An Entrepreneurial Scotland May Not Be a Scotland for Entrepreneurs

Yogi Berra, the famous baseball coach once said, "." Scotland is free to choose its identity; but the rhetoric in support of the Yes vote conflates two very different courses of action, which are at odds with one another.

In less than 24 hours Scotland will make an historic decision. Historic in part because the birth of a new nation through peaceful means has not happened very often, historic because of the legitimacy it confers on other minority breakaway regions around the world and historic because the soul of this new nation will be presented with a choice as to what sort of country it seeks to be.

Yogi Berra, the famous baseball coach once said, "You've got to be very careful if you don't know where you are going, because you might not get there." Scotland is free to choose its identity; but the rhetoric in support of the Yes vote conflates two very different courses of action, which are at odds with one another.

This is not an existential question: an independent Scotland is a viable nation. But that doesn't make it a free ride. Just as it costs money to start a business or any organization, there will be substantial costs in setting up a new nation and those costs will impair the wealth of the new nation for some period.

Alex Salmond talks about Scotland in reference to the Scandinavian nations, especially Norway. He also talks about building a more just society; a more liberal, more socially supportive nation. There is nothing wrong with that vision. And if that is the direction Scotland seeks to head then it will get there. But there is a cost attached to that vision.

Norway is a very special nation. It benefits from vast and ongoing oil reserves. But more importantly it has chosen not to spend all of its oil revenues on social benefits. It has parked the majority of its income in its sovereign wealth fund, which has been carefully accumulated over many years.

Scotland by contrast does not have the same level of reliable, future oil revenues. Ignore the argument about how much will be available. The only certainty is that is will continue to decline and Salmond's budget shows all of it being spent immediately on social programmes.

Why is all of this relevant to entrepreneurs? Because Scotland becoming an independent nation is an entrepreneurial venture painted on a vast canvas. It is exciting, comes with risks and costs and potentially creates a Scotland that Scottish people desire. But like all entrepreneurial ventures there must be a clear vision about where Scotland wants to go.

Heading towards a more balanced, socially supportive, socialist state simply does not create the conditions for entrepreneurial companies. In fact as can be seen around the world, countries that are the best for entrepreneurs tend toward more unequal economies.

On a more practical level, starting a business in a newly independent Scotland deprives new businesses of access to capital and access to markets. The UK is a domestic market of 60+ million people. Scotland is less than 10% of that. That doesn't mean it can't be done it just means a higher hill to climb.

It doesn't mean that Scottish startups wouldn't have access to capital, they would just have more limited access. There is no free lunch in this world. Scotland has a proud heritage of innovation and invention. But the past is no accurate predictor of the future.

Scotland must decide what sort of country it wants to be. Merely saying it will be both easy to do business and a great environment for startups and at the same time be heavily re-distributive is mere wishful thinking.

Doug Richard is the Founder and CEO of School for Startups, a social purpose business helping people to build successful and sustainable startups.

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