The Guardian is part way through a commendable series of questions on independence in a ‘Reality Check’ 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 – 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:
“Scotland 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 IMF’s list of countries’ GDP by head for 2011 will make surprising reading for some:
3rd – Norway, $96,591 per head
14th – Ireland, $48,517 per head
21st – Iceland, $43,226 per head
22nd – 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 ‘arc of insolvency’, as Labour’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%)
I’m struggling to see how the UK is doing significantly better than these supposedly insolvent countries, if we’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 ‘arc of prosperity’ to be tapped into for an independent Scotland.
Worthy of consideration here, as it was one of Salmond’s primary reasons for raising the arc of prosperity in the first place, is what the Corporation Tax rates in these countries are:
Norway, 28%
Ireland, 12.5%
Iceland, 20%
UK, 25%
Scotland, 25%
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 Ireland’s current difficulties is the number of bright young things leaving the country for better prospects abroad. One could argue that this isn’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 couldn’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 ‘London-based parties’, 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 UN’s most recent ‘happiness index’ has results as follows:
Norway – 1st
Ireland – 7th
Iceland – 14th
UK – 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.
I’m not saying that Ireland, Iceland and Norway’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 don’t know if this is wilful ignorance or simply a resistance to change but it is stultifying the independence debate and, to use the Guardian’s phrase, a ‘reality check’ 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.
#1 by Indy on March 3, 2012 - 10:41 am
I think the whole corporation tax thing is frustrating because people tend to analyse it according to a left/right understanding of things. It is proof for some people that the SNP are a bunch of right wingers because they can only see policy in that way. All politics is seen in that way – it’s almost like a competition for who can be most left wing irrespective of the context or the purpose of any policy.
Whereas the way I see it any government of any hue in Scotland should be looking to see what it can do to make Scotland more competitive because whether we like it or not we are always going to be competing firstly with the magnetic pull of the south east and then, as you say, with other areas on the periphery of Europe who have governments who use every lever at their disposal to give them an edge. That will be the case whether we stick with the status quo, whether we have enhanced devolution or whether we become independent. It’s just a fact of geography. We have to compete for jobs and investment and any government which does not look at every single option for making that easier is not doing its job properly.
#2 by Ben Achie on March 3, 2012 - 12:13 pm
Comparing Norway with Scotland, which country’s interests are most effectively represented within the EU? Probably Norway’s! But they are not even members! Yes, but they put a lot of effort into lobbying, and have a clear, sovereign, identity, and appear to be respected for that.
That’s a strong argument for outright independence, but the biggest one is probably the absolute decline of the UK state and its institutions. The “great” UK departments of state are shambolic, and probably have been for a long time. Look at the Home Office, MoD or DEFRA.
The Foreign Office managed to give Norway large chunks of the North Sea that were fairly shortly thereafter shown to be rich in oil deposits. The state of the Met must be a subject of lamentation too – what Levenson is digging up is hilarious, but the best joke was Sir Robert Mark’s in the 70s about catching more crooks than the Met employed.
Small countries can engender a lot of goodwill, both nationally and internationally, while large ones, due to “divide and rule” tactics internally, and their Great Power fixations, seem to have great difficulty doing that. A lot of things are going right in the world, but by being part of a dysfunctional state, Scots are missing out on much of this.
Trident is for bullyboys. In debating Scotland’s future, it is revealing to take a good look at the big picture.
#3 by David Smillie on March 3, 2012 - 12:19 pm
I am very familiar with Norway, Iceland and the Irish Republic, having lived in 2 of them and worked extensively in all 3. For the past year or more I have been saying what you have just outlined above, but people here are ignorant and the MSM works hard to keep things that way. Many people still believe the BBC is an absolutely neutral and dispassionate source of information so ‘Ireland is a basket case’. Deeply-buried sectarian attitudes reinforce a lack of critical appraisal of the Irish situation, especially by people who have never been there and have no intention of ever going. Iceland is regarded as the land of Noggin the Nog despite the fact that many Scots reside there, with a similar view of Norway by the population of the so called ‘West of Scotland’ who are largely orientated towards the USA.
Sites like Better Nation fulfill a vital role in countering such ignorance and misinformation. More power to your arm.
#4 by Angus McLellan on March 3, 2012 - 3:01 pm
London enjoys close proximity to the continent? Well, some of it anyway. But if you didn’t always have to change planes at Heathrow or Schipol or elsewhere the differences would be fairly trivial. And Edinburgh is closer to Washington, Moscow and Beijing. I hadn’t realised that until recently when reading a study on the proposed container transshipment port at Scapa Flow which made the point that Orkney is as close – by sea- as Rotterdam is to ports in the Baltic. And with the northern ice melting Scapa Flow will soon be closer to Shanghai and Tokyo too.
#5 by Aidan on March 3, 2012 - 7:59 pm
Rather all depends on your measurements. If we look at GNI (which strips out the revenues of foreign companies using the host as tax haven) the UK is the only one of the three to show a rise from 2009-2010: http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gnp_pcap_pp_cd&scale_y=lin&ind_y=false&rdim=region&idim=country:IRL:ISL:GBR&ifdim=region&tdim=true&tstart=1109808000000&tend=1267574400000
The UK is also ahead in absolute terms. GDP is a misleading indicator for use in countries like Iceland and Ireland because of the formers high interest rates and the latters low corporation tax – both of which encourage money to flow through them, rather than into them. By and large they aren’t attracting foreign investment so much as encouraging accounting trickery. If they were attracting real investment which lead to real production you’d expect GNI to reflect that and it clearly doesn’t.
GDP is also a more favourable for countries with high foreign debt but most UK debt is held within the UK where as much Irish and Icelandic debt is held by foreign holders http://en.wikipedia.org/wiki/Gross_national_income#GNI_versus_GDP
#6 by Angus McLellan on March 3, 2012 - 8:49 pm
Yes, it does depend on what you measure and how. So rather than look at GDP or GNI I think, on the whole, we might be better looking at the HDI.
And the “accounting trickery” you mention, that’ll be something like London then? It doesn’t tend to matter where things are produced, or service delivered in the UK, London hoovers up the nameplates, the jobs – usually including all the high-paying ones – that go with them and all the secondary related employment.
#7 by CW on March 3, 2012 - 11:30 pm
“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 ‘London-based parties’, 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 is bang on the money and the sooner we can face this honestly, the better. If there is any part of Scottish life that is corrosively infected with a wha’s like us attitude, it’s our attitude to emigration. We need to get serious about understanding the cultural and economic factors that underpin this. We often talk about the latter, but never seriously address the first, over which the shadow of the empire looms large, for obvious reasons (lots of emigration to run the empire, often in quite senior positions). The problem in Scotland is not so much emigration per se, which can be a very positive (and sometimes necessary) thing for those concerned, but the extent to which we lose people. In the 1980s we were losing so many people it looked like we might have a very serious demographic crisis on our hands in the form of a declining and ageing population. Thankfully we avoided it, but I still believe we don’t understand the extent to which our self-inflicted provincialisation in many spheres of life strongly influences the attitude that life is something that happens elsewhere.
#8 by Indy on March 4, 2012 - 8:35 am
But as well as measuring the people who leave we also ought to measure the people who come back surely? I would be typical there – ten years in London and then back home.
And of course, as with many nationalists I know, it was the experience of moving away from Scotland that made me a nationalist. You can often see more by taking a step outside a situation.
#9 by James on March 4, 2012 - 9:05 am
I believe Barbados is particularly effective 😉
#10 by Indy on March 5, 2012 - 11:03 am
Not many Scots move to Barbados but there are branches of the SNP in London and in Brussels because of the number of folk who decide to join the SNP after moving there. I know a number of folk who joined the SNP after a period in Brussels because they saw, day to day, that it was a huge disadvantage for Scotland not to be represented there as an independent member.
#11 by CW on March 4, 2012 - 12:59 pm
I’m not denying that that may very well be the case, a bit of perspective is certainly no bad thing, but Jeff’s statistics showed a remarkable and very worrying problem that Scotland was a very odd exception to a trend of significant population growth in other comparable places, and indeed to its own trend of population growth up to the inter-war years. In the Scottish Office of the 1970s and the 1980s in particular it was a source of enormous concern, but it was one they only understood in economic rather than cultural terms. Funnily enough only Jack McConnell ever really seemed to get this issue and make an attempt to understand the connection between our cultural masochism and demographic problems.
There’s been a few newspaper articles suggesting that population has started to grow steadily since 2002 thanks to immigration and a surprising rise in the birth rate, so maybe its no longer the problem it once was.
#12 by Craig Gallagher on March 4, 2012 - 11:01 pm
Alan Bissett mentioned something to this effect a few weeks ago in a BBC debate, that the Scottish culture of emigration to seek a better life had become a way of life, something accepted as part of the fabric of our culture, and that that alone served as notice that our entire sense of identity had a serious problem. Combined with the Caledonian Cringe, and other negative, self-deprecating and, frankly, self-immolating tendencies, it marks the Scots out as a surprisingly fragile cultural community.
In some respects, the collision between nationalism and unionism is between two cultural conceptions of Scotland, between the belief we can do anything and the notion that you don’t put your head above the parapet. I’ve been a nationalist since I was 19, and wholeheartedly embrace the tacky trappings of Scotland while at the same time am fiercely resistant to any attempt to denigrate or dismiss our national culture.
I’m more proud to be Scottish than I am anything else, yet I moved out of my country willingly, enthusiastically and with few regrets last year to spend what could be nearly a decade in the United States. The closest I’ve come to squaring that circle is my sense of despair at how difficult it has always been for Scots to lift their heads high and aim for the stars. And yet, and yet, I’m convinced independence is a certainty and that the collective sense and resurgent nationhood amongst us will carry the day.
We are a contradictory people. Wha’s like us, indeed?
#13 by Barbarian on March 5, 2012 - 2:04 pm
So Ireland and Iceland are not really in trouble then? People need to look away from the msm and realise that both countries are still in trouble.
I am sick to the back teeth of Scotland being compared to Iceland, Ireland, Catalonia (ffs!) and Outer Jibrovia.
The only country that is worth any comparison with is Norway. But Scotland will not become Norway overnight, and most certainly not if the current policy on Europe remains.
Time for a wee bit of honesty, because without that, the unionist side will push the fear factor forward.
#14 by David Smillie on March 5, 2012 - 8:51 pm
Iceland and Ireland are indeed in trouble, with no obvious way out for Ireland. Nonetheless they are not the hell holes that so many people are trying to paint them and neither are in the awful situation of Greece.
We do need to be aware of other examples. Faroe had a major collapse in its economy at a time when it was pressing strongly for independence from Denmark some years ago. Fish stocks collapsed, the economy effectively went bust and Denmark bailed them out financially. A fair proportion of the Faroese population emigrated as a result. No-one is suggesting that the Faroese economy is comparable to Scotland’s but it illustrates the unspoken fears that underpin many women’s view of independence, for example. These must be adequately addressed in the upcoming debate.
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