Recent reports by Credit Suisse and by the Welsh politician and entrepreneur Adam Price lend some detailed support to that thesis. In any case, Scotland is hardly a uniquely small country. It has a similar population to Sweden, Norway, Denmark, or Switzerland.
Alex Salmond, the leader of the Scottish National Party and the likely first prime minister of an independent Scotland, may be a socialist, but he’s not an idiot. He knows that a tax hike in Scotland wouldn’t work. Asked in a televised debate, he responded, “We don’t have proposals for changing taxation. We certainly are not going to put ourselves at a tax disadvantage with the rest of the UK.”
As Alex Massie put it in the Spectator, “It’s not quite read my lips, no new taxes but it’s not far from it.…When it comes to tax no other British politician in recent years has cited Arthur Laffer more frequently than Alex Salmond.” With a top British tax rate of 45 percent, and 41 percent in Ireland, Salmond doesn’t want to raise the Scottish rate to 50 percent and push out top earners.
3) Critics of independence often say that Scotland is subsidized by wealthier England. The analysis is controversial, but it does appear that the United Kingdom spends about £1,500 ($2,500) more per person in Scotland than it does nationally. If it is true, as many British conservatives say, that Scots are whiny subsidy‐suckers, then take them off the dole. It’s easy for a country with 52 members in the British parliament to demand more money from the British central government. An independent Scotland would have to create its own prosperity, and surely the people who produced the Enlightenment are smart enough to discover the failures of socialism pretty quickly if they become free, independent, and responsible for their own future.
4) Finally, surely the good people of England wouldn’t be churlish if Scotland decided to “dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them,” as our Declaration of Independence put it. Some British opponents of independence insist that an independent Scotland couldn’t use the British pound, and that the UK would oppose Scotland’s admission to the European Union.
As it happens, Scotland had a successful independent monetary system from 1716 to 1845, as discussed by Lawrence H. White in his book Free Banking in Britain and in a new Harvard Ph.D. dissertation by Tyler Goodspeed. So maybe it doesn’t need the pound sterling.
But in any case, it’s not clear that the UK could stop Scots from using the pound. Several countries use the U.S. dollar as their currency. Economist Steve H. Hanke of Johns Hopkins University, a leading analyst of dollarization and currency boards, says Scotland could set up a currency board and essentially peg the new Scottish pound to the British pound one‐for‐one. Scots could do business with either Scottish or British notes.
As for the EU, it’s clearly important for small countries to be able to trade freely over a wide area. That’s the basic value of the EU. But many Britons now chafe under the rules and regulations of the EU bureaucracy. Maybe Scotland would do better to join the European Economic Area, a broader common market of European countries that aims to “enable goods, services, capital, and persons to move freely about the EEA in an open and competitive environment, a concept referred to as the four freedoms.” Free trade, no supranational regulations, what’s not to like?
England and the UK would only hurt their own citizens if they sought to prevent free trade and joint currency with Scotland. Governments have been known to hurt their own citizens in pursuit of power, but the British people would have good reason to insist that they be free to trade with their neighbors across the River Tweed.
In any case, the economic arguments will go on till the vote on September 18. Scotland certainly has the elements necessary to be a successful European country. The real question is whether the Scots themselves desire, to borrow an Irish anthem, “that Scotland long a province be/A nation once again.” As a descendant of Scots who helped America secure its independence, I hope so.