24/01/2012 Newsnight


24/01/2012

Jeremy Paxman asks if the economic prophets of doom might have got it all wrong. Alex Salmond defends his corner. And what does freedom mean in China?


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Transcript


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On tonight's programme a clutch of demoralised economists, a rather

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jount jaunty Scottish first minister. The Swedish statistician

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who can foresee the future. The economy is in even more trouble

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than we thought. The fear is that a 21 isn't century crisis is as bad

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or worse than anything in the 1930s. Is there also an scenario that is a

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little more hopeful. Two economists and a financier offer us their

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ideas on reasons to be cheerful, or not. We are off for a role model

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for the Scottish First Minister. don't think, Jeremy, you can do

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yourself any great favours by comparing Scotland to Zimbabwe.

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comparing you to Mugabe? We report from China on what the

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word "freedom" mean to the urban poor and the urban woman about town.

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Do you feel as free as the women in the west? We feel free, we can do

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the things we want. No you can't? What do you mean. You can't change

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your Government? Why do we have to change our Government. We have the

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world famous statistician and sword swallower Hans Rossling here to

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make sense of China's position in the world. Following the death in

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1976 we saw the start of economic growth in China, never did we think

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we would sit here tonight and discuss when China would catch up

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with Britain. As news goes it was about as the

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dentist telling you he will have to redo root canal work. The

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International Monetary Fund has looked at the evidence and decided

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the longed for recovery is at stalling point. It predicts the

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British economy growing slower than expected. Official figures here

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shows the national debt rising to over a trillion pounds. There is

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confident predictions it will stay there. Some may be day for staying

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in bed too. George Osborne will tell us what the British economy

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did in the last three months of The world faces a 1930s moment,

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unless it acts now to prevent a downward spiral into economic

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catastrophy. They are the words of the IMF boss, Christine Lagarde. As

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a former French minister, she knows more than most how European

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politicians have been dragging their feet in this crisis. On top

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of that bleak warning, the IMF The world recovery, weak in the

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first place, is in danger of stalling. The epicentre of the

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danger is Europe. But the rest of the world is increasingly affected.

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Things were more black and white back in the 1920s and 1930, in

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Germany inflation was so rampent it printed a one trillion mark note.

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Not yet in Britain, but the national debt has reached one

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trillion pounds. That is served as a starter before tomorrow's

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official growth figure, which may not show growth at all. The reality

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is the Office for Budget Responsibility revised up growth

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for 2011, and revised down growth for the UK in 2011. The Government

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likes to blame everybody else for the economic troubles except for

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itself. First they blamed the snow, then the royal wedding, now they

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are blaming the eurozone, when is this Government going to take

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responsibility for its own actions. If she wants to know whose

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responsibility at least partly for the mess this country is in, look

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immediately to her left. I have to say it's come to something when

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Katie Price's tweets make more sense on the economy than the

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Labour front bench. Even those in the City who doubt it are believers

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again in the UK economy. Last year I was the angel of doom, one of the

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most pessimistic in the market, this year I think growth will be

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better than anyone can presume. I'm looking for growth just below 1%,

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not anything to show off about. course, that is scant consolation

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for the thousands of people, especially in the retail sector,

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looking for new jobs in this rebalancing economy. Or even for

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those refining oil, in Coryton, whose parent job went bust today,

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jeopardising 850 jobs in Essex. The man who controls the cost of

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borrowing wasn't sugar-coating the bill many are facing in the economy.

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After the steepist downturn in output since the 1930s, the UK

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economy is in the process of rebalancing. Starting from a

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position of excessively leverageed balance sheets, the Pat of recovery

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is likely to be arduous, long and uneven. The position of the world

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economy, especially in the euroarea, is serious. There is no reason to

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dispassion all crises come to answered. -- despair, all crises

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come to an end. The health of the UK economy

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depends crucially on whether the train wreck of Europe can be

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righted. Greece is in talks about a one billion euro writedown. If they

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can't come to an agreement and there is a sudden default, all of

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Europe will be plunged into an instant recession. With the

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exemption of a few hedge funds who took out insurance against a Greek

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default, everyone else wants a deal, they know the consequences are too

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unpalatable if they don't. immediate consequences of a

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controlled default, is there would be significant pressure on other

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countries like Portugal, Ireland, Spain and Italy. That in that

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financial markets would fear, or maybe expect similar defaults might

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happen there too. The crisis would very quickly transmit from Greece

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to these other countries, multiplying the effects, and

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leading to a much greater recession in the eurozone.

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But you don't think that will happen? We do not think that is the

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most likely scenario really for that reason. That the economic

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consequences are very significant indeed.

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But things aren't all that bad. The European Central Bank has made

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billions of euros available to Europe's banks at cheap rates, and

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it is starting to work. The cost for borrowing for Spain and Italy

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has gone down, and makes those countries less likely to join

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Portugal, Ireland and Greece in the bailout club. Across the Atlantic,

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whisper it, there are tentative signs of US recovery.

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So as President Obama prepares for his last State of the Union address

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before the election in November, he can also silently hope that

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unemployment will continue to inch downwards.

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For those yet to see the much lauded silent film The Artist, the

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central character finds resem in the end, having previously looked

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in all the wrong places. Perhaps Government and policy makers around

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the world have to be quieter in future and look in the right places

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for economic redemption. Our economics editor pauing Mason

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is here. This is a picture of --, Paul Mason is here. This is a

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picture of gloom what are they spelling out? They want to talk

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about the double-dip in the eurozone. There is a five-year

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growth pattern in the eurozone, the big dip in 2008, this year we

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expect a 0.5% shrinkage of the eurozone economy, on the back of 2%

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shrinkage in Spain and Italy. It is not the worst, they also do explore

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what if Greece explodes into people's faces, and on the bay sifs

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that they have projected a minus three -- basis of that they have

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projected a minus three in the eurozone. A it is not good. They

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have started to dole out advice to everybody, starting with the

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Americans. They have said to the Americans, not with standing your

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economy is doing all right at the moment, if political paralysis in

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America leads to an unnecessary withdrawal of the stimulus, it will

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be bad. They might as well as have said, "don't vote Republican", they

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didn't. To the EU, they have said get your act together, they have

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said to the Germans do less austerity. We don't know if they

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mean it for the Brits, they said anything who can get away with less

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do less. With the euro they have said there are two trillion euros

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available do what you have to do. What are they saying Governments

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need to do? Sub plement austerity with growth measures. That is where

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it gets down to -- microeconomics, one person's idea is state-backed

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funding in Germany, or a massive assault on labour costs in southern

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Europe. They never quite spell it out, because it is not in the

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tradition of countries to do these growth measures, certainly in the

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west for the last 20 years. The problem s austerity is not easy to

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do, but it is -- is, austerity is not easy to do, but it is easy to

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design. Macro-economics is not easy to abolish. It is not easy. With us

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now is Nicola Horlick, chief executive and founder of Bramdean

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Asset Management, Professor Christopher Pissarides, the Nobel

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Prize-winning economist, and the chair of economics in the London

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school economics. And Mariana Mazzucato, industrial economist

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from the university of Sussex. It is gloomy stuff from the IMF, are

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they right to be gloomy? Absolutely. I think sometimes people could

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benefit from taking a historical perspective. If you plot GDP data

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from 1850 to 1950, before the whole Keynesian stimulus began. There was

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depressions every 20 years, we have avoided depressions because since

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1950, many Governments all over Europe and the US have done what

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Keynesian said, during the slump you do not take away aggregate

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demand, during the boom you try to rein in the horpbs. What we are

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seeing now is during the -- horns. What we are seeing now is during

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the boom period it was fuelled by Government policies, and during the

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bust we are seeing cuts in demand, which is hurting the ability of the

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economy to recover, asling with as the lack of the confidence of the

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business sector to invest. Are they being unnecessarily pessimistic?

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Maybe it is just because it is after Christmas. I think there is a

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little bit more optimisim. The problem with talking like this is

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becomes self-fulfiling. If everybody keeps saying the world

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will come to answered, it will come to an end. It is very important for

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some of us to be a little bit more positive. There are reasons to be a

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little bit more positive. What are they? Well, for a start, I think

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often what happens when we go through recessionary phases is

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people fear for their jobs, when organisations are cutting jobs,

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they are fearful. That means that people who aren't going to lose

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their jobs, because they are fearful, don't spend. Many

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organisations now have had a wave of redundancies, whether it is in

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the public sector or the private sector, and those people who didn't

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lose their jobs may be feeling a bit more optimistic, may be

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prepared to spend a bit more. You never know.

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The epicentre of the trouble, they locate in the eurozone. There is

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not much reason to think that is going to be resolved imminently, is

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it? It is so important that it is resolved fairly quickly, that you

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have to have confidence in the powerful nations, especially

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Germany, that they will do something. In fact, the very recent

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reports, maybe today or something, were very encouraging in the sense

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that they seem to be prepared to go for the tough fiscal discipline,

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which is needed, and then put some more money into the European

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Financial Stability Fund. They say. They have to start by saying it,

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before they do it. What do you make of the worries about the eurozone?

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It depends what you think the cause of the eurozone crisis was. If you

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look at deficit spending in almost every country except Greece, that

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was definitely not the problem. The deficits ran up after the crisis

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because of the bailouts and all the other problems with the economies.

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It is not true that you have austerity in Germany right now.

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They are spending, they just, I think, after the crisis, have

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increased, for example, their R & D spending by four billion. The

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problem is they think Germany is imimposing on the PIGs and France

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is imposing austerity, which they have not done in order to draw. If

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you look at human capital spending, R & D, that is part of the reason

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why Germany is having the success it is having. These are objective

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problems, which can't be overcome by increasing optimisim? Can they

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Pollyanna. It is not just optimisim, also there are things that are

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being done by the Government which should help. Infrastructure

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spending, we have had a series of announcements about. That that is

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one way of helping. On a more microlevel, there is something

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called the enterprise investment scheme, which has been enhanced in

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the UK. That gives individuals tax breaks in order to encourage them

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to invest in small and medium-sized enterprises, that is very key. The

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banks, as we know, aren't really lending to those businesses. There

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are things that are being done that will help to stimulate the economy

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eventually, I hope. Actually, the prognosis for Britain, it wasn't

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particularly exciting, but it wasn't as bad as it was for many

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other places? It wasn't as bad. But it didn't have to be as bad as it

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was either. Britain was in a much better position than other

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countries, it had its own independent mol monetary policy,

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that is important. Debt levels were not very high. There wasn't that

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much urgency to go into the austerity measure that is we did

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over a year ago. Having said that, though, it is important that the

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overall framework of the Italian poll -- the policies continue like

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that. The features of the policy should be transparent, not cause

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confusion in the markets. We understand very well what the

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Chancellor wants to do, markets understand it. The IMF seems to

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think there is a danger in austerity going too far, not in

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this country, but generally? It has to go far in Europe because the

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debt situation got so out of control. Especially in southern

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Europe and Ireland. When did it get out of control, do you think?

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Greece it got out of control. Forget Greece, but in Spain?

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Italy it was always high. Spain actually it is not, it is not out

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of control even now, if you look at the state finances. The problem for

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Spain is that following the housing boom that they had up to 2007,

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there is a lot of private debt. So the question is, what will happen

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to that private debt if the borrowers cannot pay. The mortgage

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holders cannot pay, the state will have to step in and help them,

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otherwise their banks will go bankrupt. And the private debt will

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quickly become public debt. The Italy had low rates of growth

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and had the highest GDP productivity rates in Europe, the

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problem was not spending too much, but in the wrong places. They were

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not growing, they had high debts, sooner or later they were going to

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get there. If you were in Government, and you read this IMF

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report, what would you conclude that you had to do as a matter of

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some urgency now. Looking at these really worrying forecasts. What

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would you do? I think it raes right that we should continue on the same

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-- it's right we should continue on the same Pat. We need to make sure

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the markets -- Pat. We need to make sure the markets have confidence in

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us. We don't need an economic crisis on greater scale, by making

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the markets concerned about Britain and not issuing enoughg ilts, it is

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important to continue on the path of consistency. There is always

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leeway, encouraging people to invest. There are plenty of

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companies out there with strong balance sheets, it is about

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confidence. If we can some how increase confidence levels people

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will continue to spend again, individuals or companies. What

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would you take as something you have to do immediately. Two things

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you have to do immediately, one is the Keynesian issue, you do not

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take away the increase in the VAT, that was a regressive tax that hurt

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poor people more than rich people. That hurts demand because lower

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income people spend most of their income. So when you take away from

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them, that immediately hits them, that is why Tesco sales went down

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recently. The freeze in public sector wages, that was not a smart

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thing to do in the recession. There is the Keynesian point, but that is

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what economies have been doing for the last 50 years. We have a

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strategic problem, we need strategic investments in particular

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areas. I would do a bit more along the lines that is done now for

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example national insurance contributions, if a company has

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unemployed workers, especially young unemployed, give it exemption

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from national insurance tax for as long as that person is there.

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Encourage more small businesses. We failed here to find new export

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markets. The eurozone is not much good as an export market right now,

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why not be more aggressive, go elsewhere, the Chancellor's trip to

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China was welcome, but firms could be doing more R & D, subsidised by

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the state. Strategic spending is not sensitive to taxation, it needs

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new opportunities to invest in it. The Scottish First Minister gave us

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a hint today about what his country might be like if he gets his way,

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and manages to bust up the United Kingdom. The latest opinion poll

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shows half of us doubt the existence of the UK in its current

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form in 20 years time. While Moses, I mean Alex Salmond didn't promise

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a land of milk and hundred, he did promise a beacon of progressiveness.

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We have been looking into the economic questions that need to be

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settled before any referendum. What better place to prepare for

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burns night and contemplate the intricacies of Scottish

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independence, than here at the headquarters of the London Scottish

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Regiment. Cheers, they have their own blend

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of whiskey. The first problem we have got to

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wrestle with, is whether Scotland will still be, as an independent

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state, a member of the EU. The SNP insists it will simply inherit the

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same treaty rights and obligations that the UK has at present. But

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some constitutional experts are not so sure.

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Rather annoyingly, EU treaties don't have a clause that we can

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point to to to give us a definitive answer. When a Welsh MEP asked what

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would happen a few years ago. The commission replied any newly

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independent region would have to leave the EU, and if it wanted to,

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reapply to join again. That would require all the other states,

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including the UK, to agree. politics will be a question of

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whether the UK can or will help, and whether countries, in

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particular like Spain, Italy, France, that may themselves face

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potentials sigs sessionist demands are willing to --s sessionist

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demands are willing to allow favours for Scotland. And how for

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the UK is, will depend on the independence negotiations as they

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form over time. There is another problem, if Scotland has to rejoin

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the EU, EU rules are clear, they have also to join the euro, and

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that might not be the most popular move right now. Let's for a moment

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assume the SNP is correct that Scotland can stay in the EU but

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doesn't have to join the euro, does that mean it can keep the pound F

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it does, in practice, how financially independent will it

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really be? Nobody could stop an independent

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Scotland from using the pound. The problem would be that the Bank of

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England would be setting interest rates without taking into account

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conditions in Scotland. They would have no control over the interest

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rate or exchange rate. A bigger problem is who is the lender of

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last resort. If the Scottish banks went belly up as in 208, would the

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Scottish Government be big enough to bail them out, it doesn't seem

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they would. As with any divorce things could get a little fraught.

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Let's start with who owns what, the oil, for example? Maritime borders

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aren't that clear cut. There is the question of the gold in the Bank of

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England vaults, and, of course, there is who gets what share of the

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UK's national debt. Today tipping a trillion pounds. Expect the legal

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big guns to get involved. The state of Scotland's finances looks

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something like this, �62 billion of public expenditure, �42 billion of

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revenue, excluding those oil revenues. If you include those

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revenues, that rises to �48 billion, still a deficit of �14 billion, of

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course, the UK as a whole is also in deficit. If Scotland became

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independent, what Scotland would lose is the current transfer from

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the UK of something like �8 billion, and then that gap, that is

0:22:580:23:02

currently spent on public services in Scotland would have to be filled

0:23:020:23:07

by the North Sea oil of �8 billion. If there is an oil price of around

0:23:070:23:12

$100, that would be filled, if there was an oil price of $150 it

0:23:120:23:17

would be more than filled and Scotland would be better off. If it

0:23:170:23:22

was $50 there would be a problem. Oil is the key swing element here

0:23:220:23:26

in terms of whether Scotland can sustain the current position, or do

0:23:260:23:35

better or do slightly worse. think I might need another one.

0:23:350:23:41

Because there is another big issue we have to grapple with, it is this.

0:23:410:23:45

Without detailed answers to all of these and many, many more questions,

0:23:450:23:50

how meaningful can any referendum of the Scottish people be? And,

0:23:500:23:54

assuming they hear answers they like, and a deal they can accept,

0:23:540:23:57

won't that have profound implications for the rest of the UK

0:23:570:24:03

and costs as well. That's the case, well some believe that the rest of

0:24:030:24:06

the UK should also have a referendum. This is to adapt the

0:24:070:24:13

words of that famous son of Edinburgh, Sir Authur cone nan

0:24:130:24:17

Doyle a three-bottle problem. I caught up with the First Minister

0:24:170:24:23

a little earlier today. Alex Salmond, how would an independent

0:24:230:24:26

Scotland be different? It would be governed as the people of Scotland

0:24:260:24:31

would wish it to be governed. Raise their own taxes, decide on spending

0:24:310:24:35

priorities, decide whether to go into illegal wars in rae, the

0:24:350:24:41

answer would be no, incidently. It would be a difference of the

0:24:410:24:44

formation. There would be a lot more if Scotland were independent.

0:24:440:24:49

It would also be broke, wouldn't it? Independent Scotland would be

0:24:490:24:53

the sixth most prosperous country in the EOCD, that is the reasonable

0:24:530:24:57

basis to start being an independent country. We have a trillion worth

0:24:570:25:02

of public debt in the country, how much would the Scots take?

0:25:020:25:07

normal way to divide up debt is population share or GDP share. That

0:25:070:25:12

will give us 8%. Incidently we would have 90% of a trillion pound

0:25:120:25:16

asset in terms of oil and gas resources in the North Sea. But the

0:25:160:25:20

birthright of any citizen of an independent Scotland will be about

0:25:200:25:24

�16,000 worth of debt or more than that? The assets would be much

0:25:240:25:27

greater. The difference between Scotland's position, well, you're

0:25:270:25:32

talking about the debt that the UK has accumulated, we take our share

0:25:320:25:38

of that, because we're part of the UK. We can't do anything about the

0:25:380:25:41

mistakes of previous Chancellor of the Exchequer. You know the level

0:25:410:25:45

of public spending in Scotland, the last year for which records are

0:25:450:25:50

available? You also know. What was it? Scotland's fiscal position in

0:25:500:25:55

four out of the five years has been positive, expenditure and revenue

0:25:550:25:58

statement. Also, incidently. know what the level of public

0:25:580:26:03

spending was in Scotland? And the level of revenue is higher, Jeremy.

0:26:030:26:09

Over the last five years. official figures are �62 billion of

0:26:090:26:14

public spending in Scotland. 2009/10, do you know what the

0:26:140:26:18

revenues raised in Scotland were? know that in four out of the last

0:26:180:26:25

five years. They were �48, there is a �14 billion gap? There is �150

0:26:250:26:31

billion gap in the UK. Relative to the United Kingdom, Scotland is in

0:26:310:26:36

a stronger fiscal position. Let's look at the reserves that your

0:26:360:26:43

country would have available to you. Gold, first off. There is about 310

0:26:430:26:46

tonnes gold that the Bank of England is looking after, what

0:26:460:26:50

share of that do you want? Normally the way in independence to do these

0:26:500:26:53

things, there is a well trod path, many countries have become

0:26:530:26:57

independent. You have the same percentage of assets and the same

0:26:570:27:02

percentage of liabilities. You want about 8% of the 300 tonnes of gold?

0:27:020:27:07

That would be the normal way. A country's resources, we have gone

0:27:070:27:11

past the measuring tile period. Country's resources aren't backed

0:27:110:27:17

by gold. Just as well, Gordon Brown sold most of it. But you still want

0:27:170:27:23

it? A fair division of assets and liabilities, including the range of

0:27:240:27:31

assets that Scotland has. How get it -- how would you get it north?

0:27:310:27:35

Many countries hold it in common. The bank of international

0:27:350:27:38

settlements. You might leave it at the Bank of England? We have plenty

0:27:380:27:42

of vaults in Scotland. Will there be an armoured train or something?

0:27:420:27:48

It would be a lot better than the nuclear trains that go to Scotland

0:27:480:27:51

at the moment. Let's look at the politics of it, you say an

0:27:510:28:00

independent Scotland would be a beacon of progressiveness. I think

0:28:000:28:04

I remember Robert Mugabe saying something similar about Zimbabwe?

0:28:040:28:08

don't think you will do yourself any great favours comparing

0:28:080:28:14

Scotland to Zimbabwe. And comparing you to Mugabe? Or myself or any

0:28:140:28:21

other Scottish MP to Mugabe. Implicit in it, it is a one-party

0:28:210:28:25

state? As the star of Zimbabwe television I wouldn't dream of

0:28:250:28:29

comparing you to that person. Implicit is the belief there is

0:28:290:28:33

really only one party that can rule Scotland? That's not the assumption.

0:28:340:28:38

Scotland is not just a multiparty democracy. Incidently we have more

0:28:380:28:41

parliamentary parties competing than you have south of the border

0:28:410:28:45

at the present moment. But Scotland has a system of proportional

0:28:450:28:49

representation, which ensures that minority voices have a chance of

0:28:490:28:53

being regularly represented in our parliament. This is a beacon of

0:28:530:28:55

progressiveness, are there other progressive parties in Scotland?

0:28:550:28:59

Yes, there are. The Labour Party, are they progressive?

0:28:590:29:02

particularly, sometimes in the past they have been progressive. But the

0:29:020:29:06

Green Party are a progressive party. You were talking also about a

0:29:060:29:11

social union. Isn't the best way to guarantee a social union a

0:29:110:29:15

political union? No, I'm saying we can have political independence but

0:29:150:29:19

continue the social union. Whether it is institutional sharing of a

0:29:190:29:23

Monarch, for example, or the great family advertise. Jeremy, we will

0:29:230:29:27

be even able to watch you on Newsnight after Scotland is

0:29:270:29:30

independent. You can only watch part of the programme now? It will

0:29:300:29:34

be better, there is the choice of watching the whole of the programme,

0:29:340:29:37

we will have the alternative choice of a whole Scottish problem. Will

0:29:370:29:42

you pay the license fee? We will watch it on the same basis as the

0:29:420:29:46

Irish Republic. They don't pay? will pay for BBC programmes in the

0:29:460:29:50

same way as we will contribute to buy anything else we choose to

0:29:500:29:55

watch. I assure you, you shall be a star in an independent Scotland.

0:29:550:29:59

You won't be paying the license fee? We will have a license fee to

0:29:590:30:03

set up a Scottish broadcasting channel, I'm quite certain we will

0:30:030:30:08

be wanting to purchase from the BBC a range of series. Do you see us as

0:30:080:30:13

some sort of charity? I can't believe you have said that. I'm

0:30:130:30:18

sure in the BBC charity begins at home. Alex Salmond thank you.

0:30:180:30:21

pleasure. Now to part two of the series on

0:30:210:30:25

China. Not for them news of public debt, nor any debate about capping

0:30:250:30:29

benefits, come to that, not much debate of any kind, and not many

0:30:290:30:33

benefits either. The rest of the world is woefully ignorant about

0:30:330:30:37

its most heavily populated country. It is not just that it has a

0:30:370:30:40

communist Government, and a supposed million millionaires. It

0:30:400:30:43

is also something we just can't get. What is it like to live in state

0:30:430:30:48

where you can have more than your parents ever dreamed of, yet not be

0:30:480:30:58
0:30:580:31:04

free to change the Government? To get rich is glorious.

0:31:040:31:13

The words of Dun Chao Ping the words of the communist leader are

0:31:130:31:18

born out across the country's capital. But can you really have

0:31:180:31:22

economic freedom without political freedom. It is the crucial

0:31:220:31:26

contradiction. The secret of China's international success isn't

0:31:260:31:31

a secret at all. It is just that it can make things more cheaply than

0:31:310:31:35

anywhere else. But the secret of China's political arrangements at

0:31:360:31:45
0:31:460:31:46

home. That is all together much more complicated.

0:31:460:31:51

Chinese Emperors used to claim that the just ruler had a mandate from

0:31:510:31:55

heaven. Today, China's communist rulers claim their mandate to

0:31:550:32:04

govern comes from delivering social justice. Chen Yongjiang is the sort

0:32:040:32:09

of person, a peasant, that they set out to help. It has been five years

0:32:090:32:14

of rising ambitions and rising prosperity for Mr Chen, he has

0:32:140:32:18

diversified from vegtables and chickens, to taking tourists along

0:32:180:32:21

the great wall, and feeding and lodging them in his home in the

0:32:210:32:25

valley below. But now he looks to have collided,

0:32:250:32:33

not with heaven or history, but with money. Mr Chen has spent years

0:32:330:32:37

building up his business. Now the local authorities want to sell his

0:32:370:32:43

land to a developer, who plans to build a great wall theme park,

0:32:430:32:51

where his house now stands. TRANSLATION: The decision has been

0:32:510:32:55

made, the project will go ahead. It is very sad. This is a beautiful

0:32:550:33:02

place, and none of us want to leave. Mr Chen has no say in the matter.

0:33:020:33:09

His ambition, destined to become a necessary sacrifice. A few miles

0:33:090:33:14

down the valley is a taste of what's to come. Under the shadow of

0:33:140:33:21

the wall, they are already planting de ress, instead of apple trees.

0:33:210:33:24

When it comes to projects like these, it is never quite clear

0:33:240:33:29

where the state ends, and private enterprise begins. Either way, the

0:33:290:33:39
0:33:390:33:44

little guy is the loser. Once a year, China's vast economy

0:33:440:33:53

briefly pauses. Hundreds of millions of factory and office

0:33:530:34:03
0:34:030:34:06

workers head home to spend new year with their families. At Beijing

0:34:060:34:10

South Railway Station, designed by the British architect, Terry

0:34:100:34:14

Farrell, one doesn't want to hold people up. Even if the place does

0:34:140:34:24
0:34:240:34:29

have a waiting room that can hold 10,000. We have hit the buffers on

0:34:290:34:39
0:34:390:34:40

my mandarin. 11.25? Which class? 1St, 2nd or business. What is the

0:34:400:34:44

difference in price. We will go 1st class. If I have enough money.

0:34:440:34:54
0:34:540:34:58

That's cheap. Maybe there's no purity in poverty,

0:34:580:35:02

the social contract here is pretty obvious. You're allowed to make

0:35:020:35:08

money, but you're not really allowed to dissent. Of the enormous

0:35:080:35:12

number of things made in the workshop of the world, this

0:35:120:35:18

relationship between Government and citizen is surely one of the very,

0:35:180:35:25

very oddest. A communist regime that feeds its citizens by

0:35:250:35:29

satisfying western consumerist capitalism. But maybe, if you have

0:35:290:35:38

enough to eat, not having a vote doesn't really matter. The reading

0:35:380:35:45

on the commute from Beijing to Tianjin is more Financial Times

0:35:450:35:51

than Das Capital these days. In this people's Republic, people want

0:35:510:35:58

to get seriously rich. To help them, the Government provides a train

0:35:580:36:07

capable of 200 miles an hour. Tan, once one of the resented

0:36:070:36:12

treaty ports where westerners were allowed to trade in China is being

0:36:120:36:22
0:36:220:36:22

rebuilt, day by day, on the fruits of foreign trade. Freedom appears

0:36:220:36:26

to be the freedom to make money. No small matter in a country where so

0:36:260:36:30

many are still so poor. Getting rich is very, very important. We

0:36:310:36:37

are getting richer. Almost everybody is getting their life

0:36:370:36:44

better. This is very important, we can afford better lifestyles, we

0:36:440:36:48

can more things. We can have more choices. People want to make more

0:36:480:36:53

money so they can do more things, as you say, but there is still lots

0:36:530:37:03

of things they can't say? That's true isn't it? Yes.

0:37:030:37:08

Among the gloofpl so many skyscraper, Tianjin is -- the gloom

0:37:080:37:14

of so many skyscrapers, Tianjin is one of the few to retain its past.

0:37:140:37:19

It was founded by a British Methodist missionary in the 1860s.

0:37:190:37:25

There is no love for the Colonial powers, and the imperial dynasty

0:37:250:37:28

that accommodated them, except in the travel and tourism trade. We

0:37:280:37:33

are now in the original hotel, are we? Yes, and you know we walk here,

0:37:330:37:43
0:37:430:37:43

and all the people say, this is the nicest place in the hotel, the

0:37:430:37:50

Emperor used to dance here very often. Now you are standing here.

0:37:500:37:56

feel lucky already. There was, of course, no freedom whatsoever when

0:37:560:38:03

foreigners did as they pleased in a feeble China. Nowadays, the

0:38:040:38:10

foreigners' bar isn't reserved for foreigners. Soya and her friends

0:38:100:38:16

are the new Chinese middle-class, happier talking about Sex and the

0:38:160:38:22

City, than the little Red Book. Do you feel as free as a woman in

0:38:220:38:27

the west? We feel free. We feel free. We can do the things we want.

0:38:270:38:32

He yeah. No you can't? What do you mean by that? You can't change your

0:38:320:38:37

Government? Why do we have to change our Government. You might

0:38:370:38:44

not want to, don't you want the freedom to do it? Don't you want

0:38:440:38:49

the right to decide the laws under which you live? We have the right

0:38:490:38:52

to decide some things. But you can't get rid of the communist

0:38:520:38:58

party? Why we need to get rid of it? Because you might not like it?

0:38:580:39:05

Why do you have to change it. This is our Government, it raises us,

0:39:050:39:12

and it gives our clothes, schools, food, everything. But maybe the

0:39:120:39:22
0:39:220:39:24

definition of the freedom you mean, maybe it is different from our's.

0:39:250:39:29

Freedom is a relative term, and Chinese people may well be freer

0:39:290:39:35

than they have ever been. Maybe we worry too much about definitions,

0:39:350:39:41

and maybe the amazing growth of China can continue forever. But if

0:39:410:39:47

it can't, then perhaps things more intangible than the latest

0:39:470:39:51

electronic plaything will come to seem more important. But not for

0:39:510:39:57

now. We are going to hear now from the award-winning statistician and

0:39:570:40:01

academic, Hans Rosling, famous for turning statistics into graphics

0:40:010:40:06

and founder of what he calls a fact tank called Gapminder. Just before

0:40:060:40:13

we ask him to demonstrate some of his unique data on China and the UK.

0:40:130:40:19

This is, -- this is why everyone is talking about him. Here we go,

0:40:190:40:24

first an axis for health, a life expectancy from 25-75 years. Down

0:40:240:40:34

here an axis for wealth, income per person, $400, $4,000 and $40,000.

0:40:340:40:40

Down here is poor and sick, up here is rich and healthy. Now, I'm going

0:40:400:40:47

to show you the world 200 years ago, in 1810. Here come all the

0:40:470:40:53

countries. Europe brown, Asia red, Middle East green, Africa south of

0:40:530:40:56

Sahara blue, and the Americas yellow. The size of the country

0:40:560:40:59

bubble shows the size of the population. Look what is about to

0:40:590:41:04

happen. Here we go again. In my lifetime, former colonies gained

0:41:040:41:08

independence, and then finally they started to get healthier, and

0:41:080:41:13

healthier, and in the 1970s, then countries in Asia, Latin America,

0:41:130:41:17

started to catch up with the western countries. They became the

0:41:170:41:22

emerging economies, some in Africa fold, some Africans were stuck in

0:41:220:41:27

civil war and others hit by HIV. Now we can see the world today in

0:41:270:41:31

the most up-to-date statistics. He's here in the studio now. Give

0:41:310:41:39

us your analysis on China in the UK. I -- China and the UK. I will do it

0:41:390:41:44

between China and the UK. Here is getting healthier and life

0:41:440:41:49

expectancy. The UK was leading the long march out of sickness and

0:41:490:41:56

poverty. China was way behind. Now I stop, here you can see how 1815

0:41:560:42:01

after the Napoleon war, the speed was quite slow, it wasn't happening

0:42:010:42:05

much. China was pushed back in the opium war, and Britain was taking

0:42:050:42:09

off. China remained down here. This is the fantastic rise of health in

0:42:090:42:13

Britain, that was the Spanish flu, and then they come up here, you can

0:42:130:42:22

see into modern time, China starts now to get healthier, Ping goes for

0:42:220:42:26

the pun, decade after decade starting to catch up. To the point

0:42:260:42:30

now where there is almost equality? On the health axis, China has

0:42:300:42:35

reached further. Not on the money access still. China today is where

0:42:350:42:41

you UK was in 1948. What do you conclude for the future? I can make

0:42:410:42:45

it even simple letter here. I will take away the health dimension, and

0:42:450:42:51

then I will show you now on this access income, richer is that way,

0:42:510:43:01

and here in 1800, 1900, 20000 and into the future. I have lined up UK

0:43:010:43:05

and China and Sweden and Japan. In that time you can think of Sweden

0:43:050:43:10

as a more removed but independent Scotland! Down here we are South

0:43:100:43:13

Korea. Look when I drag them into the future, you can see the UK is

0:43:130:43:19

getting richer and richer, but Sweden is closer to Japan than the

0:43:190:43:24

UK. Japan is taking off but the other countries, South Korea and

0:43:240:43:29

China are down there. Only in the last 40 years they start to follow.

0:43:290:43:33

Sweden and Japan has caught up. South Korea is starting, we don't

0:43:330:43:37

even think about China that they would ever do it. But it is not a

0:43:370:43:41

new thing what happens with China, it is down after down that is doing

0:43:410:43:46

this. Sweden, first, then Japan, then South Korea, now China. And I

0:43:460:43:50

do a very simple trajectory, nobody knows about the future. But I think

0:43:500:43:55

our mind set hampers us to see what is most probable. The most probable

0:43:550:43:59

is that China will repeat what the others have done. These were

0:43:590:44:05

trailers, this is the feature film. Within 30-40 years they will reach

0:44:050:44:09

the same level as Britain. Environmental, political, there may

0:44:090:44:13

be many constraints. But this is the course of eye vents. The growth

0:44:130:44:17

is not so -- events, the growth is not so fast up here. Come and sit

0:44:170:44:22

down and we will chew the fat about China. What struck me there last

0:44:220:44:25

week was, you know the assumption here in the west is that they need

0:44:250:44:29

to understand us, they need to learn from us. It struck me as

0:44:290:44:33

being the completely the other way round, really? The first thing is

0:44:330:44:38

there is no west any longer, it is an ethnic identity, is Poland part

0:44:380:44:44

of it, Russia? What is the west? It is a very strange concept. I hear

0:44:440:44:48

you are using it. Really what we have in the world is a continuous

0:44:480:44:52

world, where we have countries at different economic and social and

0:44:520:44:56

political levels and situations. All the way from west Europe or

0:44:560:45:02

Norway, which is leading, down to Congo and Afghanistan. That's a

0:45:020:45:05

very interesting observation. My point was that the assumption is

0:45:050:45:09

that they need to learn from us, and actually it struck me that we

0:45:090:45:15

need to learn from them? It is sad to see that the Chinese communist

0:45:150:45:19

party is more serious about the new energy systems and climate than we

0:45:190:45:23

are in west Europe. We seem to be very short-sighted in our democracy.

0:45:240:45:27

We like the democratic system, we are willing to die for it. But when

0:45:270:45:32

we compare, you know, it doesn't come out that neat. When people in

0:45:320:45:36

Turkey are thinking, you know, and people in India are thinking,

0:45:360:45:40

Europe or China, what is best for us to copy in the coming decade, it

0:45:400:45:45

is not so clear for them. Have you had any thoughts about how

0:45:450:45:48

important it is to people that they have, as those girls in that film,

0:45:480:45:52

they were not bothered about the fact that they had no real

0:45:520:45:55

political freedom, they couldn't change their Government, because

0:45:550:45:57

their standard of living was getting better and better. Have you

0:45:570:46:02

had the chance to think about that? Of course they were bothered. I

0:46:020:46:06

have worked in communist countries, people cannot speak. If they were

0:46:070:46:11

bothered they couldn't tell you, because you would broadcast it.

0:46:110:46:15

They sounded very happy? Watch out for the dictatorship, they can't

0:46:150:46:20

speak freely. On your graph you put a big caveat about freedom of

0:46:200:46:24

expression? Yes. I mean the thing is, the sequence of events is

0:46:240:46:28

different today. Britain started with its institution, with its

0:46:280:46:33

freedom of speech and free press, and so on, then came technology,

0:46:330:46:37

economy, health. Today countries do it in other sequences. I think

0:46:370:46:41

India has an advantage for the future. India? Yes, because they

0:46:410:46:45

have the democratic institutions in place. They have a free press and

0:46:450:46:51

they have a very vivid civil society. So that people say there

0:46:510:46:55

is a very smooth road in China with a big bump ahead. Where as India

0:46:550:46:59

has a bumpy road but no block ahead. Hans Rosling, thank you very much.

0:46:590:47:02

That is all from Newsnight tonight, much more tomorrow, until then,

0:47:020:47:12
0:47:120:47:12

much more tomorrow, until then, good night.

0:47:120:47:17

Another cloudy day to come tomorrow. It won't be as cold as it was today

0:47:170:47:20

across eastern areas. In fact to the east of the Pennines a few

0:47:200:47:23

breaks in the cloud. A bit of sunshine. For most a cloudy day

0:47:230:47:26

with rain in western Scotland and Northern Ireland. Eventually some

0:47:260:47:29

of that rain will trickle into parts of North West England. Down

0:47:290:47:33

the eastern side, most places dry, but grey, but crucially,

0:47:330:47:38

temperatures will be much higher than they were through the day

0:47:380:47:41

today, for some it was struggling at 1-2. The mild air across the

0:47:410:47:45

south west, it will be mild again tomorrow. It is looking pretty grey.

0:47:450:47:49

There will be an increasing wind, gusty that wind on the west coast

0:47:490:47:53

of Wales, with outbreaks of rain trickling here later in the day.

0:47:530:47:57

For Northern Ireland it looks like a pretty soggy afternoon. Again it

0:47:570:48:01

will be blustery. The winds in western Scotland will get very

0:48:010:48:05

gusty indeed, possibly around the Western Isles, touching 60 miles an

0:48:050:48:09

hour. Much of eastern Scotland will stay dry. The wet and windy weather

0:48:100:48:15

swings through. Thursday turns colder with showers. Those showers

0:48:150:48:18

are likely to turn increasingly wintry no Northern Ireland on

0:48:180:48:21

Thursday morning. Further south the showers on Thursday will be of rain.

0:48:210:48:25

There could be hail mixed in at times. There will be bright and

0:48:250:48:29

sunny spells, expect showers on Thursday. Early on there will be

0:48:290:48:32

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