The Great Debate UK

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.

PHOTO: 'No Thanks' badges are displayed during campaigning by Alistair Darling, the leader of the campaign to keep Scotland part of the United Kingdom, in Edinburgh, Scotland September 8, 2014. REUTERS/Russell Cheyne 

Predictions and wishes for Osborne’s 2013 Budget

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By Nick Hostler, tax expert at BDO. The opinions expressed are his own.

Following the recent loss of the UK’s AAA rating, Chancellor George Osborne will be keen to show real progress and dedication towards eliminating the UK’s structural fiscal deficit, but must balance this with ensuring that the UK is a highly competitive and attractive location for multi-national businesses. The Budget should mark a watershed moment for the coalition government as Osborne, with an eye on the next general election, treads a fine line while demonstrating an understanding of the pressures faced by individuals and businesses across the country.

Whether he strikes this balance remains to be seen, but here is what I believe the Budget will have in store.

Budget day cheer is here again

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By Laurence Copeland. The opinions expressed are his own.

Budget Day again, and the pressure on Chancellor George Osborne is rising ominously. There is little agreement about what needs to be done, but complete agreement that something has to change because the state of Britain’s economy is simply awful.

Yet just look at the facts in the table below (all the data are taken from Eurostat, the EU’s own statistical agency). For the latest quarter, the UK economy contracted by 0.3 percent – but France’s performance was just as dismal, Germany’s economy shrank by twice as much, as did the euro zone as a whole. Only the USA achieved a significantly better outcome, a dazzling growth rate of zero  – but at least it didn’t shrink. Year-on-year (Y-O-Y, as the pros call it), the picture is even clearer. Britain’s economic growth, a miserable 0.3 percent, was not significantly lower than Germany’s, but better than France’s minus-0.3 percent, or indeed the euro zone as a whole, which was down by 0.9 percent. Only the USA grew to any significant extent – and there are signs that it may now be starting to slow down, even before the impact of the fiscal cliff and the sequester are felt.

Democracy vs. austerity

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By Kathleen Brooks. The opinions expressed are her own.

Throughout history it has always been difficult to take something away from someone once you have given it to them. Europe is finding that it is extremely difficult to reign in public finances once they start to go out of control. Democracies don’t like to vote for austerity, which is why Sarkozy lost the Presidency in France, why a radical left party came second in the Greek elections and why the Conservatives got a drubbing at last week’s local elections in the UK.

This tells us something about democracy in the western world. Governments have to manage the public finances directly – they have to sell the debt, do the sums and present budgets. However, the people who vote them into (and out of) power are the public, who rightly in most cases, believe they have worked hard, paid  taxes and deserve the services and retirement promises made to them.

Salvation through inflation: The British way out

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By Laurence Copeland. The opinions expressed are his own.

Accusing policymakers of acting out of sheer desperation is a pretty standard jibe by critics trying to put them off their stride.

Unfortunately, the latest round of QE came wrapped in comments from the Governor of the Bank of England which amounted, more or less, to saying: “Look! I’m staying calm – but it’s taking a hell of an effort, believe me!”

The QE billions should go direct to consumers

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By Mark Hillary. The opinions expressed are his own.

In 1998, the Japanese government was ridiculed for giving away almost $6bn (at 1998 value) of shopping vouchers. The plan was that consumers would spend more of this ‘free money’ and help lift Japan out of the seemingly endless malaise it suffered in the nineties – as many other developed economies were enjoying a roaring decade.

One of the major faults in the Japanese plan was that the vouchers could easily replace the need to spend actual money. If my groceries cost me $100 then why would I still spend $100 of cash on groceries and buy a nice meal in a restaurant with my voucher, when I could just use the voucher for those groceries?

Osborne’s “difficult” Conference Speech

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By Kathleen Brooks. The opinions expressed are her own.

Chancellor George Osborne has weathered criticism of his economic policies from both sides of the political isle in recent months, so it was no surprise that the buzz word from his Conservative Party Conference speech was “difficult”. Life at Westminster is difficult for Osborne at the moment and it’s unlikely to get any easier.

The problem for the Chancellor is that he has staked his credibility on bringing down the UK’s deficit, yet he is also trying to be a pioneer of growth and jobs. In the current environment neither goal looks achievable.

No excuse for inaction – BoE’s Adam Posen

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By Adam Posen. The opinions expressed are his own.

It is past time for monetary policy to be doing more to support recovery. The Jackson Hole conference has come and gone, and no shortage of excuses was provided for central banks to hold their fire — even though most economists acknowledged the grim outlook for the advanced economies.

Too much attention has been paid, however, to the failings of fiscal policies and to the shortfall from effects of earlier quantitative easing. Further asset purchases by the G7 central banks are needed to check not just a downturn, but the lasting erosion of productive capacity and of debt sustainability — especially when even justified fiscal and financial consolidation is undercutting short-term recovery. Easier monetary policy will increase the odds of other policies improving, and those policies’ effectiveness when they do.

from The Great Debate:

Rioters without a cause

By John Lloyd
All opinions expressed are his own.

On Sunday evening, a middle aged woman waded into a crowd of rioters in Hackney and shouted that she was ashamed to be black, ashamed to be a Hackney woman – because of the destruction and fear the rioters were spreading about them. But she went further. She said - Get real black people! I am ashamed to be a Hackney person! If you want a cause, get a cause! (See video below; contains graphic language.)

I had just spent a day, in Glasgow, with men who had had a cause. Forty years ago, workers at the Upper Clyde Shipyards in Scotland’s great old industrial city, where the workforce was being cut, voted to stage a work-in: a novel form of industrial action in which those laid off reported for work as normal, and continued to build ships. The action was led by two men, Jimmy Airlie and Jimmy Reid, both charismatic, both fighting for a cause – the right to work, the protection of the working class. They got huge support, in the city, in the country, even internationally. They won, for the shipyards on the Clyde, a temporary reprieve.

Why is the West bankrupt?

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By Laurence Copeland. The opinions expressed are his own.

The UK, USA, the PIIGS (Ireland and Italy are together in the same stye), France is in poor fiscal shape  – OK, Germany is ostensibly living within its means, but it looks a lot less solvent when you remember that it has underwritten the rest of the euro zone (in large part, to protect its own irresponsible banks). In any case, as I have argued in previous blogs, this or a future German Government is likely to cave in to the pressure from its own electorate and from inflationist economists at home and abroad to join the party and spend, spend, spend. Only Australia and Canada, riding high on the commodities price boom, and a handful of small countries, look stable.

Where will it all end?

With inflation, almost certainly, but beyond that, it is hard to say. However, there is one prediction I would offer for the medium to long term outcome, and it applies not only to the euro zone, but to Britain and America too – in fact to the whole of the comfortable, complacent industrialised world – and it is this.

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