Scots will be worse off if they vote for independence. It’s not good economics, and not much else is at stake.
Unlike the now-dormant (but never-dead) separatist movement in Quebec and the rising tide for independence in Catalonia, the Scottish movement lacks a strong impulse in sustaining an ancient culture. Advocates of independence may protest, but they are not about to resurrect Scots or Gaelic as a widely-spoken national tongue. They sound more like Texans complaining about Washington, lamenting London is aloof and deaf to Scottish sensibilities. And whereas Texans would like less government, the Scots want a heck of a lot more.
Scottish nationalists are quick to blame local economic problems on the tough love imposed by Thatcher and subsequent British government reforms that reduced support of Scotland’s once-powerful but now much diminished traditional manufacturing.
Independence has thus been seized upon by the professional left — academics, artists of all kinds and other “social thinkers” — who believe an independent Scotland could raise taxes and spend more to reflect more progressive social values. It has not been lost on the political parties that the Scots support Labor and left-wing candidates for Westminster in much greater numbers than do the English.
Scotland is hardly shortchanged by London. It accounts for 8.3 percent of the United Kingdom population but receives 9.2 percent of public spending. Nevertheless, advocates of independence say if Scotland got control of the 80 to 90 percent of North Sea oil that lies within its waters, it would be better off.
No doubt the new Scottish government could go on a spending spree, but North Sea production is declining and the revenue bonanza would probably tail off quickly. Then commitments to bloated social spending and industries propped up by large subsidies would be awfully tough to scale back.
Scotland would emerge like Greece — a nation with a beer budget and champagne tastes; insolvent and with massive debts.
With its oil, Scotland has an economy smaller than that of Connecticut. Without the oil, it is smaller than metropolitan Madrid.
Nationalists argue that other small countries do quite well — Switzerland being an excellent example. But the Swiss have assets the Scots won’t enjoy — a world-class financial sector and competitive manufacturing in pharmaceuticals, chemicals and machinery.
After oil, it’s whiskey and salmon for Scotland, and then things tail off quickly. Independence supporters note Scotland’s presence in some high-tech activities, but those hardly have the mass to carry the economy in Scotland’s coming post-petroleum age.
Overall, private sector productivity lags the UK average by 11 percent and is particularly weak in manufacturing and research and development.
Scotland’s service sector is stronger thanks to the Bank of Scotland, Lloyds and pension giant Standard Life, but those will likely head to England if the Scots vote to leave, and with good reasons. An independent Scotland would impose much higher taxes on their employees and operations and have an uncertain currency.
Advocates for independence say they would like to continue using the British pound, but the Bank of England has indicated it wants no part of having its monetary policies hamstrung by a high-taxing, free-spending, declining oil state.
Scotland would likely join the EU and could adopt the Euro, but the latter would put it in the kind of economic-policy straitjacket the single currency has imposed on Spain and other Mediterranean states. This is one thing the Scots are trying to escape by severing ties with the UK.
Without oil and its big financial sector employers, Scottish taxes would become too burdensome for high tech and good-paying industries, and those would ultimately leave, too.
The Scots would be left with nothing more than the flag with which to quilt their poverty.
Peter Morici is an economist and business professor at the University of Maryland and a national columnist. He tweets from @pmorici1. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
