Namibia? Or Zimbabwe (along with whatever else they can get their hands on)?
I’m not seeing how the Scottish financial sector would survive a successful independence vote. Salmond’s plan is essentially for Scotland to use Sterling without a lender of last resort. How is this not a death blow to Scottish banks? Glasgow is now the second largest British financial centre outside of London, for instance.
Plan B is viable: it’s called fixed exchange rates. They can be propped by some combination of capital controls and losing control of monetary policy for stabilization purposes. Interest rates would be set with the priority of protecting the exchange rate. And if fundamentals get too out of whack you adjust the exchange rate upwards or downwards. The world had something a lot like that during the post-war Breton Woods era.
So it can work. But it should be discussed and not brushed aside as a technicality. And generally speaking it’s technicalities all the way down.
Totally agree.
I was thinking this morning that it probably doesn’t matter that we wouldn’t have control of monetary policy as I highly doubt the UK’s current monetary policy is weighted in any way towards making sure Scotland is ok as it is.
Capt. Ridley’s Shooting Party - I thought Edinburgh was the largest financial centre in Scotland. If it is indeed Glasgow where does Edinburgh rank (out of interest).
Glasgow overtook Edinburgh in the rankings last year. See here.
Is talk of “capital controls” something the “yes” side really wants to broach?
Looks like in October Edinburgh was placed above Galsgow. Although both sides slipped overall. Didn’t realise Global Financial Centres Index was a thing so thanks for alerting me to that.
I doubt it’s something they want to broach.
That’s my main problem with the Yes campaign, their campaign is too much “land of milk and honey” when the reality of it is things will be difficult and complicated but making Scotland a better place can happen.
But how do you sell the idea that in 20 years times things will be so much better for all future generations when most voters just think of the here and now and themselves?
One of my beefs with both sides is that they’re not looking sufficiently far ahead. Politicians are concerned with the next electoral cycle, but I want to hear discussion of what happens after the oil runs out, and beyond that too.
From what I can remember from the white paper Scotland are ok without the oil.
They will have slightly less GDP per head than the UK with no oil which by the time it runs out in 40 (or more) years presumably (hopefully!) the extra money made with the oil will have been invested accordingly.
Incidentally you can do it without capital controls. But that opens up the country to additional speculative attack. Which can be addressed by sharp increases in interest rates, say around 30% for a few days. So we’re in the land of tradeoffs and debate, something that needs to be thought about and not papered over.
You could also have a commitment to forever stay at 1:1 parity with the British pound. Sort of like Argentina did with the US dollar. I would not recommend that, though I frankly have to review the underlying economics. The point is there are multiple paths to what is tricky but manageable and a few roads to grand clusterfuck. For an example of grand clusterfuck, consider giving Germany and Spain the same currency with only vague commitments to fiscal integration. Sort of an obvious mistake, in retrospect.
Or you could let the Scottish currency float. Or you could have a crawling peg: Colombia does that. (Incidentally, Colombia is an interesting case: they’ve been fighting a guerrilla war since the early 1960s, have an awful civil society and narcotrafficing, but also practical and adept macroeconomic policies.)
What are the rules going to be on UK/Scottish mobility and taxation of foreign residents in each country? Labor mobility is one of the methods by which a downturn one part of the US (which shares a single currency) is cushioned by the rest. Full fiscal integration and FDIC transfers to broken banks are another.
What do Scottish economists think of all of this? Are there serious working papers on the topic?
There is already free labour mobility throughout the EU with workers paying the local tax in their country of residence. This won’t change with Scottish independence, not even up for discussion - too many Scots work in England and visa versa already.
Actually, that’s not correct. It has been threatened that an independent Scotland would be outside the EU and thus Scots would lose their right to work in the EU. There are work-arounds, of course, such as cleaving to rUK, not Scotland.
The point I wanted to stress is that, even if Scotland was outside the EU (which I still find unlikely), there’s no way the UK would throw up a border and prevent Scots working here - it wouldn’t suit anyone. Of course that doesn’t mean Scots would get free passage to work in the rest of the EU. That would be for Scotland to sort out.
They could join the EEA.
Fair enough, though again that’s not a given.
The Scottish government created a Fiscal Commission Working Group “tasked with overseeing the design a robust macroeconomic framework for Scotland post-independence”. On the question of the choice of currency, their first report says
*All things considered, the current evidence points in favour of retaining Sterling as part of a formal monetary union
*
http://www.scotland.gov.uk/Publications/2013/02/3017/10
Assessment of key currency options
http://www.scotland.gov.uk/Resource/0041/00414366.pdf
If there was a Yes vote:
Would it not be the case that since we are all British right now we will always be a British citizen but just happen to currently live in a foreign country meaning at any point in time we could work in England, regardless of whether Scotland itself is in the EU?
Hey, that’s cheating 
But you’re probably right, unless the UK makes people choose? What happened with Ireland?
The UK recognizes dual citizenship. If you’re asking about Northern Ireland, people can choose British or Irish citizenship, with exceptions for some individuals with no background in either country. I think you can do both, but I’m not sure if you can do it easily. As you might imagine, the citizenship you choose correlates with your political alignment.
No, I mean the Republic of Ireland. I presume there was a transition period when people could have dual citizenship but I actually have no idea.
I AM aware of the situation in NI, but that is a unique set of circumstances.
They get greater rights after moving to UK, which translates to easier to obtain citizenship. It became harder to get UK citizenship from your parent(s)’ citizenship. Wiki info. Lots of dates with laws passed, which may have superseded old ones.