A nation that can't take care of itself is a fool

If the economics of precarious supply chains and globalised risk is stuttering, what is the responsible thing for a nation state to do? The same as always – make sure it's people have what they need.

Last week was our first newsletter since the start of the Israeli/US war on Iran. I started to try and explain how we should respond to the economic risk in Scotland, but by the time I'd got through describing the basic economic threats there wasn't enough space to actually solve the problem. I'll show you what a solution looks like this week.

But a quick recap; globalised supply chains were designed for an era without geopolitical competition where stability was the new normal and it started to fall apart with the rise of China and has continued to fall apart since. Sadly the UK went all-in on the idea under Thatcher and Blair and as the tide started to pull out, we were among the first to be revealed to be bollock naked.

As we became largely reliant on foreign production for our day-to-day needs we ended up with a balance of payments deficit which we made up for by attracting foreign 'investment'. That has made us highly indebted to the rest of the world and meant we had to be even more investor friendly, which accelerated deindustrialisation. We are now in this doom loop and no-one knows how we get out.

The Iran War may break the loop altogether, or some future event might. Either way, if we exit the loop without a plan, we hurtle off into the unknown. And it could be an actual nightmare. We may not have enough food.

So how does Scotland solve this? There are a little cluster of economic concepts which help you understand. Supply Management is a US New Deal-era concept where you create buffers of essential goods and use them to both ensure continuity of supply and to manage supply shocks and prices. If grain becomes expensive, dip into your grain supplies.

Foundational Economy is a recent concept that argues that not everything in the economy is equal – that food, education, policing, roads and so on are a foundation the rest of the economy relies on and so can't be managed in a laissez-faire manner. Circular Economy and Closed Loops just mean ensuring all resources in the economy keep circulating in the economy indefinitely.

Mission-Orientated Market Making (I hate that name) means actively using public policy to build up market demand for specific goods in strategic ways. Import Substitution Reindustrialisation (I hate that one too) means buying less from abroad and using the demand to stimulate domestic industry. You know what Regulatory Control and Price Caps means.

And Whole Life Costings just means that you manage parts of your economy not over the course of months but over longer cycles related to the longevity of the asset (that's what a mortgage does).

That's the model, those are the tools and this is the mission – to make sure everyone has what they need to live a good life. In fact that is my favourite definition of non-sociopathic economics – it is a system for understanding how to help everyone live a good life through the distribution of resources.

But what the hell does all this mean? Let me start by saying that this is not autarky. Autarky is a theoretical model of a completely self-sufficient country that produces everything it needs itself. North Korea is as close as it gets and that isn't the goal. You don't have to make everything to have a coherent plan for ensuring resilience. We're not going to be growing rice any time soon, but we can stockpile to ensure supply and manage price.

Then again, where Scotland can be self sufficient it should be. First is energy – but only if it is collectively owned and managed. If we would just invest in electricity storage we'd more or less be there already. But we are not and will not be self sufficient in other fuel sources – particular petrol and diesel for vehicles and natural gas for heating.

So we need to very rapidly accelerate away from those energy sources. I would start a National Leasing Agency right now and I would get straight over to China and cut a deal for thousands and thousands of good, high-quality electric vehicles with fast charging. I would invest in a proper public charging network and I would create a car leasing offer which is so financially attractive people switch rapidly.

Looking back now, can you see how stupid the whole 'heat pump for every house' idea was? Heating is Scotland's single biggest vulnerability. If we were willing to eat a lot of barley we'd have enough food, but right now we would freeze and North Sea gas is in rapid decline so it offers no security. We should be setting out ambitious plans for district heating based on renewable heat sources.

Not that the food system is OK. I've still to loop back to the seeming never-ended food policy saga I've been dragging you through, but for now let's just say we need to grow more, grow exponentially more indoors and process way, way more (bread, jam, dairy, pre-made sauces etc). This is a major investment but sooner or later we will regret it if we don't make it now.

Energy and food are two of the 'if you secure these, you're at least getting by' priorities. The other is construction materials. We need to shift to a new building material palette based on what we actually have in Scotland – wood and stone construction, hemp or fibreboard insulation and so on.

“We need to believe that we are not a second-rate bit player being buffeted around in a world that cares nothing for us”

Everything above requires direct government intervention. That is because we need scale to get the 'market making' bit done. People must be driven into these new markets. With my car lease model above that is because it is cheaper and better value. With construction materials we need building regulations to compel change. Food needs action on distribution networks and market access.

That's the point; this is the opposite of laissez-faire. It not only needs collective intervention, it needs lots and lots of collective interventions, each tailored to purpose, each altering the methods of supply, each building up domestic market demand.

Then we get to the more fundamental issues; core resources. This is the stuff we just don't have – metals, minerals, manufactured products where we can't compete. Again, this requires more than one response. With metals we can almost certainly be more or less self-sufficient if we close the resource loop. The same is true of minerals and a lot of fabrics.

Basically we need to build a powerful recycling industry. We could opt out of a large part of the global 'scramble for natural resources' if we just took care of what we have properly. Certainly Scotland could be self-sufficient in steel for most purposes if we recycled everything. Same for copper and aluminium.

We should specialise rapidly in resource recovery. We already have landfill sites stuffed with valuable metals and minerals. It is hard to overstate how powerful a position you are in if you are not dependent on imported core materials for your quality of life. In time we should simplify our resource palette and we should also replace some resources with new ones we can produce ourselves – notably a shift from plastic to bioplastic and other moulded organic materials.

And that is another area for major public intervention – we need to regulate for and invest in Scottish-made materials and regulate-out imported ones. That means ploughing money into bioplastics and mandating that these are what must be used by industry.

But there are also goods we're never going to make but that we need. Certainly the chances of Scotland ever being competitive in solar panel construction seem slim – but solar panels can be maintained and repaired. Some 50-year-old panels are still generating 85 per cent of peak electricity. If not they can be remanufactured – taken apart and made again. Batteries are very, very recyclable too.

Scotland now looks unlikely to have a boom in renewable energy manufacture (the policy-makers should hang their heads in shame...) but there remains plenty time to become a serious repair-and-maintain economy.

Circularity is key. If you don't waste resource you don't need more. But then there is a cost factor – we could certainly reduce the cost of cars and transport significantly, but some of this is more expensive than the alternative. That's where lifecycle pricing comes in. It is more expensive to maintain a fixed capital asset than to not maintain it, but it is much cheaper to not replace it than to replace it.

You need to spread the real cost over the lifetime. That is the power of leasing. Let me give my usual example; fundamentally a washing machine hasn't changed in technology since the 1960s. It's still an array of pumps and motors and heating elements and not much else. Sure, the control panel with which you interact went digital. And then it went 'wifi-enabled'. But the machine remains basically the same and cosmetic changes like these can be added throughout the maintenance cycle.

If you buy a cheap £300 washing machine you might only get five years out of it. If you buy a £600 washing machine you might get 20 years out of it. The expensive one is twice as expensive up front but half as much per year. All you have to do is spread the cost over the lifetime and the more expensive one becomes cheaper – that is what leasing does.

So the National Leasing Agency should be enabling people to get access to high-quality, long-lasting products that are properly maintained. That means we are less reliant on the ups and downs of global markets, but it also means we could just make it ourselves. Scotland is capable of making a very good washing machine if there is a market for it and that market isn't highly cost-price sensitive.

Oh god, there is so much more I was going to write here and this feels so rushed. But I'm so tired of the utter defeatism in Scotland, the 'this'll do them' governments we have. We need to believe that we are not a second-rate bit player being buffeted around in a world that cares nothing for us.

We could start by wresting the fundamental purpose of this country back from the investor class and shift our priorities. A government that does not look after its own people is a disgrace and the governments we have are too busy looking after the interests of the investor class for the reasons I explained last week.

Every single thing I've mentioned above does two things at the same time; it reduces Scotland's perilous reliance on foreign powers for our basic quality of life, and it uses the transition to create enormous economic opportunity in Scotland. It also does another two things; it largely makes us inflation-proof and it improves the quality of all the things we have and own.

I'm offering a credible plan for a transition from precarity and dependence and economic decline to one of self-reliance and quality and prosperity. This can all be done. This isn't fantasy. I started last week by sounding an alarm bell. I finish this week telling you we can be a nation to be proud of again. That's not a bad deal, is it?