As the roman-candle-carrying-beer-drinkin’-red-white-and-blue-bald-eagles soar across the US in honor of American Independence, I figured we should talk about a country that will never experience that feeling…Scotland.
Beyond the cultural conversation (which I’ll leave for the Scots to duke out), Scottish independence is another situation where the math just doesn’t math. The financial transfers from London have been vital to Scotland over the past 30 years, and the importance of financial support is ever-growing based on Scotland’s demographics.
Secession means Scotland loses the diaspora, remittances, population, financial transfers and a stable currency…I don’t know who’s running the cost-benefit analysis, but is losing all that worth keeping the fog to yourself?
If that’s not convincing enough, an independent Scotland would have ZERO chance of entering the EU, which economically and geopolitically makes Scottish secession a suicide pact.
Prefer to read the transcript of the video? Click here
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TRANSCIPT
Hey everyone. Peter Zeihan here coming to you from just above Doorman Valley, an area that is almost never foggy. But here we are considering the weather and the mood. I thought that it would be a great time to take the next in the Ask Peter series, this time specifically about Scottish independence. What are my thoughts, especially in the context of Brexit?
Well, you know how I accuse people of not being very good at math. Every once in a while this is one of those situations and really on all sides. So Scotland has benefited hugely from union in financial terms, you know, culture. Let’s put that to the side. That’s a political question. No one can say that except for the Scots themselves.
But from a financial point of view, the financial transfer from London to Scotland over the last century have been massive, especially in the last 30 years. And it’s going to become more and more important to their survival as a province of the United Kingdom, moving forward for simple demographic reasons. Now, for those of you who have traveled extensively in the United Kingdom, this is not going to be a surprise to you.
But as you move north from London, the people you see become whiter, poorer, older, fatter and unhealthier. In fact, if Scotland were to secede and become its own thing, it would be the demographically, the oldest country in Europe would have the worst finances because of health care and pension costs, and it would be the least healthy. And that alone means that the European will.
Let me say this very clearly. Never let Scotland in, ever. And that blows a hole in any of the arguments for Scottish independence, in my mind, because they would lose the transfer payments and they would be completely on their own in a country that has to import almost all of their food and increasingly a substantial portion of their energy unless they want to go back to soft coal.
The oil money from the North Sea is largely gone. So, you know, maybe it made some sense for Scotland to break away in the 1980s when the oil money was flowing and the population was younger. But now you’re left with a country that has very little in the way of manufacturing. Most of the major banks are headquartered in London.
Even the you know, the Royal Bank of Scotland has not had a great couple of decades. And if we did have secession, the question then of course, even if you could join the European Union, is whether it would work out. There is talk, of course, in Scotland of what happens with currencies and the current plan of the secessionists would be to continue to use the British pound until such time as they can make the full adoption of the euro.
Now, it’s not so much that the Brits can stop someone from using their pound. They just won’t make policy with Scotland in mind in that scenario. It also means that this is fully a negotiated divorce, kind of like the Czech Republic in the Slovak Republic seceding, or the theoretical Quebec succeeding, which means they would have to take their portion of things like the national debt.
And if they’re doing that in an environment of a fixed currency that they can’t control and they don’t have the oil money and there’s no manufacturing money. Yikes. And you are assuming here that which means that they’re going to benefit financial situation that you won’t touch anyway. So even if they did get the EU, they would get into the euro, they wouldn’t be able to qualify.
And then there’s the issue, of course, whether or not the Brits decide to punish them for some of these decisions. It doesn’t have to be anything strikingly overt. It could be just what say the Brits did when all these protests in Hong Kong started a couple of years ago, telling all the people in Hong Kong that if you want to apply for citizenship, we’ll push you to the front of the line.
300,000 people left. 300,000 people leave Scotland, young people. That would be enough to destroy what’s left of the economy almost overnight and between economic likely destitution in the north and whatever’s going on in London, the south. If you’re under 30 in Scotland and you have an education, there’s really no decision to make. You’ve probably been living in London already.
So you lose the diaspora, you lose basically what would be remittance is you lose population, you lose the financial transfers, you lose a stable currency and all that. So you can have fog by yourself, economic, quickly speaking, geopolitically speaking, Scottish independence is a suicide pact. Does that mean it won’t happen? Of course not. People do dumb things all the time.
I’m going to go down there now.
