turned against GDP. As far back as 2016 they said:
‘Three leading economists and academics at Davos agree: GDP is a poor way of assessing the health of our economies and we urgently need to find a new measure. Speaking in different sessions, IMF head Christine Lagarde, Nobel Prize-winning economist Joseph Stiglitz, and MIT professor Erik Brynjolfsson stressed that as the world changes, so too should the way we measure progress. A country’s GDP is an estimate of the total value of goods and services they produce. But even when the concept was first developed back in the late 1930s, the man behind it, Simon Kuznets, warned it was not a suitable measure of a country’s economic development: “He understood that GDP is not a welfare measure, it is not a measure of how well we are all doing. It counts the things that we’re buying and selling, but it’s quite possible for GDP to go in the opposite direction of welfare.”’
Secondly, from Manchester University:
‘The official statisticians are not the only people who think the quarterly ritual of City economists and commentators making a song and dance about the headline change in GDP – is it 0.2% or 0.3% – is a nonsense. The figure for the change every three months is the outcome of a very complicated process of collecting data from many different sources, adjusting it for seasonal changes, summing it, adjusting for inflation and so on. The inevitable margin of error is sometimes bigger than the headline number. Revisions occur frequently. With hindsight, recessions can be revised away.’
Thirdly, from real professor Richard Murphy at City University in London:
‘There will, no doubt, be those saying that low GDP growth (and none in terms of GDP per head) is bad news for Scotland. This, though, assumes that, first of all the GDP data is right, and second that GDP matters. There is no way we can be sure that the GDP data for Scotland is right because the calculation of GDP requires accurate data on imports and exports from Scotland and all experts agree that Scotland does not have that information. In that case whether or not the data is accurate depends upon whether or not a fair proportion of estimates to and from Scotland to the rest of the world, as well as to and from the rest of the UK, are correctly estimated. I have my doubts about this and explained why to the Scottish Parliament last year……We now know that GDP is a poor indication of well-being. In particular, the share of wages in GDP has been falling steadily over time whilst that of profits has been rising…..The Scottish Government would be wise to adopt increases in median pay as its economic goal and stop worrying about the nearly meaningless Scottish GDP measure that is beloved only by those who do not seem to have the best interests of Scottish people at heart.’
The above, only three, from a host of commentaries, debunk the value of GDP.
So, Douglas, why on the BBC Scotland News site, in April 2018, are you writing about a wee slump in one industry in 2015, when you could be updating us on current developments in the Scottish economy using current thinking about how you write sensibly about such a thing?
That might encourage Scots to support independence?
Oh, I see it now. In that case, maybe a piece on the Darrien Scheme next? How about:
‘Scotland’s economy all fucked up, from Darrien to the SNP’