Saturday 1 February 2014

The delusion of independence

People who are not completely dogmatic about the Scottish independence debate recognise that both sides have some good arguments and that sensible, reasonable people can support either side. One of the reasons for this is there are advantages and disadvantages to independence. If there were no advantages, it is hardly likely that so many people would support it. If there were no disadvantages it is hardly likely that so many would oppose it. I must admit that I find the debate rather tiresome at times. Would Scotland get to keep the pound, would we remain in the EU? There is claim and counterclaim and endless effort is spent on matters which are uncertain. But one method of getting at the truth is to accept what one side of the argument thinks and thus see what develops. On this basis let’s assume that the SNP would get everything that it wanted. Let’s assume that an independent Scotland would keep the pound and remain part of the EU.

Scotland would just have achieved sovereignty, but would immediately begin sharing some of it with the EU and some more of it with the rest of the UK (rUK). We know that the EU has as its goal ever closer union. Those countries in the Eurozone have already achieved monetary union and are in the process of gradually moving towards fiscal and political union. The goal of ever closer union is that eventually there will be a United States of Europe. This may still be quite a long way off. But it is clearly the goal, indeed the point of the European project and has been since the beginning.  

But what is true of the Eurozone is liable to be true of a Sterling zone likewise. The EU set up the single European currency precisely because they knew that it would make fiscal and political union eventually inevitable. They viewed the sort of crisis that is happening now as essentially benevolent, as making their goal of ever closer union easier to achieve. This really was the purpose of the Euro to facilitate the construction of a United States of Europe.

One of the biggest problems in the Eurozone is that there is not at present a transfer union whereby rich countries share their wealth with poorer countries. This means that poorer parts of the Eurozone or those in economic difficulty are liable to default. It is precisely for the reason that, for instance, Italy lacks a central bank capable of printing Euros that it has an inherent and greater risk of default. When it had a central bank capable of printing Lira the likelihood of default was minimal. The essence of the recent crisis in the Eurozone is that countries like Italy made themselves more liable to default, by giving up their own currencies, without gaining in compensation the guarantee that other countries would share the risk of their debt. This is because richer countries like Germany are unwilling to accept responsibility for the debts of countries like Italy. It is the lack of political and fiscal union which makes the Eurozone monetary union unstable. This lack means that Germany sees Italy as a foreign land. While Germany is willing to transfer money from Bavaria to Saxony automatically, it is unwilling to do the same for people in Lombardy, because these people are not Germans. It is this lack of a transfer union and shared responsibility for debt which makes the Eurozone inherently unstable. One of reasons that the Euro was set up was because economists understood that monetary union would inevitably tend towards fiscal and political union. Germans would be forced to see Italians as their fellow countrymen and would treat Lombardy and Saxony as states in a United States of Europe. Transfers would happen automatically, just as they happen between the states of the USA. The instability of the Eurozone in the long run can only be ended by its members sharing more and more sovereignty and by ever closer union. The architects of the EU knew this and for this reason argued for a single currency. They knew that it would make their goal of creating a superstate inevitable. No matter how much the present parts of the EU might resist, once they had signed up to the Euro they would have little room for manoeuvre and little choice in the matter. The alternative of leaving the Euro would bring about short term economic catastrophe. Countries can not easily leave the single currency as they would face significant risks of major currency fluctuation and possible default. It is for that reason that they have stayed even when faced with years of austerity and depression.

Well logically what is necessary for the Eurozone to be a long term success would be necessary for a Sterling zone. For this reason we in Scotland would have to be willing to transfer some of our wealth to the rest of the UK and be liable for their debts. They too would have to accept this responsibility. This would not necessarily happen in the beginning, but it would be the goal toward which we would be heading. Joining the Sterling zone would set us on a path towards a United States of Britain with ever closer fiscal and political union, debt mutualization and transfers from richer parts to poorer parts.

After all this what expressions of sovereignty would be left for an independent Scotland? Well there would be a seat at the UN, a team at the Olympics and once a year, no doubt, there would be Independence Day celebrations in Edinburgh. We would have given up our Westminster MPs, but we would be part of an ever closer union with which we would have to share ever more sovereignty. Indeed being part of the EU would make us part of two ever closer unions. Perhaps under these circumstances Scottish nationalists would have to begin calling themselves unionists. How much sovereignty would Scotland have left after all this sharing? Well, no doubt, nationalists could still feel independent and rejoice at how they had made Scotland a nation again. But really It begins to look as if the SNP would have us all go through a great deal of uncertainty and upheaval for the mere illusion of independence. Mr Salmond would have meetings on the world stage. There would be patriotic songs. There would be a lot of flag waving. But this is just frippery and of small consequence rather like when Ireland had free and fair elections when all the issues of consequence were determined by the troika of the European Commission, the European Central Bank and the International Monetary Fund. Still at least they could feel good about having got rid of the Brits and that there were no Union Jacks in Dublin

The illusion of independence might well be enough for Scottish nationalists. Perhaps in the end it is all they are after. But should they really be allowed to put the rest of us through the uncertainty and upheaval of divorce, the endless negotiations, just so that they can have that special glow from feeling now we are independent. In establishing monetary union with rUK logically Scotland would be leaving one union of countries in order to eventually establish another. We would be like one of those cartoon characters running while being tied to an elastic band. These scenes are amusing because such a character is not aware that his running and striving to get aware is futile. Scotland’s only chance to break the rubber band would be to set up our own currency from the beginning. Indeed this ability is one of the major advantages that independent nation states have. But once you’ve chosen monetary union, just like the Eurozone countries you can’t easily choose to leave. Just as they are tending towards a union of states, so too, and from the beginning, would we be on the same path only our journey would absurdly begin just as we had voted to leave. This really is cartoon character politics. The difference between a United States of Britain and the United Kingdom is so slim that it amounts to a rounding error in a budget of billions. It is a distinction without difference and barely worth debating. It is the delusion of independence that can only be of interest to someone who is content to be won over by the joys of flag waving.