Scotland’s Currency

Paul Krugman is berating the Scottish for wanting to have independence while retaining the UK’s pound sterling.  Krugman is voicing the overwhelming consensus, here, which is that the whole deal where small European countries use strong currencies used by their neighbors with more robust economies nets them very little, and exposes them to scary downsides.  I assume that the overwhelming consensus is correct.

This is why I don’t actually think that Scotland is going to become independent.  It seems to me that the Scottish people are looking to make a gesture, not become a separate nation.  The case for independence seems to be very much made on the basis of, “Nothing will actually change.”  Scotland will remain part of the EU, will continue to use the pound sterling, will continue to be a monarchy headed by Queen Elizabeth II, etc.  That doesn’t sound to me like the manifesto of a people who wish to be free of their present intolerable state.  It sounds to me like people who are frustrated with London and want to give them the finger.

I think that there is probably a large middle in Scotland who are pro-independence in the polls and in their rhetoric, but who are fundamentally not all that viscerally unhappy with their present circumstances, and will, when the rubber meets the road, not really believe that they can have an independent Scotland that is indistinguishable from a Scotland that is part of the UK.

I take no position on whether these people are right or wrong to feel this way!  I don’t have anything invested in whether Scotland should or should not become independent.  This is just my read of what the voter sentiment is.

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