Scottish Referendum:Currency Plan B (for Broke?)

This is the text of my letter,  published in The Falkirk Herald last Thursday:

"It's Scotland's pound and we're keeping it," they say. We are still being treated like children who do not understand economics.

The pound is the currency of the union. It is not Scotland's pound, nor is it England's, Wales' or Northern Ireland's pound. Scotland proposes leaving the union. You cannot divorce and expect to retain the joint account. When you're single again you must establish your own account and pay your own way.

It's no good repeatedly telling your ex-partners that it's somehow in their interest to continue underwriting your debts; after the 2008 crisis they won't believe you.

If Scotland used the pound unilaterally we would have to accumulate pounds by trade, since our government could not create for itself an increased supply of a foreign currency. Failure to generate a trade surplus would thus preclude the blithely promised fairer society. You might want it, but you can't have it if you can't pay for it.

Without a central bank, borrowing would become more expensive, especially if the Scottish government followed through on its reckless threat to throw over responsibility for its share of the UK National Debt. Remember a Scottish Chancellor under a Scottish Prime Minister recently increased that debt to rescue The Royal Bank of Scotland. No-one lends cheaply to those perceived as defaulters.

Loss of financial sector jobs could easily run into tens of thousands, reducing tax revenues, increasing the Scottish government's need to borrow and raising interest rates still further.

Using sterling without agreement has costs. It's not just a matter of thumbing our noses at the rest of the UK and saying we'll do as we like.

Ask a Silly Question

It is annoying that the standard of the independence debate remains low.  Such an important issue deserves better.

For example, we are told that most people agree with the proposition "decisions about Scotland should be taken in Scotland". What a surprise. Surreptitiously sliding emotional bias into surveys is a standard method of distorting results.

Suppose we consider a few other questions formatted in a similar way. For example, do we agree that "decisions about banks should be taken in banks"? Is it purely a matter for bankers to determine whether our deposits should be invested wisely or repaid on demand? No? Thought not.

Perhaps the Northern Isles might care to claim that decisions about the Northern Isles should be taken in the Northern Isles? How would Edinburgh respond to the assertion that "It's Shetland's oil"?

Let us pursue the logic further. Can anyone think of any reason why decisions about me should be entrusted to anyone but myself? What's all this nonsense about having to obey laws?

It should be fairly obvious that it is almost impossible to take decisions affecting one part of a community that do not affect other parts of that community, sometimes very seriously. For any society to be viable, its members must sacrifice some of their individual freedom to the greater good. The real question is therefore whether the value of the greater good is more than the value of the sacrifice.

Now let's think. What would be a good example? How exactly did Scottish banking get bailed out during the financial crisis? Who is placing the warship orders that could keep the Clyde shipyards open? Who decided to give Scotland a bigger share of UK public spending per head than England?

Or perhaps these are the sort of decisions about Scotland that should be taken in Scotland?