By Greg Palast
Monday, 15. September 2014
[Dear American reader: This is about Scotland, whose capital is not “Brigadoon,” It is a country but not a nation, voting next week on whether to dis-unite from The United Kingdom, though it wishes to keep the King (or Queen as may be). Alex Salmond, First Minister of the not-a-nation, wants to unhook from Britain but keep British coinage—and keep Scotland in the European Union. So, I ask…]
I mean, what’s the bloody point? Why pretend to declare your independence only to chain yourself to a coin with a British snout on it and simultaneously beg to become a colony of Angela Merkel’s Fifth Reich, aka the European Union?
I realize that, as an American and an economist, I carry into this debate a double dollop of disrespect from Scottish readers. But, with thousands of miles of salt water separating me equally from London and Edinburgh, I think I can see clearly what you miss from having your head inside the fish bowl.
There are two overwhelming and undeniable advantages for Scotland to declare its sovereign independence: to end both Scotland’s damaging enchainment to the British pound and the debilitating tyranny of European Union membership.
Yet, weirdly, inexplicably and inexcusably, Alex Salmond promises to throw away the two most valuable benefits of national self-determination.
First, the pound. In all the hoo-hah over whether Scotland can keep the coin with the Queen’s schnozzola on it, no one seems to have asked, Why in the world would Scotland want this foreign coinage?
The Bank of England’s singular task at this moment is to figure out how to counteract the disastrous macroeconomic consequences of George Osborne’s austerity fixations and the bleating demands of City bankers. The only time when the Bank of England gives any consideration to Scotland’s economy is when a BOE governor checks the little gauge which tells them how much of Scotland’s oil they have left to spend.
Why should the interest rates, exchange rates and monetary supply of a resource nation like Scotland be subject to the needs and whimsies of the rusting realm to your south? According to the well-accepted theory of Optimum Currency Areas, Scotland would be best off adopting the Canadian dollar, also a damp, salmon-choked oil exporter or, better yet, the Vietnamese dong.
No nation controls its economic destiny until it controls its currency—a concept easier to understand if you read it in Greek.
And Scotland’s own coin, backed by taxing power over its oil extractors, would undoubtedly be stronger than sterling and more flexible alone. Control over its own currency will enable Scotland to cut interest rates when local manufacturing falters while the Bank of England is raising rates to fight a speculative bubble in The City.
To give you a head start, my daughter has designed your new currency (above).
Second, why this pathological need to remain subjugated by the European Union? Is there some extraordinarily wise legislation crafted by the solons of the European Parliament? Does Scotland need the guiding hand of Angela Merkel, Marie LePen and the Italian premier du jour? Does Scotland fear a sudden shortage of Bulgarian plumbers?
The USA trades with Europe without giving Lithuania veto power over trade terms. And as Swiss nationals will tell you, a lack of an EU passport will not cause you to be strip-searched on your way to the Costa del Sol. Disadvantages of EU membership: loss of control over terms of trade, and policies of industrial regulation, immigration and environmental control. And sorry, Mr. Salmond, you will indeed have to join the euro, at which point, Germany’s finance minister will draft your budgets.
So that is my question to my friends north of Hadrian’s wall. Why demand your independence from Britain only to insist on keeping your shackles? If you too find attachment to your chains nonsensical, then shouldn’t your first referendum be a vote to declare Scottish independence from Alex Salmond?
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