No! A government deficit is totally normal for countries all over the world and allows people to have money in their pockets.
A government deficit is the difference between what the government spends and what it gets back. Some see a government deficit as a bad thing; however they forget that the government deficit is actually extra investment that, if spent correctly, allows us to have more money in our pockets and grow the economy. The UK government trying to reduce the deficit is what is causing austerity and suffering.
So Scotland needs a government deficit if it wants to reverse Westminster austerity and help support the most vulnerable in society. But does Scotland have the tools and resources to maintain a healthy government deficit? Yes! How do we do it? Well that depends on which experts you ask.
The Sustainable Growth Commission, an expert group set up by the Scottish Government to look at the economic case for independence, proposes that an independent Scotland would only borrow for public investment and, over time, spend above inflation to reverse austerity from Westminster. It proposes that with increased growth and savings an independent Scotland can reduce its deficit to 3% of GDP and its debt to just 50% of GDP.
However, other expert groups argue this does not go far enough to reverse austerity and tackle climate change.
The think-tank Common Weal has two books, “How to start an independent country” and “Our Common Home”, dedicated to the costs and benefits setting up an independent Scotland and tackling climate change together. They propose that the Scottish Government issues £170 billion in bonds over 25 years and for the Central Bank to buy all or the majority of them. This is called Quantitative Easing, which the UK government has done £435 billion worth of since 2009.
Experts at the economic think-tank MMT Scotland propose something similar. They argue that a Scottish Central Bank, controlled by the Scottish Parliament, should credit the right accounts without needing to issue bonds to match it. They argue that an independent Scotland, with its own currency, should not rely on taxpayers to spend and instead issues bonds for different reasons. This is something explained in detail by one of their co-founders.
Whatever your views are on how we control Scotland’s economy, all the above experts can agree that Scotland’s resources are ridiculously good for a small country of 5 million people. This is covered in great detail by the business think-tank Business for Scotland in their book “Scotland the Brief”. With just 8.6% of the UK’s population we also have 34% of the UK’s total natural resources. An independent Scotland fully utilising these resources would see incredible growth, long-term investment and financial security for the majority of the population.
The question isn’t “how do we pay for it?”, instead we should ask ourselves “how do we organise our economy for the betterment of ordinary people?”