THROUGHOUT our series of articles, the Scottish Banking & Finance Group has provided insight into how, with our own currency, Scotland can take control of the economy through government money creation, by working with the central bank, through taxation and through government. borrowing, ”which is actually a process of providing a safe place for citizens and businesses to save.
Trade unionists know independence will fail if we don’t have our own currency, so focus instead on spreading fears that the Scottish currency is ‘weak’ and that Scotland’s budget deficits and public debt are too high and unsustainable. This assumes that the deficits are “bad”, which is sheer economic nonsense. It is austerity that is bad. “Public debt” is not a problem at all as the borrowing will be in our own currency and mainly from the Scottish public.
READ MORE: Why a ‘Goldilocks’ currency will be ideal in an independent Scotland
Now it is important to discuss what Scotland can do with these economic powers. The first question is to decide what we want to do – what are the collective choices and priorities of the Scottish people? Making these choices democratically depends on Scotland having a democratic constitution that gives the people a voice to decide our future and ensure that our political institutions and processes hold our elected leaders accountable.
We will have to choose our priorities because we cannot do everything at once and cannot have everything we would like to have. We have to make choices because our human and physical resources are limited and the planet also places limits on what is possible.
This means that we have to develop an industrial strategy and think about trade – what we can produce ourselves with the resources at our disposal and what we will need to acquire from others, either by accepting foreign investment in Scotland or by importing from ‘elsewhere.
Suppose Scotland chooses to make maximum effort to initiate and complete the transition to a zero carbon economy as soon as possible. This will require the allocation of a very large part of our resources in order to build all the new infrastructure for a zero carbon economy. This will inevitably mean diverting resources from other sectors of the economy and allocating capital accordingly.
To produce the things we need to live well, we may have to decide to bring in additional resources by accepting foreign investment and expertise from abroad. One example is the production of electric vehicles – while Scotland has high value assets such as the Alexander Dennis bus company, which produces electric buses and fire trucks, we currently have no manufacturing capacity. of electric cars.
Such a capacity exists elsewhere – in the UK and in Europe for example – so we will have to either trade (import electric cars), or develop our own domestic production capacity, or invite foreign manufacturers to set up here.
Dennis was once a Scottish company, but is now owned by NFI, a Canadian bus manufacturer. This means that the profits are now coming out of Scotland. This is precisely the kind of business that should remain Scottish, but to do so requires capital to be made available to our national financial system.
We have witnessed a similar foreign takeover of strategically important Scottish assets such as steel and aluminum production by Tata and then Liberty Steel. Without capital provided by our own financial sector, Scotland will continue to see foreign takeovers of the production capacity we have.
READ MORE: Why an independent Scotland’s deficit can be good for a healthy economy
Steel and aluminum are materials of strategic importance to our economy and production capacity must remain the property of the Scots and ‘clean’ manufacturing methods must be adopted, using electric foundry technologies. Again, domestic capital must be allocated to allow this transition to occur.
We are currently seeing the threat of closures and job losses at the McVitie factory in Glasgow. It is a 200-year-old Scottish company that was part of the Scottish company United Biscuits, acquired in 2014 by a Turkish multinational Yildiz Holding (of which Pladis is a subsidiary).
Scotland simply cannot afford a food producer like this to fall under foreign control and the fact that they did is the result of our financial system’s failure to keep it in ownership. and instead seek short-term financial returns by facilitating takeover.
Foreign investment in Scotland may be necessary when we lack the capacity to produce priority infrastructure, goods and services, but we really need to prevent the capacity we have from being taken over by foreign companies. Ensuring that Scottish financial institutions provide the capital necessary to keep our businesses and infrastructure under national control is a top priority for reforming our banking and financial system.