Demergers and Scottish independence

Cadbury Schweppes this week announced plans to demerge its sweets and drinks divisions. This sort of thing happens in companies all the time. However, when even the soberest businessman proposes a demerger between Scotland and England, he's insulted hysterically.
Part of me doesn't understand the difference. The question of whether England and Scotland should demerge is analogous to the question of whether businesses should demerge. In both cases, there are costs and benefits of doing so.
The benefit of demerging is that diseconomies of scale can be reduced. Perhaps the most important of these are that, in large organizations, individuals can be isolated from the consequences of their choices. For example, many Scots want higher public spending because the English will pay for it; for this reason, some economists favour (pdf) greater fiscal federalism.
The cost of demerging is that economies of scale will be foregone. For example, in a large unit fixed costs, like the civil service, can be spread over more people.
In this sense, Scottish independence is a narrow, businesslike cost-benefit issue, in which nationalism is only part of the story - it matters in the sense that highly nationalist people feel alienated from the centre, and so the union breeds diseconomies of scale.
Which raises the question. Why does the issue of Scottish independence arouse strong passions on all sides, when the question of demerging a business does not?
Is this yet more evidence that the problem with politics is not so much what people believe, but rather the dogmatism with which they believe it?
Or is it evidence that New Labour takes everything that's bad about management thinking - the pretence of knowledge and hiearchy - but ignores everything good, a sober analysis of costs and benefits?
Or is it just that Blair supports the union so avidly simply because the Scots can be relied upon to vote Labour? 

Comments

[Meh]

I think it's clear that part of Labour's thinking is indeed influenced by the calculation that their majority depends on Scottish seats.

I'd actually take issue though, with your pretence that demerging a business doesn't raise high passions. My experience in a demerging company is that it raises very high passions indeed.

The difference is that we're all a part of UK plc, so many of us have an emotional investment in the question.

By contrast, anyone not a member of firm X doesn't have as much interest in the issue. If you go and interview workers at Cadbury-Schweppes in the pub, I think you'll find they all have some passion for the issue, although many of them (perhaps rightly) take a similar view to the one I do on the Scottish demerger:

There are principles at stake which are important and I can get passionate about, but given my position in the firm it likely won't make a lot of immediate difference.

In fact the only observable effect on my life will be the indirect influence of the issue on overall performance. If the firm does badly I might lose my job.

I may (or may not) have passionate views one way or the other about this action from that point of view.

I was against the demerger in the company I worked for as I saw clear problems coming down the line - in hindsight I was right, but that's not much comfort.

I actually am not sure whether there's a strong case against or for the Socttish demerger, so I'm sort of (due to self-determination principles) vaguely for it.

So, I don't think you entirely have evidence to blame dogmatism from that point of view.

You can claim dogmatism is affecting my views on Scotland in that I'm going with this vague principle because I don't see compelling evidence. Maybe my dogmatism is making me ignore evidence, but I'd suggest the reality is we have very little evidence (and worse, actually very little ability to produce any) one way or the other on the benefits of a Scottish demerger.

[Patrick]

I agree with Meh: if Scotland demerges from the UK, Labour will not regain power.

In addition, unwinding the union will be incredibly expensive.

Just imagine collecting taxes across borders!

[Patrick]

Oh, and I know there are cross-border tax issues already; but breaking up the union seems to me to be particularly tricky.

Does anyone know how it worked in the former Yugoslavian countries? Or are there any other models to work from?

[Sam]

I would claim that the problem is solved, because the EU has rules on the taxation of workers who work in one country but live in another, but it seems that it doesn't. The useless bastards in Brussels are too busy imposing their statist diktats on us to actually do something useful to facilitate the free movement of people in the EU.

[jameshigham]

...Blair supports the union so avidly simply because the Scots can be relied upon to vote Labour...

That may have been so until recently but David Farrer mentioned something interesting the other evening which might alter things a little.

[ian]

I think the US manages to collect taxes across borders quite effectively (assuming we are still taking about a Federal state)

As for your last three questions I think the answers are probably yes, yes and yes.

[Not Saussure]

"Does anyone know how it worked in the former Yugoslavian countries? Or are there any other models to work from?" Czech Republic and Slovakia?

[dearieme]

What about Norway and Sweden?

[KB Player]

If someone made a very good business case for Ireland to be merged with Britain do you think the Irish would buy it for a nanosecond? And would not strong passions be raised? And would you be surprised if they were?

[Flying Rodent]

It seems to me that the Nats are setting their sights too low - nationalism is so last century. There's no grand vision here.

Aggressive imperialistic nationalism is another matter. I'll support the Nats when they campaign on a platform for the immediate invasion and annexation of Northern England and Ireland.

Come on, it's the last thing they'll expect, and Britain is full of Scots who can act as sleeper agents. At a prearranged time, we'll rise up and sieze control of the state apparatus.

Southern England would likely resist occupation, due to a large number of Tory partisans, so it would be best to topple the government then hastily withdraw, leaving a puppet administration to maintain order.

Independence? It's for wimps. Show me your plans for the Glorious Empire of Greater Caledonia, Mr. Salmond, then we'll chat.

[Chrispy]

Aren't you guys all missing the point. Forget economies of scale, this is about assets. The SNP debate here is: who owns the remaining North Sea oil reserves in the event of separation? A quick glance at the SNP site reveals that sole Scottish ownership of those fields is their main policy.

[Dipper]

1. If Scotland were to gain independence then labour would adjust its policies until it became more popular. Most democracies manage to have two parties roughly equally distributed and England/Wales would be no different.

2. Sir George Mathewson, who is no idiot, identified the corrupting effects of large handouts from England as the main issue, and felt that Scottish business would be liberated by independence. I think he's not the first Scotsman to observe that increased state funding has been coincident with increased measures of failure (death-rates, employment, earnings etc). Any scots care to contribute?

[Zorro]

"Or is it just that Blair supports the union so avidly simply because the Scots can be relied upon to vote Labour? "

You really need to ask? Labour would (will?) be fucked if Scotland does 'demerge' with England. Simply not enough MP's in Wales to keep their majority. So What do you think?

[Scot]

Personally, i feel scotland is held back by britain, scotland is one of the 5 richest countries in oil, being apart of britain then there are more cars to fuel. Scotland could achieve even better on its own. Besides the point, scotland should be independant even if we didn't have the oil and couldn't cope, scotland and england have 2 alien cultures.