We’re expecting to have some more thoughtful commentary in the next day or so from some close observers of the Scottish independence vote. On the surface, the results look more decisive than expected earlier. The margin of victory, at 55% against and 45% for, was wider than the forecast 54%/46% split. And the English press looks to be rubbing it in, with most UK media outlets showing celebratory images of the victors.
But keep a few things in mind:
1. The Scots got the full-bore TARP scaremongering treatment, including powerful corporations threatening withdrawal of operations and job losses. Media outlets virtually without exception backed the Westminster/corporate messaging
2. The pro-independence forces left themselves particularly vulnerable by not having worked through the banking/currency part of their program. That meant the economic cost of a split would be far greater than necessary
3. The ferocity of the English pushback demonstrated a belated recognition of the intensity of public sentiment in favor of independence, and the hazard that posed to the UK, particularly the risk of runs on UK banks. The fact that the officialdom deployed so much firepower to assure a victory on this vote served to legitimate not just the Scottish independence movement, but separatist movements generally
As Richard Smith stressed in an earlier post, as well as Marshall Auerback underscores in his talk below, despite this loss, the independence push is not over, and that implies an ongoing risk premium for the UK. And the Scottish separatists won important concessions on austerity and local autonomy, which were effectively bribes from England to buy votes. So the independence movement scored important gains for Scotland despite the ballot loss.
Expect this debate to come back in a few years, with more of the policy bugs worked out. As Marshall wrote:
The nationalist Pandora’s Box has been opened, and as we’ve seen in Canada, once that occurs it’s very hard to close again. And the fate of the pound is one that won’t go away either.