John Warren was recently asked by a commentator on this blog to explain his opinion on what he sees as the deeply embedded Scottish attachment to sterling as a currency. The note reproduced below is John's response.
As John has told me:
I support a Scottish currency, but I am confident I understand the culture in Scotland (and the latent small-c conservatism, which runs deep); and that the case is not adequately being made. Currency never played the part is should in 2014, because Sterling was assumed, and scarcely debated; and it has not been adequately addressed since. It has been fudged. A very hot potato. Having the right theoretical case is not enough, if you do not persuade people to change their behaviour.
I don't agree with all that John says, but his opinion is important, and certainly indicates that there is a lot more political thinking as well as work to be done on this issue.
One word of warning: this post is nearly 4,000 words long. You might want to make a brew before you start.
It's Scotland's pound, and we're keeping it
The words of the title were Alex Salmond's; SNP leader, First Minister for seven years, the only man to win an overall majority for his Party in Holyrood, under an electoral system designed to prevent it; economist, banker and probably the shrewdest, most effective political operator in Scotland (or probably Britain) in the 21st century, with the arguable exception of his younger peer, Nicola Sturgeon. Salmond lost the referendum, but polled 45% on an unprecedented 84% turnout, when Conservative Unionists under Cameron only offered the vote because they were confident Salmond's support would scarcely rise above 25%-30%, under the pressure of a real choice. The 45% assumed the pound sterling, and the EU membership were safe. Not everyone did.
Salmond's commitment to independence is scarcely contestable but he had no doubt about his position on the issue of the currency, because he clearly believed keeping Sterling was by far the wisest political course to follow for Scotland. John Swinney, then Finance Secretary made this all embracing claim: “Our framework is one of monetary union with the rest of the UK. Retaining the pound under independence is something that I believe is in the interests of Scotland, the rest of the UK and the stability of Sterling itself.” (11th June, 2012); and Swinney further claimed, in language echoing Salmond, that the Bank of England was, “as much Scotland's as anybody else‘s” (BBC News, 11th December 2012).
Alex Salmond didn't hold this strong position on Sterling entirely for technical, economic reasons; but because of the fundamental nature of the politics Sterling invoked in Scotland. Salmond confidently underscored his position on the currency in a Holyrood debate, during the charged political atmosphere in the run-up to the referendum, declaiming:.”We are keeping the pound in a currency union [because] we are appealing to the greatest authority of all – that is, the sovereign will of the people of Scotland.” (Holyrood, Tuesday, 5th August, 2014).
Salmond was quite wrong about the inviolate destiny of the pound (Sterling) and independence, but clearly not about his own belief that it represented the sovereign will of the Scottish people. Wrapping the florid language of the ‘sovereign will' in the destiny of a currency may seem to suggest an unusual, emotive commitment to hard cash; but it is scarcely surprising. This is Scotland. Salmond believed he represented the orthodox, and politically safe approach to currency, without him, or almost anyone else of influence, needing to justify his case. He did so because his argument was conventional wisdom in his Party (and of course for the Unionists he hoped to persuade); and was generally accepted, as both fairly obvious, and uncontroversial in the country (save for a minority of acute, but largely ignored critics).
Survation carried out a poll published, 19th February, 2014, which addressed the issue. Here is an excerpt from the conclusions on currency: “The preferences of what both ‘Yes' and ‘No' voters wanted were broadly similar, with both having a strong preference for a currency union that would enable them to keep the pound (41% for ‘Yes' voters and even more, 52%, for ‘No' voters). But when asked what they expected to actually happen, only 23% of ‘No' voters expected a currency union to come about, less than half of those who had wanted that as their preferred option. In contrast, fully 45% of ‘Yes' voters were confident that a currency union would come about”. But the currency union didn't happen.
The transformation in SNP/independence currency policy since 2014 is total, but the evidence that the public has yet been persuaded is much thinner than proponents wish to believe. They are complacent. They are looking for easier to deal with excuses for the inability to move the ‘dial' on independence support than for currency. I do not claim it is the only problem: but it is a factor, it hasn't been fixed, and so far has been poorly, and unconvincingly addressed as a matter of critical public persuasion.
The damascene conversion of the SNP to a Scottish currency subsequently to 2014 had nothing to do with choices made from conviction. There was little choice (this too has been ‘glossed'). The conversion from the Sterling commitment was based on the fact that it was Scotland's pound, only as long as Scotland was in the Union. There, was the inconvenient fact. The British government laid out its position, bluntly; choice played little part in it.
Essentially, one party in the Union, rUK (remain UK - England, Wales, NI), had to ensure a “continuator” state existed; and that there was no final dissolution of the rump UK state. Critical factors were the 2,000+ global diplomatic, economic and monetary treaties of the UK; and the National Debt, to select only some obvious critical continuities. rUK was incontestably the only viable candidate as continuator state (for the detail, see ‘Scotland analysis: Devolution and the implications of Scottish independence'; HMG, February, 2013, Cm8554). It became clear that without rUK voluntarily agreeing to a currency union, Scotland could not assert legal rights over Sterling: and rUK, in the event made clear it was not going to offer a currency union (for the detail see ‘Scotland analysis: Assessment of a sterling currency union'; HMG, February, 2014, Cm8815; and for outright rejection of a currency union, speech by George Osborne, Chancellor, 13th February, 2014 “If Scotland walks away from the UK, it walks away from the UK pound”; see also, letter from the Chief Secretary to the Treasury, Nick McPherson to the Chancellor, 11th February, 2014, attached to Cm8815).
Salmond may have been wrong on the currency issue for a number of reasons, and although a man not easy to write-off, he is out of power and favour: but Scottish independence has moved the dial from around Salmond's extraordinary 45%, to a scarcely earth shaking 48% in the nine years following the referendum; in the most calamitous period of abject, despised, failed, and ridiculed British mis-Government, since at least the 1930s; a farce enriched in the theatre of ever changing, forgettably risible, short-lived Prime Ministers - five Conservative PMs since 2016; every one a disaster. Even with the promises of Unionists still ringing in their ears, that EU membership was only safe in Unionist hands, as the Scots voted vainly to try to keep Britain in the EU in 2016; and Scotland voting 62% to Remain, it all counted for precisely nothing, and the support for independence has scarcely moved. It remains unmoved today, when we can all see the appalling result of Brexit; with no way out of the Brexit mire politically possible. I submit the latent currency problem, never satisfactorily resolved in the public arena at least, since 2014 is a factor; and a greater factor than some of the mishaps of the Scottish Government, however vigorously exploited by the Unionist media.
Offered so many easy political targets by the British Government and Parliament's serious failures over thirteen years, independence in Scotland sits in a state of cataleptic inertia; increasingly beset instead by the foreseeable (tax) traps set within the Westminster devolution settlement. Two matters are confused by those independence supporters who insist there is no problem with public acceptance of the independent currency issue. The claim is asserted, but neither adequately made, still less proved. Independence always required a separate Scottish currency. Salmond was always wrong about the currency policy. Depending on Sterling for currency, in or out of a currency union effectively defeats any real independent policy or action attempted by a Scottish Treasury. That truth does not fix the problem of the enduring place of Sterling in Scotland. Salmond was not wrong in his understanding of the general Scottish political opinion on the currency; and the Scottish commitment to Sterling, which has deep historical roots in the economic transformation of Scotland It has traction. It was not an issue for the public in 2014, until rUK made its position clear.
Those who argue for a Scottish currency, too often gratuitously assume that this fact alone is somehow virtually sufficient to persuade the Scottish electorate to support a Scottish currency. I do not believe they have made the case, both with the general Scots voter and especially the ones with real practical leverage on this issue; and the problem is an implicit, repressed (even, perhaps unconscious) reason in the public's mind that the SNP have failed to move the independence dial forward from 2014. The case for a Scottish currency is sound, but has not been made. The currency issue is the elephant in the room. It has not been fixed.
SNP and independence supporters now appeal to the confidence the Scottish people would have in a Scottish currency - that doesn't exist. They point to opinion polls. Here is the problem. Opinion polls represent potential voters. Each person counts for one vote. It is called democracy. Currency, however doesn't count votes. Each person in Scotland does not possess just one pound. Some have more money than others; some have less: a lot more, and a lot less. Some currency is institutionalised and a few people are able to move vast sums of money at discretion. It isn't democratic. Some of them, perhaps unfairly and disproportionately, may also be Unionist; or simply trust what they and their forebears have trusted for three hundred years, through thick and thin, and trust Sterling a lot more than a theoretical currency; more than you may think. In addition, it is a very dangerous assumption to deduce that because people claim to believe something; they will act consistently with the stated belief in big decisions, and under pressure. They don't (ever since Ackerlof and Dickens, ‘The Economic Consequences of Cognitive Dissonance', 1982; the issue of irrationality and decision making in economics and finance has rightly received much more attention). Think of it as a Dacia moment. Forget the car. You do the maths.
There is the added Scottish dimension: the history that formed the Union, and the enduring impact of Sterling. I have added this section because it seemed to be implied in the request for an explanatory blog of my comment on another thread, and the history is important in establishing the importance of Sterling in Scotland. The history is quite distinct from England's currency history, and played a larger part in Scotland's modern transformation, probably than any other ‘British' factor arising from Union. Dynasty and ‘established' religion do not play as decisive a role in modern Britain or Scotland as once they did; but Sterling does play a role, that is now, even more central to everyone's life. Faced with fundamental constitutional change, Sterling's significance in Scotland represents the most obvious and powerful feature of the change every Scot will face, every single day. It is not remote, or abstract.
The decisive constitutional moment, etched in religious crisis and dynastic upheaval was for British constitutional and intellectual historians, the Glorious Revolution, 1689-90. Another, far more prescient revolution was happening, unfortunately largely quite unnoticed by historians in Scotland over broadly the same period: a monetary revolution in Scotland. The transformation of Sterling.
Scotland in the 1690s was an economic wasteland. Two extraordinary men emerged, quite likely as the unexpected representatives of a deep, long repressed desire for economic transformation in Scotland; long suppressed by the land-owning Scottish aristocracy's vice-like grip over Scottish society in every vestige of life. They owned most of Scotland outside the major townships and in a pre-industrial society they were Princes in their domains; ruling through ‘heritable jurisdictions' with quasi-judicial powers. The maintenance of their power depended on the feudal principles that had guaranteed their predominance. There was, therefore no incentive for the aristocracy to change. They already owned everything; already wrapped in aged aspic. They provide the key to understanding the significance of the monetary revolution in Scotland.
The most critical economic problem of Scotland at the end of the 17th century was lack of credit. Everybody knew it. There was no money. Nobody, least of all in the Scottish Parliament (packed with the great aristocrats and those they patronised) knew how to fix the problem; or were prepared to take any risks with their quasi-feudal hegemony to take radical action. The two men who began to describe a modern world designed on radically different terms, that entailed a money transformation were visionaries; of an unlikely kind, a very, very modern kind that few then, or perhaps even now, adequately understood. The men were John Law (1671-1729), and William Paterson (1658-1719). Law was the son of an Edinburgh Goldsmith, brought up in the money business, and with a natural gift for mathematics. He was an adventurer, a successful gambler, a duellist with, by all accounts a ‘charismatic' personality, with international appeal. He presented a paper to the Scottish Parliament, which was desperate to find answers to Scotland's deep economic predicament in 1705 :'Money and Trade Considered, with a Proposal for Supplying the Nation with Money'; a radical proposal to reform banking in Scotland and realise the potential of credit to release economic growth. It was rejected.
Law nevertheless succeeded in implementing his exotic proposal on the biggest stage of all; France. He became the most powerful economic force in France, transformed banking there and with the ‘Mississippi Scheme' led the country into the biggest financial crash in its history. Ironically, England looked on in envy at the growing crisis, and faultlessly followed the example; with the ‘South Sea Bubble' (1720),the biggest financial crash in British history, at least until 2007. Law failed, but he transformed understanding of the nature of credit, debt and money; albeit historically as international monetary economics ‘bête noire'. He was much more.
William Paterson was the son of a Dumfriesshire farmer. He was a ‘projector', with some of the characteristic brilliant financial insight of Law, a man who understood Exchange Alley, but with an acute and original understanding and instinct for the principles of (yet unknown) central banking; that Law unfortunately lacked. William Paterson was the principal creative genius behind the formation of the Bank of England (1694). He soon left; a ‘projector' whose attention turned to Darien; the adventure that broke Scotland. It was however a much better idea in conception than the disastrous project that was actually undertaken.
The Scottish Parliament, desperate for economic answers that did not disturb the land-owning hegemony operating within Scotland, latched on to the idea of Empire provided by the conception of the new trading scheme offered, using methods that England had already exploited so effectively. The whole Scottish project, however was undertaken principally in response to Downing's notorious Navigation Acts (turning older English wartime measures into mercantilist era trade protectionism); which treated Scotland as a foreign power and blocked access to Scottish trade with English colonies. In response the Scottish Parliament finally passed the Act creating a new Chartered Company: ‘The Company of Scotland Trading to Africa and the Indies' (1695).
The critical point that is too often missed is that the idea was not originally Darien at all. The Company was a deliberate intent to compete with the English monopoly, The East India Company (EIC) directly (as, in fact is effectively declared ‘on the tin'). The money was to be raised, not principally in Edinburgh (where capital was scarce); but in London. The idea had indeed been encouraged in London by financial interests there that were seriously and determinedly opposed to the EIC monopoly, and that desired competition with it. Only Scotland could offer a chartered monopoly to allow that competition. This was the idea that was to provide an outlet for Scottish economic and imperial ambition.
It never happened. The Presbyterians had supported King William unwaveringly, into power and possession of the Crown; had always supplied significant numbers of Scots for his Dutch Army, and even the Chaplain who blessed the cause when he landed on the beach at Brixham; but this Protestant king now stepped into the fray; and killed the public offer in London stone dead. The Scots were thrown back on their own devices, and money; which did not run to competing with the leading monolith that was the EIC. Darien was a last, desperate throw of the independence dice in a new world of trading empires in which they simply refused to give up this last opportunity to participate independently.
Paterson's new, mad idea was a trading dream that spanned Pacific and Atlantic, at its narrowest point; Darien. A jungle that still remains a problematic jungle today. A global vision that was only executed in 1914, with the opening of the Panama Canal. Darien was a complete disaster. The colonists quickly succumbed to diseases they didn't understand, including members of Paterson's family. Many died. England (almost unbelievably), called on Spanish support to stifle the attempt to form the colony. It collapsed.
The most remarkable point of Darien is the list of members who subscribed, unwavering in the national commitment of huge sums of personal money, in a country short of credit. The subscribers are dominated by the landed elite by investment size. But everyone who could scrape some ‘siller' together is to be found in the list of the permanently obscure. The commitment was national. Many were ruined. Everybody lost, badly. Scotland was broken. In worse desperation than ever, John Law's ideas were rejected by the Scottish Parliament in 1705. Union with England now beckoned; from England's perspective the final solution to religious and dynastic uncertainty and weakness, and now credible in Scotland's perilous state. For the Scots Union was the only way to access Empire, and serve its frustrated ambition, provided they could protect the status quo for the elite in Scotland; their domestic hegemony. Outside the elite, in Scotland the Union was hated. Outside the elite didn't count. Even the elite were wary; less about the Parliament's ignominious sacrifice, than their social status and economic hegemony. How to fix it? The Scottish Parliament was to be sacrificed for two opportunities; not religion, not dynasty; but Empire - and Sterling.
Why sterling? William Paterson was a genius, and a Whig. The Darien disaster he recovered from and applied himself to solve the problem of how Union and Empire could be achieved. Paterson had realised that from a Scottish perspective, the failure of Darien was due to a betrayal of Scotland and its independent Parliament, in England's interests, and Scotland's bitter cost, by King William (now dead). The cost of that betrayal had been heavy for the Scots, and was not forgotten. What it proved to Scots was that with a British monarch serving English Parliamentary interests first, Scotland's Parliament was now in an untenable position. The latent threat of Jacobitism in Scotland however remained sufficiently potent that it suppressed the scale of outrage, and for good reason. Confronted with the prospect of a Union negotiation with England, a price may now be exacted, for the betrayal. What price, and how was it to be exacted?
The domestic hegemony of the Scottish elite was not the major problem; England did not consider Scotland a sufficiently enticing prospect to overcome the potential problems or hostilities consequent of close, direct government, given the history between them. The Treaty of Union is largely an exercise in protecting the Scottish elite with what really mattered to them; not a Parliament, plagued with insurmountable economic problems, but their domestic hegemony; protecting Scots Law in the treaty (effectively to prevent English carpetbagging); and among other important areas of effective independence - even the heritable jurisdictions survived. The price of all that was the implicit expectation that the elite would not allow Jacobitism to become a military threat. When the Jacobites rose, not once but twice, 1715 and 1745, Parliament finally decided the Scots elite had failed; heritable jurisdictions were terminated with brusque immediacy. Ironically, Scottish enterprise began to benefit from the Union, only in the second half of the 18th century, after the lifting of heritable jurisdictions; but economic historians find little uplift from the immediate effects of Union in the domestic Scottish economy following 1707. Otherwise, Scotland, sans Parliament was largely left in the hands of the old, long established Scottish elite.
The price of the Darien betrayal was paid in Sterling; by another remarkable innovation conjured by William Paterson, this time with the help of the mathematician David Gregory (1658-1708), Savillian Professor of Astronomy, Oxford University; an Episcopalian Tory driven out of Edinburgh University by the Glorious Revolution in 1690. Paterson addressed the betrayal indirectly; rather as a problem for Scotland taking a share of responsibility for England's very large existing National Debt, which required compensation to the Scots.
Scotland was broke in 1706; but it was not ‘bankrupt' in any significant sense, as a debtor. Scotland was mostly potential long-term upside; credit was so short in Scotland, the State came with few debts to burden the new British Treasury. The same could not be said for England, which came loaded with debt. Paterson set the problem as a negotiation over the price to be paid by England, in return for Scotland accepting a share of England's debt (which as a founder of the BoE, he possessed significant knowledge).
In the event, this was a price England was prepared to pay. It was termed ‘The Equivalent'. It was worked out by Paterson and Gregory and a Committee, using Gregory's mathematical techniques, and Paterson's desire to mathematicise and rationalise the application of government, and banking; effectively the introduction and general application of present values to international and central banking finance; and therefore a revolution in the valuation of future cash flows (for the detail see William Derringer ‘Calculated Values' (2018); Ch.2, pp.79-114). There is a glimpse of Gregory's cumbersome algebra, but then a cutting-edge formula for financial present values: 1/(r -1) -1/ (r2 x r - 1) in the corner of a page in the Equivalent MS.The final sum, effectively was not the most relevant part of the process but rather the method of valuation; except first to Scotland, and second that it was agreed by both parties. The specie arrived in chests, carried up to Scotland, heavily guarded by soldiers and delivered in Edinburgh. A substantial part was paid not in specie, but bonds: more Debt. But then Paterson understood, in a way few understand now, that debt was not a weakness of England's, but the key to its power and strength; and it was transformative in Scotland, the recipient of the Equivalent in a new Currency, Sterling and more credit; but more important for the future of Scotland, it brought a new world of expansive commercial, mercantilist Empire; all driven on Sterling debt.
The Scottish elite took control of the specie and bonds; and here was the brilliance of the two-edged Paterson plan. A substantial part of the Equivalent was carefully set aside and paid directly as compensation for the Darien betrayal to its subscribers, whom had lost heavily from the disaster. Bribery, as many thought, then and since? Not in the politics of an age in which the elite self-defined ‘political Scotland'. Not in the politics of a nation betrayed by its own ruler, and its Parliament damaged beyond the contemplated repair of its majority electorate.
Some of the Equivalent, through a circuitous route ended as capital of the new Royal Bank of Scotland (1727); set up as competition for the original Bank of Scotland (1695). For many years both Sterling and the old Scottish currency were both used without difficulty in Scotland. The adjustment was made remarkably effectively. Sterling embedded itself in the fabric of Scottish life more than anything else in the Union that has survived to the present day.
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Excellent.
John’s disparagement of the slow growth in those supporting independence from the ’14 to the current day, despite the truly appalling governments in Westminster, assumes anyone/everyone is paying attention. My understanding is that with 80% of the over 70s wishing to stay in the UK, and a similar proportion of the under 30s preferring to leave, the demographic drift is worth about .5% per annum. Pretty much where we are.
My own journey from Sterling to ‘The Kilt’ as Warren Mosler delightfully called it (because everyone wants to know what is behind it) started and successfully concluded at am MMT Scotland gig 4 years ago with Mr. Mosler and Bill Mitchell. Most valuable two hours I’ve spent in a lecture theatre this century.
Fascinating.
At the same time though it indicates how both fundamental & odd money is
Fascinating, as always from Mr. Warren. Thank you.
In addition to what David says above:
There is an estimated population overwrite of up to 50k per annum of English settlers who sell up down south and move to Scotland where property prices are cheaper, and young Scots who emigrate or move south where opportunities are easier to find.
These English retirees are heavily in favour of keeping Scotland in the Union and will have a vote in any future referendum (if there ever is one).
I’ll be surprised, this being the case, if we ever reach a sustained majority on independence unless we adopt what other countries do with immigrants and deny them a vote on the constitutional future of Scotland.
This may sound extreme but in my view it’s the only sensible option.
Would that be wise?
TBH I don’t know how wise it would be but would it not mirror the rules of almost every other country in determining their constitutional future?
We wouldn’t be talking about council or parliamentary elections here but a plebiscite to determine the future of the country
Do immigrants in Scotland have a vote on these matters?
My daughters in law were not allowed a vote on EU membership even though they had lived here for over a decade and paid all the taxes they had to.
Would it have been different if they had lived in Scotland?
In fact the present government is trying to take away from them the right to vote in local elections.
I do not think you quite grasp the Scottish context. Scotland has a very serious demographic crisis, and without immigration the Scottish population will fall precipitately in the decades to come (faster than UK); leaving it with insurmountable economic and basic ‘standard of life’ options which nobody in positions or authority or responsibility in Scotland wish to face. This predicament is not acceptable to the Scottish Government. That is the essential background in this issue.
Here is the Scottish Government on the voting rights of immigrants: “Everyone who is lawfully resident in Scotland has voting rights; and those with indefinite leave to remain have candidacy rights. This sends a clear message that Scotland is a welcoming, inclusive country, where everyone should be treated equally not matter where they are from. Foreign nationals living in Scotland who have leave to enter or stay in the UK, including people with refugee status, can register to vote in Scotland. Age ranges for this are 14 or older for Scottish Parliament and council elections, or aged 16 or older for UK Parliament elections” (https://www.gov.scot/publications/welcome-pack-new-scots/). Such a policy cannot work as intended without some wise acceptance of the problem in Westminster. It doesn’t exist. The Westminster position is against the best, indeed the only viable interests of Scotland.
This attempt at developing population growth in the Scottish population (which had begun marginally to turn round the problem within the EU, until Brexit and British anti-immigration politics/legislation took effect); of course can only be done within a political framework within the Union that is set by Westminster; and what confronts Scotland is an immigration policy that dictates/overrules Scottish immigration policy intentions, seriously affects Scotland’s capacity to act and obviously catastrophic for Scotland’s future integrity or wellbeing.
The problem of separating out Scottish and British policy is not something Unionism wishes to do, about anything; it prefers chaos, politically exploiting the complexities or confusions created by a devolution settlement designed, not to provide Scotland with sufficient levers or mechanisms to achieve very much that is life changing or life enhancing, without the greatest difficulty. In the mess that is British politics today, voters scarcely understand who is responsible for what; and Unionists and Westminster are keen to keep it that way by creating as much confusion and fruitless ‘finger-pointing’ as possible; serving lowest denominator political spin, and the British press agenda that lives in a constant state of hyperbolic, venomous hysteria. We can see this in the difficulties presented to Scotland, for example to defeat its attempts to solve the demographic crisis, which Westminster has no interest in resolving, or also in issues like drug deaths; which has led Westminster cynically to exploit Scotland’s drugs problem, trying successfully to block the attempts to undertake a novel experiment in drug consumption rooms; until an ingenious way out was devised within Scotland, legally to find a way to circumvent the attempts of Westminster to block the attempt through increasing efforts discreetly to set aside the historical understandings that respected the conventions of the ‘de facto’ history that had respected Scottish institutional freedom to act.
Glasgow will now have the UK’s first official consumption room for illegal drugs in a carefully developed and funded experiment, in order to break away from a British driven policy that everyone who knows anything about the issue (I do not); insists has been a complete failure for at least forty years. The new facility is backed by the Scottish government as a way to tackle the country’s drugs deaths crisis. The pilot scheme will be based at a health centre in the east end of Glasgow. It is not a total answer, still less a ‘silver bullet’; but it is a rational attempt to break out of British miscreant incompetence disguised as policy; an attempt to do something which the best informed believe deserves a chance, and may create a wider range of solution that actually offer some hope that something real can actually be achieved.
You are right, I did not understand. That’s why I was asking if it was different to England, so thanks for the information.
I can’t work out whether a Danish person living in Scotland would have a vote for a Westminster candidate. Can you tell me that, please.
This becomes complicated because Westminster makes devolution arcane and complex, partly through deliberate obfuscation; partly through casual, needless incompetence. The Scottish Elections (Franchise and Representation) Act 2020 was a measure intended to give Scotland additional powers over elections following the Scotland Act, 2016; these powers applied to Scottish local and Holyrood elections (both voting and candidacy), and your Danish example would, I think qualify in terms of the original intent and drafting of the Bill at least. But the European Union (Withdrawal Agreement) Act 2020 muddies the water; because clause 2C of the Scottish Elections (Franchise and Representation) Act 2020 sets out the terms of a person’s “pre-settled status” (leave to remain) that qualifies the person to receive the benefit of sections 2A and 2B, which are the status for participation, following the removal of the disqualification previously built into the Scotland Act 1998, which was amended; under the new provisions of the 2020 Scottish Elections (Franchise and Representation) Act.
Got it? Hazy? Confused? Need a lawyer? Welcome to the British way of operating devolution, when they do not want to do it. It really is better for everyone if we just leave. Now.
Thanks John
Absurd, isn’t it?
This seems to ignore the fact that Alex Salmond had a cadre of renowned economists as advisors, including Professor Stiglitz – who examined the currency options and advised sticking with sterling on (false) economic grounds. Since then, Prof Stiglitz has admitted this was a mistake.
In debates prior to the vote on devolution, Alex Salmond argued his strong preference for independence and, at that time, was advocating for a Scottish currency. Sadly he was persuaded otherwise prior to the vote on independence.
Until very recently, the ‘expert’ advice to the Scottish Government led to the neoliberal Growth Commission Report with its nonsensical tests that were to be applied before deciding we could afford our own currency. Paradoxically, there are similarities to the “five economic tests” defined by the UK treasury under Gordon Brown and his special advisor Ed Balls, which were the criteria for joining the Euro.
Clearly Mr Warren is correct about the need to persuade Scots, but it doesn’t help when economists are pulling in opposite directions.
There’s another issue, which gets far less attention than it deserves. The Scottish media, and the opposition parties, behave as if Scotland is already independent in all but name when they comment on policy failures of the Scottish Government. Any policy successes of the Scottish Government , and there are many, are attributed to the UK’s largesse in the form of the block grant. The public are understandably confused, which makes it hard to persuade them that having a Scottish currency will have significant benefits.
Your use of the term ‘block grant’ to describe the funds that Scotland gets from Westminster to run Scottish public services demonstrates, perhaps unwittingly, the pervasive grip Westminster has on public perception. The so-called ‘block grant’ is actually a proportion of the taxes raised in Scotland which we get back from Westminster (currently around 60% of the total), based on similar expenditure for public services in the rUK, based on the Barnett Formula. The remainder is kept by Westminster to service ‘reserved’ expenditure such as defence and foreign affairs. So the block grant is actually the return of ‘some’ of our own money.
Correct
“The Scottish media, and the opposition parties, behave as if Scotland is already independent in all but name when they comment on policy failures of the Scottish Government.”
That is how British politics and the devolution settlement works; full of well laid traps, and a blanket news/media agenda advantage to the Union: that is just a fact. The Scottish Government however could have spent fifteen years gradually to distance themselves from the conventional Unionist assumptions, like GERS that may understandably obsessed the SNP seeking early credibility with instinctively conservative Scottish public opinion (whether Conservative or Labour, or Lib Dem) as Government executive managers, when they came to power; and made a much better fist of addressing the currency question. They have had sufficient time to do so; but their reluctance, I suggest is partly a function of the power they assume Sterling exerts as a presumption, as an awkward political ‘given’ in Scotland.
The fact that the orthodoxy of mainstream economists was overwhelmingly pro-Sterling was merely part of the general framework of conventional assumptions in which the debate took place. There was nothing especially notable about it, requiring a 4,000 word review to spend more time rehearsing the blatantly obvious. Currency was discussed in the independence debates, but not with sufficient rigour. The reason for that was the prevailing orthodoxy of conventional opinion, and its failure to find any traction with the public. Salmond was a banker; he was not going to raise the risk level to the vote he required without real traction, when he already knew he had to move at least 20% of the more sceptical electorate to reach the 50%+1 threshold to win.
I so agree with your second para
I agree with all of that Mr Warren, especially that “their reluctance, I suggest is partly a function of the power they assume Sterling exerts as a presumption, as an awkward political ‘given’ in Scotland.” However, I believe it was important to note, as I did, that Alex Salmond was strongly in favour of independence with a Scottish currency in the debates of 1995.
I’ve no doubt that changed when devolution happened and, especially, when the SNP went into government in 2007. The priority they chose then was to demonstrate good governance and to differentiate their policies from those of Westminster Government in the hope that would increase support for the cause. This succeeded, but then they ‘took their eye off the ball’. So I’d add that as a ‘political given’. This is not to reduce your point about conventional economic wisdom, but to add another angle.
The problem was then the long term drip drip of ‘SNP bad’ from the unionist media, including the BBC, which is largely based on their assumption (belief?) that the Scottish Government has sufficient powers to be treated as (almost?) equivalent to the UK government. Add that to the SNP’s focus on GERS, which assumes the resulting deficit is meaningful, and it’s a perfect storm – which the SNP have largely failed to counter.
The ‘broad church’ in the SNP would have been instrumental in the point I make about taking their eye off the ball. It was then the wrong side of their ‘broad church’, now in control, that was involved in the Growth Commission Report and the continuing neoliberal slant in the more recent economic policy documents that have been produced to supposedly support their independence platform.
Disclosure: I’m an SNP member.
If they are realy conservative Scotland should go back to th groat.
Scottish Birth Rate is 1.3/woman, Wales is 1.49 & England is 1.62
Replacement rate is 2.1
There are lots of issues but the obvious question might be to ask why the Scottish rate is so low, is it choice or is it force of circumstances?
I am not making a ‘Pro Natalist’ argument but rather support the idea that women should be able to have as many – or as few children as they wish.
I might also point out that Scots living outside Scotland had no right to vote in the Independence Referendum or in any subsequent ones.
I am afraid this is a complex issue, but It is important to recognise it is first, a world trend, particularly in the advanced industrial/post-industrial societies. It has even forcefully impacted China (PRC). Forty years ago China had a population growth problem it struggled to contain as it moved toward a 1.3Bn population. Desperate measures were invoked by a country trying to modernise after the disastrous ‘CulturalRevolution’. It enacted a ‘one child policy’ in 1979; the most draconian laws over the control of births in the world. It provided the best facilities it could make available for the first child’s future; but the policy was a mixture of carrot – and stick; you really did not wish to be a second, still less a third child. The ‘additional’ children were routinely, compulsorily separated from their families and sent to a remote region of China, effectively child internal exiles. They were not provided with the best life opportunities. It was deliberately severe. It did not work well, although some estimates suggest it impacted by reducing births by 400m over 35 years.
What did work was an improvement in the standard of living in China, achieved through the dynamism’s of Deng Xiao Ping’s economic reforms over population policy and growth rates of 7.5%+ became commonplace; reforms that transformed the underlying life risks, opportunities and expectations for hundreds of millions of Chinese. It was unprecedented. The one-child policy suddenly ended in 2015, when it was realised the problem was, ironically, now the precise opposite to that which the one child policy sought to fix. Now China is encouraging an improved birth rate, because the fertility rate has fallen so sharply with economic success, China is looking at a long term population problem from a falling birth rate, and a growing elderly population. China is not alone.
One observation on the choices involved in the birth rate.
“The two-child-limit restricts the support provided through Tax Credits and Universal Credit to two children per household. It is applied whether or not the parents are in work, and 60% of households affected by the policy have at least one adult in paid employment” (Save the Children).
In Scotland the Scottish Child Payment provides £25 from the Scottish Government, for every child under 16 years old. This policy has been used to support families because of the cost of living crisis, and the penal impacts on living costs for poorer families caused by restrictive British welfare benefits; that have the side-effect of potentially affecting birth-rates for hard pressed families.
The problem of falling birth-rates is complex and multi-dimensional; but in Scotland, between restrictive immigration and penal welfare restrictions and thoughtless child policies with adverse side-effects British government policy is a serious contributor to Scotland’s desperate demographic crisis.
Scotland’s ‘attachment’ to pounds sterling is maybe just Scottish canniness resulting from history and circumstances (the Scots own in-fighting in the clan system my mean any sense of order brought by the English was welcome, maybe?).
I think that self aware smaller nations dominated by others resort to making best of what they can in ways that look strange and even weak to others. They make the best of a bad job and in some way even that is a triumph.
But the aim and objective of the post is a good one – if pounds sterling has worked for the Scots then going forward why should they lose something just because they seek more self determination? So, they need a version of the pound that works for them as a support for independence no less than it works now as a starter. It’s an important point to make given the excuses that will be made by England whose motivations and poor over centralised democracy could make things much harder – if I were Scot, I would not trust England as far as I could throw it. Even less as it is now in fact.
I totally agree with the title of the post and hope that the Scots themselves get a chance to discuss it as it merits.
“the Scots own in-fighting in the clan system my mean any sense of order brought by the English was welcome, maybe?”.
Sometimes I have hoped we could move on from that kind of conveniently crude pat-answer-and-move-on history; and then ……
There were two Scotlands. At its (over)simplest, if you wish ‘simple’; Highland and Lowland. The ‘clan system’ was broadly detested in Lowland Scotland; and indeed in the later seventeenth century was associated with Jacobitism, Bloody Tam Dalyell, the ‘Highland Host’, the Killing Time and Presbyterians driven to worshipping in conventicles; which produced in turn the more extreme Cameronians, David Hackstone, and rebellion in response. This is the actual history that made even mercantilism impossible for Scotland, and led up to Union; but not the one generally understood, especially in England. It was a story Hume and Robertson deliberately wrote out of existence with Union; but Jacobitism, the nostalgic alternative of hopeless romantics, did not represent a united, independent Scotland of decency and tolerance either; as some superficial popular history, with no fixed abode outside social media, seems to believe. Nor did Gaeldom and its culture thrive after the Union. All of this is illusion. In Britain we feast on illusions.
The Conservative and Labour Party continue to write up the illusions of our own day, and spin them; but unfortunately for them, fewer and fewer people believs either any more; or the ill-assorted, self-selecting humbugs they offer as bait.
I think I need to add; I am not advocating Sterling for an independent Scotland; it is a disastrous prospect. Tying an independent Scotland to Sterling is the abdication of all economic freedom to do anything at all. It is subordination without representation. An independent Scotland requires its own currency. Joining the EU requires the surrender of comparatively trivial freedoms (and gains freedom of movement); compared with the disaster of depending on Sterling, and effectively being the prisoner of English Treasury/BoE policy; and no, Scotland will not require to join the Euro; it must merely go through an elaborate ritual of kicking the can down the road.
I hope you were not proposing that, and I merely misunderstood you, PSR; because I assumed on Richard’s Blog we can surely take the general principles of these issues of money and currency largely for granted.
Mr Warren
1. My mentioning of the clan system – a system that seemed to me to be abused by the English to divide and conquer from whatever accounts I’ve been exposed to in my rather poor English education – was a question – not an assertion, which is why we put question marks after such sentences? To me at least you’ve always portrayed the Scots not as victims of English imperialism, but sometimes as those who have tried to maximise the benefits as best they can. Suggesting that the relationship was more equal than one would think? Mind you, that depends on where you are in Scottish society doesn’t it? I imagine the/a class system exists even in Scotland, like it does in Ireland and Wales – so real people there tell me. Working class Scots might have a different view to those Scots with money? Note the question mark – please do. It does not imply wisdom (falsely based or otherwise). It implies wanting to know.
On this matter we will never agree. I’m an Englishman – for bad or worse – and having lived as one for 58 years I know all about the class system, and how it moves beyond class into national and international cultural identity and how racist and bigoted the English are about the Scots, Welsh, Irish and anyone else. And how that expresses itself as cultural and economic imperialism based on English exceptionalism and a sense of ‘innate’ superiority.
My optics are thoroughly working class and it is simply my empathy with the Scots, Welsh and Irish in recognising what oppression is. The time I have spent in Scotland in the early 1980’s chasing trains and visiting motive depot depots in places like Eastfield (Glasgow), Motherwell and Ayr took me into Scotland’s industrial heartland that was being ripped up at the time by London.
In Motherwell, imagine my young surprise at seeing the condition of the social housing there, roads that petered out into dirt tracks seemingly as if work had just stopped or money had just ran out or had been withheld. Visiting Glasgow’s St Rollox works and seeing pro-IRA graffiti on the surrounding blocks of flats; the condition of the infrastructure in some parts of Ayr can only be described at the time as backward even for the 1980s.
And London has presided over all that. In England too. I come from a working class background, the son of trade unionists who ended being beaten by a system designed to exploit them. From parents who told me stories about food riots in rural Nottinghamshire during the WW1 and more besides. I’ve grown up to be very suspicious and afraid of my government and I see most of what I see as deliberate and cruel – and I make no exception for Scotland either. We have been ill-ruled for so long. That is my perspective. End of.
2. The Scottish Pound – I don’t see how you can interpret my words to mean anything other than that the Scots must have their own currency of some sort – the name does not matter – but it has to work for them as you have said that the English pound has worked for them. Why should the Scots accept anything less? And they need to talk about this and their politicians should give them the chance to do so. I hope it goes well because it comes back to the English and our instinct and tradition of ‘being in charge’ and bringing imperialism home and playing games with other nations. Even so-called left wingers I know think Scotland has a free ride at their expense and that it is England’s ‘burden’. Shall I send them your way John? I think you have better things to do however. English bigotry runs deep and it is everywhere. Trust me.
Finally, I note that you always like to correct things with a poo-poo of some sort which is bit unfortunate given your erudition on these matters which is always so enlightening. Why not take the time to suggest further reading instead?
Where to start, PSR? My problem is, I confess I do not always understand the drift of your argument; I often catch the emotional content, but do not always follow the train of your argument. I think I did say that I may have misunderstood your intent. If I am a little exasperated, it is because we are, I think familiar with some of our positions on issues.
Yes, there is no fudging it; the people in Scotland with the choice (not a democracy, neither was England in 1707 – there is no point pretending); chose to dispose of a problematic Scottish Parliament in their interest, and whatever they felt entitled to declare was by definition, in Scotland’s interest. It was not a colony for them; the Scots colonised swathes of the world for the British Empire, but the treaty of Union negotiated the elite a high degree of effective independence in Scotland; cynically manipulated by Westminster but rarely pushing too far.
The Scots travel well, they always have; anywhere in the world. The elite fitted in very well with the London elite; looked after their Scottish interests, and they decided for most purposes they had more in common with the English elite than those they were won’t to term in the eighteenth century, the voteless “rabble” in Scotland. Class was not determined by an English measuring stick. Class was even more a measure of difference in Scotland; it was something, for example a seventeenth or eighteenth century Scottish collier understood only too well. The Scottish Parliament, the elite’s political club passed the Act, “Anent Coilyearis and Saltaris” (1604); that effectively enslaved the increasing numbers of vagrants and beggars; forced labour (few Scots in a quasi-feudal rural country willingly subscribed to a short life in a dark, dangerous coal mine, at any price), under terms in which owners bought and sold the colliers with the mine, and could oblige the authorities to return to the mine, those who escaped. The commitment was not just the men-folk. It applied to the women, and children; from birth. That Act, and its reiterations were not finally repealed, until 1799 (Westminster was no better, and was not prepared to challenge Scottish authority on the matter). That history left an indelible mark on ‘class’ and labour relations in Scotland for centuries.
The difference now is two world wars changed the reach and aspirations of central government in Britain; it was war, not socialism that taught Westminster how to apply systematic central control over Britain; and never give it up. Then the rise of the SNP to fifteen years of political power in Scotland, meant the Union assumptions of common Scottish political Unionist hegemony (Conservative or Labour, both rejected); had finally collapsed within Scotland, and the Scots Unionists (Conservative, Labour and LibDem, with not a wafer between them), in desperation of the electoral threat from the independence movement, have found common cause with Westminster, and are now trying to turn a founder member of Britain into the last real colony of Empire; through new, intrusive legislation and direct, executive government, not least through the anachronistic Scottish Office. This is a very new but fundamental change, only half noticed in the chaos of contemporary, ramshackle British politics.
I do not place much credence in the ‘English instinct’ narrative at all as possessing much real leverage in Scotland. It doesn’t ‘cut it’. The realpolitik will come down to how Westminster operates, what it offers Scotland, and what Scots are prepared to do, and how they will vote (the Scots like negotiation, and a deal); and I do not see all that very English guff as a material factor. The fact is, in the 21st century, look at Scotland’s prospects; it is in a remarkably strong position. It has assets Britain (and Europe for that matter) needs. It would be better independent, but it assuredly will not be my decision.
Thanks @John S Warren – very interesting stuff!