Teaching Comparative

Limits on state power

I think it's fair to read "weak" whenever the following article talks about "small" countries. Now, it's true that the Scandinavian countries have strong states, but their strength is limited much more than their capacity. Size and productivity are important.

Doug Sanders, writing in the Toronto Globe and Mail also suggests that the financial crisis could bring an end to the Scottish independence movement and a halt to further devolution in the UK.

Market meltdown teaches Europe that size really does matter

"In the centre of Scotland this week, separatist leader Alex Salmond discovered that size has become a problem. He has pegged his political future to the idea of an 'arc of prosperity' uniting small countries from Iceland to Ireland through Scotland to Scandinavia.

"That sounded good two months ago, when those Celtic tigers and Icelandic miracles were the talk of the economic world and small countries were boasting about their big banks and independent currencies.

"Suddenly, the 'arc of prosperity' is being called an 'arc of insolvency' as small countries have become the biggest victims of the financial crisis.

"In the past few weeks, Iceland has gone bankrupt and is now being bailed out by the International Monetary Fund. Ireland is suffering Europe's first real recession and has slashed its government and raised taxes to keep its beleaguered banks afloat. Scandinavian countries are talking seriously for the first time of ditching their currencies, which have plummeted, in favour of joining the big, stable euro.

"Across Europe, people are moving their savings and possibly their political support to the security of big countries, big governments, big political parties and big currencies.

"Small countries from Lichtenstein to the Cayman Islands are learning that being a tax-sheltered banking haven is a fleeting pleasure...

"In a new era when government has become the guarantor of financial stability and the lender of first resort, nobody wants to touch those countries whose banks are bigger than their economies...

"'What the voters are realizing is that Scotland is a small country, and it's small countries that are really getting hammered in this economic crisis,' Conservative candidate Maurice Golden said while campaigning against Mr. Salmond's Scottish National Party on Tuesday.

"'People are realizing that if Scotland had been independent, it would not have survived this situation.'

"To make matters more humiliating, Mr. Salmond is an economist whose previous employer was the Royal Bank of Scotland, which would be bankrupt today if it had not been bought by the British government last week...

"The flight to the sanctuary of size has transformed politics across northern Europe, as well. Until this month, the Scandinavian countries – Norway, Denmark and Sweden – were proud of their independent currencies and fiercely resistant to any pressure to join the euro...

"But one of the interesting effects of the crisis has been that large, widely held currencies – notably the dollar, the euro and the pound – have remained relatively stable, while small-nation currencies (including, to an extent, Canada's) have taken a beating..."

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Labels: concepts, theory, UK

posted by Ken Wedding @ 6:07 AM