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Freedom isn’t free

There is no such thing as a free independence, despite what a majority of Greenlandic voters hope
Her present, his future (Photo: Leiff Josefsen)

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The recent poll about attitudes towards independence in Greenland lands in a no-man’s land between two minefileds, one political, one economic. According to the results, 44% of Greenlandic voters support independence, provided it would not mean a lower standard of living.

Independence is a political goal, and its cost is a simple question of supply and demand: the less it costs, the more we’ll buy of it. The problem is that when someone is giving something away for free, most queuing up to get some of it will go away empty handed, for the simple reason that when something is free, there is never enough to go around.

This might be a good time to take a quick look at what independence, were it to be declared right now, would cost. In Greenland, public-sector spending, according to Det Økonomiske Råd, the government’s independent panel of economic advisors, is larger than private-sector spending. By comparison, in western European countries, public-sector spending typically accounts for a third of economic activity.

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This is not an insignificant amount. Some of it, of course goes to pay benefits and the like. If you take that away, you’re left with a huge sum, which is spend on public administration, education, healthcare and other public services. Greenland gets about two-thirds of the money it needs to pay for this from abroad. The EU chips in €47 million ($50 million) annually. The rest, 3.7 billion ($530 million), comes from Denmark.

As a thought experiment, let’s say that Greenland had to pay all of its public-sector expenses on its own. The result would be a 75% decline in private-sector spending due to the dramatic tax hike that would be needed to make up for the lost revenue. This would be completely unacceptable.

It gets worse: decimating the private sector would lead to massive unemployment. Private investment, and the jobs that creates, would also dry up.

At this point, one has to ask whether this analysis is rigorous enough to be taken seriously. The answer is ‘yes’ and ‘no’.

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Regarding the ‘no’, a true analysis of the cost of Greenland’s independence would require a much deeper look at its indirect effects. Regarding the ‘yes’, both the analysis above and a more rigorous evalution of the situation would end up with the same prediction: economic meltdown.

The next question is how well the results of the poll mesh with my abbreviated analysis. I think they do.

For example, 27% say they are opposed to independence, some of them probably because they believe that Greenland’s population is too small to ever be able to manage the affairs of a state.

Then, there is the 44% who are in favour of independence, provided they can have it with no economic cost. In all, this gives 71% of the population that has no interest in venturing into unknown territory. (Some news articles about the poll chose to look at the group in the middle from the opposite angle, declaring them in favour of independence and instead headlining their articles “Large majority for independence” or the like – which shows that the devil is in the interpretation.)

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Let’s look a little closer at the figures. More men than women are in favour of independence. This is no surprise: there is an endless amount of research showing that women are more risk-averse than men. What’s more of a surprise is that it is unclear what role age plays.

The number of people involved in the poll is small, which gives a higher degree of uncertainty. But, if independence were a matter of risk, then one might expect that young people would have a more favourable attitude. The counter argument for this is that the older generation was involved in the struggle to gain home rule, and later self-rule, making the question of independence more of an emotional one. The bottom line is that age appears not to be significant.

Occupation seems to play an equally small role in people’s attitude towards independence. Here, two things are worth pointing out: firstly, skilled workers are more likely than unskilled to support independence, even if it has an economic impact. One explanation for this might be that skilled workers compete directly with Danes for jobs.

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Secondly, support for independence, regardless of the consequences, is highest among fishermen and hunters (21%). This fits well with the conception that these occupations represent something authentically Greenlandic.

One reassuring result of the poll is that a solid majority appears to understand that it would border on the irresponsible to pursue independence in the near term. More worrisome is that there is little discussion about how to make Greenland economically independent. It is impossible to overestimate the connection between self-confidence as a people and the ability to exploit a nation’s resources for its own benefit. 

The author is a professor emeritus with the Copenhagen Business School.

This commentary originally appeared in Sermitsiaq, a weekly newspaper published by this website’s parent company. It appears here in a shortened version.