Photo: Michael Mucci
Has there ever been a time when Scotland has so grabbed the world's attention? First it was the Commonwealth Games, now it's whether Scotland will vote to secede from the United Kingdom. This issue boils down to just one thing and it's not patriotism. It's economics. Scotland can boast that one of its sons, Adam Smith, wrote the first full treatise in economics. If only the Scots could call upon his wisdom now to help the decide whether to break with England.
Certainly when Smith wrote The Wealth of Nations in 1776 he felt the political union with England was the finest thing his country's leaders had ever done. Prosperity came in the form of a bigger market and a state that was building an empire. Some of the arguments and dire prophecies mounted against the Scotland voting for independence would have Smith turning in his grave. The Scots have always had a propensity to take a dark view of worldly matters but these arguments surpass that. We're told there will be massive capital flight, from pension funds to ordinary savings. Companies, big and small, will also moving down south resulting in massive dislocation and upheaval in Scotland. Edinburgh will lose its status as a financial hub. The banks are particularly negative about the prospects.
UBS predicted that independence would leave Scotland in recession. Deutsche Bank goes one better, saying that independence would thrust Scotland into depression a la Greece. The governor of the Bank of England has warned Scotland that they could not expect to adopt the pound as their currency. I wonder if he knows that central banking and the Bank of England was founded by a Scotsman! All this negativity might be enough for the young, who are one of the biggest demographic groups taking part in the referendum, to thumb their noses and vote 'Yes' for the hell of it! The rest of the population, like the Scottish diaspora and the 130,000 Scots residing in Australia, are evenly divided over the issue. It's a difficult one. Perhaps it would have been better if the whole issue had never arisen.
Where did the call for independence come from? Blame it on economics.
It all happened 40 years ago when North Sea oil was discovered off the North West coast of Scotland. The fledgling Scottish Nationalist party came to prominence on the theme 'It's our oil!' A year later, they had another slogan, 'Rich Scots or Poor Britons?' Eleven Scottish Nationalist MPs had been elected to the House of Commons by 1977. Had Scotland seceded then, or even two decades ago, it would be as rich as the country that it shares that oil with, Norway. Had they had the power to do so the nationalists had the idea of a sovereign wealth fund that would pay out a permanent dividend to the Scots alone. Instead the revenue from North Sea oil was taken out of Scottish hands and flowed directly to Westminster.
Just how much of the oil bonanza is left is a moot point. The issue of independence has been festering ever sense even though the Scots were given their own government, their own parliament. Even the Stone of Scone upon which Scottish kings were crowned was returned. That English patriot, Margaret Thatcher, too, must also take some of the blame for provoking the Scots. Her economic policies made the north-south divide a reality. Her government forced the closure in 1992 of the Ravenscraig steel mill, one the few remaining symbols of heavy industry in Scotland. In 1989 she introduced the poll tax or 'community charge' making the Scots the guinea pigs before it was foisted upon the English. All the while Thatcher used North Sea to fund tax cuts and pay off public sector debt but never acknowledged the contribution it made to her government or Britain's finances.
Would Scotland been able to make a go of nationhood? Of course they could; there are smaller countries than Scotland that have thrived. Look at wee New Zealand for a start! The Scots are renowned for their aptitude for enterprise and accumulation, though, as the patronising Samuel Johnson once said: "The noblest prospect which a Scotchman ever sees, is the high road that leads him to England." On that score, there are some 730,000 Scots bustling away in England and none of them are allowed a say on Thursday's vote.
It's the consequences of a yes vote that sets off the willies. Forget about redesigning the Union Jack! It would spell the end of Britain as a diplomatic and economic power. The English would face the prospect of becoming little Englanders. The Labour Party's chances of ever gaining government in Westminster would greatly diminish as they relinquished a 60-seat stronghold in Scotland. The Royal Navy would have to find a new site to base its nuclear deterrent. If the Scots said yes the Welsh and the Catholic majority in Northern Ireland would want their chance too.
Alex Millmow teaches economics at Federation University, Ballarat.