Search topics on this blog

Google+ Badge

Showing posts with label Scotland's currency. Show all posts
Showing posts with label Scotland's currency. Show all posts

Tuesday, 1 July 2014

Jim Sillars and Michael Forsyth grilled by young Scots – and Glenn Campbell

Neither Jim Sillars nor Michael Forsyth are representative of the core positions of YES and No.

They in fact hold certain core views in common, e.g. on Europe and on currency, and this led to Jim Sillars having to avoid making the easy point  that independence isn’t the main threat to our EU membership - the UK government is.

Forsyth confined himself to repeating key Better Together soundbytes, but this could not conceal the gaping contradictions on his position on tax, on EU, on currency and on Scotland's ability to go it alone.

It ended in an atmosphere of consensus on the Margo dictum - "We're all still Scots after the vote", but a sour note was then injected by a No voter in the audience, who raised anti-English fears, which she laid at the door of YES. The Better Together young ‘uns have got the lingo off pat!

Sunday, 30 March 2014

Currency creates crisis – the Better Together meltdown after Guardian leak

A few facts -

QUESTION: What is the “optimal currency arrangement" for Scotland and the rest of the UK (rUK)?

Murdo Fraser put this question to five experts on 12th March. They disagreed on the answer. This on the same day that the Treasury Committee was grilling Mark Carney, Governor of the Bank of England and doing their level best – unsuccessfully - to bounce him out of his neutrality and objectivity on the the shape of a currency union after a YES vote, and on Scotland’s independence, as re-confirmed and re-asserted to Stewart Hosie MP.

UK’s answer isThe present arrangement is the best. Stay with the UK and keep the present arrangement – vote No!”

Scottish Government’s answer isWe like many aspects of the present arrangement but we don’t like a host of other aspects of UK – let’s keep the best of the present currency arrangement, improve it - and vote YES to Scotland’s independence!

Currency: Scotland’s currency after independence will be the pound sterling, either in a currency union with rUK (99% probability) or under sterlingisation - i.e. we will carry on using the pound as a tradable currency and peg it on a fixed rate to sterling.

Tuesday, 25 March 2014

A YouTube response to a Don’t Know’s questions “that haven’t been answered”

Djoly

Djoly (Please note the 'D' is silent, like the night)
I'm not so concerned about the impartiality of the different reporting bodies, (BBC and ITV) just their inability to get clear answers from our elected representatives. As the day's turned to weeks and the weeks to month, it is now clear that the explanation's I was hoping for, so I could make a balanced informed choice on: (security, borders, Europe, currency and how we elect our head of state, Queen? and so forth) are unclear.

Much of the major decisions will only become clear after the vote. (Europe and currency)

That is not satisfactory for the serious minded voters that want to make an informed decision. I asked my bank the other day what was to happen if the vote is Yes, they did not have a scooby. I've just bought a passport for £80, will it be valid for 10 years, and will I need it to travel down to London to visit my Brother. Will there be a General Election in 2015 if there is a Yes vote?

Being governed by parties we did not vote for, is a good enough reason for Independence, but why keep their head of state and currency.

People do not have long memories, a lot a people that have the vote will not remember the Second World War, and how Britain stood alone against an evil and powerful foe, together the United Kingdom managed to withstand the onslaught.

I'm a Democrat, so I believe the head of state should be elected. (sorry Queenie)

I have not yet decided my vote.

MY REPLY

I'm not surprised you're undecided if you think no one has offered answers to your questions, Djoly: they have ALL been answered - to the degree that they CAN be answered, given that we're remaking a country under intense hostility from UK parties and institutions - to my satisfaction and to that of around 1.5m "serious-minded" YES voters, based on polls (more to come).

It seems to me you are either afraid of change, and prefer to be locked in a dysfunctional and rapidly decaying UK status quo, or you are looking for a certainty that no one can give you in a rapidly changing world, least of all the present government and political parties.

But let me try to help -

Security: Scotland will be MORE secure, because we won't have a WMD base as a prime target in our country, making us a candidate for a first strike in a nuclear war - and nobody will have any reason to attack us since we won't be engaged in illegal wars and invading other countries. We will have our own defence force for domestic security, and will be a member, but not a nuclear member of NATO.

Borders/passports: There will be no border, no border posts, and no passport required to travel to England since we will be in the EU and covered by existing rules.

Europe: We are currently a member of the EU, and will still be one after a YES vote under UK till 2016. During the period Sept 2014 till March 2016 we will be negotiating a range of matters including our new status in Europe. No informed commentator or expert seriously believes we won't continue in membership.

Currency: Our currency will be the pound sterling, either in a currency union with rUK or under sterlingisation - i.e. we will carry on using the pound as a tradable currency and peg it on a fixed rate to sterling.

Head of state: Our Head of state will be the Queen - a commitment already given and one that cannot be changed without a referendum after independence - and there won't be one, because all opinion polls show about a two thirds majority in favour of monarchy across UK (that's why they don't hold a referendum on it!) I'm a republican, by the way - but I'm also a democrat and a realist.

2015 General election: The 2015 election will be held after a No vote - no one questions that, since there will still be a UK till 2016 and an rUK and a Westminster Parliament after 2016

(If your bank can't answer simple questions on currency, etc. I suggest you change your bank.)

Get your own copy of the White Paper, at least scan it, use it for reference and contact information sources who know what they're talking about, instead of listening to Better Together scare stories. Be part of the future, the new Scotland. Be on the right side of history - don't go down in history as a frightened Scot who voted No to his/her country's independence.

.

Sunday, 16 March 2014

A Marr interview with Alex Salmond, marred by simplistic questions – and a gaffe …

Marr, after trying to damn the YES campaign with faint praise on the polls, jumps in with the simplistic Better Together yah-boo mantra - Plan B!

He gets it partially right with "they're so hostile to Scottish independence that it's not bluff and bluster - they just determined to spike your guns" It may well be bluff and bluster (if it's not it's profound economic stupidity, allied to a craven fear of UKIP and their own badly-riven party and doubtful LibDem allies) but it most certainly is driven by hostility to independence and a desire to spike guns. He also observes that  there isn't good will on both sides. Again, Marr is half right - there is goodwill, albeit sorely tested on the Scottish Government side and a total absence of it on the UK side.

Marr's next point is that because "no one can say what's going to happen after a YES vote - if that's what happens - and therefore,  Scots are going to be left in the situation where they don't know what currency they will be using afterwards. Do you think it's sensible to have a Plan B ..." etc. He asks what's wrong with having a pound Scots or - and this is the mandatory Better Together sneer - "a groat, or whatever it would be called?"

Marr ignores completely the answer he got on his first outing with 'Plan B', and dutifully plays the BT broken record soundbyte. He gets a weary but patient repetition of the FM's first answer on the range of viable currency options, and a reiteration that 'Plan A' - a currency union - is in the best interests of both parties. The FM also reprises the requirement of the Edinburgh Agreement for politicians on both sides to act in the best interests of Scotland and rUK after the referendum.

It all falls on deaf - or uncomprehending - ears. "So why not a Scottish currency?" Any interviewer with any claims to professionalism would have had the Fiscal Commission report in front of him, or at least a key summary - but not Marr. Why bother when you can ignore detailed answers and repeat simplistic questions?

Marr conjures up Barroso. He claims that Barroso was "absolutely adamant in private and in the studio that it would not happen." In fact  Barroso said no such thing, since he is unable to speak for all the countries of the EU, and indeed he has been challenged by other heavyweight EU figures on what he did say. He then makes the extraordinary statement that Barroso "has no particular dog in this fight." No 'dog' except the Catalonian people's burning desire for a referendum on their independence.

The FM is too polite - or circumspect - to invoke Catalonia, but he does detail the reality of Barroso's current status and what his ambitions viv-a-vis NATO might be.

Marr then astonishingly offers his own opinion on Scotland's EU membership. "I think it will be quite hard to get back in, I have to say - but let's move on ..."

Let's not, Andrew- you don't get away with that so easily ...

FM: "This is what the Andrew Marr analysis says, as opposed to ... “

Marr: "Having talked to Mr. Barosso of the European Commission ...

FM: "As opposed, Andrew, to the weight of evidence that's been presented to the Scottish Parliament and its committees at the present moment. Is that the individual expression - or the BBC ‘s”

Marr blusters frantically, aware that he's in deep merde. "I've got no views on this, nor has the BBC.."

I'll leave the immigration bit - Marr was similarly simplistic on this topic.

A sad, sad performance from a once incisive political editor - in days gone bye. Long gone bye ...

Thursday, 13 March 2014

The Clash of the Experts – What is the “optimal currency arrangement" for Scotland and the rest of the UK (rUK)?

UK’s answer isThe present arrangement is the best. Stay with the UK and keep the present arrangement – vote No!

Scottish Government’s answer isWe like many aspects of the present arrangement but we don’t like a host of other aspects of UK – let’s keep the best of the present currency arrangement, improve it - and vote YES to Scotland’s independence!

Murdo Fraser put this question to five experts on 12th March. They disagreed on the answer. This on the same day that the Treasury Committee was grilling Mark Carney, Governor of the Bank of England and doing their level best – unsuccessfully - to bounce him out of his neutrality and objectivity on the the shape of a currency union after a YES vote, and on Scotland’s independence, as re-confirmed and re-asserted to Stewart Hosie MP.

 

Get Adobe Flash player

THE SCOTTISH SECTION OF TREASURY COMMITTEE with MARK CARNEY, GOVERNOR OF THE BANK OF ENGLAND – STEWART HOSIE MP SEGMENT

)

THE SCOTTISH SECTION OF TREASURY COMMITTEE with MARK CARNEY, GOVERNOR OF THE BANK OF ENGLAND – End of Stewart Hosie segment (the confirmation) and into the COMMITTEE MEMBERS QUESTIONS

)

Saturday, 8 March 2014

Ius Naturale – the Referendum and pre-negotiating positions

THE REFERENDUM

Some of the ideas here come from a two-year old blog – I’ve pulled out the essence that I believe is still pertinent.

The Act of Union was a treaty between two independent kingdoms. It doesn't take two to end a treaty or an agreement, it only takes one, either by negotiating the terms of exit - or unilaterally. The ius civile and the ius gentium are undoubtedly relevant, but so is the ius naturale, especially after 300 plus years. If the UK Government wilfully misunderstands this, and continues to act like the Romans in decline, then the Scots will become less civil and move towards acting naturale - take note, gentlemen ...

Independence is a beautifully simple concept, and needs no complex definition - it means a nation doing its own thing, in every aspect of its affairs. Full fiscal autonomy doesn't need Ming Campbell's version of the Steel Committee to tell us what it is - it's independence in everything except the ultimate sovereignty of Westminster, foreign policy and defence, the nuclear deterrent and membership of the EU and the UN.

If you really expect us to blow our negotiating hand in advance of the referendum outcome on the detail of the negotiation that will inevitable follow, dream on, UK. But by all means set out what you see as the detailed agenda for that negotiation, and we'll let you know what we think of the items that might be up for discussion. Most of them are self-evident as heads of negotiation – have a read at Scotland’s Future if you’re as bereft of ideas as you appear to be.

And lastly, Alistair Darling, David Cameron, George Osborne, Alistair Carmichael – and Gordon Brown(?) - if you want to go down in history as statesmen, rather than as pompous windbags, you might consider addressing the issues in an adult, statesmanlike fashion. Try and act in the spirit of the ius naturale. The Roman Empire first began to negotiate seriously when it was near to collapse - maybe the UK can make a better job of it in similar circumstances ...

We know what side you're on - the UK's side - and you know what side we're on - Scotland's - and England's and Wales's and Northern Ireland's. Talk calmly about the issues that lie ahead and stop your ridiculous posturing and grandstanding - it cuts nae ice wi' Scots. Frankly, it gie's us the boke ...

Monday, 17 February 2014

The eminent group of advisers who opted for the pound sterling in a currency union with rUK after a YES vote

Fiscal Commission Working Group
(Membership drawn from the First Minister’s Council of Economic Advisers.

Crawford Beveridge CBE (Chair)

– a technology industry veteran with more than 35 years of experience.

Worked as an Executive at Sun Microsystems for over 15 years.  

1991: He left Sun Microsystems to become Chief Executive of Scottish Enterprise. He returned to Sun Microsystems in April 2000 as Executive Vice President of People and Places and Chief Human Resources Officer. He is -

Non-Executive Chairman of the Board of Autodesk,

Chairman of Scottish Equity Partners Ltd

Non-exec board  member of eSilicon and Iomart Group PLC.

Awarded a C.B.E. in the New Years Honours list in 1995.

Professor Andrew Hughes Hallett

Professor of Economics at University of St Andrews.

Professor of Economics and Public Policy at George Mason University in the US

Visiting Professor at Harvard University

Professor Hughes Hallett specialises in international economic policy and has acted as a consultant to the
World Bank, the IMF, the Federal Reserve Board, the UN, the OECD, the European Commission and central banks around the world.

Professor Sir James Mirrlees

Professor Emeritus at Cambridge University and
distinguished professor-at-large at the Chinese University of Hong Kong.

In 1996 Sir James was awarded the Nobel Prize for his work on economic models and equations about situations where information is asymmetrical or incomplete. In 2010, he led the Mirrlees Review of taxation which examined the principles and characteristics of good tax system for open developed economies in the 21st century.

Professor Frances Ruane

Director of Ireland's Economic and Social Research Institute and Honorary Professor of Economics at Trinity College, Dublin. She has published widely in the area of international economics and industrial development.

Professor Joseph Stiglitz

Professor of Economics at Columbia University.

Won the Nobel Prize in Economics in 2001 and was a member of the US Council of Economic Advisers (CEA) from 1993-95, serving as CEA Chair from 1995-97.

Chief Economist and Senior Vice-President of the World Bank from 1997-2000.

In 2009, appointed by the President of the UN General Assembly as Chair of the Commission of Experts on Reform of the International Financial and Monetary System.

EXTRACT from REPORT AND CONCLUSIONS – (all highlighting, italicisation, colour and typographical emphasis is mine,and was not present in the original report format)

Monetary Policy

3.25  The choice of currency is a key determinant of the overall macroeconomic framework.

3.26  Analysis shows that it would be in Scotland’s interests to retain Sterling immediately post-independence. It is also the case that, post independence, this would benefit the rest of the UK given the scale of integrated markets, including in areas such as financial services.

3.27  Scotland’s economy is strong enough and sufficiently aligned with the rest of the UK that a separate currency would not be necessary. Retaining a common currency would promote the single market and help facilitate trade and investment to and from the rest of the UK and elsewhere.

3.28  There would be a number of ways to implement monetary policy within a formal monetary union, including options around the institutional arrangements for central banking.

3.29  The preferred model would be for Scotland to enter a formal monetary union with the rest of the UK with the Bank of England (the Bank) operating as central bank for the common monetary area (the ‘Sterling Zone’).

3.30  Ownership and governance of the Bank could be undertaken on an agreed shared basis, reflecting Scotland’s current implicit and historical share of the existing Bank’s assets as a UK institution.

This arrangement would be subject to negotiation with the UK Government. However a practical arrangement with shareholder rights allocated on a per capita or GDP
weighted basis would seem appropriate.

3.31  Monetary policy would be set in the Sterling Zone according to economic conditions in both Scotland and the UK –in the same way as is currently the case.

3.32  The Bank would remain operationally independent to set monetary policy.

3.33  This would involve little change in the day-to-day operations of the Bank or in its discharge of monetary policy. The common payments and settlements system would continue, as would the efficient use of inter-bank money markets as the principal means of providing liquidity. The Bank’s balance sheet could remain unified, albeit indemnified by two fiscal authorities.

3.34  As part of this arrangement, the framework proposes that the Scottish Government should seek input into the appointment process to key positions within the Bank (for example the Monetary Policy Committee (MPC) and Financial Policy Committee (FPC)) and an input into its remit and objectives. A representative from the Scottish Treasury could also attend MPC meetings in a capacity similar to the existing HM Treasury representative (i.e. in a nonvoting capacity and to ensure that monetary policymakers were fully informed of developments in Scottish Government economic and fiscal policy).

3.35  Related to this, and as an explicit shareholder of the Bank, the Scottish Government and Scottish Parliament should seek a role in providing oversight of the Bank and its activities.

3.36  This would create an appropriate system of accountability and representation for both governments.

3.37  Matters of collective decision making on governance and accountability could be addressed within an overarching agreement on the functioning of the Sterling Zone.

A shared institutional arrangement, such as a ‘Macroeconomic Governance Committee’, could be established to oversee matters which require coordinated input and/or agreement from the respective governments.

This practical arrangement could cover not just monetary policy, but also issues of shared interest in fiscal sustainability and financial stability. Such an arrangement would also provide a forum for knowledge transfer and the sharing of key information

Sunday, 16 February 2014

Has even The Guardian been enlisted in attacking Scotland’s democracy and aspirations?

The Guardian Leader of Friday 14th February has provoked a storm of comment. Here’s mine. It contain facts I’ve have blogged, tweeted and repeated many times over recent weeks, drawn from an extempore FM response at FMQS. I make no apology for that – their relevance is fundamental and enduring.

MY COMMENT

15 February 2014 11:28pm

I have been a Guardian reader for over 60 years. I have never read such a partial, inaccurate Leader in all that time. It is, quite simply, an attack on Scotland, its Parliament and the values and aspirations of a large and growing number of the Scottish electorate. It is a defence of the Union.

I won't waste time listing the many canards and errors - let me just say that you have used, without any real thought or analysis, the Better Together distortion that Scotland's wish to be sensible and realistic with rUK in an interdependent world - independence recognising interdependence - is in some way independence lite - not real independence.

Since the Osborne intervention - a flying visit, a quick address to a carefully selected audience, a refusal to engage with, or offer an interview to Scottish Television (STV), and a hasty and undignified departure - focused on currency union as though it was the Vulcan Death Grip for independence, consider this -

Scotland doesn't control the currency or interest rates at the moment. Neither does UK - they're controlled by Bank of England. We won't control them under a currency union either, but we'll have more influence than we have at the moment, as an independent country, a partner in a currency union. Without a currency union, we will continue to use the pound in one of a number of scenarios, already detailed together with other options in a recently published Fiscal Commission Report.

Here are the other powers an independent sovereign Scotland will have - do they look like independence lite to you?

ECONOMIC LEVERS: Excise duty, air passenger duty, VAT, capital gains tax, oil and gas taxation, national insurance, income tax, corporation tax, competition law, consumer protection, industry regulation, employment legislation, the minimum wage, energy markets and regulation, environmental regulations.

All these things are controlled in London under the UK

All of them will be controlled in Scotland after independence

We'll be able to set the minimum wage, abolish the Bedroom Tax (not just mitigate it). We will be able to transform childcare.

We will be able to remove weapons of mass destruction from Scotland

We won't have to participate in illegal wars

Scottish servicemen and women will no longer die or be maimed at the behest of a UK Prime Minister and an American President.

POSTSCRIPT

The reaction Osborne's intervention was outrage from a large number of Scots, as evidence by phone-in programmes, online media and letters to the press. I lost count of the number of undecided voters who said their minds had been firmly and irrevocably shifted to a YES vote, and there was a significant number of former No voters moved to YES. I look forward to poll results at an early date.

Friday, 14 February 2014

Alternative views of an independent Scotland – the reality of independence negotiations

A number of comments on my YouTube videos – and in the wider debate reflect different views on key policies in an independent Scotland, e.g. on currency, EU, monarchy, etc. This is because the YES campaign is broad-based and contains many views and many political parties – and those of no party. However, some supporters do not seem to have grasped the key dynamics  of what follows a YES vote and the current political realities and time scale.

Here is my response – and my understanding - offered to one such commentator offering multiple scenarios for independent Scotland’s relationship with the EU.

PETER CURRAN’S REPLY TO COMMENT

The independence negotiations will be conducted by the negotiating team selected by the Scottish government and on the basis of its White Paper policies. It will remain the government until May 2016, and an independent Scotland's position vis-a-vis the EU will therefore be determined by the outcome of their negotiations with EU.

Their policy and intent is to remain in the EU, and to negotiate terms of entry as an existing member under UK until independence day. All the options you detail are therefore academic - they will not form part of the negotiations.

Although the YES campaign is a widely-based campaign containing other parties (and those of no party) who have differing views of EU membership (and other issues), they will not influence that policy. The 2016 election campaign will commence March 2016, and all parties are then free to include in their campaign manifestos whatever policies they like, and the Scottish electorate will decide the Government of independent Scotland.

Whatever the outcome of that election, I would hope that the new government - if it is not an SNP government - will not start by wholesale repudiation of major agreements just reached with rUK and EU, nor with a rash of referendums. Such actions would sit very badly with world opinion.

Saturday, 16 November 2013

Magnus Gardham and the currency question

I thought Magnus Gardham would have let his non-story of yesterday die quietly to avoid further embarrassment. But no, today he unwisely tries to justify it, to give the wee thing legs ...

Putting our money where its mouth is

It should not fall to me, a voter with no background in journalism or politics to offer the political editor of the Herald some basic concepts from The Ladybird Book of Politics, but sadly, it seems necessary.

There is a fundamental  difference between the position of the devolved Scottish Government setting out its policy - and effectively its opening negotiating platform for an independent Scotland after a YES vote - in a White Paper, and a UK Government publishing a White Paper for implementation through its majority in Parliament. In the first context, setting out a "definitive position" on policies defines a negotiating position and a set of beliefs that underpin it: in the second context, it is simply the intention to legislate using a Parliamentary majority.

In his first few paragraphs, Magnus Gardham shows that that he understands this, yet he chooses to reject the reality because it does not suit his story or his agenda - that the Scottish Government is in some way misleading a gullible Scottish electorate over the currency. He might have taken some account of the calm, and faintly amused reaction of Brian Taylor of the BBC (and others) - a man who does understand politics - at the farrago of nonsense thrown up around Colin McKay's entirely unexceptional statement - that no one can guarantee the position of the UK Government or UK Treasury in negotiations after a YES vote, especially since that Government may well change in 2015, halfway through the most complex set of negotiations British politicians have ever undertaken in centuries.

If Magnus Gardham hopes to make the contribution to the great debate on Scotland's independence that some of his journalistic contemporaries are already making, he must outgrow his fondness for conspiracy theories and great unmaskings of secret policies and hidden beliefs, and buckle down to some real journalism in the 300 or so days left to us.

I may add that it is patently evident to anyone who can rise above the adversarial pre-negotiating macho talk that the de facto rUK governments (of whatever political colour) who take part in the negotiation will agree to a sterling-based currency union because it makes eminently good sense.

Monday, 15 July 2013

Would it really have been independence? Should we resign ourselves to less?

"Will it really be independence?" stuff still touted by those hostile to Scotland’s independence, by the fearful and confused – and by quite a few prominent journalists and pundits. (The latter group are either fearful and confused – or they’re being ingenuous…)

Clarity of thought is vital at this point for independence campaigners, so turn it around - anything that leaves ultimate control with Westminster won't be independence. (e.g. federalism or any one of the multiple variants of devolution being touted – devo max, devo plus, full fiscal autonomy.)

While the Scotland Act is in force, Scotland is not independent - everything is in the gift of Westminster, which electorally means England. And it can be modified or withdrawn at any time … The Union remains intact, dominant, with total control over Scotland.

If Scotland decides on its defence policy, its foreign policy - including when to engage in armed conflict - elects its own Parliament and Government and makes it own laws, it's independent. Anything less and it's NOT independent.

The core principle is fully independent within an interdependent world – independence that recognises the reality of interdependence in a rapidly changing and unstable world.

Independence is the freedom to choose, with no limits or constraints on those choices, except ones we freely make and enter into - and can freely unmake and exit from.

Saturday, 20 April 2013

What is Truth? (Pontius Pilate): Labour’s Truth Team and video

Scottish Labour’s strange little black propaganda video has made its appearance on YouTube, timed for the Scottish Conference. I don’t know who did the voice over, but it is a very strange voice indeed, modelled roughly on the voiceover in trailers for crap American series on repeat channels – a kind of mid-atlantic, pseudo-portentous growl. Impossible to determine the nationality of the perpetrator – could be a Scot trying to expunge all traces of Scottishness. Clearly, Scottish Labour didn’t trust an honest Scots voice to talk about truth …

The graphic mode is funereal, in the BetterTogether style of Repent_End_Union_is_Nigh! All that’s missing is the lugubrious Alistair Darling. Only the first point, on the currency deserves any attention – the rest is beneath any serious analysis. (It says a lot about Scottish Labour’s ideas of the intelligence of Scottish voters –perhaps the most catalysed, sophisticated electorate in the world right now.)

"For many years now, the pound sterling has been a millstone round Scotland's neck" “Sterling is costing jobs and prosperity” Alex Salmond 10th Nov. 1999

These quotes are over 13 years old. It was in the last millennium – the last months of the 20th century.

Since then, we’ve had 9/11, governments have come and gone, dictators have risen and fallen, the disastrous Republican US/Labour UK wars in Afghanistan and Iraq were started with a bang and are now ending with a whimper, and from 2008 onwards, the world economy and the world’s banks have gone into near meltdown, the British economy is a basket case, due in significant part to the Blair/Brown Labour Government’s mismanagement of the economy and the regulation of the banks, and the Tory/LibDem Coalition Government’s misconceived attempts to handle the shambles left by Labour, Europe has major problems with monetary policy, and the Arab Spring continues, creating major uncertainties for the Middle East and the world.

Economist, bankers, political theorists, academics and governments across the globe have hastily revised just about everything they thought they knew about monetary and fiscal management and investment.

But Scottish Labour relies on 13-year-old last century, last millennium quotes by Scotland’s First Minister to allege a contradiction over the SNP’s present policy over Scotland’s currency after independence!

It is a measure of Scottish Labour’s failure of imagination, failure of basic economic or political understanding and failure to adapt to the world we now live in that they are reduced to such Fox News-type negative campaigning and propaganda.

Political leaders failing to change their minds in the light of the vast changes to political and economic circumstances over this turbulent period would truly remarkable, branding them as dinosaurs, doomed to extinction by forces beyond their understanding or control.

That would be a fair description of the Scottish Labour Party, as exemplified by this misconceived initiative and video, dragging the very concept of Truth into their gutter.

Let’s look then at Alex Salmond’s current position on a Scottish currency, and the quote that encapsulates that pragmatic position -

Retaining the pound under independence is something that I believe is in the interests of Scotland.”

A fuller discussion of the issues can be seen in this June 2012 video. (The FM also discussed this issue at the Brooking Institution very recently.)

Here’s what I said last year on the currency question, as a rebuttal to criticisms advanced of the FM’s position.. The essence of the argument is still much the same, but heavyweight economic commentators have since then suggested revisiting the commitment to sterling and reconsidering a Scottish currency launch, in the light of rapidly the changing economic climate. -

MY REBUTTAL OF ARGUMENTS – June 2012

This is an attempt to talk the language that the average voter might begin to understand, so a warning shot to the ravening hordes of PPE graduates and professional economists – don’t try to bury me alive in complex conflicting arguments and academic references which have more to do with the political axe you are grinding than economic facts – haul your wagon to one of the many learned journals who publish this kind of thing, and have fun quarrelling with your peers over arcane theories.

1. Scotland is not going to be become independent, but if it does, it won’t really be independent if it still has sterling as its currency.

The idea that there is some pure, unalloyed version of independence in the complex interdependent world we live in is fantasy, as it is in individual life. Independence includes the right to decide with whom we cooperate, with whom we form alliances, when we cooperate and when we walk away, and whether that cooperation and those alliances are on trade, on economic controls, on defence, or in cultural, social, humanitarian and sporting policies and joint ventures.

And to forestall yet another ludicrous unionist old chestnut, our present membership of the UK does not already give us such sovereignty – it involves the surrender of the right to decide, the surrender of the sovereignty of the Scottish people on all but the few devolved matters the sovereign UK deigns to permit us to exercise some control over.

It might be nice at some point in the future to have an independent Scottish currency, Equally it might be appropriate to remain in sterling, or to join the euro, or join some other currency union as yet unknown. What will be even nicer is that the sovereign Scottish people will make that decision – nobody else.

2. Alex Salmond really wanted to join the euro: he was wrong on that, therefore he is wrong on this.

Resisting the urge to laugh at the utter naivety of this argument, I will simply say that what anybody said about the euro, about economics, about international banking and finance over four years ago is now almost completely irrelevant in the light of the economic and financial chaos that has engulfed the world. With the exception of a few prophetic voices crying in the wilderness, nobody foresaw it in any meaningful sense, least of all the economic and political theorists. Great fun can be had by selectively picking quotes of yesteryear, but it contributes nothing to an adult debate.

3. An independent Scotland would not have any influence in a currency union with the UK, much less a seat on the MPC, and would be wholly at the mercy of the Bank of England on monetary policy, and since the B of E is invisibly controlled by the UK (sic) Government and the Treasury, Scotland’s financial independence would be an illusion – the control of fiscal levers and policy would make no difference.

First, a few facts -

Currency unions exists all over the world, and can be one of three kinds – informal, formal, or formal with additional rules. They are entered into to maximise economic efficiency in a geographical region.

Scotland doesn’t need permission to use sterling – it is an internationally tradable currency, like the dollar, and if an independent Scotland continues to use it, it de facto has entered into an informal currency union with rUK.

To take the arrangement beyond the informal would require negotiated agreement with rUK. Such an agreement could only be reached during the wide-ranging negotiations that will take place after the YES vote in autumn 2014. The present UK Government is not going to enter into such negotiations, formally or informally, in the lead-up to the referendum when it is fighting for a NO vote. To do so would be to admit, de facto, that Scotland was likely to become independent. (Johann Lamont more or less did just that at FMQs.)

(If sensible politics and diplomacy were a feature of the present UK Coalition Government and Opposition, there would probably be confidential discussions taking place right now. Regrettably, there is little evidence of anyone in the Coalition Cabinet, or in the Scottish Office, or the Holyrood Opposition capable of the sophisticated approach that this would demand. There are undoubtedly such people in the diplomatic services. But to use diplomats would involve acknowledging that Scotland is likely to become an independent country.)

The Bank of England is the Central Bank of the United Kingdom. Gordon Brown gave the Bank of England operational independence in monetary policy in 1997, and it became responsible for setting interest rates through the Bank's Monetary Policy Committee, independent of Government.

The members of the MPC are the Governor of the Bank of England, two deputy governors, the Bank's Chief Economist, the Executive Director for Markets and four external members with financial expertise directly appointed by the Chancellor. A representative from the Treasury also sits with the Committee at its meetings. The Treasury representative can discuss policy issues but is not allowed to vote.

Its role is to set interest rates, to issue banknotes (Scotland still issues its own) and to contribute to “protecting and enhancing” the financial system. It has the right to use a process called quantitative easing to ‘print money’ (which is not printing more banknotes!) usually in crisis situations such as the recent banking collapse. The MPC does this by electronically creating new money to purchase assets, thus increasing the national debt. (Between March 2009 and January 2010, the MPC authorised the purchase of £200 billion worth of assets, mostly gilts – UK Government debt) This injects more money into the economy.

An independent Scotland will have full control of every aspect of the financial measure – fiscal levers – necessary to run the Scottish economy, raise taxes, etc.

If it uses a currency other than its own - e.g. the euro, sterling, the dollar – its interest rates would be set by the central bank of that currency. Scotland would therefore be subject to the monetary controls and monetary policy of that central bank.

The strength of a currency depends on the economic performance of the country issuing it, and the perception of that country, its currency and its economic performance by other countries. This determines the exchange rate, normally defined against the dollar.

For a newly independent Scotland to launch its own currency in a favourable world economy would have been a bit of a gamble: for it to launch its own currency in the current chaotic economic climate, or to join the euro would be lunacy. Sticking with sterling is the prudent, sensible option, either informally or within a currency union with rUK. This is not the time for macho posturing, indeed there is never such a time …

For the Bank of England and rUK not to accept the reality of an independent Scotland, with full fiscal control, using sterling, without having an observer equivalent to the present UK Treasury advisers would be illogical. Lyndon Johnson’s memorable phrase of “better inside the tent pissing out than outside pissing in” comes to mind. Since the criteria the chancellor uses for selecting the four independent special advisers is unknown to me, I can offer no advice other than to say that a special adviser with an insight into, and special knowledge of Scotland’s finances would make sense.

A currency union beyond the informal also makes sense to any objective adviser.

As for Johann Lamont’s nonsense about consulting the Bank of England or the UK Treasury in advance, I refer to my comments above. Expect no objectivity from them until we have a decisive YES vote and negotiations have commenced.

Friday, 15 June 2012

10 things you need to know about an independent Scotland (The Noon List)

Originally posted by Stephen Noon on May 17, 2012

yesRed_whiteBG.jpgHere are ten things you should tell your friends and family about an independent Scotland

  1. Being independent means that the people of Scotland will be in charge of Scotland’s future. Together, we care most about our nation, so nobody else is going to do as good a job of making Scotland a success. 
  2. If Scotland votes yes, the first independent parliament will be elected in 2016 – we will get the government we vote for, unlike today, with a government in London the majority of voters in Scotland did not support. 
  3. Scotland more than pays her way in the UK. We get 9.3% of UK spending, but contribute 9.6% of UK taxes. We are in a stronger financial position than the rest of the UK, to the tune of £510 per person last year - that's over £1000 for each Scottish household. As an independent country, this money would stay in Scotland.
  4. Scotland already pays for all the government services we need as an independent country - we don't have to start from scratch. However, the money will be spent in Scotland, rather than London, creating thousands of Scottish jobs.
  5. With independence we'll save on some UK spending - so the initial start up costs will be met by the £250 million annual saving from the UK's existing nuclear weapons and the £50 million annual saving by no longer paying for politicians at Westminster.
  6. Scotland would remain part of the EU. EU law doesn't allow for Scotland to be unilaterally kicked out on independence. And, EU law also makes clear that Scotland can't be forced to join the euro. We will continue to use the pound, just as we do today.
  7. Scotland has 25% of the EU's offshore wind and tidal energy potential. By 2020 our renewable energy could be generating £2 billion a year of exports and by 2050 our renewable energy could be worth £14 billion a year.
  8. Scotland doesn't need oil to become independent, but our oil and gas resource is worth over £1 trillion and gives us a safety net for the future. Last year saw record investment in the North Sea and in October, BP said they expected North Sea oil and gas to flow for at least another 40 years.
  9. The UK government doesn't include oil and gas when it talks about Scotland's finances. But, if you do include oil and gas in our national accounts, we would be the 6th wealthiest nation per capita in developed world.
  10. Scotland has a wealth of talent - for our size we have more world-class universities than any other nation and our research tops world league tables.

Thursday, 23 February 2012

The antis and the uncommitted – the key to independence

A number of conversations with individuals in the last week brought home to me forcibly again the fact that a large number of people are against independence and a significant number described themselves as unconvinced. I am left, not for the first time, with the uneasy feeling that what I do – blogging, tweeting, YouTube clipping – is reinforcing the commitment of those already committed to independence but is contributing little to shifting the perceptions that must be shifted to achieve a decisive YES vote.

This week at both Scottish questions and PMQs in Westminster, an orchestrated chorus of very dubious provenance sang stridently of the benefits of the Union and the evils of Scottish independence. This hellish choir comprised the usual suspects – Scottish Labour MPs whose jobs will vanish like snaw aff a dyke post independence, and Scottish MPs in English constituencies engaged in that most contemptible activity an expatriate Scot can engage in – talking down his or her country in an effort to curry favour with the host country. (The motivation for Scottish MPs in English constituencies doing this is all too apparent – to reassure their English constituents that they are not to be regarded with suspicion, because they are, in fact, stridently anti-independence.)

The choir is conducted by Michael Moore at Scottish questions and David Cameron at PMQs, as they spew out their misrepresentations, factoids and scare stories.

HOW DOES THE SNP REGARD ALL THIS?

The SNP group of MPs at Scottish questions can often seem a lonely, put-upon and beleaguered little group. They patently would rather not be there – and who can blame them for feeling that – and their efforts to put the record straight and ask pertinent questions are often frustrated by derisive noises off and patronising, dismissive replies. While this feeds the politics of insult, beneficial to the nationalist cause (as I know from the response to such clips on YouTube) their questions rarely make any real impact.

And I have to say at times they seem to miss open goals.

While their opponents are spreading misinformation in assertive sound bites, the SNP group often seems to be making arcane points of detail which,  however relevant, seems to get lost in the factoid fog of the unionists. Mike Weir’s response on the credit rating agencies point at this week’s Scottish Questions seemed to me an example of this – worthy, accurate and totally lacking in impact.

We have a minimum of two and a half years to the referendum, Michael Moore notwithstanding, and I speculate on what the SNP campaign strategy is in relation to this increasing miasma of misinformation. A blizzard of press releases emanate daily from the party on every subject under the sun, and undoubtedly some of these hit their mark and lead to stories in the media. I try to do my bit with them by tweeting the essence of the message when it seems appropriate.

One strategy the SNP may be pursuing is to let the Campaign to block Scotland’s independence - run by the unspeakable Labour/Tory/LibDem coalition for the safeguarding of the UK gravy train - exhaust itself by premature ejaculations in the early period of the referendum lead-in period then, in the post-consultation period, begin to deliver major detailed policy statements. The unionist incontinence will then leave them enfeebled and unable to respond effectively to cogent and coherent SNP detailed policy statements.

If this is the strategy, then I understand it and see the advantages of it. But there is a potential downside - that the unionist factoids and misrepresentations might take root in the minds of the electorate, and be difficult or impossible to shift in time for the referendum.

So where does this leave us?

PERCEPTIONS OF THE ELECTORATE

I position myself in all that I say as a voter, not as an expert. I have no insider knowledge, and no specialised economic expertise. So what what I have to say here is anecdotal, based on my range of contacts, and cannot compete with what I hope is the superb Activate database of the SNP and the analytical and campaigning skills of those utilising the information. But here goes

I see the following broad categories of voters -

1. The informed and committed

2. The uninformed and committed

3. The informed but uncommitted.

4. The uniformed and uncommitted.

I see the following motivations/perceptions among all of the above groups in relation to independence -

1. The UK is dysfunctional and only independence will provide a remedy for Scotland. Nothing short of national independence can deliver the freedom to act, within a framework of interdependence through membership of European and international organisations, e.g. EU, UN, NATO, Partnership for Peace.

2. The UK is dysfunctional but can be improved by measures short of independence, e.g. more devolution of powers to Scotland. Full independence is a bridge too far.

3. The UK is grappling with international problems common to all countries at the moment, but is coping and will cope with them. Independence is a dangerous distraction.

4. What’s all the fuss about? We (the UK) have done alright for 300 years. If it ain’t broke don’t fix it.

5. The entire political system in the Western world is corrupt, dysfunctional and only radical global action will remedy it. Nationalism is a distraction from this great internationalist goal.

The informed and committed will have already decided their positions based on their understanding of the facts, their own priorities, and to some degree on emotional considerations, which may be very powerful determinants of their position. Although some of this group may radically shift their position before the referendum, the numbers are likely to be small, unless some major event or events swing the balance powerfully towards a YES or a NO vote, e.g. a radical economic shift or a political scandal of some sort. Events, dear boy – events!

The uninformed and committed may well contain a majority who have placed emotion before reason in determining their position, and will therefore not be easily moved by facts. But some of this group may simply be uninformed and may shift their commitment if they engage fully with the arguments, i.e. they can be persuaded by factual argument. This segment of opinion is therefore crucial.

The informed but uncommitted and the uniformed and uncommitted are clearly fundamental targets for information and persuasion.

THE COMMON MISCONCEPTIONS AND QUESTIONS OVER INDEPENDECE

Here are some of the misconceptions and questions that I have experienced from my range of contacts, and from my scrutiny of press and media comment. These are assiduously fed by unionist politicians, but not necessarily created by them, and there are genuine questions in the minds of the as yet uncommitted.

1. The SNP and Alex Salmond have not spelled out what independence means.

2. Big is best – the most effective political groupings are the largest, therefore Scotland should stay in the UK.

3. Scots would be poorer after independence – it is reliant on the rest of the UK – i.e. England, essentially – to subsidise it.

4. The Scottish economic case rest on oil revenues, and oil is a declining asset.

5. As a small country, Scotland would have little influence in Europe, in the United Nations, in NATO (if it remained a member) and in global trade.

6. More devolution of power while remaining in the UK would be best for Scotland.

7. The SNP commitment to a constitutional monarchy that retains the Queen and her lawful heirs is an expedient political device to reassure monarchists, but would be speedily abandoned after independence by a referendum.

8. Adopting sterling as an independent Scotland’s currency and accepting the Bank of England as the central bank in a currency union would effectively mean that Scotland was not independent in any real sense.

9. Scotland might not be acceptable as an EU member after independence, and if it was a member, it would be forced into the Eurozone and adoption of the euro as Scotland’s currency.

10. The independence of Scotland would create a relationship rift with the rest of the UK, and have a deleterious effect on relationship with our nearest neighbours and create strains with friends and family in the rest of the UK.

11. It would be difficult or impossible to create an independent Scottish defence force, and servicemen and women would be forced into difficult or impossible choices.

12. An independent Scotland would experience high unemployment caused by the loss of defence jobs and contracts.

These are not the only misconceptions and factoids by any means, but they are the ones I encounter most frequently. From my perspective, none of them are accurate, or they betray an understandable  failure to comprehend either the nature of independence or the diplomatic and negotiating dynamics of achieving it.

I will return to all of them and try to demonstrate why I think they are misperceptions. Meanwhile, I’ll leave you with Gordon Brewer and Crawford Beveridge, with Gordon struggling to understand the distinction between interdependence – and its constraints - in the modern world in relation to independence in a currency union.