Britain is under 72 hours away from a once-in-a-lifetime vote on Scottish independence that could break up the 307-year-old United Kingdom, splitting apart one of America’s key global allies (JAMIESON, 2014). With polls suggesting that a Scottish split from the rest of Britain is a real possibility; lawmakers including Prime Minister David Cameron are making urgent appeals to save Britain its biggest constitutional upheaval since the Wars of Independence that led to the creation of the United States.
What will be voted on?
More than 4.2 million people in Scotland -- or 97 percent of the adult population -- have registered to vote on whether or not to remain part of the United Kingdom.
Scotland was an independent country until 1707, when the Act of Union with England led to the creation of Great Britain and, ultimately, the United Kingdom -- which also includes Northern Ireland.
As Scotland contemplates independence, some, such as Paul Krugman, have questioned the "economics".
“Well, I have a message for the Scots: Be afraid, be very afraid. The risks of going it alone are huge. You may think that Scotland can become another Canada, but it's all too likely that it would end up becoming Spain without the sunshine.” – Paul Krugman
Comparing Scotland with Canada seems, at first, pretty reasonable. After all, Canada, like Scotland, is a relatively small economy that does most of its trade with a much larger neighbor. Also like Scotland, it is politically to the left of that giant neighbor. And what the Canadian example shows is that this can work. Canada is prosperous, economically stable (although I worry about high household debt and what looks like a major housing bubble) and has successfully pursued policies well to the left of those south of the border: single-payer health insurance, more generous aid to the poor, higher overall taxation.
Joseph Stiglitz
Does Canada pay any price for independence? Probably. Labor productivity is only about three-quarters as high as it is in the United States, and some of the gap may reflect the small size of the Canadian market (yes, we have a free-trade agreement, but a lot of evidence shows that borders discourage trade all the same). Still, you can argue that Canada is doing OK.
But Canada has its own currency, which means that its government can't run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn't. And that makes a huge difference.
Could Scotland have its own currency? Maybe, although Scotland's economy is even more tightly integrated with that of the rest of Britain than Canada's is with the United States, so that trying to maintain a separate currency would be hard. It's a moot point, however: The Scottish independence movement has been very clear that it intends to keep the pound as the national currency. And the combination of political independence with a shared currency is a recipe for disaster. Which is where the cautionary tale of Spain comes in.
Read more here:
http://www.sunherald.com/2014/09/16/5803335_paul-krugman-the-scots-should.html?rh=1#storylink=cpy
Stiglitz
Would Scotland, going it alone, risk a decline in standards of living or a fall in GDP? There are, to be sure, risks in any course of action: should Scotland stay in the UK, and the UK leave the EU, the downside risks are, by almost any account, significantly greater. If Scotland stays in the UK, and the UK continues in its policies which have resulted in growing inequality, even if GDP were slightly larger, the standards of living of most Scots could fall.
Cutbacks in UK public support to education and health could force Scotland to face a set of unpalatable choices - even with Scotland having considerable discretion over what it spends its money on.
But there is, in fact, little basis for any of the forms of fear-mongering that have been advanced. Krugman, for instance, suggests that there are significant economies of scale: a small economy is likely, he seems to suggest, not to do well. But an independent Scotland will still be part of Europe, and the great success of the EU is the creation of a large economic zone.
Besides, small political entities, like Sweden, Singapore, and Hong Kong have prospered, while much larger entities have not. By an order of magnitude, far more important is pursuit of the right policies.
Another example of a non-issue is the currency. There are many currency arrangements that would work. Scotland could continue using sterling - with or without England's consent.
Because the economies of England and Scotland are so similar, a common currency is likely to work far better than the euro - even without shared fiscal policy. But many small countries have managed to have a currency of their own - floating, pegged, or "managed."
The fundamental issue facing Scotland is different. It is clear that there is, within Scotland, more of a shared vision and values - a vision of the country, the society, politics, the role of the state; values like fairness, equity, and opportunity. Not everyone in the country agrees on the precise policies, on the delicate balance.
But the Scottish vision and values are different from those dominant south of the Border. Scotland has free university education for all; England has increased student fees, forcing students with parents of limited means to take out loans.
Scotland has repeatedly stressed its commitment to the NHS. England has repeatedly made moves towards privatisation. Some differences are of long standing: even 200 years ago, male literacy in Scotland was 50% higher than in England, and Scottish universities charged one-tenth of the fees for Cambridge and Oxford.
Differences in these and other related policies can, over time, lead not only to markedly different growth rates, and thus to markedly different levels of GDP per capita - swamping any slight short run impact - but also, and more importantly, to differences in the distribution of income and wealth. If the UK continues on its current course, imitating the American model, it is likely that the results will be like those of the US - where the typical family has seen its income stagnate for a quarter century, even as the rich get richer.
Independence may have its costs, although these have yet to be demonstrated convincingly, but it will also have its benefits.
Scotland can make investments in tidal energy, or in its young people; it can strive to increase female labour-force participation and provide for early-years education - both essential for creating a fairer society. It can make these investments, knowing that the country will recapture more of the benefits from them through taxation.
Under current arrangements, while Scotland bears the cost of these social investments, the extra tax revenue resulting from the additional growth from these investments will go overwhelming south of the Border.
Analysis
The first is: whatever Scots decide, all decent people in the world will welcome Scotland, one of the pleasantest nations there are, in their midst.
Whether, as now, part of the UK or as an independent nation-state, doesn't matter.
The second has to do with the nature of independence in the modern world.
Today, more than in millennia of past History, fully independent nations are a myth. We are all constrained by trade, incredible ease of communication, moral international rules, zillions of clauses in treaties, huge movement of masses of different nationalities.
In practical terms the life of Scotland and Scots will change very little, if at all, whichever decision Scots make.
Apart a few days of either euphoria or relief, practically nothing will change much.
Markets, finance, debt, currency, all that matter very little: see Europe's periphery with her recent speculators induced upheavals and Brazil, with some half a dozen different currencies in 40 years, as examples.
"Iffy" questions are forbidden but I doubt the practical life of the denizens of these two parts of the world would be any different if those changes hadn't occurred.
We give too much importance to minor matters.
What will change definitely is emotions. Pride in becoming an independent nation-state, pride in being part of a successful and prosperous union of nations.
Both equally justifiable but different in nature.
For Scots to decide which they prefer.
Emotions do count. Scots will certainly and wisely choose the ones they prefer.
Let us wish full happiness to Sots and Scotland whichever decision they make.
Posts
0 comments:
Post a Comment