For those who think the SNP is riding high in Scottish popularity I have to say that the feeling is not universally shared. Whilst the desire for independence is high, and Sturgeon is doing well in the polls, within the SNP itself there is deep disquiet about SNP policy.
Like too many political parties the SNP is a personal fiefdom. A few people, mainly advisers, around Sturgeon, dominate SNP policy decision making. And the SNP membership is none too happy about that.
The adviser about whom there is, perhaps, greatest disquiet is Andrew Wilson. He is an economist, at one time with RBS. He became an MSP. And now he heads a lobby company called Charlotte Street Partners. But perhaps most importantly, he is, it seems, sole economic adviser to Nicola Sturgeon.
He wrote the Scottish Growth Commission report that suggested Scotland would have to be committed to austerity for decades after independence to build up foreign exchange reserves, which he wanted to be its priority.
And he has created the policy of sterlingisation, which has been rejected by the SNP membership in conference but which the SNP leadership appear to remain committed to (an indifference to the opinion of the membership which people in many political parties will be all too familiar with).
Sterlingisation describes a policy where Scotland would become independent, supposedly, and then use sterling as its currency for a period of up to ten years because, apparently, unlike just about every other new country in earth it would not be able to manage a currency of its own, and nor would it want to have the freedom such a currency would provide to pursue its own economic policy. Instead it would rather be beholden to the state from which it had sought to be free, and entirely at its mercy.
Wilson reiterated this policy objective at the weekend in a press interview. Tim Rideout, a regular commentator here, and coordinator of the Scottish Currency Group, to which I am an adviser, takes up the story in an article published in the National newspaper yesterday, which he has given me permission to reproduce here.
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JUDGING by the reaction then the Yes movement has been taken by surprise with the claim that ‘Andrew Wilson is the brains behind the YES movement' in an interview in the Sunday Herald. It would probably be more accurate to say that he is the brains behind a very small group of the SNP leadership clustered around the First Minister.
Lets focus, though, on the economic issues that Andrew Wilson raised.
Firstly, there was a gratuitous attack on Modern Monetary Theory. MMT is a statement of how fiat currencies work and have worked since Richard Nixon brought the last remnant of the gold standard to an end in 1971. The government creates the currency and spends it into existence. It then circulates around the economy before eventually being taken back via tax. Money is an IOU created by the state, and it actually says this on bank notes in the ‘I promise to pay the bearer' bit. The logic that flows from this lens includes that there is no such thing as ‘taxpayer's money' since all money is state money. What it should always be called is public funds. It is also evident that a shortage of demand, as in a recession, requires the state to increase spending or cut tax and run a deficit.
Mr Wilson says he ‘respects arguments' and dislikes somebody that puts a badge on something and ‘shouts at that badge'. He seems not to see the irony in that is precisely what he did in his attack on MMT.
The second point mentions the National Debt and he wants ‘an annual solidarity payment' to go to rUK. One would have to ask Why? In International Law and under the Vienna Convention the UK has already said clearly (in 2014) that it would be the Continuing State. They get all the assets and all the liabilities except what is in Scotland. So rUK keeps the UN seat, the Falklands, the Washington embassy and the National Debt. This isn't a problem for them — it is just the National Savings when looked at from the other side of the account ledger, and there is no chance of it being repaid. So long as we ask for none of their assets then we should not take any of the debt either. We should also do our own thing on development aid. There is no logic in letting rUK do it for us, especially when all the relevant civil servants work in East Kilbride.
Thirdly, and most seriously, Wilson hasn't a clue on currency. Given he was actually at the debate, it seems he does not even know what the SNP policy is. Conference was explicit that we start the preparations for a new currency ‘as soon as practicable after a vote for Independence' such that we are ready to introduce that currency ‘as soon as practicable after Independence Day'. Whatever else it might mean, nobody would say ‘asap' was 10 years. He actually has everything the opposite way round to reality. It is sterlingisation that is economically and politically risky. It is likely this policy would collapse within weeks of the indyref2 campaign starting as the No side will just say we will be like every other country and introduce our own currency. After Independence and leaving the sterling area then it is sterlingisation that is extremely risky. It is absolutely not the same as using sterling within the UK. There is no lender of last resort, there is no control of things like interest rates, borrowing will be much more expensive (not less as he claims) because we will have to go to the international markets, and there is no source of emergency funds for something like the pandemic.
He continues that we need to ‘sort out borrowing, taxation, growth and exports' before we introduce our own currency. This is a massive failing as it demonstrates no appreciation for the fact that it is having our own currency which enables these things to happen. The exchange rate adjustments, for example, is exactly what does bring your imports and exports into balance. He also does not understand that a government deficit is a private sector surplus, and as such typically good for the citizens and business and something that most governments should do most of the time (unless there is a boom).
The final word on the economic front is that the finances of any state with its own currency are always sustainable. The only time they are not is if a state breaks the cardinal rule and borrows in a foreign currency. Borrowing in dollars was the downfall of Venezuela, Argentina, and many others. Strangely, borrowing in a foreign currency is precisely what Wilson would have Scotland do.
Looking to the future, and to assist in keeping the timetable to independence and our own currency much shorter than 2026, there is a new motion being submitted to the November SNP conference. This instructs the SNP to start drafting a bill to establish the Scottish Reserve Bank as the new central bank so that we are ready to start the parliamentary process ‘as soon as practicable after a vote for Independence'. It also sets out the principles of the bank, such as full democratic control and accountability, and provides for it to create and manage a sovereign wealth fund.
The motion has been submitted by Dalkeith SNP (who also won Amendment D in 2019) and is supported by many other SNP branches and elected officers such as Angus Brendan MacNeil MP and Douglas Chapman MP. You can find out more by visiting the Scottish Currency Group on Facebook or www.reservebank.scot. You have until Friday October 23 for your branch, MP or MSP to lodge a copy with SNP HQ.
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I suggest that the polls in Scotland are largely a reflection of a desire for independence rather than support for the SNP, after all the main driver of the recent increase in support appears to be Westminster rather than anything the SNP have done. Nicola Sturgeon has been fairly good at PR so far, especially and very questionably with Covid, but the underlying serious doubts about the current SNP leadership and their clear bias and underhandedness (eg effectively blocking Joanna Cherry for standing as a candidate at the next Scottish election & the Alex Salmond affair, to name just two) has led more than a few to support the suggestion of voting SNP while holding your nose. At the moment the SNP are maybe the main vehicle to push for independence, so basically a means to an end, but longer term, the current SNP leadership would have far less support in an independent Scotland, which maybe explains a lot about the current situation.
I agree with all that
We have a PR electoral system in Scotland (the d’Hondt system), which prevents any party achieving large majorities in Holyrood. Once independence has been achieved after a transition period, an election would become due in a relatively short time and all major parties would be in with a shout of forming a government or leading a coalition. SNP would obviously be one of these, but it is widely seen at present as the only party capable of securing independence, so, post-indy, voter choice will be down to manifesto policies and SNP may not come out on top at the polls.
After Independence we should not be allowing UK based parties of any colour to influence Scottish Politics. We should be open though, to new Scottish parties with leaders that have Scotland in their hearts. No other country in the world would allow parties of another country to project their policies onto their own Parliament.
Currently they are actually the enemy within, agents of another state. They cause problems in our parliament every hour of every day they are there. So much time deliberately wasted in their Unionist policies to work against our people and our Parliament.
Imagine for a moment if our parliament consisted of Scots who really do have the welfare of our people in their focus, and where, without the drag of the outdated Unionism working against us all the time.
We are Scots, we will argue, however if we argue with the intent of making Scot’s lives better then it is a good thing, nothing like what we have to currently endure.
I really can’t imagine how rUK parties could possibly operate in Scotland after independence
Some e.g. the Greens, are already independent now
Others would have to become so or fail
I agree. Behaviour of SNP generally in recent times is becoming increasingly concerning but they are the strongest vehicle to get us over the finishing line. Thereafter I think their future depends on their attitudes & behaviour now.
Richard,
Why are you, and Englishman, living in England and with no skin in the game if Scotland becomes independent so keen for it to be so?
Justice
Just as Thomas Payne sought justice
Ah Richard Murphy, caped crusader.
And what if the policies you are selling independence on are a total disaster, and the claims you make turn out to be false?
What then for he people of Scotland? You won’t suffer a bit, mind.
You think I will single-handedly deliver independence?
Wow, I had no idea I was so powerful
I wholeheartedly agree with all Ian has said. The ‘leadership’ appears to be at odds with the mass of the membership, about a number of things, not only on the timescale for the introduction of a sovereign currency.
Andrew Wilson chairing the Growth Commission and Bernie Higgins as chair of the Advisory Group on Economic Recovery. Both are depressing and conventionally neoliberal in their suggestions but have broadly been adopted by the Scottish government and indicative of the current thinking of the ‘leadership’!
As far as Richard’s motivations are concerned, they are probably selfish in nature in the knowledge that when, after independence, his visits to Scotland will be far more enjoyable in the meeting of many happier and more prosperous Scots 😉
Agree with much of the above!
Thomas Paine?
Indeed…. I realised as I saw it go and was in too much of a rush to correct
Brilliant response Richard!
Tim is an excellent advocate for the more enlightened wing of the SNP and the Independence movement more generally and is doing sterling work (oops!!) on the currency issue. Common Weal too have written on currency and how to start a new country. I hope that these views will eventually prevail.
Of course there will be a transition period for “Scexit” and the blueprints produced by the SCG and CW are ready to be shoe-horned-in in preparation for Independence Day. But we should also try to bring Scottish Labour and Libdems on board too during that transition (I think the Greens are already on board) to add weight to the voices calling for a Scottish Currency.
As for Andrew Wilson, I consider him to be a baleful influence on the SNP leadership and someone stuck in the archetypal neoliberal world view where the interests of the wealthy and powerful, the bankers and finacialisation wizards must be protected at the expense of the 99% of ordinary citizens. His ideas would leave us independent in name only, unable to utilise the panoply of economic levers available to a country with its own currency and central bank.
I sometimes wonder if he wouldn’t be more comfortable in the Tory party. It would certainly make many of us more comfortable if he was.
In Scotland we have to be ever-mindful of the fact that UK Gov and its various organs of state as well as elements of the Civil Service will have penetrated the SNP and elements of the wider independence movement to some extent. Influential people will be turned – it happened in Scotland in 1707 and in countless other places around the world during the Empire – so no surprise if it happens now.
On the question of currency, I’ll be very conflicted in my voting if an independent Scottish currency is not adopted as official policy. With sterlingisation we’d be no better off economically and have no voice in rUK’s economic policies. Likewise with the Euro. I want to see an independent Scotland for a range of reasons (more egalitarian society, better financial regulation, no nuclear WMDs in Scotland, positive action on climate change etc), but I also want a secure economic future for my grand-children and a sovereign currency and sound, MMT-driven economic policies are essential to achieve these goals
Vote Yes
Then vote the SNP down if that’s what they want to do
Precisely. That was what I sought to say (in vastly more words) in my response to Ian’s post at the top of the blog!
Ken, if you are not already then join the Scottish Currency Group on Facebook. Obviously what happens after Indy depends on who is elected.
That’s what I’ll be doing. My first vote after Independence has been confirmed will be for the Greens unless there is another party which has a more socialist agenda and has some understanding of the absolute necessity of a sovereign currency.