Friday, 5 September 2014

The Rational Voter

"I can't see how anyone can be a rational voter without some grasp of how economies work. This has been brought home to me by the miserably low level of debate about the Scottish referendum.
"Very few people seem to know the difference between the pound and the Bank of England. The UK government hasn't said that Scotland can't use the pound. Anyone can use the pound. What it has said is that Scotland can't use the pound and, outside a formal currency union, use the Bank of England as a lender of last resort and set monetary policy. This key point appears to have been passed by many voters. So have the mechanisms by which interest rates are set; the difference between government deficits and government debts; and the way countries raise money in the international markets. This means that far too many people will be voting on something hugely important on 18 September without the tools to understand the implications."
Merryn Somerset Webb, MoneyWeek Issue 707, Editorial.

Merryn is arguing for better financial education, but surely the same rationale could support the view that there shouldn't be referenda because the electorate aren't educated enough to form a rational view. I disagree, but I'll come to that in a moment. First, here's another perspective:

"7 out of 10 Members of Parliament think that only the government is able to create money"

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