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Brexit makes Scottish independence much more economically attractive

In 2014, a brighter future outside the rUK was patriotic wishful thinking. Now it is almost a certainty.

It is difficult to think clearly when you watch the utter hypocrisy of our Prime Minister, lecturing the Scottish National Party about politics not being a game, moments before she needlessly rejects a Lords amendment to secure the rights of EU citizens in the UK. Everyone knows those rights will be guaranteed during the negotiations, so it would be so easy to seize the moral high ground by doing that now. But I’m not sure our Prime Minister, and her MPs, would recognise the moral high ground if it was staring them in the face.

But thinking as clearly as I can, and it is very early days, it strikes me that there is a crucial difference between any new Scottish referendum and the one held in 2014. In 2014, there was clear short-term economic pain, with no specific reason to believe things would improve in the longer term. This time there is still that short-term pain, which could be even greater than in 2014, but this time there is a very bright light at the end of the tunnel.

Scotland's First Minister Nicola Sturgeon had no choice but to announce a second Scottish referendum. Brexit is a huge economic and political change since 2014, and she would be neglecting her duty to the citizens of Scotland not to explore ways she could avoid a hard Brexit fate for her people. She was given no choice by the decision to leave the single market, made not be UK voters but by the Prime Minister.

Yet it is also difficult to forgive the SNP for inventing the term Project Fear, which became the vehicle by which the Leave campaign was able to pretend that Brexit would not be the economic disaster it almost certainly will be. It is difficult to forgive them for trying to pretend that the short term costs for the Scottish people of leaving the UK would not be severe. I thought then that it was a huge risk to bear those short term costs when the long term benefits outlined by the SNP appeared to be little more than wishful thinking.

But Brexit changes everything. The economic cost to the UK of leaving the EU could be as high as a reduction of 10 per cent in average incomes by 2030. If Scotland, by becoming independent, can avoid that long-term fate then you have the prospect of eventual economic gain right there. But it is more than that. If Scotland can remain in the single market it could be the destination of the foreign investment that once came to the UK as a gateway into the EU. By accepting free movement, it could benefit from the immigration that has improved the UK public finances over the last decade. No, that is not what you read in the papers or see on the TV, but I’m talking about the real world here, not the political fantasy that seems so dominant today.

There is an additional issue regarding the short term costs of independence. With little oil at a low price there is no doubt that the rest of the UK (rUK) is currently subsidising Scotland by a significant amount. Under David Cameron it was reasonable to suppose that this subsidy would continue for some time, if only to prevent another referendum. I do not think we can make the same assumption about Theresa Brexit May. The prospects for the UK public finances under Brexit are dire, yet after the Budget there seems no way that the Conservatives will put up taxes to pay for the extra resources the NHS and other public services so desperately need. As the situation gets steadily worse, nothing - absolutely nothing - will be safe from continuing austerity. To be brutally honest, if the SNP loses another referendum, even the formidable Ruth Davidson will not be able to prevent Scotland being plundered by this government.

Set against that, however, is the fact that Scotland currently does a lot more trade with rUK than with the EU. If Scotland became part of the single market, and that resulted in trade barriers being created between Scotland and rUK, the immediate impact on Scotland's trade would be negative. That would be another short-term cost. But in the longer term, Scotland would be better off with this arrangement. To see why, imagine two parts of this island, one which has easy access to the huge market which is the EU and one which did not. It is obvious which part would be expected to grow more rapidly.

There are a huge number of issues that still need to be clarified regarding this second referendum. Will the SNP still go for, or at least appear to go for, staying in a monetary union with the rUK and keeping sterling just because it is the more popular option, even though having their own currency is a much more sensible in economic and political terms. Will they be honest about the short term costs? Will the EU give them the chance of staying in the single market or EU, or will they insist they join the queue? What will the UK/EU deal be, and how would that impact on Scotland if it joined the single market.

But the bottom line is that the case for Scottish independence is now much stronger than it was in 2014 in the following sense. In both cases there will be severe short term costs. But in 2014 a brighter long term future outside the rUK was patriotic wishful thinking. Now, if they can stay in the single market, it is almost a certainty.

Simon Wren-Lewis is an economist at the Blavatnik School of Government and Merton College, University of Oxford. This is a slightly revised version of a blog post on Mainly Macro

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

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Donald Trump's cartoon nuclear rhetoric draws on a culture of American jingoism

Senior Republicans avoided condemning Trump's incendiary speech, and some endorsed it. 

From recent headlines, it seems as though Donald Trump isn't content with his Emmy-by-proxy. The US president told the United Nations General Assembly this week: “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.” Trump’s speech raised eyebrows for its bellicose tone, especially when contrasted with his predecessor’s endorsement of a war-averse approach. 

A widely circulated image of Trump's chief of staff John Kelly with his head in his hand might suggest that most listeners loathed the speech. But Trump said many outrageous things on the campaign trail and voters - at least a critical number of them - agreed. So how did his words go down at home? 

My contacts in international security were unwilling to go on the record condemning it. They were mainly Americans in their twenties, hoping for a government job one day, and fearful of saying anything that could be interpreted as "un-American".

The one person who would speak to me asked for their name to withheld. A former military analyst in the US Department of Defence, they told me that “the US has the military capability and legal responsibility to address threats to itself or allies". What Trump said, they suggested, should be seen in the context of the wider US institutions. "While Trump may have advocated for isolation in the past, the political and military forces he leads are built to enforce the adherence to international law and regional security," the former analyst said. "They provide a real counterweight to the bombast in Pyongyang.”

Trump's speech may have been colourful - his nickname for the North Korean leader Kim Jong-un, "Rocket Man", is a reference to Elton John’s mid-Cold War musical hit – but the speech should be seen as yet another reassertion of US military dominance. North Korea may boast of its Inter-Continental Ballistic Missile (ICBM) development,  but its arsenal is simply not well-equipped enough to present the same existential threat to the US that the USSR did at its peak. 

Rather than lacking comprehension, the analyst said of the speech: “Trump's rhetoric is intended to galvanise recognition that the current rules based order is threatened by North Korea's actions”.

Trump’s jingoism is not unique amongst the current American elite. Back in 1983, in his book, The Wizards of Armageddon, the liberal journalist Fred Kaplan characterised the hawkish US military strategy as simply ejaculating combative statements without a long-term plan. Kaplan quoted Herman Kahn, one of the early nuclear strategists, who called one proposal targeting the USSR a “war orgasm”. 

The US Senate recently passed a defence policy bill to increase military spending to $700bn, which includes $8.5bn for missile defence purposes. Overtly catastrophic language, meanwhile, has long been a staple of US foreign policy debates. In 2015, Trump's rival for the Republican presidential nomination, Ted Cruz, made headlines when he vowed to carpet-bomb Isis until he found out "if sand can glow in the dark". While most leading Republicans chose to stay silent after Trump's speech, a few, such as Paul Ryan and Rand Paul, publicly endorsed the message. Cruz, despite the rivalry, was among them. 

On social media, the American public are vocally divided. Some called for Trump to be denounced for his inflammatory speech, but others tweeted #MakeAmericaGreatAgain. Even some Trump sceptics agreed that the North Korea “nuclear summer” needed to be kept in check.

By contrast, overseas listeners have perceived the speech, and this administration’s foreign policy, as unnecessarily incendiary. Matt Korda, a Canadian research assistant on strategic stability at the UK-based Centre for Science and Security Studies,  told me: “Kim Jong-un perceives his nuclear weapons to be the only thing guaranteeing his regime's survival”.

“He will never give them up, no matter how much Trump threatens him," Korda added. “On the contrary: Trump's threat to ‘totally destroy’ the entire country (including millions of innocent and oppressed civilians) will only tighten Kim's grip on his nuclear weapons”.

The effects of Trump’s speech are yet to fully play out, but it is clear that his words have rallied at least a section of American society, and rankled everyone else. The Donald may seem to be mirroring the culture of nuclear recklessness his North Korean opponent helped to create, but this is also the kind of hostile and hyperbolic rhetoric which fuelled his rise to power. In reality, once Trump’s unpleasant vernacular is decoded, he can be seen to be echoing the same global view that has long pervaded the collective American consciousness. Trump's speech was not addressed at his UN doubters, but rather at his domestic fan base and his allies in the South Pacific. This is not a shift in US foreign policy - it is tradition with a spray-tan.

 

 

Anjuli R. K. Shere is a 2016/17 Wellcome Scholar and science intern at the New Statesman