Scots Should Vote No on Independence

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 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. Although Texans would like less government, the Scots want a heck of a lot more.

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 been seized 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 affect more progressive social values. The Scots do support Labor 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 UK 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 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 but with champagne tastes, massive debt and insolvent.

With oil, Scotland has an economy smaller than Connecticut and without oil smaller than metropolitan Madrid.

Nationalists argue that other small countries do quite well–for example, Switzerland and Ireland. My travels through the British Isles hardly confirm that the Scots’ neighbors across the western sea are more prosperous, and the Swiss have assets the Scots won’t enjoy–a world class financial sector and competitive manufacturing in pharmaceuticals, chemicals and machinery.

After oil, its whiskey and salmon for Scotland, and then things tail off precipitously. Independence supporters note Scotland’s presence in some high-tech activities but those hardly have the mass to carry the economy in its coming post-petroleum age.

Overall, private sector productivity lags the UK average by 11 percent and is particularly weak in manufacturing and R&D.

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 straight jacket the single currency has imposed on Spain and other Mediterranean states. Something 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 their flag to quilt their poverty.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. He tweets @pmorici1.