Our currency options in a nutshell

"The Treasury case against a post-independence currency union between Scotland and the rest of the UK has been dismantled as 'misleading', 'unsubstantiated' and 'the reverse of the truth' by one of the world's leading economists. Professor Leslie Young, of the Cheung Kong Graduate School of Business in Beijing, accused the UK Government of relying on a 'lurid collage of fact, conjecture and fantasy' in making its argument." (The Herald, 23 March 2014)

In the video above, Crawfurd Beveridge explains, in three minutes and 36 seconds, patiently, succinctly and in a straightforward way (if I can understand it, you will) why the Nobel prize winning economists and others on the Scottish Government's Fiscal Commission Working Group came to the conclusions they did about an independent Scotland's currency and about why, after a Yes vote and whatever they say now, the British government will agree to a currency union.

He explains that the Fiscal Commission group comprises "four very eminent economists, two Nobel prize winners". They thought that there were in fact "lots of options" for Scotland: "You could have your own currency. You could have a currency that's pegged. You could make it free-float. You could go and join the euro. You could do sterlingisation. They're all very, very serious options." The Fiscal Commission experts "analysed them every which way from Sunday" (I believe he must have spent some time in the US) not just from the point of view of Scotland but of the rest of the UK as well. The "overwhelming conclusion" was that, in the interests of both sides, there ought to be a currency union. But didn't George Osborne say there couldn't be?

Is this referendum different?

"The Numbers Game: Politics & Polling in the Independence Referendum."

Here's an excellent film on the use of opinion polling in the referendum campaign. It features James Kelly of the Scotland Goes Pop site which provides by far the best, most informed and most up to date comment on the polls and polling evidence.

One of the intriguing aspects to the referendum campaign has been the wide variance in the results reported by the different polling companies: Panelbase, Survation and ICM reporting very different results to the outlying YouGov (though even YouGov recently reported a big swing to Yes). But there's also a further, specific oddity that I've seen some are beginning to comment on. 

Green Yes

The Scottish Government has published a document setting out five "key gains" that independence would bring for the environmental movement. (There's more detail later but in summary):

1. We can place the environment at the heart of a written constitution
2. We can have a nuclear free Scotland
3. We will have access to the support and funding we need to protect and enhance our natural environment
4. We will be represented in the EU and have the opportunity to drive the agenda
5. We will have a stronger voice on the global stage

Better Together's tiresomely predictable response has been to claim that, unlike any other country that wants effectively to tackle the various environmental challenges that face us all, Scotland doesn't need and certainly shouldn't get any further powers to do so. It needs only a change in "political will". We just need to try harder with the limited powers that we have. Why? Well, just because, obviously.

In fact this claim doesn't just spectacularly miss the point. It highlights a sixth, and quite possibly most fundamentally important, "key gain" from a Yes vote for the Green movement in Scotland. Come independence, I'll vote Green. And I am far, far from being alone. There is an enormous reservoir of sympathy for the aims and aspirations of the Green party amongst Yes voters and activists. But for me, and the SNP voters among them, the priority at present is to gain independence, to get control of the powers that we think we need to act effectively, as we decide. It's anecdotal of course (and if anyone knows of any study on the likely political make up of the first independent Scottish parliament, please post a link in the comments). But ask yourself: does it ring true from your own experience? Does it sound right? Anecdotally, have you heard those who currently vote SNP say they'd vote Green come independence? If you haven't, ask them. In fact, then, independence is not just about making available the full range powers that a normal independent country has. It is, I'd suggest, likely to lead to a reshaping of the political landscape in a way that will hugely boost the will to act. It'll enhance both the power and the will.


But even if all that is entirely wrong, the identified gains are clear. Dr Richard Dixon of Friends of the Earth Scotland says:

When they do, you laugh.

You have a friend and you decide to go into business together. You set up a company and you both get shares in it. You work away for a few years, both of you putting in lots of time and effort on growing the business. Through your joint efforts, the company builds up a client base and a reputation that allows it to grow. It does ok but it has to borrow money from the bank to fund its activities and to allow you to pay yourselves. Business becomes a bit stagnant and although you keep your heads above water you have the nagging doubt that you could be doing so much better. 

How to drive a soft bargain

Negotiator A: Well. Thanks for coming to today's negotiation. Before we start, I just wanted to say that although my Plan A is to demand £1,000, my Plan B is that if you say no then I'll take £500.

Negotiator B: I see. Thanks.

Negotiator A: OK. So. I'll kick off, shall I? I demand £1,000!

Negotiator B: No.

Negotiator A: What?

Negotiator B: No.You just said you'd take £500.

Negotiator A: Did I?

Negotiator B: Yes.

Negotiator A: Bugger.

Negotiator B: So £500 it is then?

Negotiator A: I suppose it'll have to be now.

Negotiator B: I think it will.

[Pause]

Negotiator B: [Briskly] Well! That was quicker than I expected. Would you like a lift home?

Negotiator A: No thanks.

Negotiator B: Fair enough. I expect you'll want a bit of time on your own.

[Pause]

Negotiator B: You did go to negotiating classes, didn't you?

Negotiator A: [Indignantly] Of course I did!

Negotiator B: OK, OK.

[Pause]

Negotiator B: Who was your tutor?

Negotiator A: Alistair Darling.

Negotiator B: Aaahh!

Negotiator A: What?

Negotiator B: Nothing.



 



 

The British Government's sterling claims: a "'lurid collage of fact, conjecture and fantasy"

"The Treasury case against a post-independence currency union between Scotland and the rest of the UK has been dismantled as 'misleading', 'unsubstantiated' and 'the reverse of the truth' by one of the world's leading economists. Professor Leslie Young, of the Cheung Kong Graduate School of Business in Beijing, accused the UK Government of relying on a 'lurid collage of fact, conjecture and fantasy' in making its argument." (The Herald, 23 March 2014)

George Osborne says there won't be a currency union. The Scottish Government has made its position clear as to why it says that, assuming a Yes vote, it would clearly be in the UK's interests as much as ours to have a currency union. The unnamed UK minister, Philip Hammond, says that of course there will be a currency union as does (or to be scrupulously fair, did) Alistair Darling and as does the Nobel Prize winner Sir James Mirrlees of the independent Fiscal Commission working group .  The British government doesn't want us to vote Yes so of course it will say, now, that it won't agree to currency union. But what will it do after we actually have voted Yes? How can we know whether it is Mr. Osborne who is right or Mr. Hammond, Mr. Darling and Sir James Mirrlees? Those claiming there will obviously be an agreement (like Mr. Darling and Mr. Hammond) cite a common, mutual interest in having one, after a Yes vote. If only there was an independent, expert economist who could give a view.
 

Well there is. And boy is he unhappy.