Scotland the brave: the road to the referendum

The spectre of Scotland voting yes to become independent of Great Britain in ten days haunts the British press and Britain’s political class. Like its cousin the Québec independence movement the Scotland referendum campaign has tightened into an apparently close horse race as the referendum day draws near. Many Canadians who follow politics and particularly Québecers are following this referendum closely. Many Canadians have Scottish or British roots and families. Many of us are very familiar with the excitement or dread that this sort of referendum can produce.The debate in Britain revolves around the traditional issues that bedevil these affairs. What are the terms on which Scotland would separate from its three hundred year old partner? Would Scotland have its own central bank and currency? The Scottish independence movement says it intends to negotiate a currency union with Britain but the Government in London insists that it won’t agree to a currency union. How would the national debt be divided between the newly recreated country of Scotland and its former partner? What role do ideological differences play in the debate? Can we make better sense of the debate by viewing it as a clash between neo-liberal politics and democratic socialist or social democratic politics? What would happen to Wales, England and Northern ireland if Scotland left? If Scotland votes narrowly no will this close call lead to federalist reform in Great Britain ? How much capital flight from Scotland will occur in the final days of the referendum campaign ? What would the consequences be of a yes vote in Scotland in Spain with its Catalan separatists, in Belgium, in France, in Québec ?

Paul Krugman has written a piece in the NYT in which he argues that Canada is an independent Scottish proxy in North America, a successful much smaller independent country from the U.S. with its own central bank and currency and more left of centre in social and economic policy. So if Scotland wishes the same status it needs to plan for its own currency and central bank something its nationalist leadership has insisted won’t happen. But Canada never broke away from the US. rather it was the US that broke away from British North America a revolution that Canada refused to join. So the analogy is not a good one.Furthermore Canada like the U.S is a continental country with vast resources and a population that is over 35 million people.But Krugman is right to argue the importance of having ones own currency and central bank. Some years ago when the Canadian doller was trading in the low 60cents US band a number of misguided Canadian economists speculated on the wisdom of abandoning our currency in exchange for a new shared currency with the U.S. That would have been a very bad idea and looks particularly foolish now that the currency has traded at above par since then and in the 90cent range recently. I wish the Scots and Britons well in the coming tense days.

Personally I think a respectful rejection of the nationalist side is a better outcome for both Scotland and Great Britain. Creative federalism and devolution can solve most of the complaints. A renewed commitment to full employment and greater support for the NHS would also help considerably. Whatever the outcome from the wilds of the Grampian mountains to the beauty of the south Downs from the delights of Edinburgh to the grandeur of London Britain and Scotland will remain a diverse land rich in history, culture and natural beauty.

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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