A Place to Stand

   Thinking of this with respect to Scotland

A rentier state is a term in political science and international relations theory used to classify those states which derive all or a substantial portion of their national revenues from the rent of indigenous resources to external clients.

  Bearing in mind the Economist article that Alex Salmond erupted over, which said that 18% of our GNP comes from offshore oil.

The effects of such a state there is a challenge to developing civil society and democratization. Hence, theorists such as Beblawi conclude that the nature of rentier states provides a particular explanation for the presence of authoritarian regimes in such resource rich states.
Beblawi identifies several other characteristics particularly associated with rentier oil states. For example, where the government is the largest and ultimate employer, the bureaucracy is frequently bloated and inefficient – and indeed comes to resemble a rentier class in society.

  In Scotland the government is easily the largest employer, even moreso if we include those on benefit. It spends nearly 60% of the money in the economy.

  Thus it may not be that we Scots are more "socialist" than that we are in an economic trap, through the oil money which, unofficially, is returned by us from Westminster in the form of extra money for state spending.

    I did make a related suggestion on John Redwood's when he said that the regions (ie not London) get extra government money. By transfer payments I mean payment by central government, to the extent that it is larger than the average such payment, whether to home ruled areas like Scotland, or areas of deprivation like Liverpool.

If transfer payments are necessary I suggest that they should go directly into cutting business costs. Cutting business rates in below average areas would be easy; cutting employer’s national insurance in such areas almost equally so; regional corporation tax rates would require more finessing but are not impossible. These would work.

Transfer payments which go to paying for more overgovernment than the area can really afford does not work. The net effect of government on the economy is negative, because regulation is so destructive. thus the net effect of transfer payments made to government is likely to be negative. In the short term it may help buy off “socialist” councils but in the long term, as with paying any Danegeld, it merely encourages such a dependency culture.

While you are being pleased at the success of London may I point out that virtually every country in the world has a capital city wealthier than its hinterland. We can possibly exclude Berlin, because it relatively recently became capital/;Rome may be poorer than Italy as a whole because it is in the south but is certainly richer than its nearby hinterland/ the same applies to Being which is not on the wealthy coast like Shanghai, but these partial exceptions merely prove the general trend. This merely suggests that having the top bureaucrats there tends to draw spending there and certainly draws the HQs of large companies, who find a close relationship with government profitable. That London fits the trend does not make them more entrepreneurial than the trend.

  If the several billion Scotland gets went into cutting business rates, corporation tax and 3p off income tax, which would total about £5 bn even Salmond's windmillery would not be able to prevent our economy growing. Of course it would mean significantly less for "the most vulnerable in society" by which the politicos mean themselves, the quangoists, government funded activists, windmill owners and the most useless of the civil servants.

   They would be missed - not.