Whether or not the launch was a success, is dependent on one's expectations. Did those present, particularly the main speakers, represent a fair cross-section of Scottish society. The answer to that is "No" because of the almost total absence of Scotland's business community. With the exception of Peter de Vink, there was little evidence of support from those of a "right-of-centre" political persuasion, although George Mathewson did send a message and Brian Soutar's non-appearance should not be taken as an indication that his enthusiasm for independence has waned. Significantly, there was also an absence of those of the "left-of-centre" persuasion, with the exception of Dennis Canavan and Tommy Brennan, both of whom were well known for their commitment to the Labour Movement of the past. Colin Fox of the SSP is certainly left wing but there has always been a commitment to independence, while Patrick Harvie of the leftist Green Party, eschews Nationalism but recognises that independence is more likely to deliver the kind of Scotland the Greens want. One also has to consider the participation of people like Brian Cox and Elain C Smith, both of whom have supported Labour in the past but who now see independence as the only way to achieve the kind of Scottish society to which they aspire.
During my years in the SNP I frequently argued that the purpose of the party was to create Nationalists, which to my mind is a perfectly respectable political position to take. I am completely comfortable to be described as a Nationalist, as someone who desires the independence of his country, not to be confused with chauvinist, imperialist or colonialist, all of which have been used as synonyms by opponents of Scottish independence, in their efforts to discredit the legitimate aspirations of the Scottish people. I have always taken the view that the pursuit of independence was more important than the pursuit of socialism or any other kind of "ism" and the purpose of the SNP was to persuade others to see independence as the first and by far, the most important goal. Those who were prepared to support independence but only "if Scotland was left-wing" or "Scotland was business friendly" or "Scotland was nuclear-free" had to be persuaded to set aside their "conditions", to accept that the Scottish people would determine the kind of society Scotland would be, but in order to have the freedom to do that, Scotland had to be independent first. Those in the party who agreed with that approach were dubbed "fundamentalists" and later condemned as standing in the way of the more "gradualist" approach, which saw independence as a more long-term goal.
I have been highly critical of the SNP's approach under Salmond's leadership, much to the annoyance of the new breed of cybernats and supporters who see any criticism of the party as undermining the cause of independence. The more perceptive among them have realised that almost without exception, my condemnation of the SNP, has been when they compromised the pursuit of independence and were not above dishonesty in order to further their arguments. The most obvious disagreement and the longest running sore, has been the party's total commitment to the EU and the euro and their willingness to lie and deliberately mislead the Scottish electorate. The more recent commitment to retaining the pound sterling, together with Alex Salmond's attempt to argue that monetary policy is unimportant, is simply an extension of the original argument over the EU. My critics will be hard pushed to find any other criticisms of SNP policy and the recent spat over minimum pricing of alcohol was about the spurious claims being made, not about increasing the price of booze. Over-blown claims and assertions based on untested theories should never be used as the basis for government policy as the inability to differentiate between a statistical correlation and a causal connection has had tragic consequences in the past.
Significantly, despite twenty years of gradualism in the SNP and assertions that it has been successful, the latest YouGov poll has shown that the numbers who support independence now, are no higher than they were twenty years ago. Support for independence has fluctuated since the first major breakthrough of the SNP in the local elections in 1967, when the party took 100 seats from Labour, but the hard core support for independence has been stable at around a third of the Scottish electorate. I first came into contact with Dennis Canavan in the 1970s when he fought West Stirlingshire for Labour, against the late and greatly missed Janette Jones of the SNP. It was only in later years that he first came across as a staunch supporter of devolution and much later, of independence. My first contact with Tommy Brennan was slightly later when the SNP supported the campaign to save Ravenscraig and I was Vice-Chairman for Policy. At that time he was a hard-line Labour supporter, as was the vast majority of trade unionists in Scotland and independence was dismissed as an irrelevance. That both men have completed the journey from staunch Labour supporters to advocates of independence and open recognition that if there is to be any hope of achieving the kind of Scotland they hope for, independence is not only relevant, it is mandatory.
The platform speakers left the audience in no doubt that the actions of a certain Margaret Thatcher had more than a little to do with their shift towards independence, that and the Blair/Brown regime which was a mere continuation of the Thatcher years. Mrs Thatcher has probably been one of the best recruiting officers the cause of independence has ever had and, there is no doubt her name will crop up regularly in the door-step conversations that will take place during the referendum campaign. Whatever persuaded the likes of Canavan, Brennan, Cox and Smith to make common cause for independence with de Vink, the fact that they did, makes the launch a success. When the leaders of other political parties, however small and insignificant they may be to the electorate, which have serious disagreements over policies which are fundamental to their own members, can also make common cause for independence, it is definitely worthy of note and some celebration. That has been the hope of "fundamentalists" like me for many years and it may just be beginning to happen.
It has certainly confused the media and the Unionist commentators who make their living penning scare stories on its behalf. Eddie Barnes, under the headline, "Divided they stand" notes the incongruity of it all and raises the usual objections of the Unionist camp to a "Yes" vote, "But Yes to what?" Colin Fox is quite open about the differences that divide Peter de Vink and the SSP. He is also critical of Alex Salmond's conservatism, as is Patrick Harvie. Scotland on Sunday claims the SNP is now "making a virtue of uncertainty" as it abandons its previouslu tight grip on the direction of the debate and opens the door to disagreement on just about everything. It is certainly a new departure for the SNP and will cramp the style of the cybernats some of whom simply parrot Alex Salmond, claiming monetary policy is unimportant. I was encouraged by the way in which the campaign was launched, by the willingness of the SNP to encourage a wider contribution and by the willingness of the Greens and the SSP to make independence the unconditional goal. Hopefully, that willingness to make independence the first priority will be continued
I interrupted the completion of this to listen to the debate on BBC where Nicola Sturgeon represented the SNP. Her comments on the currency were total nonsense and if the SNP continues with this line of argument, it will be difficult for the Greens and the SSP to continue to give their support without calling into question the SNP's arguments. Nicola Sturgeon's defence of the use of sterling was based on the claim that the economies of the different parts of the UK are broadly similar and productivity levels are "the same", as if that was the determining factor in choosing to use sterling. Not only are the claims questionable, the whole message of independence is that Scotland will do much better and, as Patrick Harvie was forced to point out, the economies will diverge. When, not if, that happens, and the Bank of England is setting interest rates for the benefit of the rest of the UK, Scotland will be at a disadvantage. Sturgeon's claim Scotland will have a member on the Monetary Policy Committee is nonsense and, even if it were to happen, does she seriously believe that a single Scottish member will alter the voting intentions of the rest of the Committee to suit Scotland? It is this kind of total dishonesty that will create internal tensions which will make cooperation difficult. If the SNP is serious about encouraging the support of those outwith the party, they must take this on board.
Sunday, 27 May 2012
Friday, 25 May 2012
The Future of the EU/Euro and Independence
Robert Peston's programme last Thursday 17th, on the politics of the euro, was simply a re-run of what has been said for the past twenty years, by those who had given the project any thought. As the euro crisis has deepened it is amazing how many "pundits" are coming out of the woodwork, expressing the view that they never thought it would work. The latest stage of the crisis has dominated the media for weeks now and the reality of both the euro and the EU have never been more stark. The situation in Greece cannot be salvaged by the Greeks on their own, unless they default on their massive debts, leave the euro and revert to the drachma. The majority of Greeks are apparently opposed to this, as are the majority of the leaders of the other member states, but the majority of Greeks are also opposed to the austerity measures required of them, in order to retain membership of the single currency. Cynics have suggested that they want their cake after they have already eaten it and want everyone else to pay for it. The contagion fallout is already hitting Spain hard with 21 of its banks having been downgraded further, more empty properties than the whole of the USA, unemployment at 24% and at 54% for those under 24 years of age. The Irish have finally wakened up to the fact that those who are having to pay for the debacle are not those who caused it.
Peston's programme provided a fair summary of how the euro project was never seen as an economic measure, by those European politicians who were the architects. It was always a political measure, with the aim of creating a federal United States of Europe, while claiming that the member states would continue to be "independent nation states", with their sovereignty hardly reduced at all. The fact that control over agriculture, fishing, trade and industry and a whole range of other areas of sovereignty had already been surrendered, without as much as a whimper from the Euro elite in all the member states, ensured the euro would be set up with the full support of that same political elite. The people in those member states were lied to by their leaders, something with which they are now having to come to terms as they attempt to deal with the consequences. The Euro fanatics and fantasists in all EU states, even those which did not join the euro, now have to admit that either, they did not understand the likely consequences of the setting up a single currency or, they set out to deliberately mislead the people. The only person from the inner cabal of the SNP that I have seen admit he was wrong, is Euan Crawford who was an adviser to Alex Salmond until recently, more of which below.
There is still no agreement among the EU political elite about the way forward and while they were all full of confidence and certainty when they could either ignore or belittle those who tried to warn them of the likely consequences, now they are having to face those consequences, their confidence seems to have deserted them. Germany's Merkel controls not only the politics of her own country but she also dictates the policies of those who are supposed to be her "equals", occupying seats "at the top table" where the main decisions are allegedly taken. It has ever been thus in monetary unions, the strong dominating the weak, from the Monetary Union of Colonial New England in the 1750s, to the Latin Monetary Union of the 1860s, to the Scandinavian Monetary Union of the 19th and early 20th century. Despite the long and turbulant history of attempts to create monetary stability by controlling several different currencies, operating in different countries with different economic policies and tax regimes, little or nothing of that history seems to have been taken on board by the advocates of the euro. The Bretton Woods Agreement of the years immediately after WW II, eventually collapsed under the strain of attempting to control the currencies of countries with diverse economic problems. The Exchange Rate Mechanism - an early forerunner of the euro - met the same fate and should have been the starkest warning of what would happen, having collapsed as late as 1993.
The problem with the creation of the euro was always that the true intention had to be disguised. The people of the UK were lied to by Heath and his government, and believed they were joining a trading agreement, as the very name Common Market suggested. They were told that unless they joined, there would be 3 million unemployed in this country, a figure almost reached under Margaret Thatcher between 1981 and 1986. Having to disguise the real intention behind the euro forced the EU leaders to postpone the centralisation of taxation, necessary to allow the massive transfer payments needed to prop up the peripheral nations such as Greece, Portugal, Ireland et al. The European electorate has allowed itself to be lied to and browbeaten into accepting the progressive surrender of sovereignty through a series of Treaties but the EU elite did not have the confidence to push the centralisation of taxation because of the further surrender of sovereignty it would entail. That is now inevitable if the EU intends to keep the original project on track. It was always inevitable, as critics of the single currency repeatedly warned, but it also means a single economic policy - or as near as can be achieved - in a Union with such economic diversity among its members. There may be regional differences in how policy is applied but a centralised tax system will ensure that spending will also be centrally controlled. The alternative is to allow Greece to leave, followed by other countries such as Spain and Ireland, which are finding the one-size-fits-all monetary policy too much of a burden.
Where does all of this leave the SNP and an independent Scotland? John Swinney has already said it will be the "best part of a decade" before Scotland could consider joining the euro, although membership is still the long-term aim of the party. The SNP has hardly covered itself in glory anent the EU, being one of the strongest advocates of both entry to the EU and the euro, under the fatuous banner of "Independence in Europe", a contradiction in terms if ever there was one. The current leadership has been among the strongest supporters of the centralising Treaties of the EU over many years but repeatedly refused to explain how membership of the EU and the euro could possibly be equated with independence. In 2001 Kenny MacAskill in his "Euro Route to Independence" said, "Leave aside spurious nonsense about surrendering sovereingty to Frankfurt rather than London, as Scotland has no independence to sell". Obviously the aspirations to independence were no longer of any consequence and were no longer to be pursued. He went on, "The inclusivity and opportunities of Europe and the euro can overshadow the exclusivity and isolation of independence." That one of the leaders of a party which is supposed to have "independence" as its raison d'etre, could make such a ludicrous claim unchallenged by the party members, said a great deal about the New SNP's concept of independence.
Mr MacAskill had some interesting things to say about the supposed "benefits" of entry to the euro, claiming that, "the economic arguments are substantial and the political case overwhelming", offering Scotland "an opportunity to actively and positively sell independence within Europe". As was the fashion within the SNP at the time, he used Ireland "the Celtic Tiger", as an example "of the benefits available to small nations in being able to react quicker and deal with matters more speedily and efficiently". We expect our governments to have not only an understanding of how the economic system works, but an ability to anticipate the potential hazards. At the very least, we expect them to have advisers with those abilities, both of which were obviously lacking in Mr MacAskill's case. Has anything changed in the economic thinking of the SNP leadership since the financial crisis of 2008? One major change has been the decision to keep the pound sterling as the currency in an independent Scotland, rather than the euro, and to have the Bank of England as the "lender of last resort" rather than the European Central Bank. Obviously, this change of policy was inspired by the crisis in the eurozone, underlined by John Swinney's statement that it would be at least a decade before the SNP could consider euro entry and then "only when the economic conditions are right".
There is little indication however, that the SNP leadership have any greater understanding of either the euro or, any kind of monetary union. On the 14th december 2011, Alex Salmond lambasted David Cameron for refusing to sign up to the agreement arrived at by the other members of the EU, with the exception of Hungary, which called for austerity and fiscal discipline in order to "solve" the currency crisis. Salmond called Cameron's refusal, "irresponsible posturing that will damage Scotland's fishing industry and cost jobs." That Cameron's refusal could damage Scotland's fishing industry any more than the EU has already done is risible enough, but Salmond was arguing in favour of a treaty which called for central control of member states' budgets. So much for "Independence in Europe". Alyn Smith, SNP MEP went even further, claiming, "This deal tonight has been good news for the eurozone, good news for the EU and it is appalling news for the UK. The eurozone is getting its act together" Asked by BBC Scotland, if the SNP was still in favour of joining the euro Smith claimed, "Give it six months and the UK will be sinking a lot faster than the eurozone".
Unfortunately for the SNP leadership, the people who have had to live with the consequences of the crisis in the eurozone, the Greeks, the Spaniards et al took a slightly different view of the agreement pushed through by Germany and France, under Zarkozy. There have been riots in the streets in Greece, Spain and Italy as well as furious demonstrations in Ireland; the government in the Netherlands collapsed, the Greeks have had two attempts at forming a government and failed and Italy has had a government imposed. European fund managers are offloading their euro assets in preparation for the expected exit of Greece from the eurozone by January 2013. The new President of France, Francois Hollande has said he will not implement the austerity measures called for under the Treaty agreed by his predecessor Zarkozy and he intends to increase government spending to alleviate the problems of serious unemployment.
Alex Salmond, supported by some of the hard-of-thinking cybernats, continues to push the nonsense that monetary policy is of little importance "in the modern world", arguing that "fiscal policy has primacy". He seems to have completley overlooked the fact that the reason the eurozone cannot get its act together, is because of the one-size-fits-all monetary policy. Whatever spending policies helped to cause the financial crisis and the soveriegn debt of the worst-affected countries, it is the application of a single monetary policy on so many diverse economies that is preventing the crisis being solved. Greece cannot survive inside the euro but until the last week, the political consequences of a Greek exit from the currency, were considered to be too serious to be contemplated. The inevitability of Greece's exit has now been accepted, particularly by Germany, which should allow the Greeks to follow Iceland and bring the Greek people some relief.
In 2007, Iceland was on the verge of bankruptcy. Between 2007 and 2009, GDP fell by 10%, unemployment rose by seven times, its three banks collapsed, defaulting on debt totalling 64 billion euros. The krona depreciated by 50% and the purchasing power of households fell by over 30% but, a combination of tight fiscal policies, including a rise in taxation, together with substantial cuts in public spending and strict government control of the banks, has allowed Iceland to turn the corner. GDP has increased by 2.5% in each of the last two years and Iceland's debt has been upgraded from junk status to investment status. In 2009 an application was lodged to join the EU, something which immediately improved Iceland's ability to borrow on the foreign markets but the irony of that has not been lost on Icelanders, whose new found enthusiasm for EU entry has waned somewhat. Iceland had two main products - fishing and tourism, both of which flourished during the period in question but the main point is that the country was not hidebound by a monetary policy totally unsuited to its needs. The currency found a level at which Icelandic products were attractive to foreign buyers, although the cost of imports rose substantially. If Greece reverts to the drachma, the currency will fall in value on foreign exchanges in much the same way but at least the Greeks will be able to see a way forward. It will not be easy or even pleasant but it will be a start, with an end in sight which is likely to be a great deal closer than the prospects facing the country under the regime in the eurozone.
Now that the campaign for a "Yes" vote in the independence referendum has started, the policy statements of the SNP leadership will come under closer scrutiny. It is not enough for the party supporters to shout the mantra that "these things can wait until we are independent" while the SNP leadership continues producing policies that will undermine independence. The argument that "Scotland has no independence to sell" is fatuous and an insult to our intelligence. The SNP has shown it either does not understand how a monetary union works or, it is trying to mislead the people of Scotland. I will vote "Yes" in any referendum on independence. I would vote "Yes" even if I was sure I would be worse off, but I want independence to mean something worth while, not a collection of compromises and deals, cloaked in a series of half-truths or disguised as "gradualism". The latest You Gov poll shows that 28% of people who voted SNP at the last election, are opposed to independence. That tells its own story. The SNP has stated that part of its strategy was to show the Scottish people it could be trusted to govern well and, in some respects it has done that. It has failed totally to show it understands monetary union and the future direction of the EU, and if it has any sense, it will promise the Scottish people a direct vote on EU membership, something which it promised once and then reneged on. That is a vote which Scots not only deserve, but is vital if democracy is to mean anything in an independent Scotland.
Peston's programme provided a fair summary of how the euro project was never seen as an economic measure, by those European politicians who were the architects. It was always a political measure, with the aim of creating a federal United States of Europe, while claiming that the member states would continue to be "independent nation states", with their sovereignty hardly reduced at all. The fact that control over agriculture, fishing, trade and industry and a whole range of other areas of sovereignty had already been surrendered, without as much as a whimper from the Euro elite in all the member states, ensured the euro would be set up with the full support of that same political elite. The people in those member states were lied to by their leaders, something with which they are now having to come to terms as they attempt to deal with the consequences. The Euro fanatics and fantasists in all EU states, even those which did not join the euro, now have to admit that either, they did not understand the likely consequences of the setting up a single currency or, they set out to deliberately mislead the people. The only person from the inner cabal of the SNP that I have seen admit he was wrong, is Euan Crawford who was an adviser to Alex Salmond until recently, more of which below.
There is still no agreement among the EU political elite about the way forward and while they were all full of confidence and certainty when they could either ignore or belittle those who tried to warn them of the likely consequences, now they are having to face those consequences, their confidence seems to have deserted them. Germany's Merkel controls not only the politics of her own country but she also dictates the policies of those who are supposed to be her "equals", occupying seats "at the top table" where the main decisions are allegedly taken. It has ever been thus in monetary unions, the strong dominating the weak, from the Monetary Union of Colonial New England in the 1750s, to the Latin Monetary Union of the 1860s, to the Scandinavian Monetary Union of the 19th and early 20th century. Despite the long and turbulant history of attempts to create monetary stability by controlling several different currencies, operating in different countries with different economic policies and tax regimes, little or nothing of that history seems to have been taken on board by the advocates of the euro. The Bretton Woods Agreement of the years immediately after WW II, eventually collapsed under the strain of attempting to control the currencies of countries with diverse economic problems. The Exchange Rate Mechanism - an early forerunner of the euro - met the same fate and should have been the starkest warning of what would happen, having collapsed as late as 1993.
The problem with the creation of the euro was always that the true intention had to be disguised. The people of the UK were lied to by Heath and his government, and believed they were joining a trading agreement, as the very name Common Market suggested. They were told that unless they joined, there would be 3 million unemployed in this country, a figure almost reached under Margaret Thatcher between 1981 and 1986. Having to disguise the real intention behind the euro forced the EU leaders to postpone the centralisation of taxation, necessary to allow the massive transfer payments needed to prop up the peripheral nations such as Greece, Portugal, Ireland et al. The European electorate has allowed itself to be lied to and browbeaten into accepting the progressive surrender of sovereignty through a series of Treaties but the EU elite did not have the confidence to push the centralisation of taxation because of the further surrender of sovereignty it would entail. That is now inevitable if the EU intends to keep the original project on track. It was always inevitable, as critics of the single currency repeatedly warned, but it also means a single economic policy - or as near as can be achieved - in a Union with such economic diversity among its members. There may be regional differences in how policy is applied but a centralised tax system will ensure that spending will also be centrally controlled. The alternative is to allow Greece to leave, followed by other countries such as Spain and Ireland, which are finding the one-size-fits-all monetary policy too much of a burden.
Where does all of this leave the SNP and an independent Scotland? John Swinney has already said it will be the "best part of a decade" before Scotland could consider joining the euro, although membership is still the long-term aim of the party. The SNP has hardly covered itself in glory anent the EU, being one of the strongest advocates of both entry to the EU and the euro, under the fatuous banner of "Independence in Europe", a contradiction in terms if ever there was one. The current leadership has been among the strongest supporters of the centralising Treaties of the EU over many years but repeatedly refused to explain how membership of the EU and the euro could possibly be equated with independence. In 2001 Kenny MacAskill in his "Euro Route to Independence" said, "Leave aside spurious nonsense about surrendering sovereingty to Frankfurt rather than London, as Scotland has no independence to sell". Obviously the aspirations to independence were no longer of any consequence and were no longer to be pursued. He went on, "The inclusivity and opportunities of Europe and the euro can overshadow the exclusivity and isolation of independence." That one of the leaders of a party which is supposed to have "independence" as its raison d'etre, could make such a ludicrous claim unchallenged by the party members, said a great deal about the New SNP's concept of independence.
Mr MacAskill had some interesting things to say about the supposed "benefits" of entry to the euro, claiming that, "the economic arguments are substantial and the political case overwhelming", offering Scotland "an opportunity to actively and positively sell independence within Europe". As was the fashion within the SNP at the time, he used Ireland "the Celtic Tiger", as an example "of the benefits available to small nations in being able to react quicker and deal with matters more speedily and efficiently". We expect our governments to have not only an understanding of how the economic system works, but an ability to anticipate the potential hazards. At the very least, we expect them to have advisers with those abilities, both of which were obviously lacking in Mr MacAskill's case. Has anything changed in the economic thinking of the SNP leadership since the financial crisis of 2008? One major change has been the decision to keep the pound sterling as the currency in an independent Scotland, rather than the euro, and to have the Bank of England as the "lender of last resort" rather than the European Central Bank. Obviously, this change of policy was inspired by the crisis in the eurozone, underlined by John Swinney's statement that it would be at least a decade before the SNP could consider euro entry and then "only when the economic conditions are right".
There is little indication however, that the SNP leadership have any greater understanding of either the euro or, any kind of monetary union. On the 14th december 2011, Alex Salmond lambasted David Cameron for refusing to sign up to the agreement arrived at by the other members of the EU, with the exception of Hungary, which called for austerity and fiscal discipline in order to "solve" the currency crisis. Salmond called Cameron's refusal, "irresponsible posturing that will damage Scotland's fishing industry and cost jobs." That Cameron's refusal could damage Scotland's fishing industry any more than the EU has already done is risible enough, but Salmond was arguing in favour of a treaty which called for central control of member states' budgets. So much for "Independence in Europe". Alyn Smith, SNP MEP went even further, claiming, "This deal tonight has been good news for the eurozone, good news for the EU and it is appalling news for the UK. The eurozone is getting its act together" Asked by BBC Scotland, if the SNP was still in favour of joining the euro Smith claimed, "Give it six months and the UK will be sinking a lot faster than the eurozone".
Unfortunately for the SNP leadership, the people who have had to live with the consequences of the crisis in the eurozone, the Greeks, the Spaniards et al took a slightly different view of the agreement pushed through by Germany and France, under Zarkozy. There have been riots in the streets in Greece, Spain and Italy as well as furious demonstrations in Ireland; the government in the Netherlands collapsed, the Greeks have had two attempts at forming a government and failed and Italy has had a government imposed. European fund managers are offloading their euro assets in preparation for the expected exit of Greece from the eurozone by January 2013. The new President of France, Francois Hollande has said he will not implement the austerity measures called for under the Treaty agreed by his predecessor Zarkozy and he intends to increase government spending to alleviate the problems of serious unemployment.
Alex Salmond, supported by some of the hard-of-thinking cybernats, continues to push the nonsense that monetary policy is of little importance "in the modern world", arguing that "fiscal policy has primacy". He seems to have completley overlooked the fact that the reason the eurozone cannot get its act together, is because of the one-size-fits-all monetary policy. Whatever spending policies helped to cause the financial crisis and the soveriegn debt of the worst-affected countries, it is the application of a single monetary policy on so many diverse economies that is preventing the crisis being solved. Greece cannot survive inside the euro but until the last week, the political consequences of a Greek exit from the currency, were considered to be too serious to be contemplated. The inevitability of Greece's exit has now been accepted, particularly by Germany, which should allow the Greeks to follow Iceland and bring the Greek people some relief.
In 2007, Iceland was on the verge of bankruptcy. Between 2007 and 2009, GDP fell by 10%, unemployment rose by seven times, its three banks collapsed, defaulting on debt totalling 64 billion euros. The krona depreciated by 50% and the purchasing power of households fell by over 30% but, a combination of tight fiscal policies, including a rise in taxation, together with substantial cuts in public spending and strict government control of the banks, has allowed Iceland to turn the corner. GDP has increased by 2.5% in each of the last two years and Iceland's debt has been upgraded from junk status to investment status. In 2009 an application was lodged to join the EU, something which immediately improved Iceland's ability to borrow on the foreign markets but the irony of that has not been lost on Icelanders, whose new found enthusiasm for EU entry has waned somewhat. Iceland had two main products - fishing and tourism, both of which flourished during the period in question but the main point is that the country was not hidebound by a monetary policy totally unsuited to its needs. The currency found a level at which Icelandic products were attractive to foreign buyers, although the cost of imports rose substantially. If Greece reverts to the drachma, the currency will fall in value on foreign exchanges in much the same way but at least the Greeks will be able to see a way forward. It will not be easy or even pleasant but it will be a start, with an end in sight which is likely to be a great deal closer than the prospects facing the country under the regime in the eurozone.
Now that the campaign for a "Yes" vote in the independence referendum has started, the policy statements of the SNP leadership will come under closer scrutiny. It is not enough for the party supporters to shout the mantra that "these things can wait until we are independent" while the SNP leadership continues producing policies that will undermine independence. The argument that "Scotland has no independence to sell" is fatuous and an insult to our intelligence. The SNP has shown it either does not understand how a monetary union works or, it is trying to mislead the people of Scotland. I will vote "Yes" in any referendum on independence. I would vote "Yes" even if I was sure I would be worse off, but I want independence to mean something worth while, not a collection of compromises and deals, cloaked in a series of half-truths or disguised as "gradualism". The latest You Gov poll shows that 28% of people who voted SNP at the last election, are opposed to independence. That tells its own story. The SNP has stated that part of its strategy was to show the Scottish people it could be trusted to govern well and, in some respects it has done that. It has failed totally to show it understands monetary union and the future direction of the EU, and if it has any sense, it will promise the Scottish people a direct vote on EU membership, something which it promised once and then reneged on. That is a vote which Scots not only deserve, but is vital if democracy is to mean anything in an independent Scotland.
Thursday, 10 May 2012
Who Won The Local Elections?
Whatever the official line is from the political parties, each of them will have dissected and re-dissected the results, taking whatever can be spun as being positive, for public consumption, while party strategists decide if there are any other messages contained in the canvassing returns, which point to less obvious lessons the parties can take on board. The Lib/Dems will find it difficult to get any solace from the results and Willie Rennie was quick to concede it was a terrible night for the party. Ruth Davidson was also quick to concede the size of the defeat but tried to argue that the Tories are the senior partner in a very unpopular government, pushing through unpopular but, in their mind, very necessary policies. The Tories in Scotland did not do as badly as their counterparts in the rest of the UK, therefore Ms Davidson could see some light at the end of the tunnel.
The obvious winners were the SNP because they won the largest number of seats and the highest percentage of the popular vote. Despite being pressed on several occasions to concede the ambitions of the party went beyond that target, Alex Salmond refused to give that particular hostage to fortune, if one ignores his warning to the Labour Party that "the SNP is coming". This was a rather oblique reference to the contest in Glasgow, which other senior party figures readily conceded was the SNP's top target. No matter how much that is now denied, the general impression among commentators, the Unionists and the SNP itself, was that Glasgow was seen by the SNP as a realistic target. Again, no matter how much it is now denied by the SNP, the disappointment among the party activists runs deep because they fully expected to take not just Glasgow but North Lanarkshire as well, thereby eating into the traditional heartland of the Labour Party in Scotland.
In round figures, Labour won fewer seats than the SNP but, a point which I have not seen made, they contested far fewer seats - 497 against the SNP's 612 - but won 31.39% of the vote against 32.32% for the SNP, a difference of less than 1%. Despite having fewer Councillors, Labour has complete control in four councils as opposed to the two under SNP control and is the largest single party in ten councils as opposed to five for the SNP. That can be dismissed as Labour having their support more concentrated in certain parts of Scotland, whereas the SNP has won seats the length and breadth of the country. Much time and effort has been expended by the spokespersons of both parties since the results became known, emphasising how both SNP and Labour have seats in the far-flung corners of Scotland, an indication that both parties have increased their followings. Nothing can explain away however, the victory of Labour in Glasgow - a total of 44 seats and overall control - as opposed to the SNP's 27 and - disappointment.
It suits Labour to point to the disastrous results in the Holyrood elections of 2011 and how the party has turned things around since then. Johann Lamont did herself no harm by her demeanor after the results were known, by acknowledging that Labour had taken a hammering but had "listened to the people but still had a long way to go". It suits the SNP more to point to the results in 2007 - to compare like with like - and point to the increase of 62 Councillors in "mid-term" when parties of government tend to be punished. They obviously want to ignore, at least publicly, the substantial drop of 12% in their share of the vote since the Holyrood elections of 2011. Both sides are correct, as far as the analysis goes, but there is far more to those results than just the figures. The psychological momentum is with Labour because they didn't just hold on to Glasgow, they did so comfortably, giving them the opportunity to spin the result like mad. Their support in Scotland may be more concentrated bu it is still in the largest centres of population and, inexplicably to SNP activists, in some of the most socially deprived areas of Western Europe, social conditions which generations of Labour dominance have done absolutely nothing to alleviate.
Can anything be taken from the results that can be seen as a pointer to the likely outcome of the referendum in 2014? Political scientists and commentators will argue "No" for a number of reasons; the low turnout, the different platforms, the emphasis by all parties before the polls that "this was not about independence" (SNP) and "this should not be about independence" (Unionists) and the relative sophistication of the electorate in the way it changes its voting patterns for different polls. None of that will stop the political parties and commentators from using the polls to suggest the results will reinforce their own analysis. There was a time when every election, as far as the SNP was concerned, was seen as a stepping stone to independence; every council seat, every election contested let alone won, provided a platform to push the idea of independence. Alison Hunter, the SNP's Glasgow leader, said as much during the campaign and was slapped down on all sides, including her own, for doing so. But what else would a party do, whose raison d'etre is supposed to be independence? Unfortunately Alison Hunter is the "Old SNP" and obviously is too honest for her own good.
The "New SNP" has spent so much time either talking down independence or ignoring it completely, that many of the activists seem to have forgotten the party's raison d'etre and if it were not for the Unionist media and parties insisting the "SNP is obsessed with independence", much of the electorate would have no idea the party actually had it as its ultimate aim because they would see never a mention of the word on the election material shoved through their doors. Gradualism has taken such a grip on the party that their 300 year strategy will ensure that none of those living and active in the campaign today, will ever see it. The SNP insisted throughout the Holyrood campaign in 2011 that Scots were not being asked to vote for independence, they were voting to be given the right to a referendum, while the party saw it as an opportunity to show their competence in government The SNP, like the Unionists, saw the election as being about jobs, education, health and all the other responsibilities of devolved government. That being the case, the election of the SNP government cannot be interpreted as showing support for independence in any way, shape or form. Now, no matter how many seats were won by the SNP, the victories are not to be seen as the party pushing the idea of independence, they were about "local" elections and whatever "local" elections are about. That includes council tax, emptying bins, parking and other items, deemed so unimportant that the vast majority of the electorate cannot even be bothered to vote. Independence has become the political aspiration that dare not speak its name.
We have now reached the situation, accepted by the SNP which has allowed itself to be pushed into fighting every election on the ground determined by the Unionists, where elections which are about jobs, education, health, council tax, the smooth and effective governance of our local needs have nothing to do with independence. If that is the case, what is independence all about? We will be told it is about getting more power to Scotland, greater powers over taxation, borrowing and defence, in other words, those areas of government where the power has been retained by Westminster. To argue therefore, that independence has nothing to do with jobs, education, health et al, is a complete nonsense. Without independence no Scottish government can do anything about improving the availability of jobs, improving health and education because they all depend on economic powers, which no devolved Scottish government has under the Devolution Agreement. The SNP has given itself a mountain to climb to explain why, having told the Scottish electorate that none of the issues addressed in the Holyrood elections of 2011 and the local elections of 2012 had anything to do with independence, they should vote for a constituional change which would appear to alter so little. The Unionists have effectively spun the story that independence is about changing the constitution and little else, therefore why bother? Of course they then have to explain why, if the constituional change is so unimportant, their own scare stories about all the ills that will befall an independent Scotland are worth a light.
Unfortunately, the SNP has done much of the work for the Unionists by conceding so much ground already, following a strategy that seeks to change as little as possible, just in case some focus group takes fright. Retaining the monarchy has been a long-standing policy of the SNP despite the alleged left-wing credentials of the current leadership, most of whom were leading lights in the allegedly left-wing '79 Group, therefore there is nothing new there. However, in the past year since the Holyrood elections, the party has decided it will keep sterling and ask the Bank of England to be the lender of last resort, thereby giving control of monetary policy to London whereas it was earmarked for Brussels before the crisis in the eurozone kicked that into touch. John Swinney has already asserted that assurances will be given to the Bank of England about an independent Scotland's taxation regime. Does that mean goodbye to lower corporation tax? Alex Salmond has also confirmed the SNP will keep UK income tax rates, so no change in taxation at all? I have already pointed out that Salmond's claim that Fiscal Policy has primacy "in the modern world", is nonsense but on the basis of the statements from the First Minister and the Secretary for Finance, an SNP-led independent Scotland would control neither monetary nor fiscal policy, which begs the question of how it is going to develop an independent Scottish economy?
Membership of NATO will become party policy at June's National Council, which throws the nuclear deterrant part of the treaty into doubt, despite the declarations to the contrary by some activists. There is a growing suspicion that under pressure, the SNP will soften its opposition to Trident, particularly in light of the problems England will face with finding an alternative site. Angus McNeil, SNP spokesman on defence, has spoken openly about agreement with rUK on defence bases throughout Scotland and the latest declarations by MOD that at least two Scottish regiments will be disbanded shortly, led to three expressions of outrage from SNP MPs and MSPs. For suggesting on Twitter that reducing the chance of young Scots being sent to fight in foreign wars must be a good thing, I was accused of being anti-SNP and nothing but a unionist troll. To some SNP activists at least, so long as the requisite amount of money is being spent in Scotland, London can send as many of our young people to die in illegal wars as they want, and anyone who disagrees is just anti-SNP. In light of that reaction, and that of the likes of Pete Wishart to the abolition of two Scottish regiments, I have to ask what independence actually means to these people and the New SNP.
The campaign for the referendum starts in a few weeks, by which time the question on the ballot paper will have been settled - perhaps. The consensus of opinion among political commentators, in the immediate aftermath of the election results, was that the SNP will be keener than ever to have a second question on the ballot paper. This suggest that despite most commentators being reluctant to openly concede that Labour took more out of the elections than did the SNP, they actually think the SNP fell well below not only expectations, but the kind of result which would have encouraged the party to believe it had taken a positive step towards gaining a "Yes" vote. It seems that the elections were in fact about independence, it was just something that could not be admitted. For the SNP to concede it wanted a second question on the ballot paper, would be tantamount to conceding it could not win a straight "Yes" vote, which would kill the prospect of independence being won this time round. But some of its strategists argue that in order to get anything thought to be worthwhile out of the referendum, a second question is a "must". Who is going to bell the cat?
The obvious winners were the SNP because they won the largest number of seats and the highest percentage of the popular vote. Despite being pressed on several occasions to concede the ambitions of the party went beyond that target, Alex Salmond refused to give that particular hostage to fortune, if one ignores his warning to the Labour Party that "the SNP is coming". This was a rather oblique reference to the contest in Glasgow, which other senior party figures readily conceded was the SNP's top target. No matter how much that is now denied, the general impression among commentators, the Unionists and the SNP itself, was that Glasgow was seen by the SNP as a realistic target. Again, no matter how much it is now denied by the SNP, the disappointment among the party activists runs deep because they fully expected to take not just Glasgow but North Lanarkshire as well, thereby eating into the traditional heartland of the Labour Party in Scotland.
In round figures, Labour won fewer seats than the SNP but, a point which I have not seen made, they contested far fewer seats - 497 against the SNP's 612 - but won 31.39% of the vote against 32.32% for the SNP, a difference of less than 1%. Despite having fewer Councillors, Labour has complete control in four councils as opposed to the two under SNP control and is the largest single party in ten councils as opposed to five for the SNP. That can be dismissed as Labour having their support more concentrated in certain parts of Scotland, whereas the SNP has won seats the length and breadth of the country. Much time and effort has been expended by the spokespersons of both parties since the results became known, emphasising how both SNP and Labour have seats in the far-flung corners of Scotland, an indication that both parties have increased their followings. Nothing can explain away however, the victory of Labour in Glasgow - a total of 44 seats and overall control - as opposed to the SNP's 27 and - disappointment.
It suits Labour to point to the disastrous results in the Holyrood elections of 2011 and how the party has turned things around since then. Johann Lamont did herself no harm by her demeanor after the results were known, by acknowledging that Labour had taken a hammering but had "listened to the people but still had a long way to go". It suits the SNP more to point to the results in 2007 - to compare like with like - and point to the increase of 62 Councillors in "mid-term" when parties of government tend to be punished. They obviously want to ignore, at least publicly, the substantial drop of 12% in their share of the vote since the Holyrood elections of 2011. Both sides are correct, as far as the analysis goes, but there is far more to those results than just the figures. The psychological momentum is with Labour because they didn't just hold on to Glasgow, they did so comfortably, giving them the opportunity to spin the result like mad. Their support in Scotland may be more concentrated bu it is still in the largest centres of population and, inexplicably to SNP activists, in some of the most socially deprived areas of Western Europe, social conditions which generations of Labour dominance have done absolutely nothing to alleviate.
Can anything be taken from the results that can be seen as a pointer to the likely outcome of the referendum in 2014? Political scientists and commentators will argue "No" for a number of reasons; the low turnout, the different platforms, the emphasis by all parties before the polls that "this was not about independence" (SNP) and "this should not be about independence" (Unionists) and the relative sophistication of the electorate in the way it changes its voting patterns for different polls. None of that will stop the political parties and commentators from using the polls to suggest the results will reinforce their own analysis. There was a time when every election, as far as the SNP was concerned, was seen as a stepping stone to independence; every council seat, every election contested let alone won, provided a platform to push the idea of independence. Alison Hunter, the SNP's Glasgow leader, said as much during the campaign and was slapped down on all sides, including her own, for doing so. But what else would a party do, whose raison d'etre is supposed to be independence? Unfortunately Alison Hunter is the "Old SNP" and obviously is too honest for her own good.
The "New SNP" has spent so much time either talking down independence or ignoring it completely, that many of the activists seem to have forgotten the party's raison d'etre and if it were not for the Unionist media and parties insisting the "SNP is obsessed with independence", much of the electorate would have no idea the party actually had it as its ultimate aim because they would see never a mention of the word on the election material shoved through their doors. Gradualism has taken such a grip on the party that their 300 year strategy will ensure that none of those living and active in the campaign today, will ever see it. The SNP insisted throughout the Holyrood campaign in 2011 that Scots were not being asked to vote for independence, they were voting to be given the right to a referendum, while the party saw it as an opportunity to show their competence in government The SNP, like the Unionists, saw the election as being about jobs, education, health and all the other responsibilities of devolved government. That being the case, the election of the SNP government cannot be interpreted as showing support for independence in any way, shape or form. Now, no matter how many seats were won by the SNP, the victories are not to be seen as the party pushing the idea of independence, they were about "local" elections and whatever "local" elections are about. That includes council tax, emptying bins, parking and other items, deemed so unimportant that the vast majority of the electorate cannot even be bothered to vote. Independence has become the political aspiration that dare not speak its name.
We have now reached the situation, accepted by the SNP which has allowed itself to be pushed into fighting every election on the ground determined by the Unionists, where elections which are about jobs, education, health, council tax, the smooth and effective governance of our local needs have nothing to do with independence. If that is the case, what is independence all about? We will be told it is about getting more power to Scotland, greater powers over taxation, borrowing and defence, in other words, those areas of government where the power has been retained by Westminster. To argue therefore, that independence has nothing to do with jobs, education, health et al, is a complete nonsense. Without independence no Scottish government can do anything about improving the availability of jobs, improving health and education because they all depend on economic powers, which no devolved Scottish government has under the Devolution Agreement. The SNP has given itself a mountain to climb to explain why, having told the Scottish electorate that none of the issues addressed in the Holyrood elections of 2011 and the local elections of 2012 had anything to do with independence, they should vote for a constituional change which would appear to alter so little. The Unionists have effectively spun the story that independence is about changing the constitution and little else, therefore why bother? Of course they then have to explain why, if the constituional change is so unimportant, their own scare stories about all the ills that will befall an independent Scotland are worth a light.
Unfortunately, the SNP has done much of the work for the Unionists by conceding so much ground already, following a strategy that seeks to change as little as possible, just in case some focus group takes fright. Retaining the monarchy has been a long-standing policy of the SNP despite the alleged left-wing credentials of the current leadership, most of whom were leading lights in the allegedly left-wing '79 Group, therefore there is nothing new there. However, in the past year since the Holyrood elections, the party has decided it will keep sterling and ask the Bank of England to be the lender of last resort, thereby giving control of monetary policy to London whereas it was earmarked for Brussels before the crisis in the eurozone kicked that into touch. John Swinney has already asserted that assurances will be given to the Bank of England about an independent Scotland's taxation regime. Does that mean goodbye to lower corporation tax? Alex Salmond has also confirmed the SNP will keep UK income tax rates, so no change in taxation at all? I have already pointed out that Salmond's claim that Fiscal Policy has primacy "in the modern world", is nonsense but on the basis of the statements from the First Minister and the Secretary for Finance, an SNP-led independent Scotland would control neither monetary nor fiscal policy, which begs the question of how it is going to develop an independent Scottish economy?
Membership of NATO will become party policy at June's National Council, which throws the nuclear deterrant part of the treaty into doubt, despite the declarations to the contrary by some activists. There is a growing suspicion that under pressure, the SNP will soften its opposition to Trident, particularly in light of the problems England will face with finding an alternative site. Angus McNeil, SNP spokesman on defence, has spoken openly about agreement with rUK on defence bases throughout Scotland and the latest declarations by MOD that at least two Scottish regiments will be disbanded shortly, led to three expressions of outrage from SNP MPs and MSPs. For suggesting on Twitter that reducing the chance of young Scots being sent to fight in foreign wars must be a good thing, I was accused of being anti-SNP and nothing but a unionist troll. To some SNP activists at least, so long as the requisite amount of money is being spent in Scotland, London can send as many of our young people to die in illegal wars as they want, and anyone who disagrees is just anti-SNP. In light of that reaction, and that of the likes of Pete Wishart to the abolition of two Scottish regiments, I have to ask what independence actually means to these people and the New SNP.
The campaign for the referendum starts in a few weeks, by which time the question on the ballot paper will have been settled - perhaps. The consensus of opinion among political commentators, in the immediate aftermath of the election results, was that the SNP will be keener than ever to have a second question on the ballot paper. This suggest that despite most commentators being reluctant to openly concede that Labour took more out of the elections than did the SNP, they actually think the SNP fell well below not only expectations, but the kind of result which would have encouraged the party to believe it had taken a positive step towards gaining a "Yes" vote. It seems that the elections were in fact about independence, it was just something that could not be admitted. For the SNP to concede it wanted a second question on the ballot paper, would be tantamount to conceding it could not win a straight "Yes" vote, which would kill the prospect of independence being won this time round. But some of its strategists argue that in order to get anything thought to be worthwhile out of the referendum, a second question is a "must". Who is going to bell the cat?
Friday, 27 April 2012
Does Monetary Policy Matter?
"It will not be the case that the south will get the so-called wealthy states to pay. Because then Europe would fall apart. There is "no bail out rule", which means that if one state by its own making increases its deficits, then neither the community nor any member states is obliged to help this state" Horst Koeher, former German Finance Secretary, April 1992.
As everyone now knows, that particular clause of the Maastricht Treaty of 1993 which set up Economic and Monetary Union, has been ignored, just as the Growth and Stability Pact, which was introduced so that no single country would ever need to be be bailed out, has also been ignored right from the outset. The German people were deeply concerned that they would have to pick up the tab if their southern European neighbours overspent and ran up deficits they could not cover. The assurance given to the Germans by Herr Koeher may have been sincerely meant at the time, but it turned out to be meaningless. The eurozone is on the verge of collapse with Greece in dire straights and Spain, Italy, Portugal and Ireland deeply in debt and in the throes of austerity measures which are making life almost intolerable for large sections of their population.
Last year, Greece brought its debt down from 368 bn euros or 163% of GDP, by "forcing" the private holders of 206 bn euros of bonds, to accept an effective 74% loss on their loans. This then allowed a second bail-out by the EU and the IMF of 130 bn euros, on top of the 110 bn euros which had already been loaned. This means that by 2020 the Greek debt will still be 120% of GDP, despite austerity measures which at their worst, have caused families to give up their children into care because they cannot afford to feed them. Unemployment in Greece is 21% overall and is 50% of those under the age of 25 and despite those frightening figures, the Greek government intends to cut another 150,000 jobs in the public sector over the next three years. Despite the assurances from the EU bureaucrats that the euro will survive, Greeks are preparing for a Greek exit from the single currency. Some 16 bn euros have been sent out of the country since 2009 and bank deposits in Greece have fallen by 79 bn euros over the same period.
Greece represents just 2% of the eurozone's GDP but the fall out of the crisis in that country, together with the policies in their southern neighbours, has caused a contagion of the crisis in Spain, Italy and Portugal, with Ireland of the more northerly member states, suffering from similar problems. Spanish debt currently stands at 735 bn euros and this pushed borrowing rates to 6% in March this year, a rate which analysts contend is simply unsustainable over time. The Spanish government aimed to cut the deficit to 6% of GDP in 2011 but the actual figure was 8.51%. The aim is to cut the debt to 5.2% in 2012 and to 3% in the following year. The austerity cuts have created unemployment of 25% overall, the highest rate in the EU, and 53% of the youth of the country. In March Spanish banks borrowed 316 bn euros from the European Central Bank (ECB).
The austerity measures being forced through by the EU are now having some unexpected impacts on countries which were expected to not just cope, but to embrace the measures willingly, as the best way to deal with the problems of the eurozone. Despite the governments having signed up last month, to the German-inspired agreement to deal with the crisis, the populations in some of the member states have shown they are not as willing to accept austerity as their governments. Prime Minister David Cameron was castigated for refusing to sign up to the agreement, condemned for having "isolated the UK". Now, a matter of a few weeks after the agreement was supoosed to have been accepted by every other government in the EU, the Dutch government paid the ultimate price and collapsed last Sunday, after failing to get the austerity package through parliament. Fitch, the credit agency, threatened to down grade the Netherland's AAA status if it failed to cut the country's deficit from its current level of 4.7% to 3% by 2013. The Netherland's government intended to introduce another 14 - 16 bn euros in cuts, on top of the 18 bn euros it had already imposed; VAT was to increase from 19% to 21%, wages in the public sector were to be frozen, the pension age increased to 66 and the health budget cut so that every prescription was to cost 9 euros. On Saturday 21st April, almost 100,000 people demonstrated against the cuts in Prague, in the biggest popular demonstration since the fall of the Communist government in 1989.
There is no doubt the profligacy of the governments of the stricken countries is to blame for the debts incurred but the failure to deal with the problems, both in the individual countries and the eurozone as a whole, is a consequence of the "one size fits all" monetary policy of the eurozone. There are those who argue that coming out of the single currency would be a disaster for Greece and, there is no doubt that a return to the drachma would not be a panacea for all the ills. For a start, the Greek debt, which is currently in euros would soar as the "new" drachma was devalued against the euro, but would the devaluation of the currency be any worse than the massive problems with which the country obviously cannot cope? If Greece had not joined the euro, it would not have been in the position to run up the massive debts it has nor would it have been able to borrow as much as it has, at such attractive rates. The contagion which has spread throughout the eurozone would also have been largely absent.
Despite all of this, all of it common knowledge throughout the world, Scotland's First Minister, Alex Salmond announces in a speech to the Institute of Directors in London, that, "Monetary policy is very important. But you can exaggerate the flexibility of monetary policy. Fiscal Policy in the modern world has primacy. It can set levels of (business) investment." What message was Alex Salmond trying to get across? He is right that the flexibility of monetary policy can be exaggerated, as the experience of those caught up in the problems of the eurozone can testify. Of course, a country which controls its own monetary policy, can make it as flexible as they need it to be and will obviously tailor their monetary policy to suit their own circumstances, not, as in the eurozone, have it dictated by the interests of more powerful partners. Of course, Mr Salmond was not talking about the eurozone, therefore his message made little or no sense.
Mr Salmond was speaking about the position that an independent Scotland, under a SNP-led government, would be in, with its monetary policy dictated by Westminster and using the pound sterling as its currency. The message he was trying to get across was that monetary policy did not really matter all that much and as long as Scotland had control of taxation, a Scottish government could do very much as it pleased as far as economic policy and the encouragement of business, is concerned. Taken in that context, his message was total nonsense and goodness knows what his audience of business people thought of it. It is a line the First Minister has pushed on several occasions over some time now. He has tried to sell the idea that Fiscal Autonomy was all that Scotland needed in order to be "really independent in the modern world", hence the nonsense that "Fiscal Policy has primacy". That idea was being floated long before the announcement that sterling was to be retained and it was on the announcement about sterling, that the Fiscal Autonomy claim began to make sense.
When the SNP first announced the party, if it formed the government of an independent Scotland, would retain sterling as the Scottish currency, it also announced the Bank of England would act as the lender of last resort. This came as a surprise to everyone, including the Bank of England and to ensure there would be no problems about the Bank agreeing to this, the Secretary for Finance, John Swinney said he would "give the Bank of England an assurance that an SNP government would act responsibly in its Fiscal Policy". He went on to emphasise that the SNP government would not be allowing the Bank to see the spending plans, or to have any say in their structure. That would hardly be necessary because the first time the spending plans were deemed to be "out of line" with Bank of England policy, the SNP government would be brought back into line rather smartly - or else. Fiscal Autonomy therefore, in the context of the Bank of England controlling interest rates in an "independent" Scotland and sterling being the currency of choice, would be somewhat meaningless, particlarly in light of John Swinney's promised re-assurance to the Bank of England on Scottish spending plans. It has been made even more meaningless after the announcement today by Alex Salmond that an "independent" Scotland will retain UK income tax rates.
The SNP has often claimed that once it had control of corporation tax, it would make Scotland more competitive by lowering the rate of tax, as Ireland has done. The EU has been putting Ireland under pressure for over two years, to bring its corporation tax more into line with the rates of other EU members, something the Irish have consistently refused to do. As the EU builds more pressure to create fiscal harmonisation, particularly in light of the debacle in the eurozone, it is highly doubtful if the EU would look kindly on an independent Scotland emphasising its "independence" by reducing corporation tax. That is not to say Scotland should be put off or even think of allowing the EU to dictate, but the SNP's history is hardly one of standing up to the dictats of the EU. When the potential pressure from the EU is added to the commitment to keep the Bank of England happy on fiscal policy, the SNP would appear to have boxed itself into a corner.
In May 2011, Professor James Mitchell, wrote in Perspective in The Scotsman, that the SNP's problem "is one of linguistics, rather than conception" as it strives to persuade its members and supporters, that its position on independence has not really changed. I wrote a response which stated that it would take more than mere lingusitics to explain the volte face that had taken place on the currency. That is a year ago and in that time, the problem with linguistics faced by the SNP, has grown arms and legs.
As everyone now knows, that particular clause of the Maastricht Treaty of 1993 which set up Economic and Monetary Union, has been ignored, just as the Growth and Stability Pact, which was introduced so that no single country would ever need to be be bailed out, has also been ignored right from the outset. The German people were deeply concerned that they would have to pick up the tab if their southern European neighbours overspent and ran up deficits they could not cover. The assurance given to the Germans by Herr Koeher may have been sincerely meant at the time, but it turned out to be meaningless. The eurozone is on the verge of collapse with Greece in dire straights and Spain, Italy, Portugal and Ireland deeply in debt and in the throes of austerity measures which are making life almost intolerable for large sections of their population.
Last year, Greece brought its debt down from 368 bn euros or 163% of GDP, by "forcing" the private holders of 206 bn euros of bonds, to accept an effective 74% loss on their loans. This then allowed a second bail-out by the EU and the IMF of 130 bn euros, on top of the 110 bn euros which had already been loaned. This means that by 2020 the Greek debt will still be 120% of GDP, despite austerity measures which at their worst, have caused families to give up their children into care because they cannot afford to feed them. Unemployment in Greece is 21% overall and is 50% of those under the age of 25 and despite those frightening figures, the Greek government intends to cut another 150,000 jobs in the public sector over the next three years. Despite the assurances from the EU bureaucrats that the euro will survive, Greeks are preparing for a Greek exit from the single currency. Some 16 bn euros have been sent out of the country since 2009 and bank deposits in Greece have fallen by 79 bn euros over the same period.
Greece represents just 2% of the eurozone's GDP but the fall out of the crisis in that country, together with the policies in their southern neighbours, has caused a contagion of the crisis in Spain, Italy and Portugal, with Ireland of the more northerly member states, suffering from similar problems. Spanish debt currently stands at 735 bn euros and this pushed borrowing rates to 6% in March this year, a rate which analysts contend is simply unsustainable over time. The Spanish government aimed to cut the deficit to 6% of GDP in 2011 but the actual figure was 8.51%. The aim is to cut the debt to 5.2% in 2012 and to 3% in the following year. The austerity cuts have created unemployment of 25% overall, the highest rate in the EU, and 53% of the youth of the country. In March Spanish banks borrowed 316 bn euros from the European Central Bank (ECB).
The austerity measures being forced through by the EU are now having some unexpected impacts on countries which were expected to not just cope, but to embrace the measures willingly, as the best way to deal with the problems of the eurozone. Despite the governments having signed up last month, to the German-inspired agreement to deal with the crisis, the populations in some of the member states have shown they are not as willing to accept austerity as their governments. Prime Minister David Cameron was castigated for refusing to sign up to the agreement, condemned for having "isolated the UK". Now, a matter of a few weeks after the agreement was supoosed to have been accepted by every other government in the EU, the Dutch government paid the ultimate price and collapsed last Sunday, after failing to get the austerity package through parliament. Fitch, the credit agency, threatened to down grade the Netherland's AAA status if it failed to cut the country's deficit from its current level of 4.7% to 3% by 2013. The Netherland's government intended to introduce another 14 - 16 bn euros in cuts, on top of the 18 bn euros it had already imposed; VAT was to increase from 19% to 21%, wages in the public sector were to be frozen, the pension age increased to 66 and the health budget cut so that every prescription was to cost 9 euros. On Saturday 21st April, almost 100,000 people demonstrated against the cuts in Prague, in the biggest popular demonstration since the fall of the Communist government in 1989.
There is no doubt the profligacy of the governments of the stricken countries is to blame for the debts incurred but the failure to deal with the problems, both in the individual countries and the eurozone as a whole, is a consequence of the "one size fits all" monetary policy of the eurozone. There are those who argue that coming out of the single currency would be a disaster for Greece and, there is no doubt that a return to the drachma would not be a panacea for all the ills. For a start, the Greek debt, which is currently in euros would soar as the "new" drachma was devalued against the euro, but would the devaluation of the currency be any worse than the massive problems with which the country obviously cannot cope? If Greece had not joined the euro, it would not have been in the position to run up the massive debts it has nor would it have been able to borrow as much as it has, at such attractive rates. The contagion which has spread throughout the eurozone would also have been largely absent.
Despite all of this, all of it common knowledge throughout the world, Scotland's First Minister, Alex Salmond announces in a speech to the Institute of Directors in London, that, "Monetary policy is very important. But you can exaggerate the flexibility of monetary policy. Fiscal Policy in the modern world has primacy. It can set levels of (business) investment." What message was Alex Salmond trying to get across? He is right that the flexibility of monetary policy can be exaggerated, as the experience of those caught up in the problems of the eurozone can testify. Of course, a country which controls its own monetary policy, can make it as flexible as they need it to be and will obviously tailor their monetary policy to suit their own circumstances, not, as in the eurozone, have it dictated by the interests of more powerful partners. Of course, Mr Salmond was not talking about the eurozone, therefore his message made little or no sense.
Mr Salmond was speaking about the position that an independent Scotland, under a SNP-led government, would be in, with its monetary policy dictated by Westminster and using the pound sterling as its currency. The message he was trying to get across was that monetary policy did not really matter all that much and as long as Scotland had control of taxation, a Scottish government could do very much as it pleased as far as economic policy and the encouragement of business, is concerned. Taken in that context, his message was total nonsense and goodness knows what his audience of business people thought of it. It is a line the First Minister has pushed on several occasions over some time now. He has tried to sell the idea that Fiscal Autonomy was all that Scotland needed in order to be "really independent in the modern world", hence the nonsense that "Fiscal Policy has primacy". That idea was being floated long before the announcement that sterling was to be retained and it was on the announcement about sterling, that the Fiscal Autonomy claim began to make sense.
When the SNP first announced the party, if it formed the government of an independent Scotland, would retain sterling as the Scottish currency, it also announced the Bank of England would act as the lender of last resort. This came as a surprise to everyone, including the Bank of England and to ensure there would be no problems about the Bank agreeing to this, the Secretary for Finance, John Swinney said he would "give the Bank of England an assurance that an SNP government would act responsibly in its Fiscal Policy". He went on to emphasise that the SNP government would not be allowing the Bank to see the spending plans, or to have any say in their structure. That would hardly be necessary because the first time the spending plans were deemed to be "out of line" with Bank of England policy, the SNP government would be brought back into line rather smartly - or else. Fiscal Autonomy therefore, in the context of the Bank of England controlling interest rates in an "independent" Scotland and sterling being the currency of choice, would be somewhat meaningless, particlarly in light of John Swinney's promised re-assurance to the Bank of England on Scottish spending plans. It has been made even more meaningless after the announcement today by Alex Salmond that an "independent" Scotland will retain UK income tax rates.
The SNP has often claimed that once it had control of corporation tax, it would make Scotland more competitive by lowering the rate of tax, as Ireland has done. The EU has been putting Ireland under pressure for over two years, to bring its corporation tax more into line with the rates of other EU members, something the Irish have consistently refused to do. As the EU builds more pressure to create fiscal harmonisation, particularly in light of the debacle in the eurozone, it is highly doubtful if the EU would look kindly on an independent Scotland emphasising its "independence" by reducing corporation tax. That is not to say Scotland should be put off or even think of allowing the EU to dictate, but the SNP's history is hardly one of standing up to the dictats of the EU. When the potential pressure from the EU is added to the commitment to keep the Bank of England happy on fiscal policy, the SNP would appear to have boxed itself into a corner.
In May 2011, Professor James Mitchell, wrote in Perspective in The Scotsman, that the SNP's problem "is one of linguistics, rather than conception" as it strives to persuade its members and supporters, that its position on independence has not really changed. I wrote a response which stated that it would take more than mere lingusitics to explain the volte face that had taken place on the currency. That is a year ago and in that time, the problem with linguistics faced by the SNP, has grown arms and legs.
Tuesday, 24 April 2012
What Makes Us Scottish?
The Identity Survey carried out by YouGov, to find out what identifying features make Scots, English and Welsh people proud of their country and natiionality, has caused some commentators to re-consider at least some of their preconceptions. For example, the survey showed that Scots are not as thirled to the monarchy as was thought, provoking the suggestion that the SNP may have to re-think its policy on the monarchy. I think that is hardly likely, on the basis of a single survey, but perhaps, it will give Unionists some pause for thought because if Scots were as attached to the monarchy as they (the Unionists) like to argue, even a single survey would have shown more support. What was interesting was the reaction of a whole range of people who were asked what they felt made them Scottish.
On Scotland Tonight, Pat Kane emphasised the culture of the people, which is perhaps not surprising given that he is a musician, with a degree in English literature, while Humza Yousaf decided that food was important and plumped for chicken tika masala. Perhaps like Robin Cook, he considers it to be the new national dish. Of one thing we can be sure, that is that the world at large has no problem with identifying Scots because there is no other country which has the tartan, pipes and the kilt in the combinations that we have. The problem with identity is with some Scots themselves, many of whom seem to be terrified to emphasise their identity in case they are accused of being Nationalists. The writer James Kelman, recently wrote that he intended to vote "Yes" in the independence referendum but quickly added that not only was he not a Nationalist but that he disliked nationalism. He is one of a long line of Scots, prepared to preface their voting intentions or, their dissatisfaction with some aspect of the present political arrangement in the UK, with the qualification, "I am not a Nationalist but....". It is only one aspect of the infamous Scottish cringe, where any expression of being Scottish must be preceded with an apology.
I have never had that problem, probably because my Scottish ancestry has been traced back several generations on both sides of the family, therefore I can satisfy two of the condition in the survey, required by 52% and 73% respectively, viz. that both parents and myself, should have been born in Scotland in order to be considered Scottish. On my mother's side, the McGregors, I had an ancestor John McGregor who has been traced to the Atholl Braes where he worked as a dry stane dyker in 1760. The Fairlies have also been in Perthshire for generations, back to the 1750s, working in the Glenshee area as weavers and stockmen. Other family names include Stewart, McGillivray and Robertson. What that does is make me very comfortable in my own skin, born in Perthshire of a long line of men and women who were also born in Perthshire. It doesn't make me particularly proud to be Scots, I just am Scots. I am proud, however, very proud, of many of the achievments of the people of Scotland in medicine, education, science, engineering and a whole host of other areas where Scots have contributed to the betterment of mankind. There are other areas such as the slave trade or our well known fondness for the drink, of which I am anything but proud but unlike some, I see no reason to be forever apologetic for them or, to see our national "failings" as reasons why we cannot be independent.
The apparent obsession with identitiy in this country, the regular need to measure our "Scottishness" against our "Britishness", stems from the fear in the UK establishment that if "Scottishness" is allowed to become too dominant, the ties which allegedly bind us to the whole idea of Britain will become so threadbare they will cease to be effective. Thus, any lessening of Scots' devotion to the monarchy will obviously lessen our feelings of "Britishness" and weaken the UK. The other problem is that thrown up by the use of the words Nationalist and Nationalism. The dictionary defines a Nationalist as someone who favours independence and the interests of his own country or nation, but opponents of Scottish independence use it as if it is synonymous with imperialism - the domination of other nations - or chauvinism - the extravagant and exaggerated pride in one's own nation together with a contempt for other nations. Scotland has never been an imperialist nation and while we micht hae a guid conceit o oorsels, we are not contemptuous of others. If we were, the reception we invariably receive when travelling abroad would be entirely different from the kind of welcome we are shown. As I have pointed out before, Unionists rarely use the word independence, preferring the much more pejorative separation or divorce.
Prior to the Union of 1707, Scotland had only one main enemy and that was England, caused by that country's determination to subjugate us over a period of over 300 years. Our battles with the Danes and Norwegians were for the purpose of self-defence and our troubles with Ireland were a direct consequence of the policies of James VI and I, as he furthered the imperial policies of England. Scotland played a major part in the building of the British empire but again, it followed the Union of the Crowns then the Union of 1707, driven by the expansionist policies of England. Since 1707 our culture has been derided to the point where the Gaelic language has almost ceased to exist and we live in a country where the majority of our people cannot even pronounce the names of our own mountains and glens. It is only recently that Scots has been recognised as a distinct and separate language from English. Born into a family where agriculture played a prominet role, I spoke Scots as well as standard English from the earliest age, so that both were encouraged in my own children from the outset. When teaching, I made a point of speaking to the students in the day-to-day language they used themselves. On one occasion one young lad told me, "You dinnae speak snobby like ither teachers Sir", a rather sad indication of the way in which Scots had come to be regarded as the language of "the lower orders". The image of the taciturn Scot did not happen by accident.
Despite that, the survey showed that 67% of Scots were either very proud or fairly proud of their language while 29% were either not very proud or not at all proud. What does that say about our country when 29% of of us are ashamed of our language, the language in which Burns was able to forge a reputation that is recognised throughout the world. The survey also shows that a total of 20% of Scots were not proud of Ben Nevis, which may have meant no more than that they were totally indifferent to it. That was the problem of the survey in general; some of the questions asked made little or no sense. What was the point of asking if people were proud of our country pubs or were those questions simply thrown in to disguise the real nature of the survey - to identify those things which make us British? Significantly, only 61% of English respondents had any pride in the flag of St George while 24% of them associated it with racism. Unfortunately 10% of Scots associated the Saltire with racism although 84% were proud of it. The pressure to be British is unrelenting, with surveys such as this constantly measuring and re-defining which mores and attitudes can be said to be Scottish and which are British. The Olympics will provide limitless opportunities to wave the Union Flag and proclaim our "Britishness". God help any Scot who is perceived to be less than totally committed to the flag, the Union and Britain.
Would the survey have told anyone what it is that makes us Scots? It may have given them some idea of some of the things we regard as being important such as being born in Scotland or having Scottish parents. However it would also tell them there is little colour prejudice in Scotland as only a total of 13% of respondents thought that being white was important to be considered Scots and that it was far more important (83% of respondents) that people considered themselves to be Scottish, whatever their country of origin. To me, the encouraging thing about the survey is that the majority of Scots still consider themselves to be Scots rather than British, a total of only 5% seeing themselves more British than Scots, particularly given the welter of propaganda to which we are subjected to convert us to the concept of Britishness. That may also encourage the SNP to stop pandering to those who are determined that we remain part of Britain.
On Scotland Tonight, Pat Kane emphasised the culture of the people, which is perhaps not surprising given that he is a musician, with a degree in English literature, while Humza Yousaf decided that food was important and plumped for chicken tika masala. Perhaps like Robin Cook, he considers it to be the new national dish. Of one thing we can be sure, that is that the world at large has no problem with identifying Scots because there is no other country which has the tartan, pipes and the kilt in the combinations that we have. The problem with identity is with some Scots themselves, many of whom seem to be terrified to emphasise their identity in case they are accused of being Nationalists. The writer James Kelman, recently wrote that he intended to vote "Yes" in the independence referendum but quickly added that not only was he not a Nationalist but that he disliked nationalism. He is one of a long line of Scots, prepared to preface their voting intentions or, their dissatisfaction with some aspect of the present political arrangement in the UK, with the qualification, "I am not a Nationalist but....". It is only one aspect of the infamous Scottish cringe, where any expression of being Scottish must be preceded with an apology.
I have never had that problem, probably because my Scottish ancestry has been traced back several generations on both sides of the family, therefore I can satisfy two of the condition in the survey, required by 52% and 73% respectively, viz. that both parents and myself, should have been born in Scotland in order to be considered Scottish. On my mother's side, the McGregors, I had an ancestor John McGregor who has been traced to the Atholl Braes where he worked as a dry stane dyker in 1760. The Fairlies have also been in Perthshire for generations, back to the 1750s, working in the Glenshee area as weavers and stockmen. Other family names include Stewart, McGillivray and Robertson. What that does is make me very comfortable in my own skin, born in Perthshire of a long line of men and women who were also born in Perthshire. It doesn't make me particularly proud to be Scots, I just am Scots. I am proud, however, very proud, of many of the achievments of the people of Scotland in medicine, education, science, engineering and a whole host of other areas where Scots have contributed to the betterment of mankind. There are other areas such as the slave trade or our well known fondness for the drink, of which I am anything but proud but unlike some, I see no reason to be forever apologetic for them or, to see our national "failings" as reasons why we cannot be independent.
The apparent obsession with identitiy in this country, the regular need to measure our "Scottishness" against our "Britishness", stems from the fear in the UK establishment that if "Scottishness" is allowed to become too dominant, the ties which allegedly bind us to the whole idea of Britain will become so threadbare they will cease to be effective. Thus, any lessening of Scots' devotion to the monarchy will obviously lessen our feelings of "Britishness" and weaken the UK. The other problem is that thrown up by the use of the words Nationalist and Nationalism. The dictionary defines a Nationalist as someone who favours independence and the interests of his own country or nation, but opponents of Scottish independence use it as if it is synonymous with imperialism - the domination of other nations - or chauvinism - the extravagant and exaggerated pride in one's own nation together with a contempt for other nations. Scotland has never been an imperialist nation and while we micht hae a guid conceit o oorsels, we are not contemptuous of others. If we were, the reception we invariably receive when travelling abroad would be entirely different from the kind of welcome we are shown. As I have pointed out before, Unionists rarely use the word independence, preferring the much more pejorative separation or divorce.
Prior to the Union of 1707, Scotland had only one main enemy and that was England, caused by that country's determination to subjugate us over a period of over 300 years. Our battles with the Danes and Norwegians were for the purpose of self-defence and our troubles with Ireland were a direct consequence of the policies of James VI and I, as he furthered the imperial policies of England. Scotland played a major part in the building of the British empire but again, it followed the Union of the Crowns then the Union of 1707, driven by the expansionist policies of England. Since 1707 our culture has been derided to the point where the Gaelic language has almost ceased to exist and we live in a country where the majority of our people cannot even pronounce the names of our own mountains and glens. It is only recently that Scots has been recognised as a distinct and separate language from English. Born into a family where agriculture played a prominet role, I spoke Scots as well as standard English from the earliest age, so that both were encouraged in my own children from the outset. When teaching, I made a point of speaking to the students in the day-to-day language they used themselves. On one occasion one young lad told me, "You dinnae speak snobby like ither teachers Sir", a rather sad indication of the way in which Scots had come to be regarded as the language of "the lower orders". The image of the taciturn Scot did not happen by accident.
Despite that, the survey showed that 67% of Scots were either very proud or fairly proud of their language while 29% were either not very proud or not at all proud. What does that say about our country when 29% of of us are ashamed of our language, the language in which Burns was able to forge a reputation that is recognised throughout the world. The survey also shows that a total of 20% of Scots were not proud of Ben Nevis, which may have meant no more than that they were totally indifferent to it. That was the problem of the survey in general; some of the questions asked made little or no sense. What was the point of asking if people were proud of our country pubs or were those questions simply thrown in to disguise the real nature of the survey - to identify those things which make us British? Significantly, only 61% of English respondents had any pride in the flag of St George while 24% of them associated it with racism. Unfortunately 10% of Scots associated the Saltire with racism although 84% were proud of it. The pressure to be British is unrelenting, with surveys such as this constantly measuring and re-defining which mores and attitudes can be said to be Scottish and which are British. The Olympics will provide limitless opportunities to wave the Union Flag and proclaim our "Britishness". God help any Scot who is perceived to be less than totally committed to the flag, the Union and Britain.
Would the survey have told anyone what it is that makes us Scots? It may have given them some idea of some of the things we regard as being important such as being born in Scotland or having Scottish parents. However it would also tell them there is little colour prejudice in Scotland as only a total of 13% of respondents thought that being white was important to be considered Scots and that it was far more important (83% of respondents) that people considered themselves to be Scottish, whatever their country of origin. To me, the encouraging thing about the survey is that the majority of Scots still consider themselves to be Scots rather than British, a total of only 5% seeing themselves more British than Scots, particularly given the welter of propaganda to which we are subjected to convert us to the concept of Britishness. That may also encourage the SNP to stop pandering to those who are determined that we remain part of Britain.
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