How would an independent Scotland have fared during the crash? Given that the liabilities for RBS alone represent 2,500 per cent of Scotland’s economic output, it’s a difficult question for Alex Salmond. He replies that the banks in Scotland would have been better-regulated by wise, old him, so the problems would not have arisen. But Faisal Islam at Channel Four has unearthed a letter that rather explodes this theory, written from the First Minister to Fred the Shred egging him on with the calamitous acquisition of ABN Amro. This, as CoffeeHousers will know, is the acquisition which was so hubristic that it went on to sink the whole banking group.
The letter is here (pdf), and it includes an offer from the First Minister of ‘any assistance my office can provide’. This suggests that if Salmond had been running an independent Scotland it would have behaved as badly — if not even worse — than Ireland and Iceland in cosying up to the banks and stoking their destructive ambitions. It’s an approach that is anathema to a free marketeer: being pro-free enterprise is a very different thing to being pro-business. Salmond displays a dangerous form of corporatism, the type where politicians try to do favours for companies, and think it is in the national interest. Even Brown acted with more decorum: if a British Prime Minister would have sent a note to a FTSE100 company urging it to load up with debt and make a dodgy acquisition then there would be uproar — and rightly so.
What was Salmond playing at? My hunch is that the First Minister wanted the Shred’s endorsement in an SNP campaign. The SNP loves getting close to business, and has no respect for the type of distance between politicians and big businesses that contributes towards economic stability. He’ll have been hungry for another endorsement similar to that by Sir George Mathewson in March 2007 (which was, then, a huge blow for Labour’s argument that business prefers the Union).
‘It’s difficult to forecast the future, but I see no circumstance where independence would be a serious economic disadvantage,’ said Sir George, who helped build RBS before it was Shredded. Yet, in this letter, we can see a serious disadvantage: a system where big businesses and a small government cosy up to each other, discarding all economic propriety as they do so. As we have seen with the PIGGS, fiscal disaster soon follows.
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