Historian Kevin Tennent on the Economics of Scottish Nationhood

3 12 2009

Scotland's Flag

The British business and economic historian Kevin Tennent has published some thoughts about whether an independent Scotland would be a viable economic unit. On Monday, Scotland’s first minister announced that the country would soon be holding a referendum on independence. Monday was, of course, St Andrew’s day, the national day of Scotland– and the day of your humble narrator’s patron saint!

Tennent’s blog post draws on his extensive knowledge of Scottish, British, and global economic history. He begins his analysis with a discussion of the Darien scheme of 1690, the abortive attempt by Scotland to establish a colony in Panama. His blog post also pays attention to more recent developments. Dr Tennent writes:

“The collapse of Iceland’s banking system forced it to seek a £6bn emergency loan from the International Monetary Fund; unfortunately much of this will end up being spent recompensing savers abroad. Had Scotland been independent during the present crisis, then with RBS alone loosing around £24bn in 2008 the country would also have been driven to seek aid from the IMF; the whole of Scotland’s GDP was £86bn in 2006 (although this excludes oil and gas revenue). To cover this loss alone Scotland would have been forced to spend a more than a quarter of its GDP.”

This post should interest Canadians for two reasons. First, there is an obvious parallel between the question of Scottish independence and the separatist movement in Quebec. Would Quebec, which lacks North Sea oil, be a viable state? Second, there is the less obvious but even more important parallels between Scotland’s relationship with England and Canada’s relationship with its wealthy and populous southern neighbour. Most English-speaking Canadians would be in favour of Canada remaining independent of the USA. If they had an opinion on Scottish independence, it would probably be that Scotland should stay in the United Kingdom. Canadians are conservative in the deepest sense of the word and generally prefer to keep things as they are.   But we need to ask ourselves why, if independence is a good thing for Canada, would it be a bad thing for Quebec and Scotland?  What’s good for the goose may also be good for the gander.


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2 responses

6 12 2009
Kevin Tennent

Hi Andrew, thanks for the citation. I’m not sure the issue of Canadian independence is really comparable. On this issue I would be classed I guess as a conservative, because I want things to stay the same, but this is not because of traditionalism but because I think Scotland is better off economically as part of the Union. In Canada’s case its not clear that joining the USA would help or is even necessary – isn’t it the case that Canadians enjoy a high quality of life with very high HDI measures? Scotland meanwhile has probably the lowest in HDI in western Europe as well as relatively high unemployment. If Scotland became independent it would be left on its own to deal with these issues and loose the funding it currently receives from London, which nowadays is being targeted into more preventative health initiatives. Within the EU it would also have to compete with much poorer regions of Eastern Europe for funding. If Scotland became independent in a crisis such as this its likely that there would have to be significant cutbacks in the NHS etc., making it much harder to get those HDI levels up. The SNP have never made a convincing watertight case for how oil revenue would be redistributed and used to put the Scottish economy on a long term footing; I think Scotland needs to prove that it can be self-reliant within the union before it even thinks about doing it outside the union. A full transition to a knowledge economy that can include all Scots is a must.

8 12 2009
andrewdsmith

Hi Kevin,

My point was to get people think hard about both the “small is beautiful” mantra of Scottish and Quebec nationalists and the “big is always great” mantra of proponents of the EU and continental integration in North America.

The point about HDI is a good one, but Canada has been slipping in the HDI ratings because productivity growth is so slow in Canada (a fraction of productivity growth in the USA).

AS

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