Expert slams No campaign 'bluffs'

A leading economist has hit out at the fear tactics used by the campaign against independence, as he insisted the row over what currency a separate Scotland would use is "a lot of to do about nothing".

Alex Salmond and Alistair Darling are leading respectively the Yes and No campaigns
Alex Salmond and Alistair Darling are leading respectively the Yes and No campaigns

Professor Joseph Stiglitz, a Nobel Prize winner who was chairman of US president Bill Clinton's council of economic advisers, said a currency union between an independent Scotland and the rest of the UK could work, as he dismissed the refusal of the main Westminster parties to agree to such a deal as "bluffs".

But he also stressed that there were a range of of options for the currency of an independent Scotland, pointing out that Panama has used the dollar for more than a century, while countries such as Canada and some European nations have adopted their own currency successfully.

The expert, who is a member of the Scottish Government's council of economic advisers and its Fiscal Commission Working Group which has studied the economics of independence, spoke out as First Minister Alex Salmond and former chancellor Alistair Darling, the leader of the pro-UK Better Together campaign, prepare for tonight's live television debate.

In just over three weeks time voters in Scotland will go to the polls to decide if the country should remain in the UK or not.

Prof Stiglitz, from America, said: "One of the things as an outsider I've looked at the debate, particularly from the No side, I've been a little bit shocked how much of it is based on fear, trying to get anxiety levels up and how little of it has been based on vision.

"There is a vision on the Yes side that I see - what would an independent Scotland be like, what could it do that it can't do now."

Regarding the rejection of a currency union by the Conservatives, Labour and the Liberal Democrats, he said: " For the most part these are bluffs."

The economics expert told the Edinburgh International Book festival that if there was a Yes vote on September 18, there would have to be talks between Scotland and the rest of the UK.

"People are going to be looking at what is in the best interests of the each of the two parties and there will be a negotiation," he said

"I think inevitably they are bluffing."

He argued currency union could work, saying: " If you look at the statistics for the similarities of Scotland and England they are sufficiently similar that a currency area could work, that's what the Fiscal Commission recommended."

But he also pointed out: " Panama and Ecuador have adopted the dollar - it's worked for Panama for over 100 years. So the argument that England could decide I think is a little bit short-sighted."

He went on to state that countries such as Canada and some of the Northern European states used their own currency, saying: " There are many currency arrangements that can work, I think this is a lot of to do about nothing."

Prof Stiglitz added: " There are lots of different currency arrangements, I've outlined three different arrangements , all three of those could work.

"What really matters of course is the quality of the institutions

"The main issues here are not currency, they're probably not even North Sea oil. I think the main issue again as an outsider, and not wanting to intervene in any other country's politics, the question is the vision of society, what do you want to do."

Prof Stiglitz cited the different stances taken on tuition fees as being "illustrative of the divide in the vision of society".

In England students have to pay up to £9,000 a year in fees to study at university, while the SNP administration at Holyrood has ensured that Scottish students can study for free at universities north of the border.

"Do you want a society in which everybody has access to higher education, or in which you really make it an elite," Prof Stiglitz said.

"And in terms of inequality, access to higher education is vital and one of the most disturbing things in the United States is not only have we become the most unequal society among the advanced countries, but we've also become a society with the least equality of opportunity among the advanced countries.

"This idea of the American dream, everybody can make it, unfortunately it's a myth and what I want to say is the UK and other countries that have imitated the American model have wound up with results like America. So the UK is second to the United States in inequality and there are real concerns about equality of opportunity, and the direction of England, of raising tuition, is key to his and the direction they are going is going to be more inequality of opportunity and more inequality of income."

He argued more fiscal stimulation was needed to boost the economy after recession, as he condemned the austerity politics of governments such as Westminster.

Prof Stiglitz said: "T he austerity policies in Europe and in England have been an utter disaster. I have done a calculation of the cost of these policies, and we're talking about for Europe as a whole, trillions of dollars and the costs going forward are even larger because the young generation, who should be having productive jobs, are spending time in unemployment, not building up their skills, getting disaffected.

"That's the vision of Cameron, the vision of more unemployment."

He said: " There are risks always in any economic course, there's risks of doing something and risks of not doing something.

"So the risks of staying together is you could have a Conservative government that cuts back on government spending and that would force inevitably cutbacks here in areas of health and education.

"So there are risks either way. The difficult part is to assess those relative risks and there is no easy way of doing that. That's one of the judgments people as they go to the polls will have to make."

A Better Together spokesman said: " If we vote to leave the UK then we vote to lose the pound. A currency union has been ruled out for economic reasons. It would not work for Scotland and it would not work for the rest of the UK. Only today the First Minister of Wales said he would not support a currency union.

"The people of Scotland need to know what Alex Salmond's Plan B on currency is. Up to one million people will begin voting by post this week yet we don't know what our wages, pensions and benefits would be paid in. We have no idea what money would be used to pay for our NHS. Alex Salmond wants us to take a huge risk based on his crossed fingers and guesswork. It isn't a risk worth taking.

"We can have the best of both worlds for Scotland. That means the progress we all want for Scotland without taking on all the risks of separation. A No vote is a vote for a strong Scottish Parliament, with more powers guaranteed, backed up by the strength, security and stability of the larger UK economy. We should say No Thanks to separation on September 18."

But Scottish Finance Secretary John Swinney said: " Professor Stiglitz is right to see through Westminster's bluff and to highlight the fear-mongering of the anti-independence campaign.

"On education, health, growing the economy the Scottish Government has supported policies that are good for Scotland while Westminster has simply pursued more and more austerity.

"The referendum is our one opportunity to choose prosperity and investment in our public services over austerity and continued Tory cuts."

Blair Jenkins, the chief executive of the pro-independence Yes Scotland campaign, said: 'Professor Stiglitz sums up very well the differences between the Yes and No campaigns. Yes offers a vision of a fairer, more socially just country in which all the people who live and work here feel the benefit from our enormous wealth.

"As more and more people are waking up to the fantastic opportunities that come with a Yes vote, they are also becoming increasingly aware of the dangers of a No vote - more austerity that will hit even harder those who are already struggling, a major threat to our public health service and the prospect of being ruled from Westminster by governments that we have rejected at the ballot box.

"As a Nobel Laureate and an internationally respected economist, Professor Stiglitz speaks with expertise as well as common sense when he says that a formal currency union is the best option for Scotland and the rest of the UK after a Yes vote."