7th APRIL 2015 - Vol.XXXVIII No.018

Macdonald on Monday

A couple of things that happened the other week rather pleased me...

The US economy added a net 195,000 new jobs in June which is good news because it is always positive to see people finding work.

In the UK, the new governor of the Bank of England, that Canadian fellow Mark Carney made a statement suggesting he would be keeping interest rates on hold.

While this hints that he remains concerned about growth in the economy, it also suggests that the man who supposedly looks like George Clooney will have a fiscal policy that includes further monetary easing. This is good news for the country at a time when government policy seems determined to take the UK deeper into recession.

From a rather selfish point of view, what made those two announcements really good news was that the US dollar strengthened considerably against the pound.

By the time you read this I will have arrived in Scotland for two weeks, and the shift in currency values means that I will be clutching many more pounds for my dinars than I have received in years.

Given that I might make a small nostalgic trip while I am at home to remember the holidays of my youth.

Back then in the 1950s and 60s when Glasgow was still a major industrial power in the world the shipyards and engineering plants would all close down for the first two weeks of July.

It was an era before cheap air fares and package tours, so instead of heading for the Costa Brava people went off to the Costa del Clyde.

It was magnificent and was called 'Going Doon the water for the Fair'.

Half of Glasgow would decamp to hit the beaches of Clydeside resorts like Largs and Troon or for the island holiday resorts of Rothesay, Millport and the Isle of Arran.

Rothesay was my parents' port of choice and I have marvellous memories of getting on Clyde steamers like the Jeanie Deans or the Waverley at Wemyss Bay having travelled there on a steam locomotive from Glasgow Central.

Going into the Clyde that far south is a bit like going to sea because it is deep and on the journey to the Isle of Bute you lose sight of both banks.

Unlike modern day holidays, rather than buying sun tan oil on arrival you went straight to Woolworths and purchased cheap Pac-a-Mac raincoats which were pretty well in service for the next 14 days of downpours and drizzle, intermittently broken by brief periods of sunshine.

It was great but I can appreciate why a flight to the sun was more attractive to a later generation and that is why the economy of these islands largely collapsed.

They have never really recovered and there are a number of reasons for this.

The main one is that they were peopled by folk who were set in their ways and were not prepared to react to changing circumstances.

They did not like new ideas and they most certainly did not like the idea of people who were not local residents coming to their communities with entrepreneurial projects that could have transformed their economies.

So today most of the youngsters from these islands have to move to the mainland to get employment because there is no work at home.

Consider this.

The Isle of Arran is just over 150 square miles and is home to 5,000 souls.

It has a little agriculture and a little tourism still, not least mountaineers who want to climb its locally famous peak which is called Goat Fell.

I have often thought that if you want to market mountaineering opportunities, suggesting that sure footed quadrupeds have difficulty on the ascent is not particularly good marketing.

But it lies in a deep water firth that is not far from Scotland's central belt which remains a major economic region in the UK.

Compare that with an island of a similar size and topography in the mouth of the Pearl River which has a far worse climate than Arran.

Hong Kong manages to have seven million people working on it every day and a resident population of five million with the rest retiring to Kowloon overnight via the Star Ferry and some of the most remarkable transport infrastructure anywhere on earth.

The difference is that as a fairly unpopulated island in the late 1940s it opened its door to all the people who wanted to escape from China and other Asian territories and it became one the most successful ports and financial centres in the world.

Now I am not suggesting that Arran could have challenged the City of London as a financial centre had it gone down that route.

But I do remember when Hong Kong residents were being refused full British passports at the time of the handover to China that one Scots banker I was talking to suggested that if he and some of his friends could have got their local staff passports he could have made Arran a serious financial centre in Europe.

It works in the Isle of Man, Jersey and Guernsey so why not on the Clyde.

The answer is that Scots, and particularly rural Scots, do not like outsiders.

We are one of those nations who think people from elsewhere are here to steal their jobs.

Which is my point.

The last time I was in the UK there was an outrage of regional racism against people from Eastern Europe coming to work there.

The argument was that at a time of high unemployment, we should be keeping people out rather than allowing them in.

This, in my opinion, is not only despicable politics but inane economics.

Nothing in economics is infinite but the closest you will get to that as a concept in the dismal science is employment. It is merely governed by global population.

People and not natural resources create wealth. The economy is based on people buying and selling from each other.

That is what drives industry, commerce and finance.

Restricting the number of people in any economy restricts that economy's ability to grow and thrive.

If you doubt that, look at open economies like Hong Kong, Singapore and Kuala Lumpur.

Then look at Arran.

There is perhaps a lesson in this for this region with its obsession with quota systems for employment. - ARTHUR MACDONALD

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