Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org naiman at justforeignpolicy.org (202) 448-2898 x1
On Sun, Sep 7, 2014 at 7:55 AM, Marv Gandall <marvgand2 at gmail.com> wrote:
> On Sep 6, 2014, at 12:09 PM, Carl G. Estabrook wrote:
>
> > Is the implication that an independent Scotland should take control of
> of its currency and interest rates?
>
> I don’t think Michael Roberts directly says so, but many if not most
> Greeks, Italians, Spaniards and others who have seen their former
> currencies replaced by the euro and have been subsequently savaged by a
> ruinous economic crisis would loudly answer in the affirmative. If their
> governments had been beholden to them rather than the big European banks
> and corporations, the possibility would have long ago presented itself of
> opting out of the euro, taking control of their central bank and financial
> systems, restoring their sovereign currencies, and reviving economic growth
> and living standards through monetary and fiscal policies aimed at
> restoring export competitiveness and mass purchasing power. Instead,
> they’ve been subjected to austerity and vicious “internal devaluations”
> which have worsened the crisis, destroyed jobs and incomes, and plunged
> tens of millions into misery.
>
> It’s not an easy question to answer in the abstract, however, because the
> process of replacing an established currency with an untested one can be a
> very painful and disruptive one for weaker economies with trade and
> commercial ties to larger neighbours, and who are subject to the vagaries
> of the international market. In the short term, they face the prospect of
> capital flight, collapsing banks, bankrupted corporations, and even
> worsened conditions for the mass of the population whose sustained support
> would be crucial during the transition period. This is why Syriza, the only
> left-wing party poised to take power to date, has been divided on opting
> out of the euro, as have been two leading Greek economists widely read on
> the left, Costas Lapavitsas and Yanis Varoufakis.
>
> My impression is that there is much less concern about Scotland’s ability
> to abandon the pound in favour of its own free-floating currency. Even
> mainstream economists polled by the Financial Times seemed to agree it
> could weather any short term storms. The article is behind a paywall, but a
> few short quotes should suffice:
>
> “An independent currency – let’s call it the 'Scottie’ – could work for an
> independent Scotland and it is the only available option that would allow
> the country to set its own monetary policy and make its own trade-offs with
> fiscal policy” (Dame DeAnne Julius, former Monetary Policy Committee member
> and Bank of England court director). "The option of an independent Scottish
> currency has been unfairly maligned. A free-floating currency would indeed
> be at risk of speculative attack but with the right mandate it could have
> substantial benefits as well” (Sam Bowman, research director at the Adam
> Smith Institute). "An independent Scotland could issue its own currency,
> supported by its own central bank. Many successful European countries of a
> similar scale have chosen this option, for example, Sweden and Denmark”
> (Tony Yates, Reader in Economics at University of Bristol). “If Scotland
> had its own currency, this would provide the greatest economic sovereignty,
> which the Fiscal Commission acknowledges” (Angus Armstrong, director of
> macroeconomics at the National Institute of Economic and Social Research).
> “This is the only option that offers an independent Scotland an adjustment
> mechanism to address unfavourable movements in its competitiveness and
> provide maximum freedom of monetary and fiscal policy” (Ronald MacDonald,
> professor, Adam Smith chair of political economy, University of Glasgow).
>
>
> http://www.ft.com/intl/cms/s/2/e635505a-328f-11e4-a5a2-00144feabdc0.html?ftcamp=published_links%2Frss%2Fhome_uk%2Ffeed%2F%2Fproduct#axzz3C7CaP6rx
>
> > On Sep 6, 2014, at 9:27 AM, Marv Gandall <marvgand2 at gmail.com> wrote:
> >
> >> Below a link to a detailed analysis by the British Marxist economist
> Michael Roberts of the economic challenges which would face an independent
> Scotland if it votes to secede from the UK on September 18th. Roberts
> concludes that "at best, the majority of the Scottish people will find
> little difference under Holyrood than under Westminster and it could be
> worse if a global crisis erupts again. Scotland as a small economy,
> dependent on multinationals for investment, still dominated by British
> banks and the City of London and without control of its own currency or
> interest rates, could face a much bigger hit than elsewhere in terms of
> incomes and unemployment."
> >>
> >> But as Roberts also notes, “the decision on independence is not just a
> question of the economy and living standards". The political consequences
> of such a dramatic rupture with the status quo in Scotland could be far
> reaching - not only on independence struggles in Catalonia and elsewhere,
> but as encouragement to a wide range of other social movements everywhere.
> >>
> >> http://thenextrecession.wordpress.com/2014/09/04/scotland-yes-or-no/
>
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