Brexit: First the UK, then Scotland… then Texas?

Ryan McMaken
Von Misus Institute

That didn’t take long. Only hours after the final results came in for a British exit from the EU, political leaders in Scotland are talking about renewing their drive to secede from the United Kingdom.

Pointing to the fact that a large majority of Scots voted to remain in the EU, Scottish advocates for independence are now claiming (convincingly) that Scotland is leaving the EU against its will.

Many of us who advocated for Scottish secession in 2014 were, of course fine with Scottish secession at the time. And we’re still fine with it now. Scotland should be free to say good bye and got its own way.

Some opponents of Scottish exit, however, have claimed that Scotland is too small “to go it alone.” Defenders of Scottish independence call this the “too wee, too poor, too stupid” argument.

Even the most rudimentary analysis, however, shows that size is not an issue for Scotland. With an official GDP of approximately $245 billion, Scotland is not too much different from Ireland, Finland, and Denmark. It’s economy is much larger than that of Iceland (16.7 bln) and New Zealand (172 bln).

With a population of 5.3 million, this puts Scotland either similar to or larger than Denmark, Norway, Finland, New Zealand, and Ireland.

With a population this size, Scotland’s GDP per capita comes out to around $45,000 which naturally is similar to the UK overall today, and also similar to Canada, the Netherlands, Austria, Finland, and a number of other European states, both large and small.

Some will argue that Scots cannot go it alone because they rely too much on English taxpayers for transfer payments such as pensions. This is no doubt partially true, although the UK government also extracts tax dollars from Scots, regulates Scottish trade with the EU and everyone else, and perhaps the Scottish simply want independence even if it means a temporary disruption in living standards.

Overall, though, there’s no denying that Scotland even by itself is well within the realm of ordinary wealthy nation states, in terms of population, and the size of its economy. Scotland is in no way an outlier.

The claim that it is “too small” was repeated today, however, in this article by Roger Bootle at The Telegraph in which he writes:

Believe it or not, there is an extensive economic literature on the subject of the optimum size of a country, or more accurately, political association. From the economic point of view, as the size of political entities gets larger, there is scope for economies of scale in government and the provision of public goods such as defence. Equally, within a single political entity there are no restrictions on trade, such as tariffs or quotas so, other things being equal, the gains from trade are maximised as political entities grow larger.

Yet there are limits to the desirable size of political entities, such that, as things stand anyway, a single world government would not be optimal. The larger, and certainly the more heterogeneous, a political entity is, the more resources are taken up with arguing about distribution, that is to say who should benefit from various sorts of public expenditure, and who should pay for it. The quality of government tends to deteriorate.

In this map, I’ve compared American states to foreign countries of similar GDP:

For more similar maps, see here.

Moreover, few Americans appreciate how enormous some American states are, especially the largest four states: California, Texas, New York, and Florida.

[RELATED: Which States Rely Most on Federal Spending]

In terms of both population and GDP, California is about equal to Canada — and with much better weather. Texas is equal in economy and population size to Australia. Pennsylvania’s economy is similar in size to Switzerland.

While secession of American states is often dismissed as absurd, there are few reasons to believe that a state like Texas — to name just one example —could not immediately transition from state to nation-state. With a large economy, port cities, oil, and easy access to European, Latin American, and even Asian economies by sea, economics arguments against such a separation fall flat. And of course, the success of smaller states like Norway, Denmark, and Switzerland illustrate that bigness is truly unnecessary. Naturally, many other states even beyond the biggest states — such as Pennsylvania, New Jersey, North Carolina and others — could do the same. These states would all be among the largest economies on earth were they to leave the US.

“But what about national defense!” some may argue. “Wouldn’t Texas be constantly at war with the United States?” Experience suggests that Texas would be at war with the United States about as frequently as Canada has been at war with the United States: zero times since 1815.

International wars rarely erupt between countries with common languages, common histories, and common economic interests. Should Scotland secede, the UK won’t be sending in the tanks, and Scotland could easily join the realm of independent nation states, just as many American states could do the same.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Image source: Alasdair McKenzie www.flickr.com/photos/alasdairjmckenzie/

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