First the UK, then Scotland … then?
By Ryan McMaken
June 24, 2016
That didn’t take long. Only hours after the final results came in for a British exit from the EU, political leaders in Scotland are talking about renewing their drive to secede from the United Kingdom.
Pointing to the fact that a large majority of Scots voted to remain in the EU, Scottish advocates for independence are now claiming (convincingly) that Scotland is leaving the EU against its will.
Many of us who advocated for Scottish secession in 2014 were, of course fine with Scottish secession at the time. And we’re still fine with it now. Scotland should be free to say good bye and got its own way.
Some opponents of Scottish exit, however, have claimed that Scotland is too small "to go it alone." Defenders of Scottish independence call this the "too wee, too poor, too stupid" argument.
Even the most rudimentary analysis, however, shows that size is not an issue for Scotland. With an official GDP of approximately 245 billion, Scotland is not too much different from Ireland, Finland, and Denmark. It’s economy is much larger than that of Iceland (16.7 bln) and New Zealand (172 bln).
With a population of 5.3 million, this puts Scotland either similar to or larger than Denmark, Norway, Finland, New Zealand, and Ireland.
With a population this size, Scotland’s GDP per capita comes out to around $45,000 which naturally is similar to the UK overall today, and also similar to Canada, the Netherlands, Austria, Finland, and a number of other European states, both large and small.
Some will argue that Scots cannot go it alone because they rely too much on English taxpayers for transfer payments such as pensions. This is no doubt partially true, although the UK government also extracts tax dollars from Scots, regulates Scottish trade with the EU and everyone else, and perhaps the Scottish simply want independence even if it means a temporary disruption in living standards.
Overall, though, there’s no denying that Scotland even by itself is well within the realm of ordinary wealthy nation states, in terms of population, and the size of its economy. Scotland is in no way an outlier.
The claim that it is "too small" was repeated today, however, in this article by Roger Bootle at The Telegraph in which he writes:
Bootle is correct that there are certainly advantages of size when it comes to national defense. Obviously, it’s much harder for a foreign invader to overrun Russia than Poland. What Bootle misses, however, is that these issues can be addressed through confederation rather than through political unification. The original purpose of the United States, of course, was to act as a confederation for purposes of national defense. Member states, however, remained autonomous within their own borders. Similar structures have existed throughout history, from NATO to the Hanseatic league of northern Europe.
Scotland need not be part of the UK to enter into a defense agreement with the British.
The rest of Bootle’s argument appears even more specious. It is not a given, for example, that larger states facilitate trade. As the UK experience has shown, membership in the EU has granted access to some markets, but it has cut off access and flexibility with other markets. (Norway and Switzerland have access to these same markets, by the way, without EU membership.)
This was also an enormous issue and source of conflict in the United States, in regards to southern states. Yes, membership in the United States facilitated trade among states, but trade between Southern states and foreign markets was hampered by US tariff policy. To claim that gains from trade are "maximised" by larger states is rather overstating it, to say the least.
In fact, there are many reasons to believe that the "optimal" size of state is considerably smaller than what Bootle suggests it is. (The subtext of Bootle’s article, of course, is that Scotland is below the optimal size.)
As Peter St. Onge wrote in 2014 about the Scottish referendum at the time:
A Lesson for American States
When Americans indulge in thought experiments about the possible secession of American states, it is often assumed that most US states are too small "to go it alone." Indeed, most Americans greatly underestimate the size of many American states in relation to numerous independent and prosperous existing nation-states.
Were Scotland a US state, for example, it would be only a medium-sized state, with a GDP smaller than the gross state products of both Missouri and Connecticut, making it about the 25th largest state in terms of GDP. Population-wise, Scotland is about equal to Minnesota and Colorado (I have removed China and the US combined economy from this graph to improve scale):
In this map, I’ve compared American states to foreign countries of similar GDP:
For more similar maps, see here.
Moreover, few Americans appreciate how enormous some American states are, especially the largest four states: California, Texas, New York, and Florida.
In terms of both population and GDP, California is about equal to Canada — and with much better weather. Texas is equal in economy and population size to Australia. Pennsylvania’s economy is similar in size to Switzerland.
While secession of American states is often dismissed as absurd, there are few reasons to believe that a state like Texas — to name just one example —could not immediately transition from state to nation-state. With a large economy, port cities, oil, and easy access to European, Latin American, and even Asian economies by sea, economics arguments against such a separation fall flat. And of course, the success of smaller states like Norway, Denmark, and Switzerland illustrate that bigness is truly unnecessary. Naturally, many other states even beyond the biggest states — such as Pennsylvania, New Jersey, North Carolina and others — could do the same. These states would all be among the largest economies on earth were they to leave the US.
"But what about national defense!" some may argue. "Wouldn’t Texas be constantly at war with the United States?" Experience suggests that Texas would be at war with the United States about as frequently as Canada has been at war with the United States: zero times since 1815.
International wars rarely erupt between countries with common languages, common histories, and common economic interests. Should Scotland secede, the UK won’t be sending in the tanks, and Scotland could easily join the realm of independent nation states, just as many American states could do the same.
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