Given what is undoubtedly a duel between two warring left-wing tribes, I’ve often been asked to try and summarize the tortuous Scottish independence campaign from a libertarian perspective to an American audience. With this in mind it’s always seemed fitting to refer to the wit and wisdom of one of Scotland’s greatest transatlantic exports in recent years, Groundskeeper Willie from The Simpsons.
In an episode entitled “Milhouse Doesn’t Live Here Anymore,” Bart and Lisa put their differences aside and reconcile, which prompts the following exchange between Willie and Principal Skinner:
Groundskeeper Willie: It won’t last. Brothers and sisters are natural enemies. Like Englishmen and Scots! Or Welshmen and Scots! Or Japanese and Scots! Or Scots and other Scots! Damn Scots! They ruined Scotland!
Principal Skinner: You Scots sure are a contentious people.
Groundskeeper Willie: You just made an enemy for life!
To those of us on the right, this nicely sums up the independence campaign: Scots and other Scots fighting over who can further spread the specter of socialism, inhibit individual liberty, and, ultimately, ruin Scotland. Both sides have strived to out-promise each other on more public spending, greater economic centralization, and cradle-to-grave public services. One could be forgiven for thinking that Scots of a free-market persuasion have as much life as Adam Smith at Canongate cemetery. They wouldn’t be too far away from the truth, either.
And yet as conservatives and libertarians continue to lament the passing of Scotland’s once proud history as the ‘Athens of the North,’ far from wiping out the last free-marketers, independence could ultimately provide a boon to the movement and rejuvenate classical liberal ideas in the land that helped give them life. Given that Scotland lacks the tools that even a U.S. state possesses to attract external investment, it’s little surprise that at times it’s been nothing but a laboratory for successive socialist experiments. With polls shifting increasingly towards a stunning victory for the secessionists, however, an opportunity for some free-market solutions might come sooner rather than later.
Arguably one of the most contentious debates surrounding independence has pertained to whether Scotland could retain use of Pound Sterling, a currency backed by the Bank of England. All the pro-Union parties have stated unequivocally that as part of the ‘price’ of independence, Scotland would forfeit its currency as part of a political divorce and would no longer be able to retain the use of it. Scotland retaining the pound was also widely dismissed by financier George Soros — the man who helped break the Bank of England over 20 years ago.
As the media lapped up this line without any questions asked, the London-based libertarian think tank, the Adam Smith Institute, noted how Scotland using “pound outside of a currency union would have a more stable financial system and economy than it has now or than a currency union could provide.” But rather than spiraling towards third world status, Scotland’s inability “to print money and establish a central bank to act as a lender of last resort” would actually help reduce “moral hazard within the financial system” and incentivize banks “to be prudent, significantly improving the overall quality of the country’s financial institutions.”
One could also say the same of government.
Interestingly these restraints are what alarmed progressive economist Paul Krugman this week. Citing our North American cousins, Krugman notes that “Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t.” When Krugman says “it can’t run out of money,” what he really means is that it can be as fiscally reckless as it wants and simply turn on the printing presses and pay its debts through diverting wealth from the poor to the rich. Thus Scotland’s only other alternative would be fiscal prudence. From a country that gave the world ‘Crash’ Gordon Brown this is quite refreshing.
The reason the Union might well crumble is because it has lost its purpose. Proponents invoke the empire, two world wars, and promulgate the vacuous line of how we’re ‘Better Together’ without ever appearing to show why. This is why their entire campaign has been negative — and backfired considerably. Under independence Scotland will be forced to create an economic environment that can compete with both the lure of London and Ireland’s 12.5 percent corporation tax, while also avoiding the very government largesse and fragile financial system that the Bank of England has been able to artificially prop up. Far from becoming a socialist utopia, the conditions of independence will not only force Scotland to live under strict fiscal discipline, but embrace the very free-market philosophy that she helped export to prosperous nations around the world.
Ewan Watt writes extensively on state and national issues in the US, covering the 2012 presidential election for both print and online publications. A native of Scotland, he recently became a U.S. citizen. He writes strictly in a personal capacity. You can follow him on Twitter at @ewancwatt