January 7, 2004

THE ANTI-FEDERALISTS, RIGHT AGAIN (via Political Theory):

When small is beautiful: How big should a nation-state be? (The Economist, Dec 18th 2003)

OF THE ten richest countries in the world in terms of GDP per head, only two have more than 5m people: the United States, with 260m, and Switzerland, with 7m. A further two have populations over 1m: Norway, with 4m and Singapore, with 3m. The remaining half-dozen have fewer than 1m people. What do such variations imply about the link between population size and prosperity?

People have been debating the optimal size of a nation-state since the days of Aristotle. Understandably, given the diminutive size of Greek city-states, he thought that “experience has shown that it is difficult, if not impossible, for a populous state to be run by good laws.” The Founding Fathers of the United States fretted about the excessive size of their new nation; but James Madison argued that large size might be an advantage in a democracy, because it reduced the likelihood that special-interest groups would be able to act in unison to suppress the rights of other citizens.

Now two economists, Alberto Alesina of Harvard and Enrico Spolaore of Brown University, explore the question in a new book on the subject. Its importance has grown in the past half-century, as old political empires have disintegrated: more than half the world's countries now have fewer people than the state of Massachusetts, which has about 6m. [...]

One implication of this analysis is that, where the preferences of a country's people count, their country is likely to be smaller than it would otherwise be. Dictators typically suppress dissent, regional or ethnic. They see the benefits of size (and grab many of them); democracies are more conscious of its costs. So there are few recent examples of mergers between nation-states (North and South Yemen and the two Germanies are rare exceptions) but many of secession. The main reason for the resulting rise in the number of mini-countries is the shift from empire or dictatorship to self-determination, especially in the past quarter-century. “Borders need to satisfy citizens' aspirations,” observe the authors.


There are so many implication it's hard even to choose where to begin, but here are just a couple of places the analysis comes to bear:

(1) America: it would appear to place a real premium on returning to federalism and devolving the Welfare State back to the people, especially as our population will continue to grow, but shows once again just how exceptional we are.

(2) China and India: neither has a snowball's chance of remaining whole.

(3) Iraq/Afghanistan: There are a minimum of four eventual nations within these two artificial constructs.

(4) The EU: just one more way in which Europe is headed in the wrong direction.

(5) Transnationalism: even more obviously an anti-democratic project of the elites.

MORE:
-Economic Integration and Political Disintegration (Alberto Alesina, Enrico Spolaore, Romain Wacziarg)

Posted by Orrin Judd at January 7, 2004 12:38 PM
Comments

"Large populations, vast territories! There you have the first and foremost reason for the misfortunes of mankind, above all the countless calamities that weaken and destroy polite peoples. Almost all small states, republics and monarchies alike, prosper, simply because they are small, because all their citizens know each other and keep an eye on each other, and because their rulers can see for themselves the harm that is being done and the good that is theirs to do and can look on as their orders are being executed. Not so the large nations: they stagger under the weight of their own numbers, and their peoples lead a miserable existence -- either, like yourselves, in conditions of anarchy, or under petty tyrants that the requirements of hierarchy oblige their kings to set over them."

-- Jean Jacques Rousseau, The Government of Poland

Posted by: Paul Cella at January 7, 2004 12:49 PM

Note also that the two large nation states cited- US and Switzerland, use a federal model to decentralize into states/commonwealths and cantons.

(6) The California Experience (TM) : it and several other of the largest US states (Texas, Florida, Illinois and New York) would benefit from being broken up. (A state of Manhattan or Chicago would bolster the case for DC statehood, too.)

Posted by: Raoul Ortega at January 7, 2004 1:09 PM

Old Siberian proverb:"God is in his Heaven and the Tsar is far,far away."

Despite OJ's protests,the US is as much a candidate for secession movements,if rather less so,as India or China.

Posted by: M. at January 7, 2004 1:13 PM

In fact, a world of small economies with open borders will have to replicate America's federal strength. It will need more supra-national organisations, with more power, to preserve markets and co-ordinate policies. The European Union may be a prototype of such bodies, combining large economies of scale with political independence. For the small countries about to join itMalta, the Baltic states, Sloveniathat is good news. And would-be separatists everywhere need to become free-traders, if they are to aspire to prosperous independence.

The reviewer seems to disagree about the future of the EU. It would seem that the recent difficulties with the EU constitution that arose in part because the newer, smaller member states like Poland were given equal weight as Germany and France was a good thing.

Another factor in the US exceptionalism is the disproportionate power of the smaller states (Wyoming, Alaska, New Hampshire, North Dakota, Vermont, Delaware) because of the nature of the Senate. So maybe the EU needs a strong Senate where Malta and Latvia have the same strength as Italy, France or the UK, instead of sticking to a strict parliamentary model.

Posted by: Raoul Ortega at January 7, 2004 1:25 PM

I don't think it makes much sense to look for some general populational reason for the difference in income between, say, Norway and Botswana.

Aren't there some other factors involved?

And what about Japan? Small in area (even smaller than it looks, since os much of it is wasteland), large in population, rich.

Posted by: Harry Eagar at January 7, 2004 2:23 PM

As long as China and India have compelling political interests to remain whole (i.e., autocratic central governments, China certainly more than India), they will not break apart. India may give up small parts of Kashmir, but no more. And where will China yield territory? To the Muslims? No. In the south? No. They are busy trying to figure out how to assimilate Taiwan without becoming pariahs.

Don't forget the issue of face, which means a lot more in Asia than it does here. In Europe, Czechoslovakia peacefully dissolved. East and West Germany re-united (not as smoothly). Given the proper atmosphere, political changes in the US could be possible. But Asia is a different beast - the people have much less control over the boundaries of their lives, and the overlords are not going to cede that kind of power. The whole issue with Kurdistan is instructive.

Posted by: jim hamlen at January 7, 2004 3:45 PM

Harry, I agree the omission of Japan is questionable. The selection of 'GDP per capita' as a measure of wealth in the lead (is a similar ranking used in the book?) seems to be selected to avoid having to explain how relatively rich and populous Japan fits into the conclusion as presented. A quick Google produced some GDP per capita figures from 1995 that placed Japan at number 11. If total rather than per capita GDP were used, it would have been number 4. The 1995 rankings for GDP per capita included such economic powerhouses as Bermuda (#1 incidentally, ahead of the US), Cayman Islands, Luxembourg, and Liechtenstein in the top 10. While I certainly wouldn't mind living in Bermuda or the Caymans, calling them 'rich' countries seems to be a stretch. I found some data for 1999 with similar results.

The more important factor than strict size is probably the combination of population diversity and decentralization. The more homogenous a country's population is, the less decentralization (Federalism) is needed even if some is always good. A population governed by a ruling elite (SH's Iraq or China) loses on both counts, as they require decentralization to prosper but are governed by a single strongman or clique. The EU is definitely going the wrong way. China and India could go either way. I don't see a reason that either one could not develop some sort of decentralization, though in China that would probably mean the end of Communist Party rule.

Posted by: Chris at January 7, 2004 5:04 PM

In a very general way, and reminding myself that predicting the future is a mug's game, I have long predicted -- contra jim -- that China will split North/South.

Historically, it has done so many times. I'm guessing that sooner rather than later, the rich South is going to get tired of exporting all its money to the corrupt, inefficient North and will "devolve." Probably not via revolution, as the South will not want to have all its factories destroyed. Hard to say how it will happen non-violently.

I sort of think that Beijing will be forced to give concessions (a la Hong Kong), and once the pot boils, it will bubble over.

Concerning the wealth of small, tropical islands, Hawaii has the highest per capita output in the Pacific, about 10% higher than Japan's, which is second. And we do it without fiddling the banking laws.

Posted by: Harry Eagar at January 7, 2004 6:43 PM

Harry:

I would agree with you except for China's ambition (and dynastic heritage). They are more afraid of instability and insecurity than anything else, and splitting along Mandarin / Cantonese lines would leave them with a militarily strong north and an economically strong south. And the split would forever end the question of Taiwan, to Beijing's displeasure. Pakistan is more likely to split than either China or India.

The one possibility would be some sort of internal racial issue that split the nations politically, but that would depend on the rise of some Hindu Hitler or Chinese charismatic, and both their systems currently preclude that sort of thing.

Posted by: jim hamlen at January 7, 2004 7:17 PM

Pakistan is an army with a country attached and will most likely simply disentergrate along tribal lines.

Posted by: M. at January 7, 2004 7:44 PM

Well, going by the CIA's world fact book (2002)
the top 20 for GDP includes:

Australia: population 19 mm
Canada: population 32 mm
Germany: population 82 mm
Japan: population 127 mm
Austria: population 8 mm
Belgium: population 10 mm
Netherlands: population 16mm
And #s 21 through 24 are France, Sweden, the UK, and Italy. #25 Italy has a per capita GDP of $24,915.27, while #9 Denmark (population 5 mm)has a per capita GDP of $28,963.37 per person.

Check it out for yourself here. I don't know about the book, but the headline statistics appear misleading.

Posted by: baa at January 7, 2004 8:08 PM

baa:

The book uses per capita--as it must--rather than simple GDP.

Switzerland is $32k+

Singapore 25k+

etc.

Posted by: oj at January 7, 2004 8:19 PM

Living in the Pacific, the question would seem rather to be, when is small too small?

Tuvalu is thinking of going out of business, the first country ever to do so on purpose, I think.

Niue was also debating whether to keep existing, but Cyclone Heta probably settled that today -- blew the island away.

Posted by: Harry Eagar at January 7, 2004 11:37 PM

How is America so exceptional, when Australia and Canada are similar in most ways except their arable land is confined to one edge of the country and thus lack a vast central habitable region like the Mississippi watershed?

Posted by: Steve Sailer at January 8, 2004 7:22 PM

America is a function of its Founding ideas, more than geography or ethnicity.

Posted by: oj at January 8, 2004 7:31 PM

First, baa's cite *was* GDP-per-capita (which is the appropriate measure of prosperity, rather than total GDP). It's from the CIA world factbook. Don't know where the book's headline got its statistics.

But there are many problems with both this thesis and Judd's comments. Read about them here :)

Posted by: godlesscapitalist at January 9, 2004 7:04 PM

godless:

Though its size is sufficient reason to be certain that China will break apart, it is not the only reason. Other include, but are not limited to:

(1) increasing Christianization

(2) coming population implosion

(3) related shortage of females

(4) related inability to fund a welfare state

(5) imbalances in economic/political power between coastal regions and inland

(6) the obvious point that Tibet, the Muslim regions, Hong Kong, Taiwan, etc.--though not large in population terms--are not going to hang around once the central regime loosens the reins.

(7) the possibility that China will suffer a nuclear attack by the U.S., in order to remove its nuclear capacity, and the ensuing chaos.

and so forth.

Posted by: oj at January 9, 2004 8:21 PM
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