9 Oct 2014

Should I stay or should I go? Marriage counselling for the UK

Nadine F writes:*

If you haven’t been living under a rock for the past month, you may have noticed that the people of Scotland took part in a referendum last week in order to determine the fate of the United Kingdom. The Scottish people were asked ‘Should Scotland be an independent country? Yes or No’ and they took to the polls in droves. 84.5% of voters turned out on referendum day, and the No vote squeezed through to clench the win, and save the union, with 55% of the votes.

Whilst the pro-independence campaign opted for the punchy name of ‘Yes’, the pro-union side united under the banner of ‘Better Together’. Perhaps not the most inspiring choice of campaign monikers, armed with the entirely uninspiring, (and appropriately British) slogan of ‘no thanks.’

Comedian John Oliver perhaps put it best when he said (in a hilarious pre-referendum broadcast which you can watch here):
It sounds like what people say to convince themselves to stay in a dead marriage, ‘look, look, I’m not saying we’re good together Marion, I’m saying we’re better together. Tax wise it’s preferable to the alternative. Why are you crying, Marion? I’M SAYING SOMETHING NICE.
Perhaps he’s onto something. Perhaps our 307 year long marriage has become slightly stale over time and this referendum was Marion’s final ultimatum to her insensitive jerk of a husband (We’ll call him Billy, after Scotland’s greatest) .

Like all relationships, this one can be broken down simply by looking at what Scotland had to gain and lose in breaking all economic ties with its long time partner, and since the UK has decided to stick it out for the time being, let’s give some suggestions as to how we can get this marriage back on track.

The Yes side is pretty clear on their issues. "Scottish money" from taxes and (most contentiously) North Sea Oil not all being spent in Scotland is a big one. Westminster maintains control over crucial areas of public policy, most notably defence, and huge spending on Britain’s ‘illegal wars’ has been a major source of Scottish disaffection over the past decades. There’s also been a lot of talk about how Scotland can more than provide for itself with oil reserves, tourism, whiskey and renewable energy, and that Scotland is essentially a strong independent country who don’t need no England.

Is this a natural resource? (Photo by Nadine F)
Why? It is true, Scotland’s natural resources are by far its biggest financial asset, with a prosperous oil industry flourishing in the north east, and rumours of untapped reserves worth billions to the west. There’s more to this little country than just that though. Thousands upon thousands of foreign students flock to Scotland every year to pursue higher education, adding significantly to the working age population in the country [pdf].

Leaving, on the other hand, would create all kinds of awkward financial issues; who gets the pound, the pesky issue of dwindling oil reserves, and the swift removal of the safety net which stopped Britain from going entirely down the toilet after ’08. Not to mention the barriers (be they tangible or simply psychological) to the thousands of workers, tourists and students coming in and out of Scotland to and from the rest of the UK every day.

In staying, Scotland is running the risk of the UK tightening the purse strings even further, and investing more and more Scottish sterling in policies that the majority of Scots do not support.

Therapist’s advice:
Billy. Loosen up a little. Marion may be smaller and less populous than you, but she’s pulling her weight, pumping black gold out of the ground and into the joint account, taking in everyone else’s kids for their rebellious student years, and on top of all that she’s still holding onto your nukes for you, even though she hates them and wants them gone. Marion, perhaps your mistake was getting ready to leave, but having nowhere to go. You’re fantastic, and don't you forget it. Keep pushing him for more say on how things are run in your domain, and hopefully he’ll begin to understand.

Bottom Line: As Scotland’s leading historian put it, to justify his pro-independence stance, "there's very little left in the union except sentiment, history and family," and even if we disagree with him on whether that’s true or not, isn’t family still worth sticking around for?

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.


Anneloes de Ruiter said...

Nadine, nice post! I really enjoyed reading it. Your comparison on the union as an unhappy marriage got me thinking about our class example of marriages as an uncertain investment. The Union was once established to the benefit of all involved. However over time power changes, interests divert and asymmetric information arises. One could try to remedy this by re-negotiating the contract however if power has shifted this may not be feasible. To then leave may pose the economically most feasible option, however like with marriages, there may be more to the relationship then figures.

johanna said...

Hey Nadine, I have several points for you:
1. I agree with Anneloes, very nice post, very well writtein, good humorous take on a fairly serious topic!
3. I actually like how your post goes together with Ezra's post (http://www.aguanomics.com/2014/10/economics-can-help-your-relationships.html) He advises people (or countries?) in relationships to take a step back and assess whether they benefit from them, and if not, how to change that. This is basically what is stated in your Bottom Line as well. Do you think his theory is applicable to your post?

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