My argument is this.
Scotland's share of "identifiable" public spending is higher than that of the UK as a whole. By "identifiable" we mean the lump sum sent to Holyrood plus non-devolved functions like social security that are clearly attributable to individuals. There's considerable disagreement as to whether Scotland gets its "fair" share of the rest of government expenditure. For example, I've seen reports that Scotland is debited with its share of the Millennium Dome, planning for the London Crossrail, the English prison system, and, through the lottery, the London Olympics. There's also a lot of controversy about the amount of tax collection that's attributed to Scotland.
But the extra "identifiable" spending has been totally wasted. It goes on higher pay and pensions for workers in the Scottish public sector without any corresponding efficiency gains. If anything, Scotland's once-proud education system is now worse than that of England - despite the extra money.
So why is this being done?
If we look here we can see some figures for the 2005 General Election.
Labour's share of the UK vote was 35% although they got 55% of the MPs. But in Scotland Labour got 39% of the vote and 69% of the MPs. The first-past-the-post method of voting benefits the winner disproportionately but that effect is magnified in Scotland because up here we have a four party system. I can't find later figures but the Edinburgh City Council result for 1995 was a 41% vote share for Labour but a 59% seat share. In Glasgow Labour got 61% of the vote but 93% of the seats! In both cities Labour was about 50% over-represented.
What this means is that a given amount of spending on Labour's natural constituency will go further in terms of electoral benefit in Scotland than in England.
It's in Labour's electoral interest to build up a class of tax-funded serfs, both in Scotland and in the UK as a whole. But the payoff is proportionately higher here as the voting statistics show.
However, that doesn't mean that Scotland is some kind of northern Albania. We're number four (out of twelve) in the UK's economic output table, generating wealth at 96% of the UK rate (excluding oil revenues). The higher "identifiable" spending is wasted. In fact it's harmful, as those bloated public sector wages and pensions make it very difficult for the private sector to compete.
Scotland - inside or outside the Union - can survive perfectly well without those bribes to Labour voters. But can the Labour Party?