Letter to the local East Lothian press

This letter was sent to several East Lothian local papers by a local Yes Scotland activist

I believe, as John P Mackintosh did, that we Scots have the brains and the courage to run our own country. We have the sense to welcome the English, and their skills, into our midst. They know that whilst we will defend their country at every turn, as indeed they will defend us, it is not in the interest of the working class within Scotland to be shackled forever to England.
I appeal to traditional Labour voters, like myself, not to be deceived by the fibs of Messrs, Blair, Brown, Blunkett, Darling, Hewitt, Mandelsohn, Reid and Prescott. These new Labour millionaires sold the Labour Party’s soul. They, and 23 Tory Cabinet millionaires, now seek to persuade you to sell you country’s soul. They urge you to vote NO to INDEPENDENCE. Will you? I won’t!
To vote NO is to support pay day loans, pawn shops and abandon manufacturing skills.
To vote NO is to support wars of intervention in foreign countries.
To vote NO is to ensure a constant Conservative Government who knows nothing of your life.
To vote NO is to accept unemployment rates of 50% on parts of the west coast and 30% on average.
To vote NO means that 60% of Scots will continue to earn less than £25,000 per year.
To vote NO accepts that 100,000 children in poverty is tolerable.
To vote NO is to agree that cuts should be imposed on the most vulnerable in society.
To vote NO agrees to a £375 Bn bailout for the stockmarket and £140 Bn to cover tax evasion
To vote NO is to demand a flexible workforce that is transferable and disposable.
To vote NO is to prefer others to rule your country.
To vote NO is to beg for your fair share and the humiliation that comes with that.
To vote NO shows a lack of self-belief in ourselves and a lack of faith in our children.
To vote NO is to be frightened into staying in a relationship and the contempt that that brings.

To vote NO means agreeing to suffer poverty, degeneration, hopelessness, fear, abdication and to
giving up democratic government so deeply cherished in Scotland.
That is why I’m voting YES!
I urge all the Labour voting electors to think deeply and to act courageously.

A G

London has already declared independence, Scotland should do the same

It’s obvious that economics is an important factor in all of this. Given the lack of physical threat and our own ‘submerged’ identity, economics occupies a more important place in the argument for independence than it deserves. What we mean by this is that independence or dependence, the economy and Scotland will not collapse. In fact, at the beginning at least, we’ll not notice much difference.

There is an important point in amongst all this economic to-ing and fro-ing that is not being discussed. London has declared economic independence from the rest of the country. It has not been trumpeted and, unsurprisingly, there are no border controls, unless you count money as a control. London not longer is in sync with the economy of other areas of Great Britain. In many instances, the laws of the country no longer apply in London.

London has become a financial island on an island. It has the monetary muscle to write its own rules for its own funding. It has public works that dwarf anything that happens elsewhere in the UK for a comparable population. Didn’t we just spend 9 billion for a two week sport-fest? With no foreseeable legacy that will either benefit people or the country as a whole. (The Olympic park might even be moth-balled!) This makes the Edinburgh trams seem like a freebie. Edinburgh now has permanent infrastructure that will be used. London has a mausoleum to athletic greatness.

No one talks about how the rest of the UK subsidises London both directly and indirectly. The £9 billion spent on the London Olympics was taken from all UK taxpayers. The billions to be spent on HS2, which benefits London, will come from all UK taxpayers. The £25 billion a month being given to the London Stock Exchange to prop-up the banks and filtered through the Bank of England will be paid for by all UK taxpayers. The licence fee, which provides billions to the BBC where the majority of the money is spent in London, is paid by all UK residents. The bill for the Arts, again where London enjoys by far the majority of the funding, is contributed to by all UK taxpayers.

How about indirectly? All companies on the stock exchange have to be registered in London. A tax on being a public company on Britain; again that money goes to London. All the banks, with their complex financial packages pay fees to invest to companies in London, and this is paid throughout the UK. All the major tax dodging goes on in London. Not only tax dodging, but claiming back from the Treasury, which means tax experts are not only helping companies and individuals dodge tax, but also the UK taxpayer pays them to do so. (It is literally unbelievable! A financial Wild West in the heart of a capital city.)

The rule of financial law is not applied to London. It operates as a financial closed-shop. Yet the rule of financial law is applied throughout the UK.

London is high on public subsidy with all major areas of government being situated there. Interest rates have been set since the Thatcher-era to benefit finance and not manufacture. The setting of high interest rates in the 80s let a strong pound acquire foreign assets but crippled manufacturing. The government is run entirely based on London opinion, and therefore London interests.

We keep being told there is a deficit between what Scotland gives to the UK and what is returned. But those figures are only part of the story. By freeing ourselves from London, we will make massive savings across our economy. Massive savings that will obliterate our deficit.

Gavin McCrone’s Weighing Up the Economics Chapter 2: Devo-Max, Devo-Plus and the Status Quo

This chapter of the book is the most easily summarised. There points recounted lead to some very obvious conclusions. Any further form of devolution will have little impact on  the lives of the people of Scotland. We should either accept the status quo or have full independence. The half-way house of greater devolution bestows powers that it may be impossible to utilise and if they are, being of such limited extent, may create more troubles without the tools to resolve those problems.

The Status Quo

The Scotland Act of 2012 is devolving a certain amount of tax raising powers onto Scotland. Income tax in Scotland will be reduced by ten pence with a similar reduction in the block grant Scotland receives from the Exchequer. The Scottish government will, from 2016, be responsible for how it finances its spending. Along with this tax power on income, the Scottish government will have responsibility for stamp duty tax on land and property and landfill tax. Finally, the power to borrow, within limits, will be granted to Scottish ministers – substantial sums but not quite enough to build trams in Edinburgh as originally intended,

Under this settlement Scotland enjoys little more power than a US city. Retaining Sterling allows London to effectively control the Scottish tax rate and Westminster would still control the tax structure. Borrowing, as noted before, would be limited and would have to be approved by the Bank of England or the Treasury. What’s the point? There’s enough power to let irresponsible ministers get us into trouble, but not enough to actually build something.

Devo-Plus

The proposals for Devo-Plus are quite vague. Few taxes are devolved, although there are suggestions that tax on tobacco, alcohol and VAT be devolved. Corporation Tax is withheld as one of the possible taxes to be restored to Scotland given that it may give Scottish business an advantage or attract businesses from down South to re-locate northwards. As Scotland controls business rates then the Scottish government could reduce these to assist Scottish-based businesses, it has been argued. Here’s the problem – the loss of revenue would have to be replaced from elsewhere otherwise painful cuts would have to be made. Since the Scottish public would feel the cuts but be unlikely to see the businesses flocking north in any great numbers, the rates being a contributor to local authorities and aimed mainly at small local businesses, it’s easy to see that attracting substantial inward investment requires the power to set your own corporation tax. And that’s not on the table.

Devo-Plus, vagues and limiting, does not really improve the position of Scotland as it currently stands. There are slightly more powers on offer, yet the Bank of England and the Treasury, benefiting from the oil revenues yet excluding them from Scotland’s tax take, can insist that Scotland’s other incomings match its outgoings. Any tax powers are going to have to operate under these conditions. The whip-hand remains in London with little room for anything other than tax ‘window-dressing’.

Devo-Max

Another hyphenated neologism that suffers from ill-definition. Professor McCrone assumes it means full fiscal separation from the UK. There would be no attempt to equalize services or spending between Scotland and the rest of the UK. Yet even fiscal independence does not mean fiscal independence. It’s likely that benefits and pensions would remain with the UK. VAT cannot be reduced as long as Scotland was officially still part of the UK. A set amount of money would have to be paid by Scotland for defence, the Monarchy, the national debt and monetary union, and other things. Much of our tax revenue would be ring-fenced; we would be controlled when it came to over-spending and left with only being able to under spend i.e. cuts.

Devo-Max is another false solution that suggests some form of independence, whereas, the reality is a paper independence with as many restraints as there is just now or was ever applied to the Scottish Office. The biggest danger of any empowered form of Devo-Max is that the rest of the UK would resist it. Why should Scotland be able to attract businesses with lower corporation tax or wealthy individuals with low income tax? As North Sea revenues would be unlikely to be part of any deal, Scotland would be immediately operating with a severe deficit that the Bank  of England would demand was reduced, immediately.

Professor McCrone’s book does all of us a favour. It effectively removes the ‘third option’. All further forms of devolution are effectively dead ducks. Each initiative’s financing would be subject to some sort of oversight from the Treasury and/or the Bank of England. Scotland would be like those Southern European countries which are now run by EU commissioners. Each Scottish minister would either have to account to someone in London, or the First Minister would have to do so on their behalf. The humiliation of the situation might actually drive ministers and civil servants to independence; but we may have to wait another twenty years for that.

Independence in state, fiscal powers and currency are the only measures that allow Scotland to have any genuine responsibility and power to follow a Scottish policy.

Gavin McCrone’s Weighing-Up the Economics Chapter 1: How Well Off Are We?

Professor McCrone has contributed to the growing debate on independence with a new book on Scotland’s economic position. As the government economist who predicted the riches that the North Sea could bestow on Scotland and Britain, and who insisted on the importance of a taxing mechanism for this, he is a man who has been long acquainted with the issues of Scotland’s economy.

These blogs are intended to outline the points that Professor McCrone highlights as being pertinent to the economic case for or against independence, and, since we are of the independence party, provide some positive response to any points that do not seem to support the Cause. However, we will attempt to be honest and give full weight to all of the arguments, even those heavily against our own view.

Foregoing a little  of Scotland’s economic history in the first couple of pages of the chapter, Professor McCrone  goes onto state that outside of London and the South East, Scotland is the richest area of the UK. If we take the Gross Domestic Product (GDP) per head then an independent Scotland is only exceeded in wealth in Europe by Luxembourg, Norway, Switzerland and Monaco. This includes North Sea oil and gas which increases our output (GDP) by 21%. These North Sea estimates are based on the territorial waters being divided -up in accordance with international law and the output from the 90% of the North Sea that would fall in Scotland’s territory being included in these figures.

When it comes to tax and spend, Scotland provides a tax revenue equal to the share of its population, however it spends more than it takes in tax. According to the best estimates in Professor McCrone’s book, the current deficit between what Scotland earns and what it spends is 14%. This would be reduced to 5%, the SNP claim, if the tax revenues from the North Sea accrued to a Scottish Treasury. Still a deficit, but a more manageable one, and near to the 3% deficit required by the EU.

Professor McCrone makes the reader aware of some important factors to take into account. We do not know the share of the North Sea an independent Scotland would secure in negotiations; we do not know the future price of oil, fluctuation in the price of oil could have a huge impact on Scotland’s deficit; we do not know the share of the UK’s national debt that Scotland would have to take on, or the interest payable on that debt. These are areas that need clarification to make sure that Scotland has a reasonable chance of starting off as a prosperous state, he believes, and common sense agrees.

The worst case scenario is fairly obvious – Scotland might not be able to attain its 90% claim of North Sea oil and gas; it would then require a large reduction in its public spending; it would receive a larger portion of the national debt and at a higher rate of interest than it would like, and the oil price might fall. This would create severe economic difficulties. Certainly, the beginning of Scotland would be quite chilly if this were to be the case. There would be savings available to be made, nonetheless, finding 10% of any budget to cut is a hard task, and a thankless one, probably capable of destroying any political party for a generation.  Add to the fact, that, if the SNP formed the first government , we would still be using Sterling, then there is not a huge amount of room for manoeuvre with an independent Scotland’s finances.

Should we be pessimistic about the these obstacles? If we look at the figures more closely, then there is less cause for alarm. There’s an element of a fiction to all statistics. If North Sea oil production disappeared tomorrow, we’d really only miss the tax revenue, because most of the profit and wages from North Sea oil by-passes Scotland and goes to pension funds, trust funds, shareholders and workers who do not live in Scotland. So, despite being told we’re the sixth richest nation in the world by GDP, we probably wouldn’t feel any different. There’s no reason why Scotland should receive less than 90% of the gas and oil producing territory of the North Sea, but even if it does, again only tax would make a difference. The impact might look traumatic as far as GDP goes to have only 60% or 70% of the gas and oil territories but the tax revenue would not be so substantially harmed. (We’d still want 90% though.)

Having said that, there would still be a series obstacle. A deficit of any sort is going to be extremely difficult and, without a Scottish currency, near to unmanageable in the short term. We would be at the behest of the Bank of England. Their protection of the Sterling currency would mean that Scotland would have to run deficits at the level the Bank of England required; this would then mean that Scotland would have to tax and spend at the level the Bank of England believed would keep our deficits under control, possibly giving directives on business taxes and raising the possibility of corporation tax being higher in Scotland – a flight of capital may then ensue. Our borrowing would be regulated, subject to the Bank of England,; the interest payable on our debt would be controlled by the Bank of England, although the portion of the national debt Scotland takes responsibility for would be arrived at through negotiation. If Scotland votes Yes and then elects a SNP government which continues with a Sterling currency, in the short term, Scotland does not have the independence we and others would wish for it.

This is why we believe an independent currency is vital. It is possibly acceptable as a political tactic to state that Sterling should be kept, as a form of reassurance to voters, and there’s no doubt that some kind of peg to Sterling or another currency after independence would be useful for stability; however, to launch Scotland into independence with Sterling would mean forfeiting all our cards in the negotiations. These negotiations would quickly become the Scottish representatives surrendering Scotland’s advantages to stave off economic armageddon.

Currency is the most problematic issue for Scotland. A Scotland that could not allow its currency to weaken would have to borrow at unsustainable rates to keep up public spending. If this cannot be done which, to be honest, will not be allowed, and if Scotland cannot have its own currency and not allowed to borrow independently then it would have to cut about 5% to 10% of its budget, which, if we include the sort of multiplier effect we’ve seen in Spain and Greece, could drastically effect the Scottish economy. (The multiplier effect is when a government cuts spending and how much that effects other groups individuals’ spending in the economy.) In fact, it could eviscerate the Scottish economy in the short term, since compound interest on debt means that we could be trying to close a deficit that is continually running away from us.

In the long-term, Scotland will be a much more successful economy with independence than it is now. We are certain of that. But, we cannot be disingenuous and state that independence with Sterling and the kind of deficits Professor McCrone identifies is not storing up difficulties and may force concessions which in the near future will have ill effects. We’ll still be for independence, but we can skip most of these problems with an independent currency.

Our own currency would see us able to finance our own deficits; weaken our currency to boost exports, and encourage the buying of Scottish-made goods and services. From this position we could slowly strengthen our currency and peg it to the Euro, Sterling or another, so that our needs are suited and stability is gained with a balanced economy. We could even let a Scottish currency strengthen and use it to purchase assets – but we should not have our currency, deficit funding, interest payments and fiscal powers be dictated to us.

Professor McCrone does not countenance a Scottish currency, but assumes a SNP government with unmoderated policies. This makes the reading of the first chapter of his book unduly pessimistic as he assumes we are handed an unfavourable economic situation and the professor describes the lack of control we would have in rectifying it.  This is exactly what independence is about – changing our economic and social reality.

Pensions and the latest fear – is it real?

The latest fear, reported by the The Telegraph and The Guardian, is the shortfall in the USS pension scheme. The USS is the Universities Superannuation Scheme, a pension fund for academic and academic-related staff. It is the second largest pension scheme in the UK, according to the fund size, and it has over 200 000 members, and, this is important, has more than 390 participating institutions.

What’s the fear? At present, due to mismanagement, there is a £10 billion deficit in the fund, and this has to be made-up by universities making higher contributions over the next ten years, like many schemes all over the UK. The issue is that if Scotland separates, cross-border pension schemes, under EU rules, are not allowed to have deficits of this sort. They must be ‘fully funded’ at all times. If Scotland became independent, then the USS would automatically become a cross-border pension scheme and immediately seek to make-up this shortfall. A deficit as large as £10 billion would mean that, well, it’s never made quite clear, but there’s vague talk about companies going bankrupt (why?) and unfunded pensions, and the SNP denying reality.

Gregg McClymont MP, Labour’s shadow UK pensions minister, said: “The risk to Scots pensions from separation cannot be wished away and the time for assertion is over. ICAS are clear – we need a credible response on these issues. Everyone operating final salary schemes across the UK, like the USS, will have to find billions of pounds overnight in the event of a vote for separation. The only other option will be separating out liabilities and closing schemes in Scotland.”

The SNP have pointed out that cross-border pension schemes between the UK and Ireland exist and they have been allowed three years grace to sort out their pension deficits. Yet The Telegraph states that ‘none of that is guaranteed’. It could end-up with having to sort out liabilities and Scottish schemes having to close.

You know when you read an article and there is some reason in it, it comes close to what could be called ‘intellectual propaganda’? This means something that seems clever – it’s got quotations from important people, it lines up points as if they are refutations and tries to create the impression of solidity, then dares the other side to explain vacuous speculation – but, upon close inspection, it’s really just fear-mongering. These two articles supplied by these two papers are examples of this. They’ll turn vague insinuations into damning implications.

We’ll take the challenge of tackling, not so much claims, but inferences. First of all, Scotland will not become an independent country on the 19th of September 2014. It will probably become an independent country round about 2016 when a referendum will be held to pass the constitution and new elections will follow. This gives the scheme 2 years before it has to sort out its deficit. As already noted, Ireland and the UK have had a three year period of grace to sort out any liabilities for cross-border pension schemes; there’s no reason why Scotland won’t get the same leeway, possibly even more since the negotiations will be taking place under different circumstances and it would be a very good idea to keep a surplus country (Scotland) on the side of the EU finances, so it can make its surplus available to suffering Southern countries as guarantees for their debts. We’ve got leverage on this one. Plus, since the deficit is in 2013, and the vote isn’t until next year, that’s another year. So, Scotland has 6 years, at least, to sort out its share of any deficit funding. We won’t be looking to fund any overnight deficits for quite awhile.

Ok, let’s have some rough Maths. There are over 390  institutions in the scheme. Let’s say 400. The number of people in the are 287,594, according to The Telegraph. Rough maths says that’s 719 people per institution. Scotland has 15 university institutions. So 15 x 719…ok, Edinburgh and Glasgow are huge, so we’ll be wildly fair, and say, 15 x 4000 = 60 000. Let’s say, 60 000 scheme members became the responsibility of a Scottish pension fund, that’s about 1/5 or 20% of the total (very rough Maths). The Scottish scheme would get 20% of the assets managed, which is taken from £34 billion, giving the Scottish scheme £6.8 billion. The shortfall for that would be £2 billion. £2 billion to be found over 6 years. Remembering that the Maths are a vast overestimation of Scottish liabilities.

But, here’s where we are being misled. Scotland won’t owe £2 billion every year for ten years, or owe £2 billion in ten years time. For the next ten years, on average, there will be a £200 million shortfall. Scotland would, from an economy of £144 000 million a year, have to find £200 million a year (very rough Maths). Given the costs of union we won’t have – HS2, London-subsidies, a huge private school and academy system, Trident – any deficit will be easily covered.

First of all, a Scottish economy would have a tax surplus so large that the taxpayer could easily fund it, and taxes wouldn’t rise. We could nationalise the scheme and it could operate like the teacher scheme: the government covers the lean years and the scheme pays back when it’s in surplus. There’s never been a problem with that as far as teaching pensions go.

Secondly, we could have our own currency and finance the scheme from bond sales.

Thirdly,  a windfall tax on the banks and bonus schemes that got us into this mess would sort out the deficit in a year.

Fourthly, the scheme is used to invest in assets with proven returns that benefit the Scottish economy. The entire deficit is probably a result of the scheme buying property and giving bonuses to fund managers as assets appreciated i.e. taking assets bought with someone else’s money, watching them go up, and creaming off the excess, then when it goes bad the pension holder takes the loss. It seems The Pru manage the scheme and they have daily charges – make themselves money with other people’s money. Clamp down on this, and invest in energy generation; an industry we know has a continual and sustainable future. Then instead of fund manager pocketing bonuses generated by pension contributors, the Scottish economy grows, jobs are created, tax yield increases and pension fund holders get better returns, and, who knows, a tax cut?

The real problem is for the rest of the UK, once Scotland leaves. There’s a huge pension shortfall for the scheme, a tax deficit to add to it, and, far more institutions dependent on the scheme with less attraction for additional revenue such as foreign students. Scotland has two Russell group universities and the magnet to Americans that is St.Andrew’s. Three universities with a huge cash generating potential out of fifteen. The rest of the UK has 22 out of around 385. The deficit would be harder to fund using this method, and Higher education in England has over-expanded. The continued fall in student numbers will no doubt hit universities’ ability to contribute to the fund with the threat that the deficit might increase over the next few years. Scotland’s colleges may suffer from lower student numbers, but they are on a different pension scheme, and it is fully funded. The rest of the UK is massively under-funded pension-wise. Scotland’s universities would be leaving a sinking ship.

We don’t recommend that as a reason to separate. Scotland won’t leave the UK’s USS because it fears being dragged into a black hole. Scotland will leave because it’s about taking responsibility. The rest of the UK has to take on its responsibilities, just as much as we do. Although, like us because the rest of the UK has resourcefulness too, and unlike the poor hapless Labour MP Mr McClymont thinks, we’ll have six years, plenty of ideas and plenty of capital to work it all out.

Ultimately, Scotland, if it had to can meet all its pension contributions, and even, in the worse case scenario, Scotland can afford cross-border schemes that have been mismanaged. The pensioners in an independent Scotland will not only benefit from government guarantees, they will benefit from a country that will be one of the richest in the world, and a more equal one at that.

Willie Rennie leads a party that does not actually exist – London Scot

Trying to have a sensible debate is one thing; having to rebut political pygmies like Willie Rennie is something else … it’s fun! We can’t take Willie Rennie seriously, and we hope he doesn’t take himself too seriously either, certainly not as a political force. Willie Rennie’s most recent intervention has all the hallmarks of Mr Rennie: mistaken on the facts; ill-advised on the style, and aimed at promoting fear worry.

Willie Rennie is the leader of a party that does not exist. It doesn’t exist. Literally! He leads a party that does not exist. The Scottish Liberal Democrats are not registered as a political party in Scotland, England or anywhere in the UK. (You can check at the register here.) They are merely a front for a party that is registered in the UK and whose headquarters are (surprise, surprise) in London – the Liberal Democrats. The Scottish Liberal Democrats are really the Liberal Democrats cynically using the word Scottish to suggest that it is a separate entity that has Scottish interests at heart. Apart from being slightly patronising, it raises much more fundamental issues. If Willie Rennie is not the leader, who is? And who has the power to decide policy?

Nick Clegg is the real leader and Willie Rennie’s position is approved by and policies made by the Liberal Democrats’ Federal Policy and Federal Executive committees. They are London-Wesminster-based bodies, filled with politicians from the Houses of Parliament.  Both committees are dominated by politicians who cannot be expected to have Scotland’s best interests at heart – only one MSP is a voting member on each committee and each committee has 15 members or over.

The Lib Dem constitution allows a ‘Scottish’ Lib Dem conference to decide the policies on devolved matters yet can override those decisions if they choose. So, even if the Lib Dem Scottish conference decided on more devolution, more responsibility and more independence for Scotland, then the Lib Dem Executive can veto it. Other crucial issues like the economy, foreign policy, defence and many others are decided outright by a  group of people that have London Westminster interests at their heart. And Willie Rennie is the mouthpiece of this decision-making body.

Willie Rennie’s connections to London Westminster don’t stop there. It is worthwhile pointing out that Willie Rennie has close links with a group called Westminster Foundation for Democracy,  registered in  London. Willie Rennie blatantly thinks that Westminster democracy is what Scots should have, along with other places (or democracy by Westminster!). This group have taken him to Macedonia, Sri Lanka, Montenegro and Kurdistan at the cost of thousands of pounds. The aim is to spread democracy to these areas of the world.

Well, that’s ok , it’s a noble cause, and if the Westminster Foundation for Democracy is paying for it, what’s the problem? But that’s not the case. This body is funded by the British Foreign Office.  Willie Rennie is being taken on tour by a London-based institution, the Foreign Office; an institution that is not devolved and stands to lose a great deal of money if Scotland becomes independent, and, furthermore the taxpayer is picking up the bill for Willie Rennie’s democratic interventions, at a cost of thousands of pounds too.

Would Willie Rennie’s tax-funded trips be so bad if Willie Rennie was bringing democracy to these areas? Willie Rennie is a Mid-Scotland and Fife MSP. He has some very poor areas in his constituency. Time would be better spent doing something about this rather than bringing democracy to far off parts of the world. Why bring democracy to Macedonia when there are areas of Fife that have been left economically desolate after years of London-centric economics instituted from Westminster? Where are Willie Rennie’s priorities?

Let’s try to be gracious – perhaps he is doing something worthwhile. In which case it’s fair to ask if Willie Rennie has helped out democracy in the areas he’s visited? Well, he was 5 years too late for Macedonia, it was already a democracy.  Sri Lanka had just  killed 40 000 Tamil civilians when Willie Rennie visited as their guest. It is an unusual democracy that kills its minority groups; a boycott would have been more in order. He was five years too late for Montenegro too. With Kurdistan, he managed to visit a state that doesn’t exist, ironic for a leader whose party doesn’t exist. Kurdistan has no sovereign government but is an ethnic group of people spread across Turkey, Iraq, Iran and Syria. (Albeit, in Iraq there is a regional authority that runs ‘Kurdistan’ in that part of the world.) We would tentatively suggest that Willie Rennie’s attempts to bring democracy to a people actively persecuted by four different states was not effective.

Willie Rennie, if we’re generous we could say, wants democracy for a country that is not in being. That is something, at least. Yet he does not want it for Scotland – a country that exists and a sovreign government that nearly exists. Why are his democratic principles dropped when it comes to Scotland? Because HE IS A LONDON SCOT. His views are the views of the London establishment, not Scotland. He has spent so long benefiting from the London establishment, he cannot see the difference between what helps Willie Rennie and London’s elite and what is good for Scots and Scotland.

It’s important to remember this when we hear him bothering the airwaves with his latest worries. Alex Salmond’s speech at Nigg was on six unions that Scotland has, and about the five that will remain as part of SNP policy if independence is achieved. Obviously an independent Scotland will end political union, but the EU, Nato, the currency, the Crown and its social ties with the rest of England and Wales will remain. We at Aye Scotland have our differences with some of this, particularly currency union, but Mr Salmond has his policies and he’s entitled to make the point.

But wait! What’s that distant drone? It’s Willie Rennie and his made-in-London response that serves the interests of the London establishment, “If we slam the door in the face of the UK they may just lock it from the other side.”

Ah Willie! If only you knew: the UK can’t shut the door on the five unions that Alex Salmond describes. NATO is trying to expand and the decision isn’t the UK’s to make; Sterling is an international currency that we could buy and sell from the Chinese if we wished; Scotland has always chosen its monarch, if the Queen didn’t want the job, we’d chose a new monarch, if the monarchical system remained; the UK can’t veto Scottish entry to the EU any more than Scotland can veto English and Welsh re-entry; and as for the social union, the UK can’t stop SKYPE, the internet, free travel, and telephone calls without leaving the EU and becoming like North Korea – not a route any sane country would take.

What is annoying about Willie Rennie, apart from being a London Scot who takes jollies and drops his principles when it suits others, is that he preaches fear worry, and to do that, you’ve got to believe the other person is easily scared.

Why do other countries want their own currencies?

There is a potential storm brewing in France. It is a country that is not used to financial sacrifice. It has had for decades now good state benefits, state support for industry and strong unions that fight to uphold the social contract at a moment’s notice. Up until the most recent financial crisis, although having difficulties with unemployment, particularly youth and immigrant unemployment leading to local difficulties in the banlieues, France and its people have not been particularly scarred by the free market reforms of the 1980s in the way that Northern England has been or de-industrialised Scotland.

Yet the Euro crisis now threatens their economy and their often talked about and seemingly much-prized social model. A model of higher taxes, regulation combined with state intervention and living benefits. France’s deficit of what it spends and what it takes in tax has been growing larger, and to cover the gap requires borrowing. Debt has reached the level where the costs of borrowing could become exhorbitant (leading to eventual bankruptcy and default) if the deficit in spending and income is not cut.

To do this means that state support of industry must be withdrawn. Job losses. Benefits must be cut. Job losses. And social programmes abolished. Job losses. The accumulated loss of money from the economy will hurt other businesses. Job losses. This eventually will feed into a spiral of less money in circulation, leading to more unemployment, leading to less money. Yet France cannot do anything else. It has lost the ability to manage its own economy and must implement the reforms favoured by the EU and Germany: the superpower of Europe and the world’s third largest exporter.

The European Union policy is called ‘internal devaluation’. It requires a country to cut its spending so that its workers will work for less. This means that the workers will become competitive with other nations and that the products of their country will be sold to other countries at a lower price. This selling of products to other countries brings cash and tax revenue to the home country, making the home country’s books balance. It also means that the people in the home market should buy the cheaper home-made goods too. It’s a virtuous circle of, for instance, Germans buying cheap German goods and exporting those goods across the world.

There are several issues with this approach in the specific case of France and the application of it by the European Union. The first issue has two sides: the deflation spiral and the social consequences. To cut spending is to cut the money in circulation in the economy: this forces wages down. Wages being forced down means that prices should be forced down. Prices being forced down means that wages drop even further. Job losses are an inevitable part of this process. Monetarists hold that eventually when wages and prices meet an equilibrium then the negative spiral stops and a positive one will begin, or at least people on even nominally lower wages will have their spending power returned to them because prices will be lower too. But, and this is a very important point, in our system, there is no natural point of equilibrium, not logically and not in actuality. Not only can, logically, this cycle continue until there is no one left in employment, but the debts built-up by individuals and companies, and the regular interest payments they demand, means that they will go bust before equilibrium is reached.  Traditionally, the state steps in to arrest this downward spiral. Under the Euro and its Austerity policies it cannot as it would have to borrow at too high an interest rate, endangering the states ability to fund itself. Given we are in a world recession, and countries are trying to export their way out of it by the same methods, including currency devaluing, the likelihood of France or any country being able to offer goods at knock-down prices is rare (no, impossible).

This deflationary cycle, unsurprisingly, has an impact on the tax income of the state. Less jobs equates to less taxes; less taxes means the gap between government income and government spending grows. Usually, governments can borrow at this point, but Austerity means they cannot. The state is now chasing a finishing line that is always moving away from it. It’s like Zeno’s paradox of Achilles and the tortoise. The economy contracts, the state contracts, the tax take contracts; the deficit increases, the debt increases, the interest on that debt increases in real terms.

The social consequences are there for everyone to see: 50% youth unemployment in Greece, Spain and  near it in Portugal. 25% unemployment in the same countries. Loss of skills and industry that took decades to build-up. But this is not the worse: Italy and France are next. And even this isn’t the worst news – the worst news is that the debts have not gone down. All the suffering so far has not led to a decrease in debt, so the sacrifice of these populations has been for nothing and will be for nothing. Poverty is increasing; social services are decreasing, and life prospects, in all senses of the term, are thinning. The fact that people have a ‘capital inheritance’, that they have homes to live in or family ones to go back to, that there is flexible part-time working so that even a minimum amount of money is coming in, and the explosion of food banks, are the only things keeping a lid on what would be a dangerous situation. How will people feel when they realise that their standard of living has permanently gone and their sacrifice was to no avail?

A decade and more ago, Germany followed Austerity policies and it has worked brilliantly for them. However, this policy was followed during the middle of the largest economic boom in human history by the largest exporter of manufactured goods in Europe, and relative to its size, the largest exporter in the world. The German people suffered slightly while its economy hardly veered off-course. It is not the same circumstances now. Applying Austerity now is like using the tactics of the Somme in the Ardennes forest circa 1940.

There’s another important economic point that is not commented upon, usually for reasons of national pride. The Germans do it better. The Germans have invested in machinery, skills and quality for decades and it has paid off. Germany’s success as an exporter does not rely on its low price tags: it is built on quality, reliability and high-spec goods. The German car is never the cheapest, yet if we had the money, we’d more than likely buy German. The same for furniture, technical goods, electronic goods, chemicals, engineering parts, engineering projects and football players. Germany rarely lets you down. A brand like this is invaluable. Spain, France, Portugal, Greece, Italy do not have this reputation to the same extent in anything except the odd area here and there, and high end luxury goods. Culturally, there is no reason to think that a policy that succeeds for the German economy will succeed for the French one. (There’s also another unspoken factor – during the 1990s the Germans bought-up many prize assets in Eastern Europe and Russia, turning some countries into satellite economies of a greater German economy i.e. captive states that unwittingly buy German all the time. This economic strength is invaluable in producing an account surplus.)

So, how does this relate to Scotland and it having its own currency? Marine Le Pen, daughter of radical rightist Jean Marie Le Pen, has re-positioned herself as the saviour of the working class with a policy that calls for the return of the French franc. The return of the franc will kill the policy of Austerity imposed by Brussels. “I cannot imagine running economic policy without full control over our own money,” she said. If Greece returned to the drachma, it would be scorched alive. It’s too small and its debts could be held over it so that an asset stripping would leave it with nothing. France is too big to bully in this way. France can walk away from its debts, re-write its debts and dictate its debts and have default as its last  reserve – a default that tear through the financial system and create such a black hole that all economies except subsistence ones would be pulled into it. France has the power in reserve to reflate its economy and wipe-out its debts relatively painlessly.

Scotland isn’t in that position of crisis, or strength, but the point should not be lost. Scotland cannot meet its own economic needs without its own currency. With our own currency, all options are viable and on the table; lacking our own currency, we have no options. It would take years, probably decades, to build-up enough Sterling reserves to be a serious player at the table and have serious influence at the Bank of England. Yet overnight, we can be one of the most prosperous and flexible countries in Europe, if we use a Scottish pound.

A return of the Scottish pound with the return of our independence would mean we can fit our interest rates to the needs of our people. We can issue our debt. We can pay off our debt. We can find the right level of currency for our exporters and for imports. At the moment we’re in a seemingly benign version of the Euro, the British pound, but that’s partly because the damage has been done – the British pound has been set in the interests of the London establishment, not the Scottish, or even the English, Northern Irish and Welsh people and our manufacturing has suffered – and partly because we have not even started Austerity yet. Although this is not the current policy of the Scottish government, we feel sure that parties for the first independent Scottish government in 2016 will adopt this as a policy. Events will have made us even wiser by then.

An independent Scotland. An independent currency.