One reason why independence for Scotland would be a bad idea

There is now talk of a referendum, but let’s scroll back to 2008:

The massive bailout of banks has been widely received as welcome and necessary across the United Kingdom. But it has not been lost on Scots that the largest shareholder in Scotland’s two largest banks is now the British government.

…Brown said the $65 billion bailout of the Royal Bank of Scotland and the bank formed by the merger of Lloyds TSB and the Halifax Bank of Scotland (HBOS) proved that the United Kingdom was “stronger together.”

“We were able to act decisively with 37 billion pounds; that would not have been possible for a Scottish administration,” said Brown, whose own political fortunes have been boosted by his handling of the crisis.

Others have pointed out that the bailout for eight major British banks — including capital for banks and government loan guarantees — is worth a total of almost $700 billion, which is about five times Scotland’s annual gross domestic product.

Here is more.  The conceptual point is simple.  If you think that the world is now more prone to financial crises (and I do), the optimal size for a nation-state has gone up.  Risk-sharing really matters.


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