Thursday, April 09, 2009

Economics and the case for Scottish independence

There is, as far as I can see, absolutely nothing whatsoever that can be rescued from the wreckage that is the economic argument for independence. Today the Scotsman repeats the point that given the sheer size of the Royal Bank of Scotland's balance sheet, an independent Scotland simply wouldn't have had the resources to rescue it from collapse in the way the UK government did. What was newsworthy about the reiteration of this nose-bleedingly obvious observation was that it was John Kay, a member of the First Minister's Council of Economic Advisers who did it.

If we dismiss as idiotic the argument that, "but we wouldn't be starting from here", I would have thought there are only three rational responses a Nat could make to this:

1) The RBS should have been nationalised without compensation - a necessity since we know an independent Scotland wouldn't be able to compensate even if it wanted to.

2) The RBS should have been allowed to go to the wall - along with an explanation of why this wouldn't have a) spelled disaster for the Scottish economy, b) sparked a run on the banks everywhere.

3) An independent Scotland would have to go cap in hand to the IMF or something.

Rational but not particularly attractive - although I find myself leaning towards option 1), along with guillotines and stuff. But - and correct me if I'm wrong because I'm not really that familiar with the 'cyber-nat' community - neither the SNP nor their supporters in the blogosphere have addressed themselves to this question.

There are, in my view, two reasons for this. One is that the Nationalists are not interested in economics or economic history, nor have they ever been. Economic arguments are used pick and mix to reinforce a position they hold for other reasons. Because taken collectively they don't cohere and now don't hold any water anyway. I've heard Salmond, for example, complain that the Union is holding Scotland back from membership of the Euro, which was bad, according to him, because it meant mortgage holders were paying a higher rate of interest than they would in the Eurozone. I haven't heard him updating this view in light of recent events - but does it really need pointing out how completely crass and stupid it is to base a constitutional argument on something as ephemeral as short-term interest rates and currency fluctuations?

"We could be like Ireland", isn't anymore an argument that any Nationalist with even the most cursory acquaintance with reality now makes. But my point is, it was never made by anyone with any sense of economic history.

Don't even mention Iceland...

Except to point out that Salmond & Co conveniently forgot about their line on the virtues of being part of the Eurozone - on account of them not being members.

Surely this is enough to make the point? No-one sits and pores through economic data dispassionately and concludes that nationalism is the cause that is to propel them through political life. Economic arguments are mobilsed to support a cause they have made for emotional reasons. I'm wondering why so many unionists allow them to behave as if this was not the case?

The other reason that the SNP have not addressed themselves to this question is that they themselves do not really believe in independence. Or at least the more intelligent ones don't. I appreciate this may seem controversial but I'm increasingly convinced that this is the case. Does Salmond really think Scotland is going to go its own way - take complete responsibility for its own borders, defence, fiscal and monetary policy? It's not going to happen: they know it, we know it. They just don't know that we know it.

Actually, I'm not sure enough of us do know it. This allows them to continue to pretend that they believe it and extract the political advantage this gives them. It might seem perverse to say something in defence of the hapless Wendy Alexander at this juncture but despite the fact that she did it in an incredibly ham-fisted and incoherent way with her "Bring it on" embarrassment, the spirit of what motivated her was correct: I'm unsure of the form it should take but it's about time we started calling the Nationalists' bluff.

Open footnote to Nationalists: No Nat has ever been able to answer the following questions to my satisfaction but here's an open invitation for anyone to have a go:

a) Why should the boundaries of the nation also be those of the state?

b) If a policy is good for working people in Scotland, why not also for people in Newcastle, or Liverpool, or Manchester, or London? Or anywhere else, for that matter?

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