The Guardian is part way through a commendable series of questions on independence in a â€˜Reality Checkâ€™ series. I suspect however that a key factor for the dim and distant referendum result is one that may not get picked up in this series â€“ Is there still a Northern Europe arc of prosperity for Scotland to join?
As unfortunate as it is to think that the success or failure of other countries should determine Scotland’s constitutional fate, this is an issue that still dominates the independence debate, so much so that I often wonder whether Alex Salmond regrets uttering the following lines:
â€œScotland can be part of Northern Europe’s arc of prosperity. There are three countries (Ireland, Iceland and Norway) there which are all in the top six wealthiest in the world. In contrast, devolved Scotland is in 18th place and the UK as a whole is only 14th. With distant London in charge, Scotland will just keep slipping further behind.”
In the occasional discussions that I get into on whether Scotland should break away from the UK or not, it is not so much an emotional or rational tie with the United Kingdom that makes people keen to vote No but rather it is the fear of being the next Ireland or Iceland. I honestly rather suspect that many such people don’t even stop to consider if that would be such a bad thing.
The logic goes that Ireland is a basketcase and Iceland effectively went bankrupt so why would Scotland want to risk following suit? So far I have not sensed much consideration over the likelihood of following suit or, for that matter, how bad the situations in these countries actually are. Headlines, unfortunately, are sufficient for conclusions to be drawn.
So, the IMFâ€™s list of countriesâ€™ GDP by head for 2011 will make surprising reading for some:
3rd â€“ Norway, $96,591 per head
14th â€“ Ireland, $48,517 per head
21st â€“ Iceland, $43,226 per head
22nd â€“ UK, $39,604 per head
26th – Scotland, $33,680 per head
Norway, Ireland and Iceland may not be in the top six any more but suggestions that they are part of some sort of â€˜arc of insolvencyâ€™, as Labourâ€™s Jim Murphy once put it, are very wide of the mark indeed.
Even looking at growth for the most recent quarter available, 2011 Q3, makes for interesting reading:
Norway, +1.1%, (2011 Q2: -0.3%, 2011 Q1: +0.5%)
Ireland, -1.9%, (2011 Q2: +1.8%, 2011 Q1: +1.4%)
Iceland, +4.7% (2011 Q2: +2.8%, 2011 Q1: -3.6%)
UK, +0.5% (2011 Q2: +0.3%, 2011 Q1: 0.0%)
Scotland, +0.5% (2011 Q2: +0.2%, 2011 Q1: +0.1%)
Iâ€™m struggling to see how the UK is doing significantly better than these supposedly insolvent countries, if weâ€™re even doing any better at all. On an aggregate basis, Scotland and the UK were outperformed by each of Ireland, Iceland and Norway in the first three quarters of 2011 so there is clearly some sort of potential for an â€˜arc of prosperityâ€™ to be tapped into for an independent Scotland.
Worthy of consideration here, as it was one of Salmondâ€™s primary reasons for raising the arc of prosperity in the first place, is what the Corporation Tax rates in these countries are:
As much as I personally am concerned about a race to the bottom across Europe if countries start undercutting other countries on Corporation Tax, particularly given France and Germany have rates set as high as 33% and 30% respectively, it is clear that Scotland has a difficult challenge ahead of it to compete with London, Dublin and Iceland in attracting investment, whether it is independent or not. London may have the same Corporation Tax rate but it also enjoys closer proximity to the continent and better transport links and can expect to be at the front of the queue. Iceland and Ireland of course just have cut rate deals, while Norway has enough oil revenues to keep its tax rates high.
Perhaps the saddest aspect of Irelandâ€™s current difficulties is the number of bright young things leaving the country for better prospects abroad. One could argue that this isnâ€™t a road that Scotland would want to go down through independence and, yet, that is precisely what is happening now. (I know this from experience as I moved to London strictly because Scotland couldnâ€™t provide the PhD that my partner wished to study. Wales, incidentally, could).
The Irish population in 1961 was 2.8m. The population today is 4.5m.
The Norwegian population in 1961 was 3.6m. The population today is 5.0m.
The Icelandic population in 1961 was 179,000. The population today is 318,000.
The Scottish population in 1961 was 5.2m. The population today is 5.2m.
There is clearly only one stagnant, problem child in the above list and that is because there is an historic, corrosive brain drain taking place in Scotland that is damaging growth from both a population and an economic viewpoint. It is little wonder that â€˜London-based partiesâ€™, to use an unfortunate phrase, are championing the continuation of the UK when it is London that is the prime beneficiary of this very brain drain.
Kids wanting to get away from it all in Sweden move to Stockholm, kids wanting to get away from it all in Norway move to Oslo and kids wanting to get away from it all in Iceland move to Reykjavik but too many kids wanting to get away from it all in Scotland move to London, and we are haemhorrhaging talent and creativity as a direct result.
This post has largely consisted of financial or demographic related data based on growth, and there is a strong argument that constantly chasing growth is the wrong direction given the global equality and environmental problems that we face. So, which countries are simply the happiest? Surely if Ireland and Iceland are facing such tough times, the arc of prosperity will have been replaced with an arc of despondency instead?
Well, the UNâ€™s most recent â€˜happiness indexâ€™ has results as follows:
Norway â€“ 1st
Ireland â€“ 7th
Iceland â€“ 14th
UK â€“ 28th
Is it worth Scotland risking breaking away from the United Kingdom in order to simply be a happier place, even without considering whether it would be better off? It does appear that is worthy of consideration, based on the statistics.
Iâ€™m not saying that Ireland, Iceland and Norwayâ€™s situations are in themselves a reason for Scotland to be independent but what I am saying, quite categorically, is that their situations are not, as many seem to believe, a reason for Scotland not to be independent.
Too many Scots are considering exaggerated risks while turning a blind eye to the benefits that independence could bring. I donâ€™t know if this is wilful ignorance or simply a resistance to change but it is stultifying the independence debate and, to use the Guardianâ€™s phrase, a â€˜reality checkâ€™ is long overdue.
An arc of prosperity is still there for Scots to be a part of, all they have to do is want to see it.