Scotland: a nation cannot be independent and use another nation’s currency or even peg to it

It is Wednesday and only a few points plus a sort of reflection on a recently departed musician. The few points really relate to the latest news from Scotland that it is thinking (once again) of seeking independence but using a foreign nation’s currency (one version) or pegging to another nation’s currency (another version. We should be clear – an independent Scotland requires its own currency, which it floats on international markets and has a central bank that sets its own interest rates (that is, determines its own monetary policy). Using a foreign currency or pegging to a foreign currency immediately voids national independence. The fact that the leading players in the independence debate don’t seem to comprehend that point is a worry. The fact that there is also strong sentiment to be part of the European Union post independence also tells me that the notion of independence is not well understood or developed in Scotland. That’s the bad news today. The good news is much more interesting – check it out.

Bonnie Scotland seems intent on going down the ‘gurgler’

I have written about Scotland before:

1. Australia and Scotland and the need to escape neoliberalism (May 20, 2019).

2. Some MMT considerations for an independent Scotland – Part 1 (May 7, 2019).

3. Some MMT considerations for an independent Scotland – Part 2 (May 6, 2019).

4. Ridiculous MMT critiques distorting Scottish independence debate (April 23, 2019).

5. Oh Scotland, don’t you dare! – Part 1 (June 4, 2018).

6. Oh Scotland, don’t you dare! – Part 2 (June 5, 2018).

7. I would be voting NO in Scotland but with a lot of anger (August 18, 2014).

8. Bonnie Scotland – ignorance or denial – either way it is fraught (October 13, 2013).

9. Bonnie Scotland – ignorance or denial – either way it is fraught (September 27, 2012).

Many of those posts were in response to my interest in the questions that were arising about Britain’s position in Europe and the possibility of Scotland breaking clear of the neoliberal chains that continued membership of the UK guaranteed – whether run by the Tories or New Labour.

I have also been fascinated with the Scottish question since I studied the Jacobite period quite intensely as a university student and beyond.

But they were also in response to calls from activists in Scotland for research evidence from an Modern Monetary Theory (MMT) perspective to help them lobby for the best currency outcome should Scotland become independent.

By the way events have unfolded in the last year, it appears that shifts within the independence movement has meant they are no longer interested in an MMT solution nor an anti-EU voice and I am no longer part of their dialogue.

They have instead sought to build a strategy using input from those who purport to be MMTers but who sadly lack the qualifications to claim that expertise and are pro-EU and all that that represents.

I sensed on my several visits there that there was always a friction between the pro-EU camp within the independence movement and those who, sensibly, understood the EU to be the bulwark of neoliberalism and that Scotland would only be going from the ‘frying pan into the fire’ if it left the UK but then sought EU membership.

The pro-EU camp also could not seem to appreciate that they would not be able to claim continuation of Britain’s membership, post Brexit and thus retain the Treaty Annexure exemptions pertaining to the maintenance of their own currency that was applicable to Britain (negotiated by Margaret Thatcher).

If they entered the EU it would be as a new country and they would then have to adopt the euro after the convergence criteria were met, which, as we all know forced the accession candidates in the late 1990s to invoke premature austerity long before the Stability and Growth Pact was introduced.

Which brings me to the latest development that echoes a long held proposition – that Scotland should adopt the Norwegian krone should it gain independence.

One word describes this proposal: madness.

This idea goes back to 2012 before the first independence referendum.

It was based on the idea that Norway and Scotland share an industrial bias – export sectors dominated by oil, which in Norway’s case, helps maintain a strong currency.

Scottish economists are scared of a new Scottish currency collapsing.

But the relative productivity of the oil sectors are very different even though the populations of both countries is similar. Norway is more efficient.

Further, the Scottish economy tracks the overall British economy fairly closely. And if you look at real exchange rate movements, the British and Norwegian economies do not move in sympathy in terms of international competitiveness.

In the blog posts cited above, I explain in detail why an independent Scotland requires its own currency, which it floats on international markets and has a central bank that sets its own interest rates.

Nothing short of that will deliver independence.

In this article – Scotland should choose the krone (January 25, 2012) – carried the subtitle “Which currency should an independent Scotland use?”

The irony of recommending the use of a foreign currency and being independent seems to pass these commentators by.

But the problem is deep in Scotland it seems.

The – Survation poll – conducted over September 10-12, 2020 – revealed that:

1. 42 per cent would be less likely to support independence if “The pound is replaced with a new Scottish currency”. 15.93 per cent said they would be more likely to support the vote. 34.8 per cent were indifferent.

2. 41.9 per cent would be less likely if “An independent Scotland is outside both the UK and the EU for several years”. 33 per cent indifferent, 15.1 per cent more likely.

This Table from the Poll shows the problem:

I am sorry to say that it doesn’t look like a very prospective future for Scottish independence with all that going on.

MOOC Modern Monetary Theory: Economics for the 21st Century

So here is the good news!

I mentioned a few months ago that I would soon have a big announcement to make. I can now make public what I have been up to over the last several months by way of advancing Modern Monetary Theory (MMT) education initiatives.

We are now well advanced on the development of a MOOC that will be launched in March 2021.

I am working with – NewcastleX – which is my university’s digital team to create the course material which will be available all around the world for free.

That is the philosophy of a MOOC.

The course – Modern Monetary Theory: Economics for the 21st Century – will start on March 3, 2021 and you can get all the enrolment details (it is free) from the link.

This will mark the first stage of the – MMTed project – that I have been trying to get off the ground for a while now.

We have been hampered by lack of funds to date, but the partnership with the University on this MOOC has really been a massive first step. The digital learning team at the University is first-class and have really helped me understand how these new platforms work.

In terms of – MMTed – if you are able to help on an ongoing basis that would be great. But we will also appreciate of once-off and small donations as your circumstances permit.

You can contribute in one of two ways:

1. Via PayPal – which is our preferred vehicle for receiving donations.

The PayPal donation button is available via the MMTed Home Page or via the – Donation button – on the right-hand menu of this page (below the calendar).

2. Direct to MMTed’s Bank Account.

Please write to me to request account details.

Please help if you can.

I am very grateful to all those who have donated funds to date. You will start to see the product of our work and your assistance with the launch of the MOOC.

Other courses will start being offered immediately after that.

Music – A mountain has gone!

This is what I have been listening to while working this morning.

I have never really like the Les Paul Junior guitar.

I was partial to the fuzz box but since the early 1970s have never used one.

I don’t particularly like rock and roll and certainly not the heavier tendencies.

I never liked guitar hero bands.

But you have to admit that in the modern history of electric guitar – Leslie West – was one of the better players and his power trios really marked a time in that history.

So why have him on my ‘show’ today?

Because he died on December 23, 2020 at the age of 75. He was a physical wreck all his life but could really play the guitar.

Here the UK Guardian’s – Leslie West obituary (December 28, 2020).

I liked the comment from the Kiss guitarist “Leslie’s tone could stop a rhino in full charge.” That would make any guitar player proud I think.

While Leslie West is most associated with the band – Mountain – I thought he played the best when Mountain split in 1972 and he teamed up with bass player – Jack Bruce – after – Cream – collapsed in a morass of Clapton-Baker ego, to form – West, Bruce and Laing – dubbed the US Cream.

This is one of my favourite songs from their third album released in 1974 – Live ‘n’ Kickin’ – it was from a live concert.

This band got lost in a haze of drugs, which was unfortunate.

The song – Politician – was originally recorded by Cream on – Wheels of Fire.

Leslie West’s playing is cleaner (less fuzz and noise) here, which better demonstrates his virtuosity and the bottom end was one of the best (Corky Laing and Jack Bruce).

You might also like to hear Mountain playing at Woodstock in 1969 with their classic song – Southbound Train – a pretty good performance.

He told the Rolling Stone magazine in an interview published August 24, 1989 – Woodstock Remembered: Mountain Guitarist Leslie West on Playing the Fest – that playing at Woodstock was only Mountain’s third gig and on arriving at the site by helicopter “it felt like something out of Close Encounters of the Third Kind.”

And because he is gone and won’t be coming back, we can listen to another of his great songs – Mississippi Queen – which came out on Mountain’s debut 1970 album – Mountain Climbing! – released after Canadian – Corky Laing – took over the drums and added significance heaviness to the sound.

This was an album that was often playing when I lived in a large house full of people and musicians in Melbourne during the early 1970s.

It is the only Mountain album I have owned.

This version is from the re-released album (1995) but the track is original (1970).

Pretty good.

Anyway, as I get older, I notice all these characters are dying. It is a queue it seems.

RIP Leslie West.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.