When Scots go to the polls this Thursday, many of the yes voters — those choosing independence — will do so for economic reasons. Their primary assumption is that independence will earn Scots a durable economic boom: a grand future born of Scotland’s oil and gas reserves.
The reality isn’t as kind as the rhetoric. First off, the yes campaign’s value appraisal of oil and gas reserves relies upon an exaggerated share of Scotland’s extraction profits. Moreover, to offset lost government wealth transfers from the U.K. (around $2,100 more per head than in England), Scottish nationalists must assume oil prices will remain high (even amid the growing U.S. energy boom) and that production will increase (although it has steadily declined since 1999). The nationalists also present wildly optimistic assessments of Scotland’s untapped oil reserves.
Scotland’s economy also faces major structural problems outside its energy sector. Consider a few statistics. Scottish exports account for only 6.3 percent of the U.K. total, whereas England accounts for 74.1 percent. While Scotland has a slightly higher total employment figure than England does, it has a bloated public sector (22.1 percent of total employment vs. 17.4 percent in England). The Scottish work force is also less productive than its English counterpart. Most disconcerting: Measured per 10,000 adults in the U.K., Scotland has fewer businesses than Northern Ireland and Wales, and a staggering 21 percent fewer than England. The business community has been clear about its view of the referendum. Even the Royal Bank of Scotland has threatened to leave Scotland if independence occurs. In short, the Scottish independence movement has subjugated itself to voodoo economics.
This takes us to the crux of the issue. During the 1980s, then–prime minister Margaret Thatcher cut U.K. government subsidies to Scottish industries. Many closed. Thatcher’s political legacy in Scotland cannot be underestimated. In February, the Scottish health minister suggested that Scotland’s alcoholism crisis is due to Thatcher. Many Scots feel betrayed by their southern brethren and seek psychological liberation from unpleasant history.
Nevertheless, Scotland’s economic and social ills aren’t Mrs. Thatcher’s fault. Rather they’re the fault of a generation of Scottish politicians who have failed to accept that globalization is inevitable and to demand pro-market reforms. Instead of owning up to hard truths, Scotland’s political Left offers ever-more-clownish representations of a looming socialist utopia. And thus, ignoring the evident moral and intellectual bankruptcy of the European socialist project, the pro-yes campaign is in denial.
Of course, these economic questions are hardly unique to Scotland. As I’ve noted before, socio-economic comparisons between California and Texas speak to the broader truth of 21st-century economic theory: first, that capital flows to the point of best return; second, that ever-expanding government is fundamentally unsustainable. In Scotland, this reality has been ignored for many years, to much negative effect.
Regardless, today, the voters of Scotland now hold the cards. If they want independence, then that’s their choice. But Scots must consider their responsibility carefully. While their cultural and historical participation in the U.K. might seem a distant concern amid economic strife, any separation will be final. And its consequences will be far-reaching. As someone who bonded with his Scottish grandfather over cups of tea, I’m a firm believer in Scottish greatness.
That being said, empowerment and socialism are mortal enemies. Mistaking them for allies, Scotland’s yes campaigners risk a very bleak future.