Sometimes You Get What You Deserve

This may surprise people, but I’m all in favor of Scotland breaking away from England. Why you ask? Is it my love of Scotland and its vast open soggy spaces? Nope. Perhaps it’s my love of freedom. Indirectly. More to the point, I’m a lover of irony and I think Scotland breaking away would be a great lesson for the world. Here’s how I see things...

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?