The
Geographer
sterling monetary union? And
what do we learn from the
experience over recent times
of other small independent
European economies that have
successfully maintained stable
economic systems outwith the
EMU and indeed outwith the EU?
There is much in these questions
to understand still.
To date, the debate has been
somewhat casual about what
is really of direct interest to a
constitutional question for which
the outcome is presumably a
new arrangement that could
span decades, if not centuries.
Arguably it is not the capacity
of a new arrangement to handle
the big current economic policy
challenges, but rather the capacity
to respond to the challenges
that might be anticipated over
the very long term, and indeed
the challenges whose nature and
import is absolutely speculative.
The central challenge is: would
the new economic system display
the characteristics that we would
require to promote a stable and
sustainable economy in the face
of the huge global challenges that
might be encountered over the
coming decades?
We should pay close attention
to any adjustment or transition
process from one economic
system to another (which is, of
course, a separate consideration
from any short-term and
temporary economic challenge,
such as a recession or banking
crisis, that happens to be
important at a particular point in
time). If adjustment is anticipated
to take years or even decades,
then most people would probably
seek long-term benefits that
were more substantive and more
certain. So, the analysis of the
long-term outcomes is again a key
part of this debate.
One grossly under-discussed
question is whether the status quo
is in fact an option at all. The
Scotland Act (2012) moves
us on from the original 1999
devolution settlement, but
it would, for example,
appear extremely unlikely that a
UK Government will not revisit the
basic UK equalisation question. Is
the current approach (founded on
a considerably dated, underlying
Needs Approach to equalisation,
and the marginal adjustments
determined through the Barnett
formula) sustainable, or will
the pressures for revision be
overwhelming? A revision would be
a very significant step away from
the status quo. Moreover, such is
the public support for enhanced
devolution, it seems inconceivable
that, were independence to be
rejected, more powers would not
be granted to Scotland.
Concluding thoughts
The answers to many questions
are simply unknown at this time.
They may depend on institutional
structures yet to be negotiated
and whose precise form is
therefore unknowable. They
may also depend on the impact
of policy choices where our
knowledge is too soft to provide
the clarity that we seek. Evidence
may be lacking or only exist for
economies other than Scotland, or
new powers and new policy simply
create an economic system for
which we have no history of how
individual economic agents and
businesses might respond. This
is not a failing of analysis: it is
a reality about any non-marginal
economic policy change that
creates a new set of incentives
and behaviours that an economy
has never seen before. We can,
and should, offer the insights that
theory and other economies can
provide, but we can’t know with
certainty.
Thus, there is a reality here.
Choices in the referendum, and
indeed choices post-referendum
about the precise detail and
form that enhanced devolution
or independence might actually
take, cannot be founded on hard
fact and hard evidence as we
might wish. Our thinking and
our conclusions need honesty in
this respect. Indeed, one striking
conclusion would appear to be
the importance of acknowledging
openly the intractability of some
challenges and the obvious risks
and, instead, providing a focus
on the management of risk and
uncertainty, much as the private
sector has done for years. Risk
and uncertainty are not per se
reasons to forego an opportunity,
but a motivation for contingency
planning.
While policy impacts will remain
highly uncertain, this does
highlight the critical nature of
the post-referendum phase, and
the negotiations that would follow
around the institutional structures
and multilateral agreements that
would be necessitated by any
constitutional change.
Political debate has a tendency
to move rapidly from one issue to
the next, rarely pausing for long
to allow an issue to be analysed
and challenged with a desirable
intensity and care that would be
more likely to expose both the real
strengths and the weaknesses of
the conflicting views. Nonetheless,
I would argue that it is to these
primary questions that the debate
needs to continually revert, as we
strive to gain better insight into
their real meaning and application
to the various constitutional
options with which the Scottish
people are confronted, and from
which a choice must inevitably be
made. Those who advocate the
constrained self-determination
of independence and enhanced
devolution, irrespective of its
precise impact on the economy
and upon Scottish society,
must surely see the value of
understanding these immense
challenges.
The ultimate challenge