Scottish Independence and the unheard economic arguments for “No”

Simon:

Perhaps there are more options than you consider–and so more insights to be had–from the finding that Scottish adults are increasingly unpersuaded of the economic case for “No.”

1/ The question “better or worse off?” says nothing about “how much better/worse off?” Economist protagonists in the debate have been remarkably unspecific about this key matter. But voters may therefore have decided, based on paying close attention to this non-specificity, that there isn’t much in it, either way.

2/ Further, the economic arguments for “No” may have been seen as reflecting the ulterior motives of their political proponents, rather than the neutral perspective of economists. This impression may have given by the evident bullying over currency union, and claims, such as those by Mr Darling in the first TV debate, that Scottish renunciation of UK debt would lead to a creditor strike, a piece of evident nonsense given developments in Greece, Argentina, Uruguay etc. And the impression of ulterior motives may have been aggravated by the propensity of the No campaign to give no acknowledgement to the counterarguments, such as the fact that zero outstanding public debt would be a great elixir to creditors, and such grudging acknowledgement that many small independent nation states do just fine.

3/ The economic arguments for “No” have also ignored key issues: (a) the economic impact of the UK leaving the EU, a fate which independence for Scotland could spare it from; (b) the future impact on net fiscal transfers from RUK to Scotland of further devolution of constitutional powers to Scotland, and of essential fiscal adjustment in UK in coming decades as public debt is worked down. The good voters may have figured these matters out, even if economists have not.

4/ And those arguments for No also seem to give no weight to the possibility that choices over the type of fiscal adjustments made to lower aggregate UK debt may differ between Scotland and RUK, even beyond what scope added devolution may allow to accommodate this. In this regard, the decision of Westminster parties to delay specification until the last minute of what those additional discretionary powers for Scotland may be is a remarkable tactical failure of the No campaign.

5/ In short, economists have prepared their arguments poorly, and had those arguments delivered by self-serving and error-prone politicians. So there can be little surprise that the No campaign might feel that its economic arguments not have been given the attention that they deserve … or, perhaps, they have.

6/ And so if, sadly, Scotland decides to go its own way, there will be plenty rumination to be done, including by economists.

Peter Doyle

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