Scottish independence! Yay or Nay?

Haven’t blogged in a while, mostly due to military engagements but I’m out now and in Scotland. So a topologically relevant topic seems appropriate, on September 18th Scotland will have a vote about whether or not to leave the UK: should they?

Who should be able to vote for such a thing? I think in philosophy the solution to the boundary problem (who can vote) is called “all-affected-interests-principle”. So it’s odd that I can vote even though this probably doesn’t affect me and UK citizens can’t even though they are to be affected in a number of ways, including Security Council status in the UN, military strength, and the economy.

Weird legal issues:

Not in UK means not in EU which comes with not being an EU citizen. However it is likely that Scottish people will just remain UK citizens and also gain the Scottish citizenship, while not all UK citizens will get Scottish Citizenship, so Scots would get the rights of all UK citizens (including voting) and their own but UK citizens would now not have such easy access to Scotland, doesn’t sound too fair to me.

Now, Scotland would probably be allowed into the EU but “probably” is not certainly and there could be a significant lag time between independence and entering the EU, in the meantime Scotland might not have member state rights, including free trade. I don’t think I’ve read anything on what can possibly happen to their exports in such a scenario.

So when should an area try to be independent?

The US declaration of Independence puts it well: “Governments long established should not be changed for light and transient causes”. It’s reasonable to want independence if you are slaves of some sort, secondary citizens or governmental abuse. There doesn’t seem to be any freedom that a Scotsman doesn’t have, if they really want to I’m sure the UK would not mind the website suffix “.scot”.

Even weirder finance issues:

As usual politicians throw around random figures, specifically some undeniably inaccurate statements about future projections of income for Scots conditional on independence.

So if Scotland becomes independent, what happens to its debt? Does the UK pass some its debt on to it? If so how much? Apparently if it pays its population share (aka total UK debt*proportion of UK citizens which are Scottish) then the only way to increase the wealth of Scotland is to get at least as much revenue from the optimistic projections(joke) of North sea Oil.

Economics:

Finally to the good stuff, fairly obvious, asymmetric SHOCKS! Monetary policy is pretty good at dealing with shocks to the economy which are symmetric but not so good at dealing with asymmetric shocks, so the wider your government the more it can have fiscal stabilizers to dampen a crisis. Aka if a crisis hits Scotland only and not the rest of the UK, the UK government will be able to reallocate funds to dampen the Scottish shock and vice versa, setting independence achieves almost nothing but surely limits options.

There is also question of what currency Scotland will be using as the BOE won’t have them be using the pound. If this is done quickly and efficiently, which I deem as unlikely then currency might not be a problem but if Scotland temporarily has its own currency and does not set about the right expectations about joining the Euro or at least pegging, then there is room here for immense volatility which would also be catastrophic for trade.

The truth:

As always the problem comes down to politicians, since they have the most to gain by separations. Alex Salmond claims that Scots will win a thousand pounds over the next 15 years if they vote yes, and the UK government has a counter-bribe of 1400 per person over the next 20 years. This is what democracy comes to, bribing the public with(in all likelihood) borrowed funds.

Overall:

Accepting such a thing sets a precedent and others would want to join, including Catalona, Veneto, Basque country, Padania, Brittany, Corcisa and Transyvania.

Why should Edinburgh not be independent from the rest of Scotland, why should households not be independent from the rest of the world?

Data is scarce on this issue, so it should be natural to be risk averse and vote no. I would however think it worthwhile if independence implied a return to Scottish Banking! I am unsure as to if it could work when such a system is competing with neighbouring central banks but it’s worth a try.

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