Sunday, 17 August 2014

All aboard the Independence Convoy

So, five more weekend blogs until polling day.

I quite like politics so I’m not really one to complain about the length of the campaign. What however is undeniable is that, despite its length, some of those saying that they intend to vote Yes simply have no idea what they are voting for.

The obvious example is the currency. I’ve pointed out before that when Eck declares that “there will be a currency union” he never for a moment goes on to say “and if there isn’t we’ll call the whole thing off” but it is clear that some at least of those telling pollsters they will vote Yes do so assuming we  would keep the Pound. They won’t however be offered the chance to vote again if/when we are not.

Then again, many voting Yes openly state they don’t want to keep the Pound. That this would, at best, be a temporary expedient. A future Scottish Government of their preferred political complexion would pursue a different policy. This fundamentally misunderstands the nature of the Currency Union Eck (even fancifully) proposes. This would be an international treaty that bound future Governments on both sides for at least a prescribed fixed period. Indeed, insofar as I understand Eck’s proposal, in perpetuity. If the treaty read instead that “there will be a Currency Union but only so long as one side and the other wants it” then it would be worthless. The markets would smash it in five minutes by simply being unwilling to trade Scottish issued Pounds and British issued Pounds on the same basis since the issuers themselves would, at the point of issue, have conceded that the two currencies might, at some future point, have different values. That is what destroyed the Czech/Slovak currency union so quickly.

So, although the” Vote Yes means we’ll keep  the Pounders” and the “Vote Yes and we’ll ditch the Pounders” are both voting Yes they are patently voting for quite different things.

Quite who gets to “interpret” their vote is something I’ll come back to.

I do however want to make a point that it seems to date my own team have failed insufficiently to articulate. A separate Scottish Currency is potentially disastrous for the poor. There is no point in the Scottish Government simply stating that “A Scottish Pound is worth the same as an English Pound.” Assuming that it was an internationally convertible currency that parity would not be their decision. And it is inconceivable that initially at least the new currency of a Country with no economic track record would stand the test against that of a currency with three hundred and more years of international tradability. I’ve pointed out that this is specifically the reason that the Scottish Government’s own Council of Economic advisers specifically recommended against this option.

But let’s assume that the Scottish Government went ahead anyway (in my view it would be their only viable option)  and then paid Scottish Social Security benefits  on the basis of their assertion that the two Currencies “are” worth the same. That assertion would be worthless when the recipients of these benefits tried to spend their Scottish Pounds in the shops. For the prices in the shops, not least for imported FOOD, (and that is an awful lot of our food) would reflect the International value of the Pound Scots. And the option of paying out more Pounds Scots in Social Security Benefits to compensate for the reduced value of the currency, even setting aside which taxes  would be raised to fund this, would, in any event, simply lead to an inflationary spiral that devalued the currency even further.

And just in case you think it would only be those directly dependent on the state who would be affected, so would anybody with a Scottish House and a Sterling mortgage. Not only would their house be instantly worth less, in real term;  unless they hade been foresighted enough to renegotiate its terms, any mortgage obligation to a British Bank would continue to be payable, by them, in Sterling while they themselves were only being paid in Pounds Scots. I joked in the past, but it was not entirely a joke, that if my only consideration in voting was the interests of lawyers I would be as enthusiastic for Yes as Alex Salmond. For the potential emergency remortgage work and later repossession litigation would be enormous.

And finally, just in case the public sector salariat think themselves immune, they might have contributed to their pensions in Sterling but the Scottish Government can “honour” them in whatever currency they wish.

When a currency is devalued it always impacts on domestic living standards but this is usually disguised by the diversity of foreign trade and the feature that since the abandonment of fixed exchange rates (modern) devaluation takes place gradually. Here we are talking about instant devaluation of our currency against that of the Country with which 70% of our trade is conducted. Think that through. Although, to be fair, it would be good for exporters. And, as I say, lawyers.

It seems to me however that, to date, my team have allowed the impression that whatever currency we use is a matter of grand economics and possibly sentiment but actually of little day to day significance. Tell that to the Greeks.

But,  and here is my central point. If you vote Yes you are voting for whatever you get and the arbiter of what you get will be Alex Salmond. The express proposition in the White Paper is that the current Scottish Government be given a mandate to negotiate the terms of Independence and that Independence take place before any opportunity arises  to replace that Government. And no matter whether I,  or Jim Sillars or Patrick Harvie, like it, the current Scottish Government enjoys an absolute majority at Holyrood. So to those who suggest that “The wider Yes movement” (setting aside for the moment whether such a thing actually exists) would have a say, I reply “how”? Mr Harvie leads a minority opposition Party with two MSPs. Mr Sillars isn’t elected to anything and it is unclear to me how he ever would be.

But I close with perhaps a question possibly even more important than currency. Membership of the EU.

A good number of those voting Yes assert they are doing so for fear that otherwise “The English” might, at some future date vote to take us all out of the EU. Setting aside the frankly ludicrous proposition that we could remain in the EU if the rest of Britain, with whom we do 70% of our trade and with whom we wish to maintain an open border, opted to leave, I will take these Europhile nationalists at their word.

The shortest ever negotiations to join the EU involved  Finland and took 31 months from start to finish. Now, let’s just take from that that there is a possibility, at least, that negotiations for Scottish membership would not be concluded in the 18 months between September 2014 and March 2016, the future date we would putatively, on 18th September 2014, have voted for Scottish Independence to take place. Who would decide what objective was given priority? The current Holyrood Administration. That is expressly what the White Paper says is authorised by a Yes vote.

So, if you want to remain in the EU and nonetheless intend to vote Yes you are expressly delegating that decision to Alex Salmond and, in March 2016, trusting him to prioritise your desire for EU membership over his desire to achieve his life long ambition of Independence. And to do so knowing he faced an election in May 2016.

So long as you vote Yes on that understanding, and are fully aware of what you are doing, fair enough. But don’t complain after the event. For the First Minister will be in possession of “The Sovereign will of the Scottish people” and you will have given it to him.


  1. Vote Yes if beheading, ethnic & religious cleansing is your thing then

  2. Regarding the EU, two points:

    1. If the (r)UK leaves, Ireland would be in your "ludicrous" position of having an open border with the UK under the CTA (as it is not in Schengen) and conducting most of its international trade with the UK. Both of those assertions would continue to be the case irrespective of Scotland's status. Presumably the EU and Ireland would have to give this issue some thought in the event of a UK in/out vote. I wouldn't have thought the electorate in Ireland would say "oh, we've got to leave the EU since the Brits are out".

    2, regarding the EU, there is no treaty provision that says what happens if part of member state secedes. All there has been are the (differing) assertions of various Commission figures. It also has to be borne in mind that the UK's treaties with the EU would be affected given the effects to its population and economy. The other member states - even Spain - have made clear that it would not object to Scotland if the UK does not object. I think the Spanish have very cleverly drawn a distinction between their situations and Scotland. If there is a yes vote on 18/9, the Spanish will say that Cameron was stupid to allow a referendum in the first place.

  3. Further to the point about Ireland and the (r)UK leaving the EU, this report is interesting:

    "Wall Street banks drawing up plans to move operations to Ireland in event of UK exiting EU"

    Presumably none of them would consider moving to Edinburgh if an independent Scotland was in the EU and rUK was going to leave.