Broad Oak: your emotional support animal

Sunday, April 27, 2014

Could a free Scotland manage economically?

I've already suggested that if it secedes from the UK, Scotland might seize the opportunity to remain outside the EU (rather than suffer the boom and bust of, say, Ireland and Greece) - and maybe should be looking to forge closer cooperation with other "semi-detached" European nations such as Norway and Iceland.

For example, look at the sea areas controlled by these three:


Exclusive Economic Zones (EEZ) & Fisheries Protection Zones (FPZ), Iceland and Norway (Jan Mayen & Svalbard are Norwegian) Source: Bates

 
Scottish Sea Areas (from Scotland's Marine Atlas)

Save for a couple of loopholes, there is a vast contiguous sea area under the control of the "SIN" countries.

Indeed, if Scotland is to join with anyone, Norway would be far better than the corrupt, undemocratic economic shambles of the EU. Their population sizes are similar (c. five million) but Scotland clearly has a lot to learn from the Norwegians: GDP per capita c. $40k for the former, c. $100k for the latter (and a big sovereign wealth fund that will provide financial security for the foreseeable future). Further, Norway has claims to the Arctic shelf that could result in still more oil and gas:

Arctic territorial claims and potential for oil and gas
(Source: The Economist, 16 June 2012)

I'm not suggesting that Scotland would roll up to the banquet with knife and fork to eat Norway's pie; I'm saying that the three countries might have a synergy based not only on geographical position but on their potential for joint economic and technological development.

For example, one reason Norway is so prosperous is that she can sell a lot of her oil abroad, since most of the country's domestic electricity comes from hydroelectric installations. Similarly, Scotland has 85% of the UK's hydroelectric resources and has great potential for other renewables (she provided 36% of the UK's renewables output in 2012). Some of the hydro power is used for aluminium smelting - just as Iceland uses geothermal energy for the same purpose.

Then there is the shared expertise of Norway and Scotland in shipbuilding and marine engineering.

And Scotland has fishing, tourism, brewing, the arts...

What if Scotland picked up the Treasury's gauntlet, dropped the British pound and floated its own currency to protect and develop its industries, maybe with some initial financial/investment support from her neighbours to the north-east?

Perhaps independence, with the help of carefully-chosen partners, is not such a romantic pipe-dream, after all.

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5 comments:

Sobers said...

Of course Scotland could become a prosperous nation on its own. As you say it has many natural resources, and potential allies close by.

However one suspects a more likely scenario for an independent Scotland is spending all the oil money on the usual socialist claptrap until it runs out, and then being reduced to penury, because the socialists are too ideological to realise you need to create wealth in order to spend it, and they will never promote business, because that might mean an individual getting wealthy. So Scotland will remain poor, just as it was for most of its history, the oil money being just a blip.

Incidentally, the fact that Scotland produces 36% of the Uk's renewables is actually a liability for Scotland, as renewables rely entirely on the subsidy provided by the green levies on energy bills to be viable. Scotland does not have enough population to support the amount of subsidy required. It relies on the extra population south of the border to pay up for them. Post independence the English public may not be so happy to pay more for their gas and electric and see the money go to a foreign country. The Scots may end up with no renewable subsidy from England, and having to negotiate a price for their electric with one customer, who can go elsewhere. Not a good position to be in.

Sackerson said...

And if they introduced proportional representation, so breaking the stranglehold of the Labour Party? See tomorrow's note.

Hydroelectric power doesn't seem to need subsidies, to me.

Sackerson said...

P.S. The historical poverty wouldn't have anything to do woth greedy and tyrannical chieftains - the ones who initiated the Highland Clearances and who were ruined by fellow-Scot William Paterson's Darien Scheme so they had to sell the country to avoid bankruptcy?

So would a properly democratic and technological Scotland solve its challenges?

Sobers said...

Approximately 80% of the Scottish electorate vote for leftist parties - Labour, SNP, and Lib Dem. All favour higher taxes and higher State spending. The Tories don't get a look in - a low tax, small government, pro-business party would get even less than the Tories do now. It wouldn't matter what sort of electoral system is in place, Scotland will get a high tax high spend government til the money runs out.

As for the renewables about two thirds of Scottish renewable generation comes from wind - figures here: http://www.scottishrenewables.com/scottish-renewable-energy-statistics-glance/#chart5

None of that is viable without massive subsidies paid for by English bill payers. That won't continue for long after independence.

Weekend Yachtsman said...

But they won't stay out of the EU.

They are strongly in favour of the EU, because England is opposed.

Salmond has stated over and over again that Scotland will "remain" in the EU without a break or any need for negotiation, after the split.

It's a lie of course (Barroso and many others have tried to correct him, but Salmond is always right in the eyes of the faithful, so nobody cares), but it shows that this is a concern and an important one.

Scotland will rejoin the EU as soon as it can.

Independence my arse.