“How would an independent Scotland pay for it?”

Cameron Archibald cuts through the propaganda and ‘love-bombing’ that’s landing in your feeds and your timelines as the “UK Gov Scotland” raises the Unionist game to undermine the prospects of an economically viable independent Scotland.

It’s that time of year again when unionists start spreading lies about how an independent Scotland is subsidised by taxpayers money from the rest of the United Kingdom.

 

This is an argument that supporters of independence have often struggled to tackle. In fact a recent YouGov poll found that, despite a majority saying they would vote Yes, one of the weakest arguments on independence was the economy.

There are many reasons for this, but today we’ll touch on just one, which is important. Right now unionists have complete control of the narrative. By using GERS each year they propose the argument that Scotland’s high government deficit is bad for us and that we rely on taxes to fund our spending. Instead of actually debunking this argument we accept it. We agree with unionists that our deficit is bad and we agree that we need taxes to fund our spending. So we’re forced on the defensive to prove to them that we can lower the deficit.

This is completely and utterly wrong. So now it’s time to turn the tables.

First, the independence movement needs to change its language entirely. Our language needs to move away from the narrative that unionists want to control. Take for example Alexandria Ocasio-Cortez in the US Democrats. She’s intentionally flipping the script from “how do we pay for it?” to “how will we organise it?”

So if US Democrats like AOC can change her language to reach out to ordinary people then there’s no reason that independence activists can’t do the same.

So how do we respond to these sorts of arguments from unionists? Well the response is actually quite straight forward if you understand how modern economies work with their own currency and central bank. So, let’s pretend that that you are being interviewed by Andrew Neil on the issue of the union dividend. Don’t panic, you’ll be fine! Just breathe and state the facts as they are. Ready? Let’s do this.

And before you go on live TV, everything stated in this blog will be linked to an academic source. You know, the real experts instead of a one-sided article in the Daily Record or Daily Mail. Because quite obviously the best way to beat unionists is to state the facts.

Now smile, and don’t look at the camera!

*the interview begins*

Andrew Neil: Welcome to show.

You: Thanks for having me on.

Andrew Neil: As you saw from our opening, Scotland has the highest deficit in all of Europe and benefits from extra spending from the UK. That’s the equivalent of £1,986 per head of population. Tell me, if Scotland embraces separation and loses that dividend, how will you pay for your public services?

 

You: The same way we paid for bank bailouts in 2008, tax cuts for the rich, the House of Lords, weapons of mass destruction, and illegal wars. We will use public money from the central bank in an independent Scotland.

 

Andrew Neil: I know you’ll use public money, but you clearly have a tax short-fall. Without the UK’s extra tax revenues going to Scotland where will you find that extra spending? The truth is Scotland will be forced to accept austerity, isn’t that right?

 

You: Let me clarify what I mean by “public money“. The UK government is monetary sovereign. That means it does not use taxes for government spending. It’s just keystrokes on a computer. It’s newly spent public money from the central bank. So an independent Scotland could continue that with its own central bank and currency.

 

Andrew Neil: So you just want to print money, is that it?

 

You: Please let me finish Andrew. So there is no “union dividend” because that money is simply credited to Scotland, which can still be done with independence. What we’re doing is just the same as what the UK government is doing, except our spending will go to ordinary people.

 

Andrew Neil: Printing money is an idiot’s game. Have you seen what happened to Wiemar Germany, Zimbabwe or Argentina? Everyone knows that printing money causes hyperinflation. You might as well want to magic up a unicorn while you’re at it.

 

You: First of all we don’t “print money”. These days governments don’t go to the printing press and fill their brief cases full of £50 notes. It’s all done electronically by crediting the right account. Afterwards governments choose to issue debt. This is completely normal for monetary sovereign states and, again, happens all the time. That’s what the UK government is doing right now. So where is all our hyperinflation? Think about it, the UK carried out £435 billion of quantitative easing since 2009. That was because it had its own central bank to do so. An independent Scotland with its own central bank would use the same tools as the Bank of England has right now.

 

Second, the examples you cite were not caused because they “printed” money. Weimar Germany lost its productive land from the allies, whilst Zimbabwe systematically ruined its own resources. When productivity falls drastically and demand remains high then you face an inflationary problem. But the simple fact is that crediting accounts, even without issuing debt, does not create a sudden spike in inflation.

Andrew Neil: I see you aren’t addressing Argentina.  But why should we believe you when there’s clearly experts who would refute such nonsense?

 

You: On Argentina, they followed the neoliberal model by borrowing in a foreign currency. Foreign debt is real debt that has to be payed back with interest. It’s not the same as having debt denominated in our own currency, which is a benefit to our country.

 

Secondly, I understand if you don’t want to take my word for it, especially as I know you prefer your right wing “experts”.

 

Andrew: *laughs* is that the old BBC bias line?

 

You: Let’s agree to disagree. But if you don’t believe me then believe the Cato Institute, which is a right-wing economic think tank. They wrote a report that covered every single event of hyperinflation in history and discovered there was three main causes to it. It came down to war, political mismanagement and countries moving from a state-lead economy to a free-market economy. You’ll notice that their conclusion did not mention “printing money”, which again we don’t do anymore. So the question for an independent Scotland is not “how do we pay for it”, but rather “what areas should we spend on?”
*
Andrew Neil: But you know that an independent Scotland can’t just spend a limitless amount of money. Where do you draw the line with all this magic money?

 

You: I’ll put aside your magic comment, but that’s a good question. First, we want to make sure that we spend money in areas that can help grow productivity and increase employment. That can be done through a Job Guarantee programme, which can be discussed in detail another day. But we want to spend in areas that grow meaningful goods, that are in high demand here and elsewhere in the world. This strengthens our economy and-

 

Andrew Neil: That’s all very well, but you still haven’t told me where you draw the line.

 

You: I will if you let me answer the question. Money isn’t the limit, resources are. Once we’ve fully utilised our resources, which is made up of labour, skills, physical capital, technology and natural resources, then any spending above this can be inflationary. Since we’ve reached full productivity in that scenario, then extra money will just circulate in our economy. So instead of having fiscal targets, by dictating to people what our deficit and debt level needs to be, we have an inflation target. Our deficit and debt levels should be whatever it has to be in order to support ordinary Scots to meet their needs and wants.
*
Andrew Neil: I want to go back to another point you made before. You’re seriously trying to tell me that an independent Scotland having a national debt in its own currency is a good thing?

 

You: Of course, do you know what it is?

 

Andrew Neil: I certainly do. Do you actually know what it is?

 

You: I do. The national debt is an account of all the currency that the government has issued and not yet taxed back. It is our net money supply into the economy. Its our savings, our pensions, the disposable income we have in our pockets every day when we walk around – that is the national debt. So having a big national debt, that does not go above our real resources of our economy, is totally okay and good for us.

 

Andrew Neil: As if anyone is going to believe that.

 

You: Well tell that to Japanese Andrew. Heck the UK’s national debt isn’t small either!

 

 

Andrew Neil: Since when was burdening future generations with increased debt considered a good thing? Because you know for a fact it all has to be paid back.

 

You: No it doesn’t. It is our debt, which as I’ve already said is the money we need in our pockets to live, we don’t owe it to anyone other than ourselves. And we don’t need to scare ourselves about our children paying it off in the future either, all generations do it. Our grandparents pay back the national debt. Our parents do it. We do it. Our children will do it too. Everyone pays it back in the form of tax, because tax removes some of our currency from the economy.

 

And I should add, an independent Scotland having a deficit is a good thing too. A Scottish deficit is adding net financial assets to the economy. It’s the complete opposite of austerity.

 

So when Conservatives like Boris Johnson, and sadly some SNP and Labour figures, talk about reducing the deficit and national debt, what they’re really saying is they want to drain ordinary people of net financial assets. They want you to have less because they aren’t driven by the facts; they’re driven ideology.

 

Andrew Neil: But the UK is balancing the books right now, yet the sky has not fallen in. In fact groups such as the UK’s independent fact checking charity, Full Fact, have said the UK is still to remain one of the fastest growing economies in the G7. So balancing the books is clearly doing some good, especially with Brexit on the way.
*

Comments (19)

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  1. w.b. robertson says:

    This argument will, I suspect, be difficult to convince the voters. It reminds me of my wife deciding to spend money on a new hat, arguing that it is not expenditure but an investment.

    1. Wul says:

      Your household is able to print its own currency WB?

      Jeez, even Andrew Neil was able to follow the argument!

  2. Wongabloke says:

    Excellent arguments, but difficult to prosecute in practice without prior learning.

  3. Donald McGregor says:

    I’m loving the concept of pushing back, and I’m loving the detail, but our doorstep and coffee bar conversations need to echo things our recognised political leaders are saying.

    Maybe we should crowd fund a visit from AOC for a lecture tour that takes her and Bernie Sanders arguments and frames them in a Scottish context. That would draw the crowds and start a narrative.

    1. Jo says:

      “Maybe we should crowd fund a visit from AOC for a lecture tour that takes her and Bernie Sanders arguments….”

      Let’s not. We have enough Americans lecturing at us right now without inviting more.

  4. Stuart Clark says:

    Interesting article and a novel way of presenting it; through the eyes of someone interviewed by
    Andrew Neil ( how many politicians have been dismantled by this son of Paisley?)

    Surely if your ideas work for iScotland they will work for any other country too?

    Are there any precedents where econonomies have used these methods and prospered?

    1. Bob Cooper says:

      Search for L. Randall Wray Modern Monetary Theory – he provides a few examples.

      https://www.youtube.com/watch?time_continue=1&v=7sd-ElKMbPI&feature=emb_logo

      He has a wee joke in there about MMT – “economics advances one death at a time”.

      Since our old folks seem to be voting Tory more than the younger folk, its mebbe truer for progressive thinking in Scotland than it is in the world of academic economists.

  5. Wullie says:

    Murdo Fraser collects his “Union Dividend!” every payday! No need to win an election either.

  6. Lordmac says:

    If we are a burden why are the UK not giving us the heave ho, or is it the fact we have the wasted space to keep the Trident and the rent money is worth paying to us

  7. Eddie Cairney says:

    Far too many words and unfamiliar concepts for most people. The trick will be to simplify the message down to manageable proportions and then it will be a very powerful message indeed and probably a game changer.

    1. Craig P says:

      Agreed. Its not an economic argument, it’s a marketing campaign. And one that as long as we stick to talking about deficits and:

      1. People trust the media
      2. People believe the budget of a country with a sovereign currency works like a household budget

      We will never win.

      Make the message simple but also, as the OP says, reframe the argument.

      Look at countries like Denmark and Ireland with fewer resources than us. Why are they doing better?

      Look at all our resources. Where’s the money going?

      Business for Scotland have some excellent graphics. Compare ‘regional distribution of wealthiest households’ with ‘regional GDP’.

      https://www.businessforscotland.com/where-does-scotlands-wealth-go/

      Oh look! The highest GDP is in SE England and E Scotland! Yet Scotland has the poorest households.

      That’s not a coincidence. It’s an inevitable feature of an economic system based in London.

      It’s fine to be a unionist, but rather than boasting of the handouts Scotland gets, they should be on bended knee thanking us for sacrificing our potential for the greater good of the UK.

  8. ray says:

    Nobody knows the secret and hidden billions syphoned off every year by the English establishment. Scotland would be immeasurably more wealthy once England is off its back.

  9. Me Bungo Pony says:

    On independence, with Scotland as a new state and the UK as a continuing state, almost £4bn would be wiped off Scotland’s “deficit” as we would no longer be responsible for paying off any interest on the UK’s humongous national debt. If we then tax the North Sea at realistic levels then the bulk of what remains of that “deficit” would be taken care of if not wiped out.

    It’s not rocket science. New states are not responsible for the debt of its former master unless both countries elect to be “successor” states (as happened with the Czech and Slovak republics). The UK has already made clear it would retain ALL the paraphernalia, trade deals and Treaties it currently enjoys as a “continuing state” so would also retain the national debt in its entirety. The UK would be legally responsible for that debt. As an analogy, if you take in a lodger to help pay the mortgage, the lender does not expect the lodger to take on a share of that debt when they move on and would take a dim view of any customer who tried to persuade them otherwise. The debt is in the customer’s name and the lender expects them, and them alone, to pay it off.

    As to the North Sea, just read this if you haven’t already;
    https://www.businessforscotland.com/uks-oil-gas-revenues-dwarfed-norways/

    I’m not poo-pooing what the article says, but it does take some explaining and many will have switched off well before any understanding has dawned on them.

  10. Robert McClair says:

    Funny how the Andrew Neil types never mention THE most obvious example of a country leaving the UK and becoming HUGELY successful…by ANY measure.
    Now a free Ireland was born out of a very bloody war…which clearly no-one wants to replicate….and had as a result a difficult infancy….but lets look at what we see today…in these very islands, a to a free nation smaller than Scotland.
    When the Irish joined the then EEC in the 1970’s, their per capita wealth was half that of the brits..now…40+years on, itsa matter of record that figure is now DOUBLE that of the brits, and salaries are on average 40% higher than in the UK.
    It’s also true that the UK government…AND THE UK PRESS…have failed to recognise that, in a very recent UN report ( of December 2019 in fact) Ireland has just been assessed as the third best country ON THE PLANET in which to live ( behind only Norway and the Swiss) with the brits now down in 15th place.
    21st century Ireland is today a fine example of much of what ever increasing numbers of scots rightly aspire to, …being a happy, free, wealthy, democratic independent inside an EU that respects them greatly….and we really DO need to ask ourselves why our political class ….and the overwhelmingly unionist press…are not being asked why, if Ireland …devoid of many of the natural resources the scots are ‘ blessed’ with ( like oil, renewables, fishing….remember most of the recently much-bragged about UK fishing grounds are very largely in SCOTS waters…and with hi-tech industries backed up with 4 of the worlds top 200 universities) the scots are HUGELY well placed to replicate that clear Irish success.
    Instead, we see ourselves relentlessly defending the wholly imaginary GERS figures that Westminster trots out, using an accounting formula that NO ACCOUNTANT ON THE PLANET would ever recognise…and which owes its very existence to the then tory scottish secretary , Iain ( later Lord) Lang who produced these ethereal figures back in the time of the John Major government , and who replied to Major’s question as to why he had done so, by saying ” it was necessary to stem the advance of the independence movement in Scotland”…a fact only unearthed years later after a FoI request !
    Now, we could at this point be sucked into the sterile ” what about the deficit’ debate…all the more ironic coming from unionists who have knowing run UK budget deficits for much of the last five decades( and in spite of the £ 400billion+ oil windfall that went straight to the UK Treasury without as much as a bump across any Edinburgh desk) but I suggest that we tackle this by ourselves posing a few questions ourselves by way of riposte.
    These…and this is a far from exhaustive selection….might include the UK Treasury cost of removing and presumably re-installing a Trident weapons system that Scots want no part of, …(in the Thames Estuary perhaps?), ….and enquiring quite why Scotland’s 8.4% of the UK populace, has been ‘ allocated’ on occasions no less than 38% of the ‘ fixed costs’ of running UK plc……or why scots are paying towards HS2, Crossrail, London Olympics….even the Millenium Dome was once in there ( maybe it still is) …yet when it came to the Glasgow Commonwealth Games…Westminster kept its purse firmly zipped !
    There is a long, LONG list of such counter-examples that most scots know nothing…NOTHING AT ALL…about, due to a government led by a weak. morally rudderless, ammoral man happy to edit a magazine describing scots as being ‘ verminous” and who claims that ‘ a pound spent in Croydon is better than a pound spent in Strathclyde’ amongst his endless utterances and follies.
    Add to that a hugely supine scottish press …at all levels….whose aim in life is to promote the comforting idea that being the recipients of ethereal english ‘ largesse should be the pinnacle of our national aspirations …and after 300+years of the very Westminster governance that THEY claim brought us to this pretty pass.
    Finally, can someone…indeed ANYONE….out there please explain to me quite why, if the Westminster acolytes truly BELIEVE that scots are such a drain on ( principally) english resources as they constantly claim….WHY ON EARTH DO THEY DO IT? Can anyone…even THE most cursory examination of Commons exchanges, or even a scan of the mainstream readers comments pages…in both scots and english newspapers it has to be said….PLEASE,PLEASE,PLEASE explain to me just why these out-of-pocket southern based contributors to the scots rolling in wealth are so, SO hostile to those ever increasing numbers of scots who wish to leave them behind, and hence relieve them of this onerous burden to those ungrateful jocks.
    That position they adopt makes zilch sense to me…and I beg of them…please put me right !

  11. Gail Sneddon says:

    Supporters of independence and promoters of independence must be furnished and deliver this information properly. The biggest questions must be answered by the correct people.

  12. Josef O Luain says:

    Great work, well presented too. Those who control the economic narrative also control the “economic” reality and by extension: every last one of us.

    That households can’t create money and therefore cannot be simplistically compared to national economies has taken a long time for many to grasp. Despite all, many have now grasped this simple wee truth. If only for that reason, the short article above should be carefully studied and returned to to assist us in the identification of the huge amounts of ideologically grounded hogwash currently circulating as economic “fact”.

  13. Wul says:

    This is a great piece. More of this please!

    I’d like to see it as a series; “How to Promote Independence Under Pressure” Using an imaginary Andrew Neil interview is a great device. Like a lot of bullies, he crumbles when faced with a well-informed, assertive opponent.

    I don’t agree with those above who say that the arguments are “too complex” and “too detailed” to be understood and used on the doorstep. After all, many of us are able to successfully spout the convoluted reasoning that makes it a good idea to send all your money to a neighbour, who then gives you some of it back, while calling you a scrounger. We have learned this trope, we can easily learn another few.

    The arguments need do need to be repeated, illustrated and made relatable however. ( that’s why the “household budget” myth works; it’s something easy to relate to and visualise). Get this stuff on postcards and drop it from the skies, I’ll help fund it.

    PS: The “Household Budget” myth/analogy got me thinking; If you WERE the head of a household, and could print ( or create) your own currency ( like the UK Gov.), how cruel and heartless would you need to be, to watch your own children starve in order to satisfy your idealogical wish to “balance the books”?

  14. Wul says:

    The “Union Dividend” is patent bollocks anyway.

    If I deliver a loaf to the the old lady next door to the bakers, then drive 50 miles, over hill and glen, to deliver a loaf to the old lady in the croft, burning £10 worth of petrol on the way, is the old crofter £10 “better off”?

    No she isnae. She’s got one loaf, just like her cousin who lives next door to the bakery.

    It just costs more to deliver services in a sparsely populated, poorer, colder, less connected country. Is someone in Wick £100’s of pounds “better off” because they can receive a first class letter the same as someone in Slough?

  15. Rob McClair says:

    Am I to understand then that, the unionist argument for the continued presence in the union is that their stewardship of scotlands affairs over the last 300+years, is that they have enjoyed such ‘ success’ , that part of these islands, and its attendant people are ….and should remain…to be the ‘ subsidy junkies’ of popular myth in the likes of the Daily Express, Telegraph, the tory benches at Holyrood, all preferring the gentle embrace of that de pfeffel chappie who bestrode the publication that referred to us as ‘verminous scots’?
    Is it THAT huge success that makes the union so indispensible?….and is it mere aberration that the FIRST country in these islands to knowingly abandon the warm embrace of Westminster is now such a clear and resounding success ?…..or are we to dismiss it as ” Paddy Propaganda’?
    Are they ‘ avin’ a larf in those parts ?

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