The Peter Zeihan Podcast Series - Ask Peter: Why Is Scottish Independence a Suicide Pact?

Episode Date: July 4, 2023

As the roman-candle-carrying-beer-drinkin’-red-white-and-blue-bald-eagles soar across the US in honor of American Independence, I figured we should talk about a country that will never experience that feeling…Scotland. Full Newsletter: https://mailchi.mp/zeihan/ask-peter-why-is-scottish-independence-a-suicide-pact

Everyone, Peter Zine here, coming to you from just above Dockman Valley, an area that is almost never foggy, but here we are. Considering the weather and the mood, I thought that it would be a great time to take the next in the Ask Peter series, this time specifically about Scottish independence. What are my thoughts, especially in the context of Brexit? Well, you know how I accuse people of not being very good at math every once in a while? This is one of those situations and really on all sides. So Scotland has benefited hugely from Union in financial terms. You know, cultural, let's put that to the side. That's a political question. No one can aside that except for the Scots themselves.

But from a financial point of view, the financial transfers from London to Scotland over the last century have been massive, especially in the last 30 years. And it's going to become more and more important to their survival as a province of the United Kingdom moving forward for simple demographic reasons. Now, for those of you who have traveled extensively in the United Kingdom, this is not going to be a surprise to you. But as you move north from London, the people you see become whiter, poorer, older, fatter, and unhealthier.

In fact, if Scotland were to secede and become its own thing, it would be the demographically the oldest country in Europe, would have the worst finances because of health care and pension costs, and it would be the least healthy. and that alone means that the European will, let me say this very clearly, never let Scotland in ever. And that blows a hole in any of the arguments for Scottish independence in my mind, because they would lose the transfer payments and they would be completely on their own in a country that has to import almost all of their food and increasingly a substantial portion of their energy unless they want to go back to soft coal. the oil money from the North Sea is largely gone so you know maybe it made some sense for Scotland to break away in the 1980s

when the oil money was flowing and the population was younger but now you're left with a country that has very little in the way of manufacturing most of the major banks are headquartered in London even the Royal Bank of Scotland has not had a great couple of decades and if we did have secession the question then of course even if you could join the European Union is whether it would work out there is talk of course in Scotland of what happens with currencies and the current plan of the secessionists would be to continue to use the British pound

until such time as they can make the full adoption of the Euro. Now, it's not so much that the Brits can stop someone from using their pound. They just won't make policy with Scotland in mind in that scenario. It also means that this is fully a negotiated divorce, kind of like the Czech Republic and the Slovak Republic succeeding or the theoretical Quebec succeeding, which means they would have to take their proportion of things like the national debt. and if they're doing that in an environment of a fixed currency that they can't control

and they don't have the oil money and there's no manufacturing money, yikes. And we're assuming here that, which means they're going to be in a financial situation that the EU won't touch anyway. So even if they did get the EU, they wouldn't get into the euro. They wouldn't be able to qualify. And then there's the issue, of course, whether or not the Brits decide to punish them for some of these decisions. It doesn't have to be anything strikingly overt.

It could be just what, say, the Brits did when all these protests and Hong Kong. Kong started a couple years ago, telling all the people in Hong Kong that if you want to apply for citizenship, we'll push you to the front of the line. About 300,000 people left. If 300,000 people leave Scotland, young people, that would be enough to destroy what's left of the economy almost overnight. And between economic likely destitution in the north and whatever's going on in London and the South, if you're under 30 in Scotland and you have an education, there's really no decision to make. You've probably been living in London already. So you lose the diaspora, you lose basically what would be remittances, you lose population, you lose the

financial transfers, you lose a stable currency, and all that so you can have fog by yourself. Economically speaking, geopolitically speaking, Scottish independence is a suicide pact. Does that mean it won't happen? Of course not. People do dumb things all the time. I'm going to go down there now.