Just say "no" to the oil

I came across an article by Doug Casey in the October issue of Liberty.

Casey writes:

In any country, the level of prosperity is determined by things like the level of personal freedom, respect for property rights, integrity of civil institutions, and cultural attitudes in general. Contrary to popular opinion, a country's geography and resources have almost nothing to do with how wealthy it is. If anything, they tend to be counterproductive, acting more as inducements to theft and lethargy rather than enterprise and hard work.

I wrote along similar lines last month:

Owning lots of oil isn't necessarily a recipe for prosperity. Far more important is a culture that respects property rights and whose people admire and wish to emulate entrepreneurs. Sadly, that doesn't sound like Scotland, does it? Better to say, proudly, "It's Scotland's Adam Smith", rather than "It's Scotland's oil".

I want to consider the question of how a fiscally independent Scotland would structure its tax policy, a subject that may no longer be entirely hypothetical given that the traditionally unionist Scottish Conservatives and some media commenters are now openly advocating what's become known as "full fiscal freedom":

THE Scottish Tories are secretly exploring radical plans to give Holyrood control over a range of UK taxes, including stamp duty, excise duty and VAT, The Scotsman has learned.

Let's go back to those "resources" mentioned by Mr Casey.

I've never understood why so many people think that the UK government is entitled to tax North Sea oil but that a Scottish government wouldn't have the same right in the event of either complete national independence or under "full fiscal freedom" in a UK context. It's fairly straightforward really: the oil's in Scottish waters, even with the recent redrawing of the maritime boundary that only makes sense if you think that Dundee is in East Anglia. And if, under "full fiscal freedom", it wouldn't be "Scotland's Oil", whose would it be? Norway's?

But if we go back to Mr Casey's point, possession of "resources" could make a country worse off. So perhaps a radical Scottish government shouldn't want to lay claim to North Sea oil. Not only that, giving it to England, or Norway or even the Faeroe Islands could, under a Caseyian analysis, be considered a hostile act!

So who should get the oil? It's quite simple really. I contend that oil in the North Sea doesn't belong to any government - Scottish, English, British or Norwegian - and that no one has the right to tax it. The oil belongs to those who discovered it and mixed their labour with it. In other words, it's Shell's oil, and BP's oil, and Exxon's oil.

If the Tories want to be really radical they should announce that a fiscally independent Scotland would give the oil back to its rightful owners and finance what little state expenditure that they could justify (if any) with a low flat tax, preferably on sales rather than income. Such a policy would make Scotland the most prosperous place in the world.