Independence sceptics are often worrying endlessly about the jobs that might disappear as a result of Scottish Independence.

However, many jobs will be created as a result of independence. Here are a few areas that spring to mind, but I’m sure there will be many more.

• A lot of countries will open embassies in Edinburgh — we can’t be sure of the number, but there are about 60 embassies in Dublin, and about 75 in Copenhagen, so one would expect a similar number. Some of these will be small, but others will be huge, and there will be lots of local jobs needed to set them up and keep them running, on top of the money created by embassy employees finding places to live and spending money in local shops and restaurants. Of course Scotland will need to finance a similar number of embassies abroad, but we’re already paying about 10% of what the UK are spending on representations abroad, so I reckon there’ll be a net gain.
• There will be ministries created for the previously devolved areas. Using Denmark as a basis (it’s probably a better guide than using 10% of the UK), there might for instance be about 850 employees in the Scottish Foreign Office in Edinburgh and about 150 in the Scottish Ministry of Defence.
• Even if the SNP at the moment claim it won’t be needed, I think it’s likely there will be a Central Bank of Scotland, even if it’s just to administer a currency board. Using Denmark as a guide again, there might be more than 500 people working there.
• There are other government offices of various kinds. For instance, the DVLA in Swansea almost 7000 employees — a Scottish DVLA would therefore probably have at least 700 employees. On the other hand, there are UK government offices in Scotland — for instance, the HMRC accounts office in Cumbernauld AFAIK covers an area larger than Scotland — so it’s somewhat complicated to work out exactly the net number of jobs created in Scotland.
• Some companies would need to create separate Scottish subsidiaries. For instance, mobile phone companies would presumably need completely separate organisations in Scotland. I’ve no idea how many companies we’re talking about here, or how large their Scottish operations are, but we must be talking about thousands of jobs moving to Scotland. Of course there will also be companies based here that will need to create English subsidiaries in the same way, but I have a feeling the net effect will still be very positive for Scotland.

Of course there won’t be a perfect match between the jobs that will disappear and those that will be created — you can’t retrain a nuclear weapons worker to become a Foreign Office employee overnight — but I think on the whole it seems likely that independence will be very good for Scottish employment figures.

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When I worked in Champs-sur-Marne (Paris) last week, I was impressed by the way most of my co-workers would jump into their cars at 12 o’clock, drive to a nice restaurant, have a leisurely two- or three-course meal and then return to work around 1.30.

I then realised it wasn’t just because they were really fond of good food, but also because it’s encouraged by a system called “Ticket Restaurant“.

Basically each employee can buy a number of tickets restaurant at half their nominal value (i.e., they pay €5 for a ticket worth €10), while the employer pays the other half; I believe the employer gets some sort of tax relief so that the actual cost is less than €5.

It’s really a win-win-win situation:

• The employee gets a relaxing lunchbreak and a square meal at a very decent price.
• The employer has satisfied employees and doesn’t need to provide a canteen.
• The wider economy can sustain many more jobs in the restaurant trade than if the system didn’t exist.

I have a feeling introducing a similar system in the UK could help kickstart the economy, as well as decreasing stress levels in industry.

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Several articles, such as this one in the Scotsman, have covered the Chancellor of the Exchequer’s announcement that Scotland after independence won’t be able to use the pound:

The Treasury confirmed that, while it could not block Scotland from using the currency, it could be reduced to a situation where it had no say in fiscal policy, was prevented from printing its own money and was locked out of any valuation decisions.

Treasury officials confirmed this would mean Scottish banks, which are licensed by the Bank of England to print their own notes, would be barred from doing so in the event of independence.

Royal Bank of Scotland, Clydesdale Bank and Lloyds-owned Bank of Scotland are able to print bank notes with the faces of famous Scots, in a long tradition that has been symbolic of Scottish identity.

Whereas there’s nothing Scotland can do about being locked out from England’s fiscal policy – but to be honest, it currently tends to cater for the needs of the City of London anyway – an independent country can certainly make its own decisions about printing bank notes.

I would recommend creating a Scottish pound after independence, locking it to the English pound using a currency board. This basically means that the Central Bank of Scotland would store English pounds in its vaults and print Scottish pound notes and mint Scottish coins in the same amounts.

The advantage – apart from having distinctive Scottish money – would be that it would be easy to break the peg and link the Scottish pound to the euro instead if that was decided to be desirable. If English money was used directly, that would be much harder.

Lots of countries use currency boards, and they work really well, so it’s a no-brainer to use one at first, at least until Scotland has been seen to have a strong economy, after which it might even be desirable to let the Scottish pound float freely.

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After my disastrous predictions for 2011, here are my predictions for 2012:

1. The referendum on Scottish independence won’t take place yet.
2. SF will leave the Danish government.
3. It will again become possible to get a Danish passport in Scotland.
4. The euro will not collapse – all current members will remain inside the Eurozone.
5. The British inflation rate (measured by CPI) will not fall below 4%.
6. UEFA 2012 will be won by the Netherlands.
7. After a year with record-breaking levels of rain, Scotland will enjoy its second-warmest year ever.
8. The Icelandic volcano Katla will erupt and cause a new flight ban over Europe.
9. The Russian government will be forced to step down and call fresh elections.
10. The Eurovision Song Contest will be won by Georgia.

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For det første ville det undre mig, om nogen britisk bank ville låne en husejer 80% af boligens værdi som afdragsfrit lån, når man må antage, at boligpriserne falder yderligere.

For det andet har aktierne ikke klaret sig ret godt i de senere år, så han kan bestemt ikke antage, investeringen (i aktier og obligationer) vil give et afkast på 8% om året.

For det tredie baserer hans kursgevinst sig på, at renten er steget kraftigt om tre år; hvis krisen fortsætter – hvilket mange regner med – vil renten nok være lige så lav, som den er nu.

Måske er jeg for pessimistisk, men jeg synes ikke, det klæder en mainstream-avis at lokke folk til investeringer, der lige så vel kan gå rent galt.

Hvis nu for eksempel aktierne falder i værdi i stedet for at stige 25% over tre år, kan investoren være ude af stand til at indfri realkreditlånet, og hvis boligpriserne er faldet i mellemtiden, kan 80%-lånet være blevet til et 105%-lån, og investoren trues nu af personlig konkurs.

Denne form for investeringsrådgivning var normal i boomårene, men jeg blev godt nok noget forundret over at finde dette indslag i dag, hvor avisoverskrifterne ellers udbasunerer, at “den dansk[e] krise [er] værre end ventet“.

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The UK is so clearly affected by the euro crisis but can’t do very much – British advice is clearly not received very positively by eurozone politicians. Wouldn’t it have been better to have been part of it so that the UK had been a central part of the negotiations to solve the crisis?

If the UK had joined the euro from the beginning, British politicians could also have influenced the project. For instance, they might have managed to keep out Italy or at least Greece, or prevented the budget deficit rules from being watered down.

However, now is definitely not the right time to join. The eurozone is clearly going through a lot of upheaval at the moment, and one might as well wait for the situation to settle down before joining.

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My guess is that many people are thinking like him, but it’s not often they say it out loud.

I just hope he’s being a bit too pessimistic!

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Until last year, most British banks offered a “self-certification” mortgage, which meant you didn’t need to prove your income. These days, even self-employed people need to document their past and future earnings. This is supposed to prevent people from taking on mortgages they can’t afford.

It’s not prudent, however. There are very few safe jobs these days – the speed with which Murdoch shut down News of the World is just one example – and although some people find it easy to find another job if they’re made redundant, it’s tough for many people.

Crucially, banks don’t work out the probability of redundancy and the projected time it takes to find a new job given your educational background and career so far. Instead, they treat any permanent job as being safe and happily lend you four time your current salary, while self-employed people with variable earnings and people who have recently started up a new company (which is just what the economy needs at the moment) are turned away.

In the old days, wage inflation meant that even if your next job was a step down the career ladder, if was likely to pay more or less the same in absolute terms. However, these days wage inflation is very low, and many people are having to take big pay cuts in order to get a job at all, so you can’t just assume that people can afford tomorrow what they can afford today. They also don’t deduct money for child-care costs before working out how much to lend you, which is equally ludicrous.

The other problem with the current lending policies is that they completely disregard the actual risk to the bank of not getting their money back. If your house is worth £200k and your outstanding mortgage is £50k, there is practically no risk in lending you that sum, because the money can be recovered unless house prices fall by 75% (which even the most pessimistic forecasters don’t predict).

If the banks were truly prudent instead of being obsessed with irrelevant box-ticking, they would completely change their system. What they should be doing is this:

First of all they should work out whether the borrower wants to borrow more than can be recovered in a repossession. If not (i.e., if they want to borrow less than the property will be worth even after a house-price crash), they should hand out advice about the trauma of having your house repossessed and then let the borrower make the decision, without going through the hassle of estimating salaries and the like. If the borrower on the other hand wants to borrow more than can be recovered in a repossession, the bank should work out in detail the projected salary growth, the risk of unemployment, etc. and then charge enough money to make sure than they on average make a profit.

The banks would make more money that way, and there would probably be fewer personal bankruptcies, so I don’t understand why they continue with the current system.

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The people – such as many Democrats in the US – claim that what the economy needs is more stimulus, but they never really seem to explain how that’s supposed to work in a globalised world.

Of course there are certain industries that spend a great deal of their costs on local salaries, so it is probably true that building an extra road will counteract the recession to a certain extent.

However, many “normal” people would, if given a pay-rise or a bonus, spend most of it on a holiday abroad, a new gadget imported from China, or at least on two bottles of South African wine, and while this will be beneficial to the world economy, it doesn’t help the local economy much.

I don’t really have a solution, but I just want to point out that spending your way out of a recession must be a lot easier in a non-globalised economy.

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He points out that tomorrow it will be 40 years ago that the Gold Standard was abolished (and fiat currencies introduced). He then asks:

So are we nearing the end of this economic era? All the hallmarks are there. We’ve been through the periods of faith in the system, peaking with the certain belief in the 1990s and early 2000s that inflation targets really would help keep governments on an even keel. We’ve had the financial crisis that usually marks the beginning of the end of established monetary systems. And now we are seeing the debasement.

Consider the price of gold, which has recently scaled new highs. [...] The price reflects many factors, including economic growth, but chief among them is a diminishing faith in the ability of fiat currencies to maintain their value.

[...] It is no coincidence that the price really started to spike (in other words faith in currencies versus gold plunged) in 2001, which just so happens to be the year central banks first started experimenting with quantitative easing (QE) – in Japan.

[...]

As ever these days, any hope, such as it is, lies in China. It is fast realising that its investment in US debt will not be fully repaid.

However, in the long run it has two options: to allow the US to debase or default; or to negotiate, forgive a chunk of the debt and dramatically reduce those imbalances. It can afford to do so economically; whether it can afford it politically is another question. However, such a bold move (and I do not expect it any time soon) would at least mark a fitting gesture from an economy which will help construct the next international monetary system.

What would the next international monetary system be like? Would we see a return to the Gold Standard, a move which Conway has previously dismissed as madness? (The latter article is also the source of the illustration above, which illustrates that the Gold Standard implies the abolishment of independent monetary policy, whereas we’ve sacrificed fixed exchange rates instead for the past four decades.)

I’m not sure what we’ll see. However, very few countries have had truly free-floating currencies for the past decades, so I’m not sure sacrificing independent monetary policy will be seen as a big problem to most countries, although it of course will have major implications for the US and the UK.

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