The “no” campaign against independence has reached the stage of endgame panic that leads to desperately throwing charges and publicity stunts at what the polls indicate are increasing support for independence among Scots. Over the last several days we have seen a new anti-independence troika emerge – Gordon Brown, Mick Jagger, and Paul Krugman. I have written previously about the unintended self-parody of making a “rogue” like Brown the “spearhead” of the joint effort by the Tories, Labor, and the (vanishing Lib-Dems) to convince the Scots not to reclaim their independence. (Note to the “better together” opponents of independence – “spear” metaphors aimed at the Scots are best avoided, particularly when wielded by the kind of Scottish “rogues” that Burns denounced in his famous poem about the corrupt and treasonous origins of Scotland’s “union” with Great Britain.)
But any political campaign that brings together Mick Jagger and Paul Krugman to oppose independence for Scotland demonstrates such gravitas that it can be forgiven for picking Brown – the man most culpable for the UK financial crisis and the self-destruction of the UK Labor Party and the most despised politician in the UK – to “head” the latest legion of “spear” chuckers against independence for Scotland.
Krugman’s column does pose a special challenge for those of us who understand Modern Monetary Theory (MMT) and Krugman’s increasing embrace of MMT. Krugman’s central point in his column is almost correct. He warns that not having a sovereign currency is dangerous for the reasons MMT has long explained and Krugman now accepts. (Bizarrely, Krugman still denounces MMT for taking positions that MMT scholars do not in fact take and he keeps making the same strawman arguments no matter how many times my colleagues and I point out that MMT scholars do not take the positions he ascribes, without citation, to MMT.)
Krugman is correct that not having a sovereign currency is a risk and that Scotland would be far better off recovering all aspects of sovereignty, including its once sovereign currency. That is politically impossible in Scotland (as it is in Ecuador as I have explained previously).
What Krugman does not explain, however, is that Scotland already lacks a sovereign currency because it lacks sovereignty and is part of a “union” in which it is a small, permanent, and often scorned minority. Regardless of the vote on independence Scotland will lack a sovereign currency. The English have a sovereign currency, the Pound, and they have had at all times under the “Union” the votes to set the UK’s economic and currency policies. Scotland was helpless to prevent the insane austerity that crippled Scotland’s recovery from the Great Recession and forced it back into a gratuitous second recession.
Even when a “rogue” Scot like Brown was leading the key ministry or the PM he, disastrously, represented the giant banks at the direct expense of the people of Scotland (and the entire UK). The Scottish politicians that can secure leadership positions under a “union” dominated by the English will overwhelmingly be those willing to accommodate themselves to that domination. It is no surprise that UK’s three “traditional” parties (I will, overly generously, grant the rapidly vanishing Lib-Dems this status) in Scotland have united in their opposition to independence. To use Burns’ apt term, they must be “rogues” to Scotland if they aspire to English support.
Krugman’s Historical Mashup about Canada and Colonialism
Krugman also makes an incoherent argument about Canada suggesting that its lower productivity than the U.S. stems from its “independence” and smaller population. But Krugman is actually talking about Canada’s independence from the United States! (Note to Krugman, Canada was never part of the U.S.) A far more likely explanation of Canada’s lower productivity and far smaller population than the U.S. is that we achieved our independence from the Brits a century before Canada secured its independence from the Brits.
Remaining a British colony until 1867 (at which point it was still not fully independent of the UK) reduced the population and economic growth of Canada compared to the U.S. The Brits were often hostile to the majority of the people of colonial Canada given the fact that they were of French origins. There was substantial migration from Canada, particularly by those of French origins under UK colonial rule. There is substantial academic debate about the drivers of Canadian economic growth, but the data show that under colonial rule the UK made very weak investments in the railroads that later proved critical to Canada’s ability to develop its astonishing mineral and agricultural wealth. The UK’s colonial rule of Canada was, of course, guided by the principle of what the Brits viewed as being beneficial to the Brits, not what would be beneficial to the people of Canada.
To sum it up, Krugman’s arguments, adjusted for historical realities, provide additional reasons for viewing the effort to create a panic about Scotland’s economy should its people vote to reclaim their independence as bogus. Canada gained massively from independence. Oh, and the Netherlands gained immensely from becoming independent from Spain, so Krugman’s Spanish metaphor also proves the reverse of his argument. (Krugman is correct, however, that Spain should have never adopted the euro – and neither should Scotland, or any other nation.)