Scotland’s Economic Potential: A Deep Dive into Independence
This week, economists from around the world gathered at Leeds University to discuss Scotland’s economic potential. The conversation was lively, with experts from the USA, Argentina, Japan, and Denmark offering insights into how Scotland could achieve financial independence and economic prosperity.
Key Takeaways from the Conference
Here are some of the key takeaways from the conference:
* **Financial Independence is Key:** Many economists, including Stephanie Kelton and Randel Wray, emphasized the importance of financial independence for Scotland. They argued that it would allow the country to implement the policies necessary to transform its economy.
* **Interest Rates and Inflation:** Papers presented at the conference challenged the mainstream narrative that raising interest rates slows down the economy. Instead, some academics argued that interest rates can actually contribute to inflation.
* **Public Debt is Not a Barrier:** The conference highlighted the example of Japan, which has a high debt-to-GDP ratio but maintains low unemployment, inflation, and a stable currency. This suggests that public debt is not necessarily a barrier to economic growth.
* **Sterlingization is a Bad Idea:** Thibault Laurentjoye, Associate Professor of Economics from Aalborg University Business School in Denmark, warned against Scotland continuing to use the British pound after independence. He said: “I can hardly understate how terrible an idea it is to borrow in a foreign currency. Over 97% of outstanding defaults happen when countries borrow in a currency that they do not issue.”
* **A Job Guarantee for Scotland:** A panel of economists, including Pavelina Tcherneva and Yan Liang, recommended a job guarantee as a key policy for an independent Scotland. They argued that such a policy would support lower inflation and ensure that everyone who wants a job has one.
Scotland’s Economic Future
The conference provided evidence that many of the constraints often used to justify low investment and public spending in Scotland are not necessarily true. The panel of economists agreed that Scotland has the potential to build a thriving and sustainable economy.
