First The UK, Then Scotland... Then Texas?

Tyler Durden's picture

Submitted by Ryan McMaken via The Mises 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.

Bootle is correct that there are certainly advantages of size when it comes to national defense. Obviously, it's much harder for a foreign invader to overrun Russia than Poland. What Bootle misses, however, is that these issues can be addressed through confederation rather than through political unification. The original purpose of the United States, of course, was to act as a confederation for purposes of national defense. Member, states, however, remained autonomous within their own borders. Similar structures have existed throughout history, from NATO to the Hanseatic league of northern Europe. 

Scotland need not be part of the UK to enter into a defense agreement with the British. 

The rest of Bootle's argument appears even more specious. It is not a given, for example, that larger states facilitate trade. As the UK experience has shown, membership in the EU has granted access to some markets, but it has cut off access and flexibility with other markets. (Norway and Switzerland have access to these same markets, by the way, without EU membership.) 

This was also an enormous issue and source of conflict in the United States, in regards to southern states. Yes, membership in the United States facilitated trade among states, but trade between Southern states and foreign markets was hampered by US tariff policy. To claim that gains from trade are "maximised" by larger states is rather overstating it, to say the least. 

In fact, there are many reasons to believe that the "optimal" size of state is considerably smaller than what Bootle suggests it is. (The subtext of Bootle's article, of course, is that Scotland is below the optimal size.)

As Peter St. Onge wrote in 2014 about the Scottish referendum at the time: 

So small is possible. But is it a good idea?

 

The answer, perhaps surprisingly, is resoundingly “Yes!” Statistically speaking, at least. Why? Because according to numbers from the World Bank Development Indicators, among the 45 sovereign countries in Europe, small countries are nearly twice as wealthy as large countries. The gap between biggest-10 and smallest-10 ranges between 84 percent (for all of Europe) to 79 percent (for only Western Europe).

 

This is a huge difference: To put it in perspective, even a 79 percent change in wealth is about the gap between Russia and Denmark. That’s massive considering the historical and cultural similarities especially within Western Europe.

 

Even among linguistic siblings the differences are stark: Germany is poorer than the small German-speaking states (Switzerland, Austria, Luxembourg, and Liechtenstein), France is poorer than the small French-speaking states (Belgium, Andorra, Luxembourg, and Switzerland again and, of course, Monaco). Even Ireland, for centuries ravaged by the warmongering English, is today richer than their former masters in the United Kingdom, a country fifteen times larger.

 

Why would this be? There are two reasons. First, smaller countries are often more responsive to their people. The smaller the country the stronger the policy feedback loop. Meaning truly awful ideas tend to get corrected earlier. Had Mao Tse Tung been working with an apartment complex instead of a country of nearly a billion-people, his wacky ideas wouldn’t have killed millions.

 

Second, small countries just don’t have the money to engage in truly crazy ideas. Like Wars on Terror or world-wide daisy-chains of military bases. An independent Scotland, or Vermont, is unlikely to invade Iraq. It takes a big country to do truly insane things.

A Lesson for American States 

When Americans indulge in thought experiments about the possible secession of American states, it is often assumed that most US states are too small "to go it alone." Indeed, most Americans greatly underestimate the size of many American states in relation to numerous independent and prosperous existing nation-states. 

Were Scotland a US state, for example, it would be only a medium-sized state, with a GDP smaller than the gross state products of both Missouri and Connecticut, making it about the 25th largest state in terms of GDP. Population-wise, Scotland is about equal to Minnesota and Colorado (I have removed China and the US combined economy from this graph to improve scale): 

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. 

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.

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InjectTheVenom's picture

TEXIT baby, fuck yeah ! ! !

TBT or not TBT's picture

There is no Texas. There are the Democrat-ized cities. And there are the surrounding suburbs and sprawling private property. Actually a lot of the USA is like this.

Aristotle of Greece's picture
Aristotle of Greece (not verified) TBT or not TBT Jun 24, 2016 9:12 PM

Americans don't have the b@lls to do it since most of them have been turned into fat complacent Pavlov dogs.
http://wp.me/p4OZ4v-42I

Global Douche's picture

I for one am NOT a fat, complacent Pavlov canine. I actually work for a living! Furthermore, I will move to and help defend Texas if it chooses to Texit. Of that, there's no doubt. She will survive if there's but one state which can pull it off and stop pulling DC'es fart finger. If Travis County doesn't want to come along for the ride, their newcomer lefties can simply sell off and choose to leave, or they can actually possess spleens and males can learn to grow a pair!

You'll see the Sea Change in this nation when the freebies stop coming. There's a Bobby Bare tune from the early 80's "When you ain't got nothin', you ain't got nothin' to lose!" and I see that coming back around. The pot with the collective frogs is starting to steam up. You don't see what I'm seeing around the corner - that America will rebound and it will make your jaw drop!

Zero Point's picture

If Texas ever seceded, I'd move there from Australia and help you. Most Americans I like tend to come from there. Maybe it's just because I like to hunt and fish. And hate the government.

AlaricBalth's picture

FLexit !!! Why not? 18th largest world economy, great tourism attractions, the hottest women, a new AK-47 factory in Pompano, missile manufacturing near Orlando. We have military bases and major ports.

FLEXIT!!! We're weird enough to do it!!!

jcaz's picture

I like it!  Plus we have the highest rate of flunked-out pregnant teens in the country-  cutting us off of the Government tit is the best way to clean this sand bar up.....

Future Jim's picture

"Scottish advocates for independence are now claiming (convincingly) that Scotland is leaving the EU against its will. "

Scotland wants to stay in the EU? I now see Scotland in a whole different light. They're a bunch of pussies.

cdevidal's picture

I'm ready for Mexit... get illegal Mexicans out

 

Washington would never allow a Texit though. Texas is one of the most prosperous states and brings in so much U.S. tax revenues and oil sales. Of course the government doesn't want you buying an AR-15. Of course they heavily armed the IRS.

svayambhu108's picture

I recall that piece from Dmitry Orlov,  where he called Britain an anti-EU tool, and Scotland a sort of  anti-anti-EU

JMT's picture

where is this place? in the northeast near Boston or NYC?

AlaricBalth's picture

And we have more golf courses than those haggis eating Scots.

FLEXIT!!!

Handful of Dust's picture
Brexit: Putin Takes a Swipe at Cameron After EU Leave Vote

 

The Russian leader waited over a month to respond, but did so in searing style, saying Russia would never intervene in Britain’s decision making and taking a shot at Cameron’s behaviour and popularity.“The statements of the British Prime Minister Cameron prior to this vote, in which he claimed to voice the position of Russia, has no basis,” Putin said at a conference in Uzbekistan on Friday. “I think this was nothing but a wrongful attempt to influence public opinion in his country.

 

“This is nothing but a display of a low degree of political etiquette,” Putin said, Russian news agency Interfax reports, candidly pointing out that even this rhetoric did not have the desired result for Cameron.

The Russian president also added that whether the decision had “more positives than negatives” only time could tell, but he believed that, as evidenced by the result, the majority of Britons did not like the EU.

 

http://www.newsweek.com/brexit-putin-swipe-david-cameron-uk-eu-leave-vot...

Tarzan's picture

If Texas sticks it to the DC cabal, I just might have to return to the land of my fathers, but then, Florida's kinda nice too, with more Golf Courses then beloved Texas, and no State taxes.

ali-ali-al-qomfri's picture

Republic of Texas 1836-1846,

Texas had a taste, hmmmmmm

hardmedicine's picture

THERE's no state taxes here....... what you talkin bout???

 

cheech_wizard's picture

Just really high property tax...

jcaz's picture

Yes, while Greeks are the hardest-working people in the world......

Since when did Greeks care about balls, Aristotle?  Other when they're slapping against your ass,  I doubt you have any use for them....

swmnguy's picture

Good Lord, how many accounts do you have to pimp your "Biblicism" site?  I might have had some interest if you'd mentioned your site a few times, and then put up clear, non-obscured links.  You could make your points on ZH and have some kind of tagline about how you go into it in more depth on your site, as Cog Dis and others do without irritating people or insulting their intelligence.

But that's not what you're doing.

SimpleJackBlack's picture
SimpleJackBlack (not verified) Aristotle of Greece Jun 25, 2016 11:28 AM

If it were any state in the union it would be Texas first.

The Saint's picture

The problem is the national debt.  If Texas were to succeed how would they take their share of the national debt?

Oldwood's picture

Texas suffers from the same blight as America the whole. People used to come to Texas to be Texans, but most now only come for money with no real intent of staying, of being a Texan. It's a rental.

The things that used to define Texas...its hardships and rugged individuality that were required to survive, do not exit in the metro areas where the bulk of the population is. If the money dried up they would be gone in a heartbeat without a fairly well or goodbye. But this is what most of America has been reduced to.

Nationalism or even localism has been turned into a dirty word. To have ANY allegiance to your community,city or state is considered a mental defect that should be monitored. You can only have allegiance to cherished identities as determined by the state.

Stuck on Zero's picture

Texas can't secede for the same reason Quebec was prevented from seceding: debt. The Canadian government told Quebec that if the seceded they would have to take their share of the Canadian debt. Of course, that's a crippling amount of debt.

you enjoy myself's picture

Texas is not a bunch of unarmed bitches.  They won't get "told" anything by the federal government should they decide to actually secede.  Seriously, how many people would move to Texas on principle alone should a Fed/Texas battle appear to be brewing?  Forget about normal citizens capable of autonomy and self defense, you'd probably have 75+% of all special ops alumni moving there for the specific purpose of defending against a federal invasion.

jcaz's picture

Maybe, but unfortunately, Texas politicians ARE a bunch of unarmed bitches that too gladly have bent over for Obama-  they all got hard when Barry gave them a whiff of Federal oil money and sold you guys out.

First overthrow your OWN fucked-up government,  and THEN talk to us about the Federal government.

hedgeless_horseman's picture

 

Ron Paul is a Texan, but retired.

Unfortunately, so is Banker Bitch Kevin Brady: http://www.zerohedge.com/news/2016-05-24/nobody-ready-willing-or-able-as...

And so is Israel's and Goldman's Bitch Ted Cruz: http://www.zerohedge.com/news/2016-03-14/ted-cruz-illustrates-how-use-de...

As is Bar Association and Banker Bitch Cornhole: http://www.zerohedge.com/news/2016-01-08/unarmed-standoff-houston

So, yes, we are fucked.

Stuck on Zero's picture

Actually, I've been hoping that Washington DC would secede from the union and leave the rest of us alone.

Pumpkin's picture

If Texas does leave, their economy will quadruple in 10 years.  I'll be among the first to go.

Global Douche's picture

Apparently, citizens of Quebec province are considering an exit again. And what can the Canucks do monetarily? They've sold off damn near all their gold! Bwahahahaha!!!

Global Douche's picture

Apparently, citizens of Quebec province are considering an exit again. And what can the Canucks do monetarily? They've sold off damn near all their gold! Bwahahahaha!!!

20-20 Hindsight's picture

Quebec ain't going nowhere.  They had a window of opportunity in the 70s-80s, when their economy was running on all cylinders, the population was younger and brimming with creativity and entrepreneurship.  Those days are gone.

SilverRhino's picture

If we take the debt we take the assets.   

Nukes and an aircraft carrier group for openers.    Second Armored will make a nice border guards tank division as well.   

Oh?   We don'tget the toyz?   Fine, keep the debt.  

BlindMonkey's picture

Nukes yes but that aircraft carrier stays.  It is overkill for the gulf of Mexico and costs a ton to keep running. 

goldsaver's picture

Texas won't secede because the legislature lacks the balls to do so. During O'bambie's first term the Texas legislature passed an anti-TSA bill making it a felony for a government employee to touch a citizen without consent or probable cause. O'bambie warned that he would shut down all flights coming in and out of Texas to other US airports if the TSA was not allowed to grope citizens. The brave brave Sir Perry vetoed the bill the same day.

Bob's picture

And the same damn thing is gonna happen with Brexit, according the Paul Craig Roberts:

http://www.paulcraigroberts.org/2016/06/24/the-brexit-vote-paul-craig-ro...

http://www.paulcraigroberts.org/2016/06/24/despite-the-vote-the-odds-are...

Anybody remember what happened with the Greek referendum defying the Troika?

They were crushed.  Same thing will happen in England long before the scheduled date--two years from now!--for their exit from the EU to actually take effect.

shovelhead's picture

What are they going to do?

Send Muslim Jehadis to swim the Channel?

crazzziecanuck's picture

Not the same.

 

The same neoliberals that dominate the EU dominate the UK and every other "developed nation."

 

Nothing will happen to the UK in terms of dirty shenanigans because those that run those games know full well that the leadership of the UK are on board with their overall aims.  This wasn't the same case with Greece because it performed SUBSTANTIVE reform.  For example, Greece proposed that the EU work to close tax loopholes to prevent rich Greeks from skirting taxes.  Djisselbloom freaked out.  Why?  Because Djiseelbloom was from a nation whose nation profits greatly from the "Dutch Sandwich" tax evasion system.  The result, when Greek didn't squeeze pensioners or cut taxes, the Eurogroup threatened that Greek banks would be cut off.  When Varoufakis proposed to go after tax evaders, the Eurogroup *CUT OFF* Greek banks.

 

This is why Brexit won't do sh*t.  Maybe it will slow them down a hair.  The rot is pervasive and runs very, very deep.

Déjà view's picture

Perry is a neocon RINO like most of his ilk...

Texans became debt slaves under his tenure. Texas State/ Local debt ABSOLUTE/ PER CAPITA is second highest amongst all states.

Tejas beholden to GS/Wall Street...

The Saint's picture
The Saint (not verified) Déjà view Jun 25, 2016 1:20 PM

Texas State debt isn't even in the top 5 per capita.

 

Top 5 State Debt Per Capita

Alaskia $40,714

Hawaii $33,111

Connecticut $31,290

Ohio $27,836

Illinoise $24,959

 http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report#ixzz4CcFGiFH2   Texas is second in local debt per capita of the big states . http://www.politifact.com/texas/statements/2013/dec/06/debra-medina/texa...  
Déjà view's picture

http://www.forbes.com/sites/realspin/2016/02/26/the-texas-borrowing-bing...

Think the federal government is the only one with a debt problem? Think again.

According to the Texas Bond Review Board (BRB), the state agency charged with overseeing debt issuances, Texas’ total local debt (including principal and interest) exceeded $338 billion in 2015. This means that every man, woman and child in the state owes about $12,250 for his or her share of all the debt incurred by city, county, school and special purpose governments. And the tab for Texas taxpayers is growing fast.

Just five fiscal years ago, in 2010, Texas’ local debt totaled $309 billion. Since then, however, local governments have gone on a borrowing binge, adding $30 billion in new debt, which works out to be almost $13,000 borrowed and spent for each new Texan.

Putting Texas’ problems into perspective 

To put Texas’ local debt problems into perspective nationally, consider a new report from the BRB: Among the top ten most populous states in the nation, the principal amount owed by Texas is $225 billion and is the 2nd largest total next to only California who is $268 billion in the hole. Meanwhile, Texas’ local debt per capita of $8,350 ranks as the 2nd highest total, behind only New York’s $10,646 per capita. Both the aggregate amount owed and the debt per capita are well in excess of the nationwide averages.

Déjà view's picture

Combining state and local debt service outstanding, the total is $415.4 billion, or more than $15,000 owed by every man, woman, and child in the Lone Star State. That substantial amount must be resolved in some fashion before we are all burdened with even higher taxes and fees, resulting in fewer opportunities to prosper.

http://www.texaspolicy.com/blog/detail/15000-owed-by-every-texan-for-sta...

States with the highest amount of state and local debt per capita in the 2012 fiscal year (the most recent data available from the Census Bureau) were New York ($17,405 per person), Massachusetts ($14,517 per person), Alaska ($13,066 per person), Connecticut ($11, 928 per person), and New Jersey ($11,623 per person).

http://taxfoundation.org/blog/where-does-your-state-stand-state-local-de...

Déjà view's picture

Your link seems very dubious...

Considering NATIONAL debt is nearing $60,000 per capita !

 

hardmedicine's picture

Yeah, we have a LOT of RINO's up there.  REally I believe we need to have a Big Texas awakeneing.  we need to clean up this faux conservative hell hole of a capitol they call AUSTIN.  Recently read that more than 60% of austin school children (public school anyway) were hispanic.  That's from 40 years of open borders folks.  Texas governor needs to call out the national guard to protect our border and we need to take Texas back first.  That's just my  2 cents anyway

 

Déjà view's picture
Demographics show the changing face of Houston

 

Updated 8:42 pm, Tuesday, September 23, 2014

report drawing on 2010 census data backs up that assertion, showing Houston's ethnic mix to be 39.7 percent non-Hispanic white, 17.3 percent non-Hispanic black, 35.3 percent Hispanic, 7 percent Asian and 0.7 percent other/Native American/Pacific Islander

mary mary's picture

Quebec people fell for that?  I don't think the 13 Colonies, when they seceded and became the USA, paid any "their share" of Britain's debts.

That's why it always comes down to the Military.  The purpose of the Military is to back you up when you tell foreign nations that you aren't going to pay them anything.  Countless wars have occured because foreign nations "were forced to invade" to collect debts.  You have to have your own Military to resist that invasion.

IMTanuki's picture
IMTanuki (not verified) Stuck on Zero Jun 25, 2016 8:46 AM

Great point. They talk a great game, but their share of $19T would be crippling.

yogibear's picture

The central government in Washington is corrupt. Time for those good states to leave and let socialist states like California and Illinois bankrupt themselves. 

Handful of Dust's picture

There's very little "community spirit" anymore in many parts of America and Texas is not exception.

 

With the massive influx of foreigners from Mexico, the Middle East, Asia, and so on, few identify with America let alone Texas. Will Durant details this as one major reason Rome collapsed; all the barbarians who flooded into Rome had little allegiance to the values and goals of the Empire and little interest in saving it. When I lived there in Texas a short time ago there were only two people who were native Texans (besides me) in my immediate area; the others had moved here to make money thru small businesses (Asians, Muslims, etc) and the people who worked on lawns, in stores, etc were also not from Texas...most were from Mexico or the Middle East or Pakistan.

Take a stroll thru Houston Galleria Mall on the weekend and that's what the big cities are composed of now.

You'd have to move to Boerne, Texas or similar to be relatively surrounded by "Texans."

Oldwood's picture

 

We must learn to live with less while surrounded by "plenty" to find peace and happiness.

At least that's what I've heard. Personally, I wouldn't know as I'm knee deep in it.