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from Edward Hadas:

The economic lessons from Scotland

Adam Smith, one of the leading figures of the 18th century Scottish intellectual enlightenment, liked free markets and restrained governments. The 21st century campaigns for and against a Scottish political liberation show that governments have acquired an economic importance which Smith could hardly have imagined.

If the government’s economic role was as limited as Smith would have liked, the debate preceding the Sept. 18 independence referendum would mostly have been about national identity and the advantages and difficulties of becoming a small country in a big world. The economy would hardly be an issue, since only the most rabid Scottish nationalist would accuse the English of cruelty in that domain.

In fact, though, the purely political issues seem less important than the question of what might be called political economy: would a Scottish government with full regulatory, fiscal and monetary control make the nation richer? The answers differ, of course, but there is a shared assumption that the government is right at the centre of the economy.

In a way, that is quite right. The remit of modern governments runs through the entire economy. They regulate, adjudicate and motivate. They are the largest employers and purchasers in any country. They run complicated welfare states. They build infrastructure, protect private property and make key investments. Their deficits help keep the economy on an even keel.

from Breakingviews:

Why buybacks should be banned

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

“Charlie and I favor repurchases when… its stock is selling at a material discount to the company’s intrinsic business value.” It takes courage to contradict Warren Buffett on matters related to investing, but the Berkshire Hathaway boss is leading investors up the wrong path with share buybacks.

from Breakingviews:

SAB/Heineken could leap antitrust hurdles

By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A $130 billion Anglo-Dutch beer monster could leap antitrust hurdles. Heineken has rebuffed a takeover approach from SABMiller as “non-actionable.” As you might expect from a combination of the world’s second- and third-biggest brewers, there are major competition concerns. But these could be fixed and the result would be an emerging markets titan. The rejection suggests family control of Heineken is the real sticking point.

from Breakingviews:

Calculator: Does Scoxit = Brexit?

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

If Scotland votes for independence, there is a two-in-three chance that the remaining United Kingdom will quit the European Union, according to a new Breakingviews calculator. By contrast, there would be only a one-in-five probability of a “Brexit” (Britain leaving the EU) by the end of the decade if the Scots vote to stay in the UK on Sept. 18.

from Breakingviews:

RBS/Lloyds moving plans leave key questions opaque

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Scotland’s largest banks have moved to head off a crisis. Royal Bank of Scotland and Lloyds Banking Group say they will shift their Edinburgh-domiciled operations to London, should Scots vote for independence on Sept. 18. That’s a step towards financial stability – but not if you’re a Scottish consumer.

from John Lloyd:

No gimmicks, just 10 good reasons why Scotland shouldn’t leave the UK

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Readers of a romantic bent, perhaps Scots or descendants of Scots, may think that it would be cool for Scotland to vote for independence from the United Kingdom next Thursday.

If so, here are 10 reasons why they’re wrong. It would mean nationalism  – the call to old loyalties deeper than any civic and cross-national identities – would win. The Scots nationalists are nothing like the proto-fascist groups at large in Europe: indeed, their party is social democratic, liberal in social policy. But the demons unleashed will be stronger than their politics. The countries of Europe have many secessionist movements. Spain has two, in Catalonia and in the Basque country. Belgium is divided between the French Walloons and the Dutch-speaking Flemish. Italy has an old secessionist movement in German-speaking Alto Adige and a new one in the north, claiming a territory called Padania. France has an occasionally violent movement in the island of Corsica. Others will come along. All would be hugely encouraged by Scots independence. It would consume Europe for decades. The UK has been, in the past century, an imperial power, claiming ownership of large parts of the globe, fighting and imprisoning those who sought liberation in Africa, India and elsewhere. U.S. President Barack Obama’s grandfather, Hussein Onyango Obama, was imprisoned and tortured by the British in Kenya because he was suspected, it seems wrongly, of being a member of a militant pro-independence group, the Mau Mau.But in the latter part of the 20th century and in the 21st, Britain ceased to be part of the problem and strove to become part of the solution. The ‘solution’ is to find a way to manage the world out of confrontation and division into a common effort to attack its real problems – ecological damage, poverty, drought, Islamist and other terrorism. The loss of Scotland would diminish it, weaken its presence internationally, weaken what it does and can do for global governance. The UK is a major and founding member of NATO: it’s a nuclear power. Yet all of its submarine-based nuclear armament is based in Scotland, at a base near Glasgow. Moving it – as an independent, anti-nuclear Scottish government would demand – would take years and many billions of pounds to execute. And this at a time when NATO is seeking more commitment, more defense spending from its members to counter the growing threat from Russia. The United States, presently blamed by critics inside and out for being weak in the face of global challenges – from Islamist terror, from Russia, from China – has under Obama’s presidency sought to convince the Europeans that they must take greater responsibility. Scots independence would be an example of a people taking less: it would present the malign example of a region, by claiming independent status, ducking out of taking the hard choices in the world – while seeking protection from those still constrained to make them. The UK has been a large part of ‘the West’ – that group of nations, which include ‘Easterners’ like Japan, South Korea, Australia and New Zealand and others – that privilege democracy, a strong civil society and rule of law. For the UK to lose Scotland would point up to a failure of democracy, at a time when the growth of China and the challenge of Russia is putting it’s primacy in doubt. With the discovery of major oil reserves off Scotland in the early 1970s, most of the UK’s oil has come from the fields off the Scots shore. There are still large reserves – how large, is still being proven. Scotland would demand total control of these reserves – they would be mainly within its territorial waters. It’s another malign example of a region rich in mineral reserves severing links with the larger state of which it was part in order to enjoy the easy income. It’s what the Oxford economist Paul Collier called, in a recent talk, ‘a dirty little resource grab’ – one sure to be copied elsewhere. Scotland has a large financial sector, even after the near-collapse of the Royal Bank of Scotland, still one of the world’s banking giants. The turbulence and uncertainty which independence would cause would prompt several big banks and financial institutions to relocate to England: and foreign-owned businesses would also take precautionary measures. It wouldn’t be disaster: but it would mean that the UK, presently growing more strongly than any other European state but still recovering from recession, would be badly knocked back. Modern terrorism has targeted the UK: it’s seen by radical Islam as both a threat to their plans to create a fundamentalist Caliphate and to make of the Moslem populations round the world – there are nearly 3m Moslems in the UK – adherents to their cause. As UK security chiefs have warned, an independent Scotland with  new and small security services would be hobbled in efforts to combat extremism – and would be seen as a pressure point. Finally, there’s the more indefinable damage: to civility and to common culture. The nationalist campaign has raised tempers on both sides of the divide – within Scotland itself, and between Scotland and the rest of the UK, especially England. Nationalists like to see England as still an imperial hangover, un-modernized, run by ‘posh’ Conservatives for whom most Scots didn’t vote. Independence would make this still worse: many English say they want Scotland to go, because they’re tired of their complaints. It would be a long time before that died down: and something precious, a recognition of difference within unity, would have been lost.
This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

This much is at stake. The world will not benefit, now or in the future, from an independent Scotland. But there’s nothing it can do about it, but wait to see what choice that nation makes.

from Edward Hadas:

A holistic economics of healthcare

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Every country in the world seems to have a healthcare crisis. The problems are particularly severe in rich and ageing countries, including the United States and the United Kingdom, where expectations are especially high and the systems were designed for a different reality. A new report from The King’s Fund, a British charity, suggests a better approach.

from The Great Debate:

Scotland can expect one heckuva hangover after independence vote – yes or no

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Scotland will soon be suffering from a monumental hangover. There will be a lot of hurt heads, a lot of tears and, without a doubt, an immense amount of anger that will last who knows how long -- weeks, months, maybe even years -- if Alex Salmond’s dream of independence comes true.

The Sept. 18 referendum on independence is quite unlike any other United Kingdom election I have witnessed. It is much more visceral, with so many complicated currents swirling beneath one simple question: Is Scotland in Britain or out of it? There are a lot of people going with their gut instinct, and you sense that if the outcome goes against them, the simmering rage will finally bubble over.

from Hugo Dixon:

Brexit risks have shot up

Brexit risks have shot up in the past few weeks. The chance of Britain exiting the European Union by the end of the decade is now probably around 50 percent.

The main factor driving Brexit is the knife-edge referendum on Scottish independence. If the Scots vote next week to quit the United Kingdom, it is highly likely that the rump UK will leave the EU. If the UK doesn’t break up, it is much less likely that it will then part from the EU, but this is still a risk.

from Breakingviews:

RBS puts lipstick on Citizens for $14 bln IPO

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Royal Bank of Scotland is applying a fair amount of lipstick to its U.S. unit ahead of a planned initial public offering. Citizens Financial is worth up to $14 billion, based on the price range of $23 to $25 a share set on Sept. 8. Like the leaders of its home nation, RBS is painting too pretty a picture of life after independence.

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