A devolved country within a nation does not.
In my view, and the main reason why I voted No in September 2014, the SNP plan for “independent” Scotland – to be a country without its own central bank – was not independence at all: the only way I think our situation could now be worse would be if Yes had got the majority and we were now facing a situation where both monetary and ultimately fiscal policy would be set by George Osborne from rUK to iScotland.
If you have rose-coloured spectacles you may suppose that Osborne would naturally make decisions that would benefit and profit iScotland.
If you don’t, you may suppose that Osborne’s goal would have been for the City of London to profit hugely at iScotland’s expense.
But No got the majority, the independence campaigners now have years ahead to figure out a better scheme for independent Scotland, and the SNP are trying to get full fiscal autonomy anyway.
As Patrick Harvie noted on Twitter, Greece has full fiscal autonomy and no monetary autonomy. They can perceive solutions to their crisis, but have no power to execute those decisions. That is the position the SNP wanted – and still want – Scotland to be in.
Many SNP types are annoyed I don't back FFA. Meanwhile in #Greece, a leader with fiscal autonomy & no monetary power prepares to speak…
— Patrick Harvie (@patrickharvie) July 1, 2015
And at more length in the Common Space and on his own website, noting that the Scottish Greens had quietly opposed currency union and supported independence “to give Scotland a chance to change economic direction”
“But neither a currency union, which we opposed during the referendum, nor a headlong rush toward a poorly designed scheme labelled ‘full fiscal autonomy’ will achieve that.
“Instead, without control of macroeconomic policy, we would remain locked in to decisions made by the UK Government. Either proposal looks superficially like handing Scotland more power, but in reality would mean tying our hands behind our backs.
“Fiscal autonomy must come with the ability to run a radically different economy policy. We’d also need to be able to build up reserves, and determine borrowing without reference to the UK government. We have yet to see such a scheme proposed. Even if it was, there would still be severe limits to fiscal policy if we have no control of monetary policy.”
As I wrote in May 2014:
I’m not refusing independence. This is not independence: it’s devomax. And the notion that the Scottish economy is “just one point” is – well, shortsighted to say the least. All the best and finest aspirations for an independent Scotland depend on our getting away from the London/Westminster control of our economy.
I like devolution: our Scottish Parliament was worked out carefully by a broad range of Scots over several years, then implemented at Westminster by broadly-sympathetic MPs.
I’m in principle able to be convinced that independence could work for Scotland.
But as for the mixter-maxter that the SNP keep coming up with, whether it’s devomax or currency union or full fiscal autonomy, I can’t agree, for reasons I outlined in July 2012, three years ago, and still stand by:
A nation’s finances are the product of a national economy. What the devo-max people appear to be proposing is something akin to the US states, which have internal taxation and spending systems but are still part of the federal government, which taxes and provides revenues across the US.
In essence, what appears to be being proposed for Scotland by devo-max is that the Scottish government shall have all of the fundraising powers of a national government – while still being part of the UK. If Scottish devolved finances failed, the UK government would still have to bail Scotland out.
I know this sounds like The Economist making jokes about Scotland the Broke. But the basic check of financial regulation is to ensure that the risks of a decision will be borne by the decision-maker. The idea behind devo-plus/devo-max is to give the power to make financial decisions to the Scottish government, while still leaving the UK government final responsibility for the risks.
Be as optimistic as you like about the good sense and financial probity of Holyrood as compared with Westminister, this isn’t a good idea.