EDINBURGH — The people of Scotland
decide Thursday whether national pride outweighs economic risk.
The vote on independence is taking place without any of the usual
factors that drive the dissolution of great nations: no war, no acute economic
crisis, no raging territorial dispute. In fact, the situation is quite
the opposite: peace, a slowly recovering economy and a central
government in London that promises to grant more powers over taxing and
spending to the Scottish Parliament.
The Scots cannot
claim they have not been warned about the uncertain and even dire economic
consequences of splitting from the United Kingdom, on issues like the currency,
investment, pensions and declining energy revenues from the North Sea.
Economists normally as ideologically
disparate and disputatious as Alan Greenspan, Paul Krugman, Adam S. Posen and
Niall Ferguson all have predicted a negative economic outlook for an
independent Scotland, while expressing anxiety, too, about the impact of such
uncertainty on the larger European and global economies.
Those warnings, echoed by many British leaders and
business executives, and traditional feelings of connection and kinship on this
island, may narrowly win the day.
But half of Scots, give or take a few percentage
points, are expected to vote for independence anyway. Some do not believe the
negative forecasts, calling them “fear-mongering.” Some say they resent the
sense that an outside elite is patronizing them or doubting their capacity. And
many will vote yes for other reasons — to feel responsible for their own fate
and to build, or rebuild, what they hope will be a fairer, less unequal country
of their own, for better or worse.
Alyn Smith, a pro-independence Scottish member of the
European Parliament and a former corporate lawyer, said that the British
government did what was best for the United Kingdom, not necessarily for Scotland.
“The U.K. does not incentivize how to grow the Scottish economy, but the U.K.
economy,” he said.
Those opposed to independence, called the “Better
Together” campaign, have focused so much on the potentially negative effects of
independence that many Scots seem to have simply stopped listening, or decided
that they prefer the reassurances of Alex Salmond, the leader of the
independence movement. Mr. Salmond maintains that Scotland can stand on its
own, that the British government is “bluffing” when it says it has ruled out a
currency union, and that the European Union is exaggerating the difficulties
Scotland would face in joining the bloc as a new member.
“The no campaign has been prophesying that the sky
will fall for so long that it’s just all noise and not credible anymore,” Mr.
Smith said.
There is resentment, too, among independence
supporters at what is seen as dismissive attitudes of British elites. They
point to an appearance in Scotland in February by the chancellor of the
Exchequer, George Osborne, when he declared that it would be impossible for
Britain to have a currency union with an independent Scotland — but took no
questions on the topic, one of the most important of the campaign.
“People were offended that this politician from southern
England, with no real standing in Scotland, should talk to us in those terms,”
Mr. Smith said.
Iain Macwhirter, a columnist for The Sunday Herald
newspaper, called Mr. Osborne’s visit a turning point in the campaign. Why is
“Project Fear” not working? he asked. “Why have so many Scots refused to heed
the warnings of press, politicians and banks?” His answer: “Well, in a
nutshell, George Osborne happened.”
Those who favor independence argue that Scotland is
politically and culturally alienated from a government in London dominated by
the Conservatives and the power of money. Many in left-leaning Scotland say a
yes vote would bring them not only autonomy but also a more Scandinavian-style
social democracy — nuclear free and more equitable.
Some in the yes campaign seem to be making
quasi-economic arguments of their own, selling Scotland as a socialist paradise
of enhanced benefits fueled by endless amounts of North Sea oil and gas.
Yet the warnings of British and international
economists are not easily dismissed. They tend to center on questions of the
currency, budget deficits, energy resources and relatively lower growth in
Scotland, as well as reduced clout in global affairs for a shrunken Britain.
Tight polls have many in Washington freshly alarmed,
with the White House and many American heavyweights voicing strong support for
keeping the United Kingdom together.
The no camp warns that Scotland would lose not just
the British pound but a sizable chunk of its financial sector as banks and
insurers flee south, taking jobs and capital with them. With the future of oil
revenues uncertain and declining, an independent Scotland could not afford its
current welfare state, let alone expand it, the argument goes.
Mr. Greenspan, a former chairman of the Federal Reserve,
told The Financial Times this week that the
economic consequences of independence would be “surprisingly negative for
Scotland, more so than the Nationalist Party is in any way communicating.”
He said that
pro-nationalist assurances that Britain would continue to serve as Scotland’s
central bank after a divorce were most likely wrong, and that attempts by a
newly independent Scotland to use the British pound would “break apart very
quickly.”
Others see
both the risks and benefits of independence as overstated. The new nation would
be well-off to start with, but on course to grow poorer: Scotland has a G.D.P.
per capita above most regions of Britain, lagging behind only London and the
southeast of England. But Scottish productivity is 11 percent lower than in the
rest of Britain, and its population is unhealthier and aging more rapidly. Mr.
Salmond’s plan to increase public spending by 3 percent a year means that even
if the Scottish government spends all of its oil revenues, the hole in its
finances will grow without higher taxes or higher-than-anticipated economic
growth.
If the
pro-independence side wins, economists predict, Scotland would face the uncertainty
that would hang over 18 months of divorce negotiations, which
The currency has been the
biggest flash point in recent months. Even left-leaning economists warn that a
currency union that lacks a fiscal union and a true “lender of last RESORT
” would make Scotland vulnerable to the same
risks that nearly undid the eurozone. Excluding oil, Scotland ran a public
sector deficit of nearly 11 percent of its national income in 2012-13 — a
bigger gap than in Greece or Ireland.
” would make Scotland vulnerable to the same
risks that nearly undid the eurozone. Excluding oil, Scotland ran a public
sector deficit of nearly 11 percent of its national income in 2012-13 — a
bigger gap than in Greece or Ireland.
“In psychological terms,
independence represents a form of magical thinking,” said Colin McLean, a
Scottish fund manager. “Without understanding the precise mechanism, this
single change represents a cure-all for widely conflicting aspirations ranging
from growth to redistribution.”
Not all business leaders are
against independence. Ken Beaty, a former investment strategist and a Scot,
lives in England so cannot vote, but said he saw the struggle for Scots as hope
versus fear. “But some things are worth taking risks for,” he said.
Stephen Gethins, a former
adviser to Mr. Salmond, said that economists were focused too much on the
challenges of independence instead of on the opportunities presented by the
Scottish resources of oil, gas and renewable energy through wind and waves; of
whisky, food and tourism; of a thriving energy-services sector; and of a people
that have traditionally exported their best minds to London and the world.
Mr. Gethins pointed to Joseph
Stiglitz, a Nobel Prize-winning economist, who has dismissed most of the
warnings, arguing in The Scotsman that “independence may have its costs —
although these have yet to be demonstrated convincingly; but it will also have
its benefits,” which Scotland can recapture through the taxes it would not have
to share with London.
The referendum allows those 16
and over to vote, and while younger voters are divided in their opinions, they
also appear more likely to be optimistic and less likely to be swayed by
economic arguments. Kate Macauley, 19, flew home to Glasgow from a summer job
in Massachusetts to vote.
“There’s nothing sure, but I
want to make our own way, to improve things we want to improve,” she said. And
if the noes win? “I’d be devastated,” she said. “I’d just hope that somehow we’d
have another chance.”