Thursday, December 5, 2013
The costs of secession movements
Scholars and commentators that have been thinking about the potential secession of Quebec and Scotland provide interesting insights on the sovereignty debate in Catalonia. The constitutional, cultural, economic and demographic realities are different, but Quebec and Scotland are the only examples of parts of industrialized states that have tried to secede peacefully through referenda. Robert Young introduces the important concept of the transaction costs in the transition to secession, which, as well as uncertainty costs, depend on the politics and the degree of conflict associated to secession should this occur. He claims that transition costs in general can be very significant, and may delay for several decades the potential net benefits of independence. Kim Somers and François Vaillancourt present some interesting quantitative work on the now fifty-five year old debate about sovereignty in Quebec: despite the small number of time observations and endogeneity problems, they show serious costs of the hypothetical event of secession in terms of GDP and migration, but they do not find significant overall economic costs of the movement towards independence. This may provide a clue of the proposals for “light” or “low cost” independence that seem to be made by secessionists in Scotland now that the referendum approaches: “independence” seems to be compatible with keeping the pound, the queen and the BBC at least. What secessionists find useful is the “movement”, the “process” towards independence: that is not very costly economically and it provides huge political dividends potentially for many years. But they need the process to last, not to finish, that would be too costly (politically for them, and economically in general).