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An independent Scotland will have to choose between the pound and Socialism

Whatever the “Yes” campaign claims, threatens or believes, here will be no currency union between an independent Scotland and the remainder of the United Kingdom. All three major parties plus UKIP have said this outright, and the voters back them up. Quite right too, unless you think it’s a good idea not to cancel the joint credit card after a bitter divorce.

(Just a reminder: there almost certainly will not be any divorce. All the polls point to Scotland choosing to remain part of the UK.)

So, to Plan B. Sterlingisation. The Guardian has flagged up a report from the Adam Smith Institute saying, correctly in my opinion, that for iScotland (OK, so I did just say “iScotland” and I cannot guarantee to resist “rUK” either – sue me) to use the pound as Panama uses the dollar would be the best option.

Under “sterlingisation”, Scotland would not be able to print its own currency and would lack a lender of last resort. But the ASI report said the experience of Panama pointed to this being an advantage because it would force lenders to be more prudent.

In contrast to the situation for a currency union, there would be nothing the rUK could do to stop iScotland simply deciding unilaterally to use the pound, and no reason it should care anyway. But it would be tough for Scotland at first. It would be the equivalent of gastric band surgery. No more splurging on welfare for you, Alba my love!

This is not the first time the Adam Smith Institute has said something like this. My post on currency options for an independent Scotland back in February was partly inspired by an article by Dr Eamonn Butler of the ASI.

You know my views. No surprise that a free-marketeer like me agrees with the ASI here. It does seem a little odd for the Yes campaign, spearheaded as it is by the Scottish National Party, backed by the Radical Independence Campaign and the National Collective, to be quite so keen.

63 comments to An independent Scotland will have to choose between the pound and Socialism

  • Just a reminder: there almost certainly will not be any divorce. All the polls point to Scotland choosing to remain part of the UK.

    Nooooooo. I mean for gawd sake vote YES and then adopt the Cuban peso for all I care. Scotland’s best and brightest are welcome to head south but to hell with Scotland’s political culture. Independence for England Scotland now please!

  • momo

    Under “sterlingisation” … the ASI report said the experience of Panama pointed to this being an advantage because it would force lenders to be more prudent.

    Can the US switch to the Pound?

  • JohnW

    Lenders??
    Finding credit will be a challenge given Salmond’s cavalier attitude to debt repayments.
    Socialism ended in the 1970’s when Dennis Healey learned the consequences of ignoring elementary economics the hard way – if the Brits couldn’t make it work having lead political-economy for 400 years then no one could.
    Blair’s repeal of Clause IV in 1995 was a mere formality.

    Scotland faces the same choice as every other nation – fascism or capitalism? – take your pick.

  • Natalie Solent (Essex)

    Perry, I can see the argument that hiving off Scotland would leave the rest of the UK smaller but politically stronger.

    As would hiving off Wales ten years later.

    As would hiving off the North of England seven years after that.

    As would hiving off everywhere in the UK except London five years after that.

    As would hiving off the Loony Left London boroughs the year after that.

    By then we’d be so strong politically that the USA would be glad to offer us asylum, I’m sure – assuming it hadn’t been undergoing an equivalent process of strengthening through concentration itself and as a result is by this time known as “the Free Republic of Texas minus Austin”.

  • It would be interesting if Scotland wound up like Gaza, using Sterling (Israeli) money while committed to destroying the UK.

    Rockets over Newcastle ?

  • Mr Ed

    The answer is obvious, the new Scottish money will have a historic name, the old Pound Scots suffers from being too ancient, and was devalued to 12:1 against the English Pound by the time of the Union.

    Name it after a Scottish city, but the Pound Glasgow sounds too rough, the Pound Edinburgh too snooty – As the Morningside lady asked the Baker ‘Is that a roulade or a meringue?’ The Baker replied ‘No, you’re quite right, it’s a roulade.’- the Pound Dundee is too cakey, so let’s go for an ancient capital:

    The Pound Stirling.

  • Regional

    Mister Ed,
    Shouldn’t that be ‘Yes, you’re quite right, it’s a roulade’

  • Mr Ed

    Regional, almost, typing on train with dodgy wifi distracted me, sorry. ‘No, you’re not wrong, it’s a roulade’ is the end of it (i wouldn’t say ‘punchline’.

    And sorry for the lame jokes.

  • Mr Ed

    Looking at wider issues, what about citizenship? Will Scots cease to be British citizens if ‘yes’ prevails? If not, why not? Should they not lose British citizenship as a matter of honour, not wanting to have any allegiance to a foreign State? (Using the term ‘foreign’ ftsoa). In which csse, they would cease to be EU citizens pending readmission of Scotland to the EU. Now if they weren’t British or EU citizens, they would have no right to work, visit or reside in the rUK unless granted it. The UK government website says nothing about citizenship at first glance:

    4. Will there be a border and what passports will we need?
    If Scotland votes for independence an international border would be created between an independent Scotland and the continuing UK. It’s not yet known whether Scotland would be required to join the European borderless travel area (the Schengen area), which covers most EU countries but not the UK and Ireland – if it were required, people would need to show a passport to cross the border between Scotland and the rest of the UK. If an independent Scotland were able to negotiate an opt-out from Schengen, it could be part of a Common Travel Area with UK and Ireland, but this would depend on it agreeing to align some of its visa and immigration policies with those of the UK and Ireland.

    That quote also presumes Scotland entering Schengen and implicitly suggests EU membership (but the Swiss are in Schengen).

    However, Scots in a Scotland outside the EU might be like the Manx, not enjoying free movement to work in the EU.

    But then again, does anyone believe Cameron and Osborne’s currency threats towards Scotland when they passed the Loans to Ireland Act 2010 to lend £3,250,000,000 to the Republic despite Irish independence in 1922 and many decades of frosty hostility from that State, since the EU expected it.

  • As would hiving off Wales ten years later.
    As would hiving off the North of England seven years after that.
    As would hiving off everywhere in the UK except London five years after that.
    As would hiving off the Loony Left London boroughs the year after that.

    Natalie has pretty much described my *ideal* progression and end state.

  • stuart

    Just an aside here under the current funding arrangements is us lot in East Anglia who pay for you high living lot in London

    http://en.wikipedia.org/wiki/Barnet_Formula

    Freedom for Suffolk NOW!

  • Laird

    I would gladly move to the “Free Republic of Texas minus Austin”.

  • This looks like a golden opportunity for a nation to adopt Bitcoin as its currency.

  • Regional

    Mister Ed,
    You’ve begun a sentence with a conjunction a very common error.

  • Nick (natural genius) Gray

    And what is wrong with that, Reg? Then it will become standard, if it is very common. Common usage is the ultimate democratic endorsement, and a sign of the strength of the language English.

  • Laird

    And you, Regional, omitted an important comma, also a very common error.

  • Regional

    Laird,
    I’m a pig ignorant yokel and effwit, no problem there.

  • Regional

    Jeez,
    You people!
    You talk about free markets yet the governments of Europe, Canada and America heavily subsidise agriculture and dump surplus production on world markets destroying local producers. The heavily subsidised Canadian pork farmers even went to the world court demanding access to the Australian market which was granted and they nearly destroyed the Australian pork producers, being a classic example.
    You wonder why people hate you.
    Australian farmers are not subsidised.

  • Mr Ed

    Mister Ed,
    You’ve begun a sentence with a conjunction a very common error.

    And yet, it worked. It is no error if it is not ambiguous. My English teacher ‘Bomber’ Nicholson taught well ‘e did, and he specifically permitted that practice with illustrations.

  • Natalie Solent (Essex)

    Perry,

    “Natalie has pretty much described my *ideal* progression and end state.”

    What makes you think you get to decide where the progression stops and the end state begins?

  • Jon

    Wouldn’t it just be easier all round if London became independent and the rest of the UK got to keep the Scots? The examples cited by the SNP as successful “small” countries, like Singapore, Luxembourg etc. bear far more resemblance to London than they do to Scotland. We’re also not wholly reliant upon petrochemicals to pay for our ongoing needs, and we’re far more pragmatic about immigration than electors in our surrounding environs…

  • Jacob

    Where is the English Abraham Lincoln?
    Abraham Lincoln knew how to deal with rebellious states that tried to secede from the Union (United Kingdom?).

  • James Waterton

    If Scotland gets an independence vote, why doesn’t England?

    I know that the polls point towards a No victory, but this isn’t your standard ballot. I reckon most Scots want independence, but those that nevertheless claim they’re going to plump for the status quo are being guided by their hip pocket. The Scots are surely well aware that it’s unlikely they’ll have another opportunity to leave the Union in this lifetime. In such circumstances, I suspect that there might be an unusually high number of last minute changes of heart amongst those who are currently claiming they’ve definitely made their minds up to vote no.

  • James Waterton

    Gosh, imagine what would happen if someone split an infinitive. That would drive some crusty old grammarian who hasn’t seen the outside of their crypt for the last 70 years to absolutely fly off the handle.

  • PeterT

    And you, Regional, omitted an important comma, also a very common error.

    I would probably have used a semi-colon after ‘conjunction’.

    You’ve begun a sentence with a conjunction; a very common error.

  • Where is the English Abraham Lincoln?

    Hopefully he would get assassinated *before* a civil war started rather than afterwards. The idea of fighting to keep Scotland in the UK is actually hilarious.

  • You talk about free markets yet the governments of Europe, Canada and America heavily subsidise agriculture and dump surplus production on world markets destroying local producers.

    And you think folks here are in favour of that? Which planet did you just fly in from, dude?

  • What makes you think you get to decide where the progression stops and the end state begins?

    Hell Natalie, I an in favour of an independent Principality of Kensington and Chelsea! We already even have our own army, albeit a rather old one ;-)

  • RogerC

    Where is the English Abraham Lincoln?

    Whether the Scots decide yes or no, I’m just glad that we’re having a debate and referendum rather than resorting to military means to decide the matter. If the Scots want to leave, why on Earth should we try to restrain them? What does anybody gain from that? And if they want to stay, fair enough.

  • And if they want to stay, fair enough.

    Indeed, and if that happens I hope they regroup and try again… and again… and again.

  • Jacob

    “The idea of fighting to keep Scotland in the UK is actually hilarious.”

    The idea of keeping the North sea oil and naval bases is not so hilarious. Though, of course, the North sea oil is running out, and those bases are utterly useless, I don’t know if there is still any Navy to speak of.

  • Regional

    Perry,
    Agriculture is heavily sudsidised to keep food cheap.
    America actually grants export enhancement awards so American food producers can destroy local producers.

  • jimmy dublin

    As a former Scotsman, I take slight offense to some of the comments regarding this topic, however as a current ukip supporter, much of what has been said is indeed partially true

  • Agriculture is heavily sudsidised to keep food cheap.
    America actually grants export enhancement awards so American food producers can destroy local producers.

    Actually without subsidies and with a truly global market, food would be a lot cheaper. Rather than sending Third World countries distorting aid money, I would much prefer just letting them sell their damn food to us, thereby funding better agriculture in such places and ending the absurdity of things like the Common Agricultural Policy.

  • The idea of keeping the North sea oil and naval bases is not so hilarious.

    As long as the Scots sell the oil, that is fine by me. And as the Russian navy is a rusty shadow of the Soviet navy, not all that worried about naval bases.

  • Regional

    Perry,
    Boom Boom!

  • Laird

    PeterT, you would have been incorrect to use a semicolon there. A semicolon separates an independent clause, but “a very common error” is a dependent clause.

    As to the actual topic under discussion here, there’s an interesting article in today’s Wall Street Journal (by someone at the Adam Smith Institute) suggesting that what he calls “adaptive sterlingization” is the solution to iScotland’s currency problem. Apparently it’s essentially the same method used successfully for the last century by Panama (which bases its currency on the US dollar).

  • Julie near Chicago

    “A very common error” isn’t any kind of clause. A clause must have a subject and a verb.

    In Standard English, one would say something like,

    “You’ve begun a sentence with a conjunction, which is a very common error.”

    However, there’s another way of putting it which isn’t formal Standard English, but which is clear and doesn’t actually break any rule of which I know *g*; yet it does omit the conjunction (conjunctive pronoun) “which”:

    “You’ve begun a sentence with a conjunction — a very common error.”

    The long-dash acts somewhat like an ellipsis; it indicates an omission of some words which the formal rules require, but which are so often omitted in common parlance that they’re implicitly there. Or so I analyze the situation, even if I do flout the Law by using a conjunction to begin a sentence with. *g*

    Of course, the reason for not so using a conjunction is simply that by definition a conjunction is a word used to join (conjoin) two clauses within a single sentence. But (I’m doing it again) it’s such a common usage of the not-quite-conjunction that it should probably be granted status as a distinct part of speech. At the moment, I’d consider it an acceptable idiomatic usage in service of readability and style, and move on.

    On the other hand, could people PLEASE stop using “like” as a conjunction! It just simply AIN’T!!! *grinding and gnashing of teeth*

  • Laird

    Julie, I would disagree that it’s not a clause. The subject is implied. The single word “Stop!” is a proper complete sentence because it has an implied subject (“you”). Similarly, in the clause “a very common error” both the subject and the verb (“it is”) are implied. I have no problem treating that as a proper clause.

    I do agree that beginning a sentence with a conjunction is acceptable idiomatic usage. I do it regularly, for stylistic effect.

  • Fraser Orr

    Didn’t Samuel Johnson say that “Correcting grammar is the last refuge of a scoundrel.” Or did I remember that wrong?

  • Fraser Orr

    BTW, a mea cupla: let me preemptively say that I made a punctuation error, started a sentence with a conjunction and abused an adjective as an adverb all in one short post. You have to forgive me though, I’ve lived in the USA for a fifteen years.

  • Julie near Chicago

    Laird, regardless of what’s implicitly there, a clause must contain an actual, explicit subject and verb, which the phrase “a very common error” does not. Lacking the verb, there is also no subject; there are merely a noun, its modifying adjective, and the adjective’s modifying adverb.

    We are talking about the rules of Standard English and not about idiomatic usages that are not Standard English. This is a discussion about technicalities, not about what is understandable even though technically incorrect. And in particular, our sub-discussion is about the technical status of a particular phrase which does not meet the specific criteria for inclusion in the category of “clauses.”

    “Stop!” is unusual in Standard English, in that it consists of a single word, an interjection, which is also an imperative verb. It is a sentence in the imperative mood, which does not follow the usual syntax. Therefore it does not suffice as an example in the present context. I hate to drag Wikipedia into this, but for what it’s worth, it does speak to the issue thus:

    “Imperative sentences sometimes use different syntax than declarative or other types of clauses.”

    https://en.wikipedia.org/wiki/Imperative_mood

    Unfortunately that very sentence contains an error which is, unfortunately, all too common. :>(

  • Julie near Chicago

    And it’s doubly unfortunate that Yrs Trly didn’t proofread her final sentence, or at least not carefully enough. :>(

  • James Waterton

    How did this thread degenerate into a pedant’s playground?

  • Michael Jennings

    At least it didn’t degenerate into cheese puns.

  • Julie near Chicago

    Fraser, for use of the period instead of the question mark (which I am positive you would have put outside the quotation marks, as is meet, just and proper): 1/10 of a demerit. For making a typo, no demerits. For not catching the typo upon proofreading, 1/100th of a demerit.

    You must decide for yourself how much you deserve in the way of demerits, and the penalty you owe therefor. [Sic: not a typo. See even the online OED, which, unfortunately, is no longer the Last Word.]

    On the charge of beginning a sentence with a conjunction: Excused.

    Now, about remembering things wrongly, I’m almost inclined to say that’s between you and the Great Frog. Even the 1933 print OED (1971 Compact version, which is just the 1933 printed in microdots) allows “wrong” as an adverb, although it doesn’t sound very excited about it. The OED does give “wrongly” as meaning (among other things) “mistakenly,” “erroneously,” which is your usage. On the other hand, perhaps it’s being supplanted by “wrong” as an adverb. Are people more likely to say “wrongfully” when they wrongly in the sense of unjustly or unfairly treated — as in, “he was convicted wrongfully”; and just plain “wrong” when they say things like “you’re doing it wrong” or “did I remember that wrong”?

  • Julie near Chicago

    “Pedant’s playground”? On the one hand, a felicitous phrase. On the other, I will say that if people are going to go calling out other people’s English, and carry it a step too far, thus adding their own error (Laird, you shoulda quit while you were ahead — your first comment, about the missing comma, was quite right) they ought to remember that there are others around here who are capable of duelling using the dread weapon of Inner Editors everywhere: the red pen.

    Besides, it’s surely a less disturbing pastime than viewing the latest round of beheadings and victims of war and violence on UT. Although sloppy English is certainly quite upsetting enough in its own right. *sniff*

  • Paul Marks

    In theory Scotland (or anywhere else) Scotland could reject the Pound and socialism.

    The Pound is a fiat currency anyway – not exactly a wonderful idea.

    However, the whole discussion is made mote by the political nature of Scotland.

    Scotland is an area of competition between the Scottish National Party and the Labour party – both collectivist parties.

    Free enterprise has far less support “north of the border” than it does in England (and freedom has not got a vast amount of support here).

    So YES an independent Scotland (although it would not be “independent” anyway – it would be under the rule of the E.U.) would move towards even more socialism.

    But that is nothing to do with the Pound (one way or the other) – it is just the nature of Scottish politics.

  • Laird

    Julie, I surrender.

  • Regional

    Scotland needs the Pound to pay for it’s socialism.

  • James Waterton

    On the other, I will say that if people are going to go calling out other people’s English, and carry it a step too far, thus adding their own error…they ought to remember that there are others around here who are capable of duelling using the dread weapon of Inner Editors everywhere: the red pen.

    See, this is when I’d simply make a snide comment along the lines of ‘if you really are unable to suppress the urge to be a pedantic ass, at least have the common decency to ensure your whiny bleatings on the matter are themselves, y’know, correct’. However, red pens at dawn – in an attempt to out-pedant the pedant – only lowers one to their tedious level.

  • Mr Ed

    Leftist educationalist positively hate the teaching of grammar. Those of us who suffered any form of State education should be grateful for the chance to remind ourselves of the grammar positively denied us. I went to a charity secondary school unable to punctuate a paragraph, my English teacher learned me the essentials within one lesson.

    Calling out grammar should only be in fun, or in case of ambiguity.

    And if the Scots do leave, will they take ‘outwith’ with them?

  • Julie near Chicago

    Laird, I am happy to meet you halfway. Did you say somewhere you’re in S.C.? If so, Nashville would be close enough to 50-50, I guess. We can chill with a couple of cold beers, clink steins with one hand and punch each other out with the other. :>))

    –J.

  • Jim

    “Scotland needs the Pound to pay for it’s socialism.”

    Ding ding ding, we have a winner. The people who aim be in charge of Scotland if it votes yes know that they will be severely constrained in their ability to spend other peoples money, if there is no big neighbour to cover the tab if it all goes t*ts up. So the best option is to demand to be independent when it comes to choosing how much to spend, but also demand that the big neighbour continues to underwrite the cheques.

  • Laird

    Indeed I am, Julie.

  • Snorri Godhi

    It is somewhat odd that, in such a historically literate forum as this, nobody has yet pointed out that Argentina did not “have” to choose between dollarization and socialism … not for a while, at least. Eventually they chose socialism, of course.
    Or am i oversimplifying?

  • Schrodinger's Dog

    I’m just baffled as to why the Scottish nationalists want to keep the pound after independence; economically it’s the second-worst option, after joining the euro.

    One of the driving factors of Scottish nationalism is that an independent Scotland would be wealthier. But the reason Scotland is poorer than England is that it shares a currency with England, consequently it also shares a monetary policy, which tends to be set to suit English needs. And a monetary policy which is suitable for one area, such as the Home Counties, may not be elsewhere, such as the Scottish Highlands. Anyone who doubts this has only to look at the economic devastation that membership of the euro has brought to the countries of southern Europe.

    A much better option would be for an independent Scotland to introduce its own central bank and its own currency, whatever they choose to call it. (New Zealand, with a smaller population, has its own currency.) It might even achieve the nationalists’ ambition of a richer Scotland.

  • Jacob

    “A much better option would be for an independent Scotland to introduce its own central bank and its own currency”

    So they can print their own money without restraint.

    “It might even achieve the nationalists’ ambition of a richer Scotland.”

    Rich in paper money.

  • rxc

    The countries in the EU no longer have control of the currency that they use, yet they continue to spend like mad. The smaller countries that don’t have a large financial base to squeeze have had problems, and Scotland would likely fall into this category.

    I think that Panama is a special case, because it has a strong, reliable funding stream and no politicians with delusions of grandeur, yet.

  • lucklucky

    Why having a monetary policy is desirable?

    Scotland should at most have a currency that represents major world currencies and not one of their own or England.
    Of course this would mean Scotland is not going to be a socialist paradise. So i guess that is out of question.

  • Nick (natural genius) Gray

    As for the names, perhaps Scotland could be changed to Scotdom, the domain of the Scots.

  • Phil B

    OK – to get the subject back onto the topic of the Haggis eaters going it alone …

    The last time I looked, around the Livingstone area, four out of five jobs were government jobs such as tax offices etc.. No doubt put there as “Jobs for the Boys” by various politicians either as outright blatant bias (Blair, Brown) or as a “Vote for us!” election bribe. Similarly the closing down of the English ship yards that were capable of building warships (Swan Hunter on Tyneside, Vosper Thorneycroft, Yarrows etc.) and awarding contracts to the Scottish yards.

    Now, if the Scots vote yes and the English Government fancies the concept of the tax affairs of English subjects being handled abroad, then there are lots of people in India that speak excellent English and will do the job for a very good local salary of 5000 quid a year. Hell, even at 10,000 a year it’s a bargain.

    Soooooooo … just imagine a town where 80% of the well paid, secure for life jobs disappear overnight and are either repatriated to their home country or outsourced to India, the Philippines etc. …

    How certain is the YES vote in that area? Factor in the other jobs allocated to Scotland to keep the population sweet and to buy votes and the stark reality is … if they have enough sense to come in out of the rain then its a resounding NO!.

    Unfortunately.

  • Paul Marks

    Mr Ed – I suspect you are not a fan of David Crystal and the rest of the “English has no standards” crowd. I (as a state “educated” person)am one of their victims.

    As for the Scottish “debate” – I repeat that is made moot by both sides being socialists.

    On the American Civil War….

    If Jefferson Davis and co had said in 1861 (not after the war – before it started) “any black person may leave if they wish to do so” then I would have fully SUPPORTED the right of the Southern States to secede.

    The “freedom” to enslave others is not freedom.

    But even the Scots Nationalists do not say that people would be kept in Scotland by force.