It now seems certain that the Scottish people will have the opportunity of voting on an independence referendum, at latest in 2014 and probably sooner, with David Cameron’s government and Scottish first minister (and Scottish National Party leader) Alex Salmond disagreeing mostly on the referendum’s timing. It’s thus worth looking at the prospects for an independent Scotland, and whether its economy and political management are likely to lead towards a Norway-like prosperity or a Greece-like slough of subsidy and corruption.

With a population of 5.5 million and a GDP around $220 billion, Scotland is certainly big enough for independence, whether or not its economy was closely integrated into that of the European Union. Croatia, Slovenia and Slovakia, countries I know well, are all considerably smaller in terms of their economy, with Slovakia being comparable in population. Norway is slightly smaller and considerably richer, with a population of 5.0 million and a GDP of $255 billion. With Slovakia and Slovenia full euro members, Croatia about to join the EU and Norway proudly independent, that gives Scotland several quite encouraging examples of independent countries of comparable size that have done quite well.

The other factor encouraging seekers of Scottish independence is the massive contribution Scots have made to civilization. The Scottish Enlightenment, containing as it did David Hume and Adam Smith, is at the apogee of human intellectual achievement, while Scottish contributions to the Industrial Revolution, to the governance of the British Empire, and to pure science (James Clerk Maxwell, to name a notable example) are far out of proportion to the country’s modest population and suggest an immense potential in an independent Scotland.

Before we get carried away however we should not that nearly all the best Scottish achievements in culture, engineering, government and science have come while the country was part of the United Kingdom. Its achievements as an independent country before 1707 are less impressive. Admittedly before 1500 or so the country was a mass of feuding tribesmen (sorry, Braveheart fans) but even in the 1680s the mutual religious massacres of the Killing Time don’t suggest a well-ordered polity.

Economically, the most celebrated attempt at asserting Scottish independence of English capital was the 1698 Darien project, an attempt to set up a colony “New Caledonia” at the Isthmus of Panama. This incompetent effort ended in disease and failure with the loss of over 2,000 lives, is estimated to have absorbed one fifth of the wealth of Scotland and led directly to the 1707 Act of Union with England.

Then there’s the Scottish financier John Law, who set up Europe’s first paper money scheme with the French Banque Royale in 1718, which collapsed two years later, taking with it French credit and much of the wealth of the French middle class, preventing the much larger France from adequately financing its eighteenth century wars with Britain. Modern Keynesian economists have attempted to rehabilitate Law as an economic genius. His contemporaries saw Law for what he was, a persuasive swindler, and forced him to flee France disguised as a woman – an indignity never visited on Keynes except in Bloomsbury Group amateur theatricals!

Thus Scotland’s record of achievement as an independent state is much less impressive than Scots’ records of achievements as British subjects. It should not therefore be assumed that Scotland will segue quickly to a position of Norway-like success; the country’s track record admittedly in the distant past, suggests that Norwegian levels of self-discipline and probity do not come naturally.

In the 1970s when independence was first seriously mooted, the Scottish economy had a major resource asset, North Sea oil. However in the last thirty years the North Sea reserves have been depleted, and the remaining reserves are estimated at only 920 million barrels, worth about $92 billion at current market price, only about five months’ national output. The oil industry employs an estimated 100,000 people, 6% of Scotland’s working population. It’s a business well worth having, but it is no longer capable of supporting the Scottish economy. Scotland is not Norway.

One of Scotland’s major problems on independence will be the loss of the subsidy from the British parliament. This currently totals about 27 million pounds annually, almost 20% of Scotland’s GDP. However that figure ignores the Exchequer’s receipts from Scottish taxpayers. The net subsidy appears to be of the order of 8 billion pounds annually, a more modest 6.5% of Scotland’s GDP – in other words, significantly more than the total government receipts from North Sea Oil, which are declining. Scottish public spending is currently 21% higher than the British per capita average, while its per capita GDP is about 5% lower. Thus the country has a bloated public sector, with public spending above 50% of GDP. In an independent Scotland, this will drag down growth and will need to be financed.

To balance the Norwegian and to a lesser extent Slovenian and Slovakian successes, there is of course a counterexample, of a small country that joined the European Union with its eye on the massive EU budgets available for infrastructure and other investment in poorer countries. I refer of course to Greece. From its accession in 1981, Greece’s crafty socialist premier Andreas Papandreou ensured that the country would have ample access to every possible EU subsidy, with the result that the Greek people advanced to a living standard ahead of most of Western Europe, entirely without gaining the productivity to justify such wealth.

For those wishing success to an independent Scotland, the Greek example is worrying. Writing in the Financial Times Wednesday Salmond set out a “Plan Mac B” proudly claiming that he would reverse the cuts in public investment planned for the U.K. by 2014-15, while the public-sector Scottish Investment Bank would finance appropriate private sector investment, for example $1.2 billion in Scottish renewable energy in the year to September 2011. He would maintain the guarantee of no compulsory redundancies, abolition of prescription charges, a freeze in council tax and free university education. As a flagship project he proudly announced that on December 21 construction had begun on the new Forth Road Bridge, “one of the largest infrastructure projects in Europe.”

Salmond also believes that an independent Scotland would automatically be a member of the EU, a development that is by no means certain. He has also announced that an independent Scotland would eventually join the euro. However there is one problem with this. Scotland’s exports have been declining in recent years, with the manufacturing sector particularly weak, and now represent only 6% of UK exports, down from 9% a decade ago. That bodes ill for membership in a currency which has consistently been very strong against sterling. Judging by the record of its past decade, Scottish membership of the euro would lead to a steady loss in competitiveness, ending with a PIIGS-type debacle in a decade or so.

Salmond would no doubt wave his hands and assert that Edinburgh would grow rapidly as a financial center with Scottish euro membership. However since the country’s two largest banks are Bank of Scotland, a major component in the HBOS collapse and bailout and RBS Group, now ignominiously controlled by the British government, Edinburgh’s ability to take over parts of London’s financial services role may be less than he thinks. The days are long gone when Scottish banking was an example to the world, with no central bank, free banking and a cost of money so low that the Scotch whisky industry, with its twelve year maturing cycle, was able to out-compete Continental rivals simply because it could better afford to let the spirit mature.

In any case, with Salmond’s ideas on the size of government, it’s difficult to see any but the most deranged expatriate bankers coming to work in Edinburgh, braving its icy January north-easters and punitive taxation.

Finally, the economic acuity of Scotland’s political class can be gauged by remembering that the last two authentically Scottish prime ministers (Sir Alec Douglas-Home — born in England — and Tony Blair don’t count), Ramsay MacDonald and Gordon Brown, presided over the two greatest economic disasters in modern British history. The days of Adam Smith when Scotland led the world in economic enlightenment are clearly long gone.

One wishes the Scots well; indeed as an Englishman by birth one is so well disposed to them that one hopes they vote against independence, expensive though that choice would be for British taxpayers. However the political balance in Scotland is such that an independent Scotland is most unlikely to be economically successful, even though there is no intrinsic reason why it should not be. Instead it is likely to become Greece without the sunshine, an unhappy land of political bickering, excessive taxation and eventually of spiral into poverty. In such a polity, whisky sales would no doubt soar, even though the unfortunate Scots would no longer be able to afford the good stuff!

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)