First, I doubt Scotland will vote to break away. I know that some polls show the YES vote with a slight lead, but polls require no commitment. When it comes time to actually vote, people tend to get a little less fanciful.
That said, I can see a YES vote winning in a squeaker. If that happens, then Scotland will break away and chaos will ensue. In fact, the first thing I see happening is Scotland issuing a new currency (the “Duhmhass”) which they will discover offers the average Scott a good deal less buying power than the pound. Why? Well, here’s the thing.
A country’s currency is based on the economic potential of that country, and Scotland’s economic potential is about the same as if West Virginia broke away from the US. Scotland is a high tax country which relies on steady cash infusions from productive England to keep their sorry economy limping along. More than 55% of Scotts work for the state, putting them around East German levels. Their unemployment rate sits around 19%. They have no natural industries except sheep molesting. In fact, the majority of their largest companies are actually English companies who have opened branches in Scotland.
The one industry they do have is North Sea oil, but there are several problems with that. First, oil economies are notoriously fragile. Secondly, the commodity price of oil is falling at the moment and isn’t likely to recover for quite some time. Third, the Scottish National Party (SNP) has already made noises about nationalizing the industry. Not only will these statements alone chill further investment, but if they actually do it, then you can write off their oil industry for decades. And fourth, they are running out of oil in any event.
The issue of nationalization brings up another interesting point. Every single company of any size has warned against a YES vote. Many have threatened to close stores or hike their prices dramatically. Several Scottish banks have promised to flee to England. The SNP has responded by talking about getting even with these companies through nationalizations, heavy taxes or regulation, or other means not addressed. That’s a sure fire way to kill an economy. Indeed, that is the Hugo Chavez plan... the one that ended up with shortages of toilet paper and food and everything except shortages.
As I see it, here is what will happen if the Scott’s vote YES.
(1) Their currency will crash and they will be shocked to find themselves the poor man of Europe.
(2) The lack of English subsidies will crush their tax revenue base, which will lead to layoffs of government employees and hard choices when it comes to spending.
(3) They will push far left into quasi-socialism with the obvious result of following Venezuela into the toilet. This will be a great lesson for the rest of Europe in what not to do.
(4) England will shift solidly right. Indeed, the only thing making Labor competitive now is that Scotland votes overwhelming for them. With them gone, the Tories should dominate. The effect in England will be similar to the effect here if the Northeast stopped voting in our elections. This too will be good for the world as England, freed from its freeloading cousins, should undergo an economic renaissance.
(5) Other similar groups will follow Scotland’s lead. Specifically, I would expect Spain to break into three or more incompetent countries. Then Belgium will break into two. Italy might follow shortly afterwards, breaking into rich Northern Italy and dirt poor Southern Italy.
This will result in a serious shakeup in Europe, which may well inject a good deal of localized power into a system designed to trample the locals in favor of unification. The result should be an increase in competition of the kind we have here, where the states act as laboratories for ideas, which then drift upward. This could honestly revive European competitiveness to a large degree, and that’s a good thing. So let’s give the Scotts what they want and then let their suffering be a beacon of sanity for the rest of Europe.
Thoughts?
35 comments:
Alex Salmond is more or less a wannabe Scottish Hugo Chavez.
But it won't matter. They will go whining to the English, begging for help, guilt-tripping the English over every bad thing that happened, and the English will give it to them. Scotland will continue to be subsidized for years to come while bashing the English for their "selfishness" every time they don't give enough.
Kit, He seems like a turd. I expect he will create quite a disaster before he gets replaced.
I'm not so sure England will give them anything. England doesn't exactly have much to give right now and the Scots aren't exactly being nice to the English. They will probably have more luck begging from the EU.
Andrew,
What do you think will happen to Salmond if Scotland votes No?
By the way, one good outcome of this whole affair if Scotland votes to remain in the Union could be a devolved English parliament.
By the way, one thing that annoys me about Scottish and Welsh nationalists is that they fight like hell for devolved Scottish and Welsh parliaments but have fiercely opposed letting the English have theirs. Probably because it would be full of Tories.
Kit, I suspect he will continue on, buoyed by his near victory.
The problem with devolved power in this sense is that it rarely involves any loss of revenues. Basically, "devolved power" just means that they get to vote themselves more things the central government will pay for.
"I suspect he will continue on, buoyed by his near victory."
Grrrr.
Kit, You can rarely kill a political cockroach, especially when they come as close as he has so far to winning.
Excellent observations, it will be a disaster for the Scots if they break away...
Well, at least they have bagpipes.
Excellent analysis, Andrew. It would be nice if they do break away from England, for the sake of England.
If that's the case, perhaps England can reverse some of the damage Labour has done.
Hey, McLeod, get off my ewe..!
As you say, it will be interesting to see what happens. I'd like to see the same as you, a reinvigorated Europe fueled by peaceful secessions. I kinda doubt it will start with Scotland, though. The margins are so close, and polls tend to skew away from status quo. That isn't to say it couldn't still happen. As you note, there are several burgeoning secessionist movements throughout Europe, and I don't think a "No" on Scotland will deter many if any of the others. Once it begins, I expect dominoes.
Critch, LOL! Yep. That sums up Scotland to me!
Thanks Ben! I think it would be interesting to see England freed from Scotland, to see how that changes their politics and ultimately their economy.
tryanmax, If I had to put money on it, I would bet on a NO vote. But a YES is possible this time because they do seem to have momentum. In any event, you are right that once one of these places goes, it will likely lead to a domino effect that will breakup several countries. Ultimately, I think that's a good thing.
Andrew,
Great article. I confess I hadn't paid any attention to this issue, but now I feel I have a solid understanding of it.
I can't make myself care one way or the other but this is somewhat fun to watch in a 'which way will the ball fall?' sort of way.
You're welcome, Anthony. :)
I'm in the same boat. I'm only interested in the sense of being curious to see how it plays out. I don't really care which way it goes.
I'm Scots, Irish and English,,all the way back,,,and as a history major it's very apparent that us Celts have never been worth a damn at anything but fighting for the English..
Right there with you in the heritage department, Critch, with a dash of Welsh to round out the British Isles, plus some Czech/Slovak and German, too -- pasty people of the world, unite!
Excellent breakdown, as always, AP (if only re. the Northeast ceasing to matter in elections here)! Still, I think you omitted the biggest elephant in the global room, at least as it pertains to the US: how will the dominoes fall towards Texas finally (re)seceding from the Union? ;-)
I wouldn't assume that a new national currency is a foregone conclusion.
Scotland would do very well to keep the British pound as their own national currency. This would provide them with reasonable currency stability and it would encourage foreign investors - so, economically, it dosen't have to be such a high cliff. I believe there are a few Central American countries whose foreign currency is the US dollar. It does make the country somewhat dependent on the fiscal policy of the "currency host country," but there's not much any country can do about another country taking their currency for it's own.
That said, Scotland would have to discover some fiscal responsibility, but with their position on the North Sea, the presence of Britain's nuclear offense force base within their country and, assuming they continue to accept the Queen as their sovereign for the near future, I think they could do quite well. It might even be a boost for England.
But that fiscal responsibility thing - that's a deal breaker!
Critch, I can't think of many contributions the country has made. Some of their people definitely, but not much from the country.
Thanks Eric! LOL! Texas. Yeah. In all seriousness, that would be a serious disaster for all parties. Personally, my bigger fear is that someone lets California break into multiple states. That would pack the Senate with Democrats.
KRS, I doubt fiscal responsibility is on the agenda. This has all the hallmarks of one of those fantasies where the locals don't realize how reliant they really are on the people they hate and they discover that once they are thrust out on their own.
You make a good point that they could keep the pound. The problem with that, however, is that they would have no control over things like interest rates and that can lead to policies being put in place that cause chaos within the country trying to piggyback on the currency.
If I remember correctly, one of the South American countries who used the dollar found themselves priced out of export markets for that reason.
You can bet your ten gallon hat that the "secessionists" in Texas are watching closely. Oh, and by the way, if California break up into 3 parts, Texas will surely break up into the 5 parts that it has in its treaty with the US. Texas is the only state to be annexed as a state by treaty, so we can do that if we want.
Btw, didn't Scotland become part of Great Britain under Elizabeth I? Lots of heads lost and stuff? So Elizabeth II, the other longest reigning Queen/Monarch of England may lose Scotland. Interesting bit of irony...
Bev, If California breaks into three parts, I think the rest of us should get a vote on whether or not we want to let them in. I'm voting NO.
Scotland came into the Union on May 1, 1707 according to the Wikipedia. The Queen at that time was Freddie Mercury. His big song was Der Commissar. Scotland is famous as the birthplace of Scott toilet tissue. Today, its primary export is groundskeepers. And its current King is Sean Connery. Love that Wiki! ;-)
Speaking of Scottish groundskeepers...
I always WONDERED where Scott toilet tissue came from! And Sean Connery should be king. Okay, okay, maybe my history is faulty, but Mary, Queen of Scots was beheaded all the same...and anyway, she was French according to that recent historically accurate tv show "Reign". And then there's something about Catholics and Protestants killing each other and stuff.
Rustbelt, I heard about that yesterday. LOL! I love Willie. He's a great character.
Bev, I believe the Catholics and Protestants KIDDED each other. Rumors of 30 and 100 year wars are Buddhist propaganda. ;-)
In all seriousness, it's clearly easier to hold a country together when you can behead the opposition. This time, all they can really do is threaten to withhold Scotland's allowance. That's clearly not as effective!
For what it's worth, I read yesterday that if Scotland does secede they plan on going nuke-free, which means kicking out the British navy.
As a Canuck I have some experience of this thing. MY taqline for years was, "My Canada does not include Quebec"... When I saw what they were up to my first thought was to tell the rest of the UK to tell Scotland to 'sod off'' these separatists are not worth the powder it would take to...
For our Frogs I finally figured out what they really want. They want TO HAVE WON the Battle of the Plains of Abraham back in 1759. they lost and are still whining.
I remember when Scotland was a force for good and for advance in the world (starting with a Macadamized road and a 24 hour time zone system). they sold out and now are just a bunch of soviets with less ambition than a spammer. Ah well; maybe this time good will win and these losers will have to live in their own mess.
and yes I do check in every now and then.
FREEEEEEEEEEEEEEEDDDOOOOOOOOOOOOOMMMMMMMMMMMM!!!!!
Sorry, but - A; I just couldn't help it.
And - B; I can't believe nobody said it already. :)
GypsyTyger
Hi darski!
I suspect this is a lot like Quebec, and most of their grievances either aren't real or are mainly meant for show. I think they will be shocked at the reality versus the fantasy if they do split off.
GypsyTyger, I kind of wondered when someone would quote that. LOL!
Andrew, it's 'cause I'm a crossover from the film site. :)
GypsyTyger
True! In any event, someone had to say it!
BTW, the film site will return to regular programming soon. It's been a long month so far.
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