Saturday, July 26, 2014
Independence is not what it used to be (a brief comment about McCrone's book)
The book by Gavin McCrone "Scottish Independence. Weighing Up the Economics" is a comprehensive account of the economic issues involved in the referendum about the independence of Scotland that will take place in September. There are chapters on welfare, on monetary policy, on financial regulation, on energy, on fiscal issues, and others. Two of the main ideas are i) that even in the case of "independence" the Scottish powers will be strongly constrained by the realities of economic links, and ii) that the intention of the Scottish nationalists to remain in a currency union with the UK after independence is contradictory with other objectives of secession. On the first issue, the constraints of an independent Scotland, it is quite clear that an "independent" nation-sate in the European Union in the XXI century is not the same as an independent nation-state say in 1922, when Ireland became independent (and as the author explains, started a long and painful road until becoming a rich nation), let alone when Scotland was independent until 1707. Many of the discontinuities between national borders in the past have today disappeared in Europe, and a national government is today constrained by flows of people, capital, and by the rules of the European Union. Relatedly, many policies that the Scottish nationalists claim that would be possible under independence are possible today and are not being implemented, or would be possible under enhanced devolution. On the second issue, the problems of a currency Union with the UK, McCrone stresses the difficulties of keeping a currency union and at the same time pretending to have fiscal sovereignty, something that was also pointed out by the Governor of the Bank of England, Mark Carney. This is an excellent and very balanced book by one of the persons that better knows the Scottish economy. He claims that an independent Scotland would be a perfectly "viable" state, and does not use any scaremongering arguments at all. But his conclusion is clear: the uncertainties and contradictions of the project for Scottish "independence" are such that the alternative of a better devolution scheme in the context of a rebalanced (federal?) United Kingdom is much stronger.