Scottish Independence, yay or nay?

[Sugar Ape]

http://www.nytimes.com/2014/09/08/opinion/paul-krugman-scots-what-the-heck.html?_r=0

 

Scots, What the Heck?

 

Paul Krugman

 

 

Next week Scotland will hold a referendum on whether to leave the United Kingdom. And polling suggests that support for independence has surged over the past few months, largely because pro-independence campaigners have managed to reduce the “fear factor” — that is, concern about the economic risks of going it alone. At this point the outcome looks like a tossup.

 

Well, I have a message for the Scots: Be afraid, be very afraid. The risks of going it alone are huge. You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.

 

 

Comparing Scotland with Canada seems, at first, pretty reasonable. After all, Canada, like Scotland, is a relatively small economy that does most of its trade with a much larger neighbor. Also like Scotland, it is politically to the left of that giant neighbor. And what the Canadian example shows is that this can work. Canada is prosperous, economically stable (although I worry about high household debt and what looks like a major housing bubble) and has successfully pursued policies well to the left of those south of the border: single-payer health insurance, more generous aid to the poor, higher overall taxation.

 

Does Canada pay any price for independence? Probably. Labor productivity is only about three-quarters as high as it is in the United States, and some of the gap may reflect the small size of the Canadian market (yes, we have a free-trade agreement, but a lot of evidence shows that borders discourage trade all the same). Still, you can argue that Canada is doing O.K.

 

But Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t. And that makes a huge difference.

 

Could Scotland have its own currency? Maybe, although Scotland’s economy is even more tightly integrated with that of the rest of Britain than Canada’s is with the United States, so that trying to maintain a separate currency would be hard. It’s a moot point, however: The Scottish independence movement has been very clear that it intends to keep the pound as the national currency. And the combination of political independence with a shared currency is a recipe for disaster. Which is where the cautionary tale of Spain comes in.

 

 

If Spain and the other countries that gave up their own currencies to adopt the euro were part of a true federal system, with shared institutions of government, the recent economic history of Spain would have looked a lot like that of Florida. Both economies experienced a huge housing boom between 2000 and 2007. Both saw that boom turn into a spectacular bust. Both suffered a sharp downturn as a result of that bust. In both places the slump meant a plunge in tax receipts and a surge in spending on unemployment benefits and other forms of aid.

 

Then, however, the paths diverged. In Florida’s case, most of the fiscal burden of the slump fell not on the local government but on Washington, which continued to pay for the state’s Social Security and Medicare benefits, as well as for much of the increased aid to the unemployed. There were large losses on housing loans, and many Florida banks failed, but many of the losses fell on federal lending agencies, while bank depositors were protected by federal insurance. You get the picture. In effect, Florida received large-scale aid in its time of distress.

 

Spain, by contrast, bore all the costs of the housing bust on its own. The result was a fiscal crisis, made much worse by fears of a banking crisis that the Spanish government would be unable to manage, because it might literally run out of cash. Spanish borrowing costs soared, and the government was forced into brutal austerity measures. The result was a horrific depression — including youth unemployment above 50 percent — from which Spain has barely begun to recover

 

And it wasn’t just Spain, it was all of southern Europe and more. Even euro-area countries with sound finances, like Finland and the Netherlands, have suffered deep and prolonged slumps.

 

In short, everything that has happened in Europe since 2009 or so has demonstrated that sharing a currency without sharing a government is very dangerous. In economics jargon, fiscal and banking integration are essential elements of an optimum currency area. And an independent Scotland using Britain’s pound would be in even worse shape than euro countries, which at least have some say in how the European Central Bank is run.

 

I find it mind-boggling that Scotland would consider going down this path after all that has happened in the last few years. If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled.

[VERBAL DIARRHEA]

authority in Somalia?  Who's that then?  Captain Pugwash?

 

Northern Ireland and Wales should be next.  Fuck them off as they contribute nothing but misery, grief, fireworks and community singing.

 

If Wales goes will my Mam need a passport to go to her caravan

[jonnybastard]

So we'd lose a big lump of cold, wet, remote shithole, sparsely populated with unfriendly misers? Fuck em, we've got all that in Yorkshire.

[Faustus]

Why does that dickhead on the youtube vid have to shout? I don't disagree with what he's saying but, fucking hell, tone it down, knobhead.

[VERBAL DIARRHEA]

Who gets control of the Irn Bru reserves ?

[Moctezuma]

Don't you live in the north Anny; from my experiences there seems to be more retired non Scots up there than anything.

 

I can honestly say the only Scottish accent I heard in Gairloch was in the shop (which does fucking amazing pies I might add).

 

Aultbea was a different story however; couldn't understand a ruddy word anyone said.

 

This is pretty much correct Stouffer, heap of retired English and people wanting to escape the rat race up there, while loads of the local youth tend to move to Scotlands metropolitian areas.

[Jairzinho]

Why does that dickhead on the youtube vid have to shout? I don't disagree with what he's saying but, fucking hell, tone it down, knobhead.

 

The same reason he pushed a toy pig through London, to be noticed. To get any publicity you must do something ridiculous.

[stringvest]

Confirmation just in that the Duchess of Cambridge's knees have refused to join the "Better Together" campaign.

[Nightcat]

Have you actually read the McCrone report?

[Mook]

Scotland will look like Somalia in 5 years.

 

Great news for Glasgow then.

[mgw100]

Sugar Ape, that's an interesting article you posted and a one that's difficult to argue with. I'm no advocate of integration of monetary policy, especially where it is between economies of different sizes. It's the issue that had stopped me being wholeheartedly a supporter of the Yes campaign until quite recently.

 

I'd much prefer that Scotland went with a currency of it's own so I'm hoping that Westminster sticks with it's promise of not allowing Scotland to use the pound. 

 

As much as this is unsatisfactory, all this will become much clearer during the negotiation phase. It's going to be in the interests of all parties to find a good solution then. At the moment, there is too much politicking going on to understand what the best solution is.

 

The currency is just a means to an end, there's some much bigger principles at stake. Against my usual instincts, I've decided not to become too bogged down in it.

[Ginny]

Been reading that The Royal Family are starting to get a bit nervous over this. Too right.

[Sugar Ape]

Sugar Ape, that's an interesting article you posted and a one that's difficult to argue with. I'm no advocate of integration of monetary policy, especially where it is between economies of different sizes. It's the issue that had stopped me being wholeheartedly a supporter of the Yes campaign until quite recently.

 

I'd much prefer that Scotland went with a currency of it's own so I'm hoping that Westminster sticks with it's promise of not allowing Scotland to use the pound. 

 

As much as this is unsatisfactory, all this will become much clearer during the negotiation phase. It's going to be in the interests of all parties to find a good solution then. At the moment, there is too much politicking going on to understand what the best solution is.

 

The currency is just a means to an end, there's some much bigger principles at stake. Against my usual instincts, I've decided not to become too bogged down in it.

 

Like I've said before - If I was living up there I'd be extremely tempted to vote yes. However, looking at it with my head and not my heart I think the no vote makes the most sense. There are just too many unanswered questions for me to think a yes vote is the best option.

 

A big problem I can see coming up for Scotland - If they vote yes - Is the response of Cameron. He's going to lose a lot of face over it and face calls to stand down etc... He's bound to want to be seen as ' being tough ' in negotiations to try and regain some credibility. Hopefully he'll fall on his sword if he loses the union but I doubt it.

[mgw100]

If they vote No, what's going to happen then? Cameron knows he is never going to get any MPs up in Scotland. Will he be fair then when divvying up the public spending? Why would he be? Why wouldn't he spend it in marginal seats or to make the Tory heartlands even happier?

[cochyn]

I'm sure Cameron has said he'd stand down if Scotland gains independence. Well, his entire fucking government should stand down, disgraced for coming second in a one-horse race. I'm no fan of Salmond - he's just as slippery and deceitful as the worst Tory - he's Michael Fabricant with a Saltire. But for the Tories to lose Scotland to a bunch of other Tory pricks would be fucking unforgivable. It would just show the contempt with which they've treated the whole process.

[Ginny]

Is it even possible that Scotland will gain independence from England? I mean with the royals, English banks, parliament etc... There's too much at stake for these power players to just let this happen innit?

[VERBAL DIARRHEA]

Been reading that The Royal Family are starting to get a bit nervous over this. Too right.

Why is Rab C Nesbitt getting Balmoral if they vote yes.

[Mook]

Why is Rab C Nesbitt getting Balmoral if they vote yes.

 

Aye, chicken balmoral.

[VERBAL DIARRHEA]

Aye, chicken balmoral.

Keep me abreast of proceedings

[Mook]

Keep me abreast of proceedings

 

Clucking right & I will.

[Sugar Ape]

If they vote No, what's going to happen then? Cameron knows he is never going to get any MPs up in Scotland. Will he be fair then when divvying up the public spending? Why would he be? Why wouldn't he spend it in marginal seats or to make the Tory heartlands even happier?

 

If they vote no they will get further devolution of powers. Will you get everything you want? No. Will you be better off than if you go it alone? That's the question.

[VERBAL DIARRHEA]

Been thinking of moving down to Scotland for a few years now. My missus can get a huge wage increase and I will always travel to work but it's Aberdeen and the house prices are crazy.

[stringvest]

Down?  Where are you at the mo?  Are you Father Christmas?

[Champ]

Been thinking of moving down to Scotland for a few years now. My missus can get a huge wage increase and I will always travel to work but it's Aberdeen and the house prices are crazy.

And its Aberdeen

[VERBAL DIARRHEA]

And its Aberdeen

Yeah. Good money but crazy money if you get what I mean.