A paper with the title Scottish Independence: Issues and Questions; Regulation, Supervision, Lender of Last Resort and Crisis Management is not one liable to set pulses racing on the streets of Auchtermuchty. Or anywhere else, for that matter. Nevertheless it is a matter of some importance. The paper, published by the David Hume Institute, was written by Professor Brian Quinn and reported upon by Bill Jamieson in today’s Scotsman.
According to Quinn, who is an expert of some standing in these matters, a currency union between Scotland and the remainder of the United Kingdom would – or at least has the potential to be – sub-optimal. Actually we might already suspect that’s the case because a) that used to be a standard SNP complaint about the UK and b) the nationalists only decided to favour maintaining a sterling zone after the eurozone ran into difficulties. Until recently sterling was an anchor dragging Scotland down; now it offers welcome stability and certainty. Whatever.
Now banking regulation is not a sexy subject, not even these days. Nevertheless, as Jamieson writes:
Prof Quinn warns that a shared system of banking supervision would encounter difficulties at the level of both individual financial institutions and the financial system with, in particular, serious weaknesses in governance and accountability. And, once an independent Scottish Government adopted economic policies that differed from those of Westminster – the very point of the SNP’s case for separation – these flaws, he believes, would increase in severity. As a result, it seems “very likely” that the Bank of England would judge Scottish financial institutions – notably its banks – to have become riskier and apply higher regulatory requirements to protect depositors and investors.
It is true that this is merely a hypothesis. But it also seems quite probable that if Scottish financial institutions faced regulatory burdens rather higher than those imposed on organisations in London that some of them might at least consider relocating south of the border where, in most instances, most of their business is conducted anyway.
At the very least an independent Scotland’s ability to set its own economic and regulatory policies is liable to be severely constricted. This isn’t “scaremongering” it’s a real problem. Unwinding the United Kingdom is rather more complicated than, say, recognising Kenyan independence.
Now it is quite reasonable to take issue with the detail of Quinn’s argument. He may be mistaken (though as Bill Jamieson says he is hardly “just another opinion” since his CV includes being “honorary professor of economics and finance at Glasgow University, having been head of banking supervision and executive director of supervision and surveillance at the Bank of England and served as deputy governor. He was for ten years a member of the Basel committee of banking supervisors. After retiring from the Bank, he was appointed adviser to the Monetary Authority of Singapore and to the central banks of Chile, Colombia, Venezuela and Malaysia on banking supervisions and crisis management. He also worked with the International Monetary Fund, the World Bank and McKinsey as a consultant on financial supervision in several countries.”)
Be that as it may, I was as interested in the nationalist reaction to Quinn’s paper and Bill Jamieson’s article as I was in the paper itself. And it was illuminating. Among the twitter responses I saw: “Fuck off, Bill”, “Regurgitated disinformation”, “Threadbare Unionist scaremongering”, “Disgusted at your lack of faith in Scots ability to run Scotland. Banks? We’d never have let them overheat. Westmidden greed!” and, tellingly, “When I see an article like this I don’t even read it.”
Wings Over Scotland, one of the more prominent independence-supporting blogs*, read the first paragraph of Jamieson’s piece and wrote that, having got that far:
[We] had to dash from the room in a panic, as every single SCAREMONGERING alarm in the building was doing its dinger at maximum volume.
Anyone who’s STILL casting doubt on whether there’s a credible economic case for independence at all – something repeatedly conceded by every senior figure in the No campaign – can’t possibly expect any reasonable person to bother reading any further. So we didn’t, and we suggest you don’t either.
OK then! Alternative views that challenge nationalist (or Yes voters’) orthodoxy are inconvenient aren’t they? Why trouble yourself reading them? Waste of time, pal. Spare yourself heartache and misery by just ignoring them. Lalalalalalalalala, can’t hear you.
And this, my friends, is what you might call The Closing of the Nationalist Mind. A tartan coccoon has been spun into which neither daylight nor alternative perspectives may penetrate. It is nice in there. Everyone knows your name and everyone agrees with you on everything.
But, anecdotal as this particular example may be, it reinforces impressions fostered on other occasions and at other events recently. Namely, that many cheerleaders for independence spend as much and quite probably more time congratulating themselves on their sagacity than they do on talking to people who do not already agree with their views. (A glance at the comment sections on leading independence-supporting website confirms this: they provide as good an example of confirmation bias as you could ever hope to discover. There’s little debate, little meeting of minds in these places. They are cathedrals frequented only by True Believers.)
So many, perhaps a majority, of Yes voters are so convinced they are right that they struggle to imagine why or how other people might take a different view. Independence is so self-evidently sensible that no sensible person can possibly oppose it. So why waste time talking to them? Better to presume they are pagans beyond the pale.
By no means should you ever suppose your opponents might argue in good faith. Better instead to presume their motives are base. What else would you expect? What’s the point of engaging?
Now if this is the sort of thing you like then it’s the sort of thing you like. But it seems an unpromising way of converting folk to your cause. Senior SNP and Yes types know this but there’s some distance between Salmond and Swinney and co and the more vitriolic kind of nationalist agitator.
I don’t expect questions about banking regulation to determine the outcome of the referendum but it is, as Bill Jamieson and Brian Quinn suggest, an issue of some substance and importance. Shouting – however loudly – that it ain’t don’t change the fact that it is.
It is, of course, possible that a currency union could be made to work but it is also obvious that there are potential – not definite but certainly potential – difficulties with it. Wishing the matter away or shouting that even raising the question is somehow illegitimate does no-one any favours, least of all the independence cause.
I may be mistaken about this (as always!) but it does sometimes seem to me that the people who shout the loudest about the need for independence are also the people most likely to persuade their compatriots that independence is a sub-optimal idea.
*UPDATE: Fairness demands I note that a different contributor to Wings Over Scotland subsequently published a piece which at least discussed some of the points Quinn and Jamieson were making.