Ian Jack tells us that Scotland could thrive as with Denmark – this is entirely true. The bit that an independent Scotland would need in order to thrive like Denmark would be to be like Denmark of course, this being something that no one in Scotland either understands or is recommending.
For there’s a secret to those Scandinavian economies. It’s that while they do have highly redistributive states – a choice that you may make if you like, I don’t but so what – they also have highly capitalist and free market economies. Denmark, for example, has been pointed to as the most free market and capitalist country – OK, perhaps “most economically free” – on the planet.
This is Scotland as Scandinavia, a version of the future that has been tickling Scottish political appetites since the 1960s. In the words of Sillitto and his co-authors, “many Scots like the cohesive and egalitarian social models of the small Nordics which lead the world in many economic and wellbeing indices”. Sillitto wants Scotland to emulate their industrial innovation, their social policies and their “hard, focused work ethic”.
Well, yes. But what does it actually mean to be more like Denmark. Sure, the unemployment pay is great. So are the training opportunities while unemployed. After two years it all stops. No, really, everything – if you’ve not applied yourself to that training and still can’t get a job after two years you get nowt.
Further, can you imagine the screaming if someone tried to do all these things in Scotland?
And yet the two models differ in many respects. Most informed observers would probably argue that the Nordics have more “socialist” economies, perhaps much more socialist. On the other hand in many respects the Nordics are much more free market than even the US. Sweden has a 100% voucherized school system. Their Social Security is party privatized. Denmark has for-profit fire fighters. Several Nordic countries have privatized industries that are publicly owned in the US (airports, air traffic control, passenger rail, water companies, mail delivery, etc.)
However if you restrict your analysis to the 8 categories out of 10 that exclude size of government (i.e. exclude the tax and spending categories) then Denmark is number one in the world in economic freedom.
It’s possible to describe this coming from either end. The first is that if you’re going to have a high tax, high benefits, country then you need to have a strongly free market economy underneath it. Otherwise the disincentive effects of the tax will be too great for there ever to be economic growth.
The second is that if you’ve already got that high redistribution then you don’t need to regulate in any other parts of the economy – that predistribution perhaps – because you’ve already dealt with that equity problem.
Which does give us a bit of a test. GM once approached Sweden and said that the Saab car plant would need to be closed because no one seemed to want to buy the cars of the factory. GM did so expecting a good socialist-type government to insist that of course subsidy would be forthcoming to keep it going. They were rather surprised to find the Swedes agreeing, sure, close it. After all, if no one wanted the cars or the factory why waste money keeping the place open?
So, can we imagine that happening in Scotland? Obviously, not Saab, but the general idea? In a country where the government owned ferry line manages to bankrupt the government owned ferry building company through incompetent design and contracting?
Hmm, that might be a tough sell then, eh?