Causes and Consequences
by Carole E. Scott
Carole E. Scott email@example.com is the editor-in-chief of B>Quest. In the section of B>Quest this article appears in comment on current issues from various points of view are welcome.
Mankind soon learn to make interested uses of every right and power which they possess, or may assume. The public money and public liberty...will soon be discovered to be sources of wealth and dominion to those who hold them; distinguished, too, by this tempting circumstance, that they are the instrument, as well as the object of acquisition. With money we will get men, said Caesar, and with men we will get money. Nor should our assembly be deluded by the integrity of their own purposes, and conclude that these unlimited powers will never be abused, because themselves are not disposed to abuse them. They should look forward to a time, and that not a distant one, when a corruption in this, as in the country from which we derive our origin, will have seized the heads of government, and be spread by them through the body of the people; when they will purchase the voices of the people, and make them pay the price.
Thomas Jefferson, Notes on Virginia, 1784
The Role of Government
The history of mankind over the centuries is a chronicle of a continuous struggle to convert government from being an instrument used by the few to control the many for their own benefit to an instrument for the provision of public goods and services to the many. For most of mankind's history the ruling few fought this conversion tooth and nail. Ultimately seeing the handwriting on the wall, they shifted gears. While the feudal lord claimed to rule in the name of God, the communist lord, who, like the feudal lord, owned everything and everybody, claimed to rule in the name of the people. In the feudal period self interest guided the behavior of the ruling class. It was no different in communist nations. In Western European nations the leftist ruling class had to settle for or preferred democratic socialism, that is, the welfare state. According to public choice theorists, all rulers act in conformity with their self interest.
The original motive for forming governments, claims Gordon Tullock, was probably the desire for special types of redistribution. He considers the popular view of governments having been started by groups of people who got together to collectively decide on an organization to generate public goods and services to be a myth which serves the interests of some types of social and political analysis. [Tullock, 18] As far as we know, he points out, the first governments were despotic; not the democracies that grow out of despotism.
If you look at the real world, Tullock claims, "it seems highly probable that the state did not originate as people voluntarily cooperating, but rather as someone with a comparative advantage in violence conquering his neighbors for the specific purpose of taxing them." Larger organizations were formed via conquest that "always remained important in the development of government." [Tullock, 18] Although he admits that Alexander the Great also had other motives, such as spreading Greek civilization, "there seems no doubt that his principal motive in his successful war with the Persian Empire was to convert himself from the hereditary chief of a small kingdom north of Greece into a world emperor." [Tullock, 17] For obvious reasons, the fondest dream of despots and want-to-be-despots has been the ultimate Leviathan: a one world government.
Centralization of Power
Thomas Jefferson believed that any unchecked power will expand inexorably to serve its own interests, not someone else's, not everyone's in common. Fortunately, unchecked government doesn't need enemies. It is its own worse enemy for, like a cancer, it grows and grows until it destroys its host and, thus, itself. [Douglas, 162]
Long after Jefferson's day, C. Northcote Parkinson claimed that administrators are bound to multiply. [Parkinson, 161] Public choice theory tells us administrators, whether they be in the private or the public sector, want to increase their power and pay. Through adding workers an administrator can justify adding subordinate administrators, who, in turn, will try to acquire more subordinate workers and administrators and so on. Supervising a larger number of subordinates increases the administrator's power and justifies a higher salary for him or her. As a result, an administrator's self interest is served by supervising more workers.
Those controlling the rudder of the ship of state may, as they often claim, believe that a larger, centralized government is, due to economies of scale, more efficient. Because they do not realize that, like a living organism, markets can operate by themselves many of them believe that they require central direction. That a larger, centralized government benefits them personally by increasing their political power; thereby materially enriching them and their associates, may just be a coincidence, or, as public choice theorists suggest, it may be what chiefly motivates them. Unfortunately, just as corporations separate ownership from control, even in a democracy a centralized government may prevent the people from controlling the government.
Economies of scale are not the only benefit advocates of big government claim for it. A popular belief among many liberal intellectuals is that centralization is good because it is progressive. According to them, larger political units--all the way up to world government--lead to greater wealth by providing access to wider markets. [Hoppe, 24] That this is not so is revealed by the fact that some of the world's wealthiest nations, such as Switzerland, are small. In the absence of protectionist trade policies wide markets for both inputs and outputs are available to even the smallest nation on the same terms as in a domestic market. However, Switzerland and some other small nations have prospered despite protective tariffs.
Modern liberals, who are the antithesis of the Eighteenth Century liberal, assume that modern technology will make it feasible for the entire world to be ruled by one government. They view modernization as being like giving a jellyfish a nervous system. However, as desk top publishing illustrates, the reality is that modern technology is eliminating economies of scale that have in the past given large organizations an advantage over smaller ones. Like huge corporations, in the future huge countries may find competing with smaller ones difficult. Economies like Hong Kong before it was taken over by China; not the defunct Soviet Union, may the wave of the future.
Clearly, we are today in the midst of a technologically-generated economic revolution comparable to the industrial revolution. As the recent experience of corporate America makes clear, this will likely be an age of decentralization characterized, as was the industrial revolution, by a productivity-increasing higher ratio of capital to labor. In the future the successful organization will be nimble and agile: the antithesis of a huge bureaucracy. Big will not be better. It will be a burden. In terms of knowledge, computers are going to play the same role the six shooter played on the American frontier by enabling the smaller entities to compete with larger entities.
Government can be decentralized by lower levels of government and the people assuming responsibility for matters formerly the responsibility of the central government. Decentralization either via greater local autonomy or secession is both a promoter of and is promoted by free trade. A region of a nation or a secession-created state is, or course, smaller than an existing or former nation and is, therefore, less self sufficient. For the secession-created nation self sufficiency in many vital areas may be either impossible or so costly that some things must be imported, whereas before they were provided domestically. A sub-national region or relatively small state may be incapable of absorbing the volume of products that its mines, fields, and manufacturers can produce. Therefore, much of its output must be exported. Exporting may be advantageous, too, because domestic markets may be too small for some domestic manufacturing plants to obtain all possible economies of scale.
Today in the United States you probably do not have to be a cynic to believe that the characteristics that gives a person a comparative advantage in being an elected official is frequently the product of their charisma, chutzpah, and guile. While the upper reaches of our ruling class are composed of elected officials, it also includes individuals who supply politicians with large donations, judges with lifetime appointments, and government bureaucrats. Although the arena in which judges and bureaucrats exercise their powers is constrained by, respectively, what cases comes before them and the functions of the agency they run, they have powers that the United States' Founding Fathers though were restricted to the executive, legislative, and judicial branches of the government. Furthermore, they are able to exercise their powers more arbitrarily than can members of the executive and legislative branches of the government, who must stand for election.
In the United States a huge government bureaucracy serves the interests of the members of Congress because it provides them opportunities to harvest votes by rescuing voters from their clutches. In addition, government bureaucrats provide a block vote that supports the preservation and expansion of the government and, therefore, the pay and power of the bureaucracy. Because the regulations the bureaucracy establishes have the force of law, though it Congress can get things done that it does not dare do accomplish directly.
Although the government lacks the inherent checks on the multiplication of administrators that the private sector has: competition and the need for profits, others exist. Expanding bureaucracies usually produce fatal stagnation. [Douglas, 154] For the ship of state, bureaucracy has an effect like that of barnacles on a real ship. Like a ship, the economy slows down. A rising ratio of government bureaucrats to taxpayers requires that taxes be increased. Additional taxes are spent in ever less productive ways, while the productivity of the things the private sector has to forgo in order to pay the higher taxes is ever greater. The only limit to the amount by which taxes can be raised "s the point where the victim refused to pay." [Parkinson, 61] Victims must resort either to peaceful or violent revolution or secession.
Lord Acton's forecast that the love of freedom would become a hatred of inequality, and that the state would become an instrument to mold as well as control society has come to pass. Absolute equality can only be achieved by force, and when force is used, liberty is lost. Karl Marx believed that force was necessary to achieve equality. This is why he said that in order for communism to be achieved, force must be used against the owners of property, who will fight to keep it. Therefore, a liberty-denying dictatorship of the proletariat must be established. Society is molded by high taxes designed to discourage the consumption of some things and low taxes designed to encourage certain kinds of investment. Subsidies, too, are used to encourage various activities. In the United States co-financing by the federal government (the "carrot") and fines (the "stick") are used to steer state spending.
Because the redistribution of income has become the major function of the federal government in the world's wealthiest nations, the Twentieth Century may go down in history among economists as the "Redistributionist Century" and as the "Equality Century" among political scientists. Income is redistributed both between groups of people, such as people living in different regions of the country, and between individuals. Income redistribution between individuals may also redistribute income between groups, as happens when people with low earned incomes are concentrated in a given region or among a given racial, religious, or cultural groups. Policies that do not directly redistribute income often do so indirectly. A tariff that protects an industry concentrated in one part of a nation or internal improvements needed in only part of a nation redistributes income between regions.
Karl Marx forecast that revolution would be the result of conflict between property owners and those they employ, the proletariat. The class-based theory of Mosca, on the other hand, explains the origin of both revolution and secession in terms of a clash between a different set of classes: the people who hold and exercise public power and an inevitably much larger class composed of those it governs. According to Mosca, the ruling class is divided into two groups, the official rulers and a much larger group, the executive class, which transmits, communicates, and mediates the orders of the high command to the ruled class. Without the executive class, minority rule could not persist. C. Wright Mills claims that in the modern world a larger power elite: an unholy trinity composed of civil, military, and major corporate administrators, has come into being. [Meisel, 22] (President Dwight D. Eisenhower warned the his country about this alliance.)
In the modern world this societal pyramid is much taller than it was in the past. This is because, while people have always looked to government for physical security: protection from fellow citizens and foreign armies, today they also look to it for economic security. The power-hungry ruling class has taken advantage of the feeling of insecurity arising from the fact that today the family cannot be substantially self sufficient to enlarge its power by promising to provide economic security. By promising to provide the people with economic security, the ruling class has been able to expand its control over society and the economy, making the general public the ward of the state; thereby producing throughout the entire society the social problems long plaguing those living on American Indian Reservations.
A ruling class, Mosca claimed, exists whether it is based on popular sovereignty or aristocracy or monarchy. The masses provide the means that sustain and justify the ruling class' actions either because it suits their interests or they do so under duress. If the masses organize, which in the information age is easier than ever before, they will be led by a counter elite like the Boston merchants of 1775. Dissidents in modern Poland relied greatly on information and advice from the West, much of which was provided with the help of modern technology, in over throwing the Polish government and detaching the country from the Soviet Empire. Because the counter elite may be antagonistic to the existing government, battles will be fought between the minorities that hold power and those who want to. [Meisel, 5-6]
The Welfare State
Preaching, as the communists do, something for nothing proved popular in many countries where the many had little; so for a good part of the Twentieth Century most of the world's people lived in either communist or highly socialized nations. In the largely impoverished "South" (Africa and Latin America), there were socialist nations wedded to dependency theory. In the West, there was the welfare state, a luxury only wealthy nations can afford. In the welfare state, you have the right to eat whether you work or not; whereas, in the less-well-off, communist Soviet Union you were required by its constitution to be socially responsible: you had to work in order to eat.
East Germany was the most prosperous of the nations behind the Iron Curtain; yet it was bankrupt. [Shales, 111] It seceded from the Communist Bloc in order to federate with the most prosperous of Europe's non-communist states, West Germany, the "grandmother of social welfare states." [Shales, 110] By seceding from the Communist Bloc, East Germany hoped to switch from being a relative have to absolute have.
West Germany was a dyed-in-the-wool, social democratic welfare state, a social market economy. A social market economy can best be described as one trying to have its cake and eat it too by grafting democracy and supply and demand onto communism. Because in this kind of society the strong are committed to the weak, it is not surprising that the West German government sought to raise, largely via massive income redistribution, East Germans' standard of living to that of West Germans', hoping to do so virtually over night. Initially, the transfer was achieved by over valuing the East German mark vis a vis the West German mark. Because he believed that "new social questions must be tackled not by a policy of redistributing income but primarily by a policy which fosters, rather than impedes, performance," the president of the Bundesbank resigned when this unwise policy decision was made. [Shlaes, 112]
C. Northcote Parkinson believes that if the people of nations like Germany "were lightened of their tax burdens, relieved of excessive bureaucracy and cured of administrative constipation, we should see a sudden burst of real activity and enterprise." [Parkinson, 98]
Critics claim that Germany's cradle-to-grave-social welfare system stifles energy and innovation. Instead of creating new jobs, jobs are shared by reducing the work week; thereby raising labor cost per unit of output because workers' wages are not reduced. Largely because labor costs are higher there than anywhere else in the world, Germany's international businessmen are investing abroad, rather than at home. Unemployment payments without end discourage people from working. Very steep, progressive taxation is a disincentive to saving and investing. (The top five percent of German earners provide 40 percent of all income tax revenues.) When tax and social costs accounted for 30.7 percent of GDP in the U.S., they accounted for 43.7 percent in Germany. [Shales,119] In Germany, some claim, tuition-free higher education has dumbed down education.
The average German is entitled to from 25 to 32 days of paid vacation plus 10 to 13 days off on state and religious holidays. "The only way a German company can lay people off is to go bankrupt," a German businessman says. [Sclaes, 115] Stores are prohibited from marking merchandise down except simultaneously at prescribed times. Stores must close on Sunday and at lunch times three Saturdays in each month. Getting a permit to open a new plant is very time consuming. Industry is hamstrung by strict environmental regulations. Fifty percent of the members of corporate boards of directors must be trade union representatives. Environmentalists' protests are driving research abroad. In light of all this, it is not surprising that Germany, long a nation on the cutting edge of advancing technology, is no longer and is deep in debt. Critics claim that "The Americans invent, the Japanese produce, while the Germans still debate ethics." [Shlaes, 121]
The Demographic Problem
The only area in which East Germany is rapidly catching up with West Germany is demographic. Much more fertile when reunification took place than was West Germany, whose birthrate, like all Western developed nations, was low, in East Germany since reunification births have declined significantly. Its marriage rate has fallen below West Germany's. Like the world's other industrialized, welfare states, Germany will experience a horrific demographic problem in the next century. It is expected that in the year 2000 every fourth German will be over 60 years old. Ceteris paribus, "by 2030, Germans over the age of 65 will out-number their younger countrymen by a 10-to-6 ratio." [Shlaes, 121] Without substantial in-migration in the short run of young people, who, certainly in large part, will have to come from the developing world, today's welfare state cannot be maintained in Germany.
Already rising, the value of young people in the industrialized nations is going to increase further. Already we are experiencing one of the likely results of the rise in their value. The industrialized nations, whose average age well exceeds the average age in the developing world, are less willing to send its youths out to fight than in the past. "The refusal to tolerate combat casualties is not confined to democracies. The Soviet Union was still an intact totalitarian dictatorship when it engaged in the classic great power venture of Afghanistan, only to find that even its tightly regimented society would not tolerate the resulting casualties." [Luttwak, 24]
The combined losses of the Union and the Southern Confederacy during the Civil War exceeded those of all the other wars the United States has fought. If the U.S. in 1861 had been a heavily-indebted, welfare state whose families rarely had more than one or two sons, would it have been willing to make such a sacrifice to preserve the Union?
The largely militarily uncontested breakup of the Soviet Union; the U.S. pulling out of Somalia when 18 men were killed (earlier, in Lebanon, it took over 200 Marines to precipitate a hasty pull out); and NATO's handling of the wars in Bosnia and Kosovo strongly suggest that in the foreseeable future the industrialized nations will use infantry sparingly and in modest amounts short of a major threat to their vital national of political interests. Infantry will have to be used if territory is to be taken and held.This is significant if Bruce D. Porter is to be believed, as in his book, War and the Rise of the State, The Military Foundation of Modern Politics, he concludes that waging war is what made the Leviathan state possible. However, the Gulf War, sold beforehand to the American people as necessary to guarantee plenty of cheap foreign oil and afterward in order to create a "new world order", proved that the U.S. can still engage in major military operations. (Remember "making the world safe for democracy in 1917?) However the Gulf War was fought in a manner designed to minimize casualties. The same was true of the War in Kosovo, which was fought because the new world order is in one in which ethnic cleansing is not allowed to take place.
We can expect that technological change in military hardware in the future will be oriented toward casualty reduction. The more progress that is made in this direction, the greater will be the ability of the U.S., the only remaining super power, and other industrialized nations to wage war. Unfortunately, modern technology also facilitates terrorism, which drove the British from Palestine, is the only way the militarily weak can resist the militarily strong.
Why have birthrates in the welfare states fallen to such a low level that the ability of governments to deploy their soldiers has been affected? Certainly modern means of birth control play a role, as it is hard to believe that most women of child-bearing age wish to give birth every other year, which is what a sexually-active, healthy woman could expect if she did not practice birth control. The precipitous decline in birthrates during the Great Depression, when condoms and abstinence were the only means of birth control available, and the surge in the birthrate during the long economic expansion after World War II reveal that economic considerations affect the birthrate.
Until well into the Twentieth Century Western governments actively supported policies that barred women from most employment outside the home and confined them to low paying jobs. After World War I, for example, the U.S. government made streetcar companies fire women conductors. Sometimes there was no pretense that a government action restricting women, such as prohibiting night work, was motivated simply to protect women. In recent years, however, there has been a 180 degree turn around in U.S. government policy in regard to women working outside the home. Although non-economic objectives played a role in their creation, today many of its policies provide either a strong economic incentive for women to work outside the home or a disincentive to staying at home.
It has largely been due to the efforts of the government that every job short of things like being a National Football League linebacker is open to women. It has played a role, too, in reducing the gap between the average pay of women and men. It is responsible for the failure of the amount of income exempt from the income tax per child for many years not keeping up with inflation. Through child labor laws and the provision of generous Social Security payments to the elderly, it has reduced the value of and, thereby, the incentive to have children. It has pressured men to encourage their wives to work by raising taxes. It has caused women to more often need to seek work by having made divorce easier and alimony harder to obtain.
For several decades after women got the right to vote the government was content to keep women on a pedestal and out of men's way. Possibly because it made them feel secure, many women were content to stay on a pedestal. However, more and more women complained about being relegated to the kitchen, barefoot and pregnant. Finally, claiming it had seen the light and become converted to the cause of women who demanded equality, the government began striking down restrictions on women's activities. By taking away the carrots and sticks that bound women to the home, the government unlocked a vast new source of funds for itself because the more women work outside the home, the more taxes it can collect. The more taxes it can collect, the more it can spend. The more it spends, the greater is its power.
The warfare-welfare state was fueled by war and inflation says Raimondo. [Raimondo, 89] War has been used as an excuse the public will accept for vastly increasing the government's share of the nation's output, and inflation is the result of government borrowing much of the money it uses to purchase a larger share of the nation's output.
Since the end of the War in Vietnam, particularly after the collapse of the "Evil Empire," the growth of central government spending in the U.S. has mainly been accounted for by the growth of transfer payments. The poor and those employed in distributing them are not the only beneficiaries of transfer payments. The middle class and the rich get them too. In the U.S. most agricultural subsidies, for example, go to the most well off farmers. There has been a continual increase in the proportion of the population that receives transfer payments. Through Aid to Families with Dependent Children (AFDC), the government has encouraged women to have children by men who will not support either them or their children. A high degree of tolerance and excuse making for anti-social behavior in combination with the welfare system have combined to create a crime-prone, unemployed, permanent underclass. This phenomena has intensified compassion fatigue which, in turn, has created a continuous individual form of local secession consisting of the migration of working people from the cities and states with the highest welfare burdens.
As an economic philosophy, equality of income is what communism is all about. In contrast to this view, Americans have historically believed that people are only entitled to equality of opportunity. However, as a result of unequal abilities, ambition, and luck, equal results were not forthcoming. Dissatisfaction with this state of affairs caused income redistribution to become the federal government's primary activity. This, Tullock claims, "is probably the most important single function of most modern governments. Further, it is a very traditional government function, with all recorded governments having done at least some of it." [Tullock, 1]
"Only the government, through taxation, takes away wealth from the producers and distributes it, through subsidies, to the consumers. In the free market, wealth may be donated to help the poor and the less fortunate or to promote a charitable cause, but such actions by their very nature increase the social utility for all concerned; political welfarism, however, increases the utility of some at the expense of others." [Skousen, 196]
Discriminatory redistribution may be achieved through taxation, regulatory policies, or other economic policies which "systematically work to the disadvantage of some groups, while benefiting others, in morally arbitrary ways." [Buchanan, Secession, 40] "Discriminatory redistribution is a violation of a fundamental term of the 'social contract' and, hence of the conditions for legitimate political authority over those against whom it is perpetrated: namely, that governments operate for genuine mutual advantage." [Buchanan, Secession, 44]
Opposition to income redistribution has a long history in the United States. As Allen Buchanan has pointed out, "the chief justification for American independence was discriminatory redistribution: Britain's mercantilist policies systematically worked to the disadvantage of the colonies for the benefit of the mother country." [Buchanan, Secession, 45] Americans bought an end to the discriminatory income redistribution imposed upon them by their government, the British government, by seceding from the British Empire.
Although the cause of secession and revolution may be the same: dissatisfaction with the nature and/or actions of government, they are different phenomena. The revolutionary seeks to replace the existing government, while the secessionist is content to leave the existing government in place, but wishes to remove himself or herself from its rule.
Early in the new country's history the Southern States began complaining about tariffs protecting the industry of the North and, thereby, redistributing income from the South to the North. Long before 1861, when nullification failed, South Carolina seriously considered leaving the Union over this issue. Many in the rest of the South felt the same way, but dissatisfaction then was insufficient to precipitate the secession of the Southern States.
"Charges of discriminatory redistribution abound in actual secessionist movements. Indeed," claims Buchanan, "it would be difficult to find cases in which this charge does not play a central role in justification for secession, although more often than not it is buried in stirring but confused rhetoric about the 'right of self-determination." [Buchanan, Secession, 41] According to Hans-Hermann Hoppe, "one of the most important reasons for secession is typically the belief on the part of the secessionists that they and their territory are being exploited by others." [Hoppe, 25]
In the United States in the Nineteenth Century the agrarian South claimed that protective tariffs redistributed income from it to the industrialized North. Also objected to were federally-financed internal improvements and bounties and subsidies that benefited the North. Federally-financed improvements in transportation between the Northeast and the Northwest both cost Southern taxpayers and negated the advantage the South enjoyed from South-flowing rivers.
In Twentieth Century Spain Basque secessionists claimed that the percentage of total tax revenues paid by their region was more than three times what it received. (A Basque saying is that the State has a mouth in Basque country and an utter elsewhere.) In Nigeria in 1967, Biafra had 22 percent of the nation's population, but it contributed 38 percent of its total revenues. In the Congo, Katanga Province contributed 50 percent of revenues, but it received only 20 percent of expenditures. In the Baltics and Soviet Central Asia, secessionists said that the rest of the nation has benefited from policies which imposed environmental damage on them. [Buchanan, Secession 41]
In Africa, secessionists often claim that the central government favors a particular tribe. Although the attempted secession of mineral rich Katanga from the Congo and Biafra from Nigeria are cases of the haves seceding from the have-nots, the reverse also occurs. The Soviet Far East is an example of a have-not status causing the secession option to be considered. The people of the Russian Far East complain that not enough income is being redistributed to them from the rest of the nation. As an independent nation, they believe that they might benefit more from future exploitation of their region's mineral resources. Scotland, a have-not nation for generations, considered secession after oil was discovered off its coast because this would mean it would not have to share this wealth with the rest of Great Britain.
After a long period of the consolidation of nations, in recent decades a splintering trend has emerged. The former Communist Bloc nations of Yugoslavia and Czechoslovakia, the former violently and the later peacefully, split. The mushrooming of actual and potential secession has not been confined to areas formerly behind the Iron Curtain. Secessionist sentiment is still strong in Quebec. At a horrendous cost, East Timor finally broke away from Indonesia, which fears that other regions will follow suit. In Iraq, the United Nations is protecting secessionist Kurds. Germans in Poland and Romania; Hungarians in Slovakia, Serbia, and Romania; Albanians in Serbia; and Turks and Macedonians in Bulgaria want independence. The desire of Albanians in Serbia for independence led to the recent war in Kosovo. In the United States Northern Californians talk of splitting California into two states. In New York Staten Islanders have threatened to secede from New York City. In Italy, "compassion fatigue" resulting from income being redistributed from the North to the South led the Lega Nord (Northern League) to press for independence for Northern Italy.
Like the Confederate States of America, Northern California, and Staten Island, the Lega Nord illustrates that secessionist movements are not simply the product of differences in culture, race, language, and religion. It can and has taken place in the absence of any of these differences. If cultural, racial, and linguistic differences and previous injustices, such as the loss of independence, exist that produce a desire for secession, in the absence of a conflict of economic interests, these things may be inadequate to generate secession. Would, for example, there be as much desire for secession from Great Britain among Catholics in Northern Ireland (Ulster) if they were economically as well or better off than Northern Ireland's immigrant-descended Protestants?
Central action such as that involved in regional redistributive policies often provokes strong opposing reactions within regions; typically, it is perceived as insufficient by the low income regions [the Far East] and unnecessarily burdensome by the high-income regions [Northern Italy and Staten Island]. This discrepancy in the perception of central policy is due to differing interests of regions at various levels, as well as the center. The high income regions may perceive this outflow as having a high opportunity cost, which results in the tax revolt that is presently witnessed in numerous regions. The interregional conflict that arises from this tax revolt may necessitate new central concessions, which further increase the spiraling effect of regional disparities and central intervention, as occurred in Western Australia, which in 1933 proposed to secede from the Commonwealth because its leaders believed that its economic interests were being largely ignored by the government (which was dominated by the more industrialized eastern regions), thus setting in motion a series of concessions. [Bookman, 47]
Relatively low-income regions might attribute their relative economic positions to unfair practices, exploitative of their resources, or inadequate assistance from neighboring regions. Relatively high-income regions may perceive themselves as the economic backbone of the state, while their neighbors drain their resources and restrain their growth. Thus, states with wide regional disparities in income constitute a ripe environment for perceptions of injustice at all levels of income. [Brookman, 44]
There will always be have and have-not regions and, therefore, potential for secession, it is argued, because
There is a 'law' of uneven, regional economic development. Though the unevenness is apparent when we contrast huge areas such as continents, most, if not all states also reflect economic differentials between regions. This is true of ethnically homogeneous and heterogeneous states alike; Germany, as well as France, illustrates notable sectional differences. Among the contributing factors are regional variations in such categories as (1) topography (ease of transportation), (2) climate, (3) soils, (4) availability of natural resources and raw materials, (5) population density, (6) the current technological capabilities of the local populace, (7) distance from potential markets, (8) the comparative advantage of local industry with regard to (a) age of plant and equipment and (b) margin of profit, and (9) enduring effect of earlier decisions regarding investments and the locating of support industries and facilities (the infrastructure). [Motyl, 34]
Opponents of the secession of the haves from the have-nots claim that the haves do not have the right to secede because they have an obligation to help the have-nots. This is referred to as distributive justice and is clearly a theory appealing to communists and other kinds of socialists. If this obligation is unlimited, then equal incomes are justified. If, on the other hand, the obligation is limited, what determines its limit? Does this obligation justify the use of force if people will not voluntarily comply? Is this a form of slavery? If there is a trade off between income redistribution and the rate of economic growth, what size trade off is too high?
Secession, the cause of much of world's warfare, has not been an uncommon event. Most of Great Britain's colonies in North America seceded in the Eighteenth Century. Subsequently, Spain's Latin American colonies seceded. In the Twentieth Century Britain lost India, which included today's Pakistan and Bangladesh, its African colonies, and most of Ireland. Indonesia broke free of the Netherlands, which much earlier had thrown off the yoke of Spain. France lost its colonies in Africa and the Orient, including Algeria and Vietnam, and Portugal lost its African colonies and its enclaves in India and China. After the 1917 communist revolution in Tsarist Russia, Poland, the Baltic States, and Finland gained independence. Only Finland was able to maintain it. Poland and the Baltic States regained their independence late in the Twentieth Century. The West Indian Federation (Jamaica, Trinidad, and Tobago) split up in 1962. Singapore became a city-state when it left Malaysia in 1965. Later East Pakistan (Bangladesh) broke free of West Pakistan (Pakistan).
Governments oppose secession for a variety of reasons, the most obvious of which is that it will reduce their power and revenues. A newly created nation, too, may present a security threat. For the enterprise of government secession is as unwelcome as freedom of entry into an industry is for a business enterprise because the new nation may be a commercial and political rival. Also, the secession of one region may lead others to emulate it.
Today in both Europe and the United States the failure of ever more extensive income redistribution to solve the problems of its recipients has led to compassion fatigue. The political consequences of compassion fatigue have been substantial in both Europe and the United States. The failure of handouts in the United States led to welfare reform. While for years the liberal rich throughout Northern Europe indicated that they thought that things were changing in the Mediterranean basin, by the 1970s most of them appear to have privately acknowledged that the handouts were not working. In the eighties and nineties disillusionment became public.
"The North," contends Italy's Lega Nord, "generates taxes. The South consumes handouts. In between stands the national government in Rome, which takes from one to give to the other, while diverting a substantial amount into its own coffers." [Viviano, 38] Handouts have gone, it says, not into southern infrastructure, but into some people's pockets, and, as a result, Southern Italy has failed to develop. To get ahead, people in Southern Italy have either had to migrate to the North or join the Mafia. Southern Italy, claims the anti-institutional and pro-individual Lega Nord, will never develop so long as it receives handouts.
By creating a new national border the Lega Nord hopes to prevent the movement of people from the poor South to the rich North. A like attitude towards poor immigrants can be seen throughout the Western Europe and in Japan, which permits extremely little immigration. Increasingly, undesired foreign immigration is creating ever louder demands for the closing of national borders. Concern about immigration from under developed nations is strong, too, in the Southwestern states of the United States. While opposition to immigration motivated by fear that it would lower wages and bring about cultural changes preceded the creation of the welfare state, in the U.S. the provision of tax-financed benefits to immigrants, particularly illegal ones, has probably intensified opposition.
To think of Italy as a single economic entity, claims Kenichi Ohmae, is to ignore the reality of an industrial North and a rural South; each of which vastly differs in its ability to contribute and in its need to receive. "The nation state," he argues, "has become an unnatural, even dysfunctional, unit for organizing human activity and managing economic endeavor in a borderless world. It represents no genuine, shared community of economic interests; it defines no meaningful flows of economic activity. In fact, it overlooks the true linkages and synergies that exist among often disparate populations by combining important measures of human activity at the wrong level of analysis." [Ohmae, 78] The lines on the map which matter today, he believes, are those which delineate what he calls regional states. Regional states' boundaries are drawn by the invisible hand of the global market for goods and services.
"Public choice," ill-named because the only choices it recognizes are essentially private, is both a branch of microeconomics and an ideologically-laden view of democratic politics. Analysts of the school apply the logic of microeconomics to politics and generally find that whereas self-interest leads to benign results in the marketplace, it produces nothing but pathology in political decisions. These pathological patterns represent different kinds of "free-riding" and "rent-seeking" by voters, bureaucrats, politicians, and recipients of public funds. Coalitions of voters seeking special advantage from the state join together to get favorable legislation enacted. Rather than being particularly needy, these groups are likely to be those whose big stake in a benefit arouses them to more effective action than is taken by the taxpayers at large over whom the costs are spread. In general, individuals with "concentrated" interests in increased expenditure take a "free ride" on those with "diffuse" interests in lower taxes. Similarly, the managers of the "bureaucratic firms" seek to maximize budgets, and thereby to obtain greater power, larger salaries, and other perquisites. Budget maximization results in higher government spending overall, inefficient allocation among government agencies, and inefficient production within them. In addition, when government agencies give out grants, the potential grantees expend resources in lobbying up to the value of the grants--an instance of the more general "political dissipation of value" resulting from the scramble for political favors and jobs. [Starr]
Economists define public goods and services as things that private producers will not produce because there are so many free riders that it is not profitable to produce them. A private producer of a good or service can only enforce payment for it by denying a good or service to anyone who will not pay for it. Goods and services often provide benefits both to the purchaser and others, who are called free riders. What someone is willing to pay for a good or service is based on the amount of benefit he or she will enjoy. If too many of the benefits a good or service provides are enjoyed by others, it cannot be sold for enough to cover the cost of producing it, much less provide a profit to its producer. Through taxation, the collection of money by force, a government can collect enough to cover the cost of producing a good or service. In a true communist economy, everything is produced by the public sector (government); not just public goods and services.
Comparative advantage is typically used by economists to show both how countries decide what to produce for export and what to, instead, import and to demonstrate that it makes sense to import some things even if you are the most efficient producer of everything. It appears that Tullock is viewing it as a way to explain how individuals decide whether to gain an income by working or using force to take what they want from others, a legal activity when conducted by the government. Another way of viewing this is that a person must choose between earning a living by producing goods and services, employing people who produce goods and services, or governing those who produce or employ those who produce goods and services. In a primitive society brute strength is typically how one becomes a ruler. However rule is achieved, the use of force against others is legitimate and must be used in some cases.
Theory and some empirical evidence suggests that by reducing the incentive to work, save, and invest, the redistribution of income reduces the rate of economic growth.
Complexity theory developed in recent years demonstrates mathematically how order is generated spontaneously in all types of situations, including the marketplace., which is what a long line of economists, starting with Adam Smith, have claimed based on theory and empirical evidence.
Dependency theorists label countries like the U.S. bourgeois and Latin American and African countries proletarian. Through free trade bourgeois countries, they claim, exploit proletarian countries. Industrial firms in proletarian countries are run out of business or never emerge in the first place as a result of a flood of cheap imports (surplus production) from bourgeois countries and the tariffs they impose on manufactured imports. According to this theory, the terms of trade between the raw-material exporting proletarian countries and the industrial-goods exporting bourgeois countries continuously decline. As a result, the proletarian countries have to export ever more in order to pay for a given amount of imports from the bourgeois countries. Conflicting with this theory is the fact that the under developed countries that have grown at the most rapid rates in recent decades have been those that are the most market and foreign trade oriented.
Believing high trade barriers played a role either in bringing about and/or perpetuating the worst worldwide depression ever experienced, since the end of World War II the U.S. and some other countries have signed agreements binding all parties to them to lowering their trade barriers. The various versions of the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA) are examples of such tariff-reducing agreements. They are not, however, free trade agreements. What they produce is highly managed trade and further extend the power of government.
Governments may prefer to lower trade barriers through these agreements, not only because they believe that like reductions are not likely to occur through unilateral action, but also because they protect them from competitive reductions in revenue-generating tariffs. These agreements also give them the opportunity to create supra-national organizations that enable them to achieve ends, such as socialist planning, they might otherwise be unable to obtain. In the U.S. international treaties have the advantage to the government of not being subject to provisions of the Constitution.
Communist Cuba is an excellent example of the poverty of protectionist trade theory. A believer in the neo-Marxist dependency theory should have smiled when the U.S., hoping to bring Cuba to its knees, cut off trade with it, because cutting off trade with industrialized, capitalist countries is just what these Marxists advocate. They advocate the resulting self sufficiency because in applying Marxist class theory to countries, dependency theorists conclude that foreign trade exploits and, thereby, impoverishes under developed countries like Cuba.
Rather than being a transient phenomenon that liberals or progressives believe or a dialectical engine of progress as Marx believed, Porter argues that, above all else, war is "a powerful catalyst of change" whose consequences can be both reforming and ruinous. He believes that war was the main cause of the territorial consolidation of Europe from perhaps as many as a thousand political entities in the Fourteenth Century to 25 by 1900. In the Twentieth Century totalitarian regimes used the glorification of war in their "prostration of all politics to the good of state." Rather than being created in the U.S. during the Great Depression, he believes that the welfare state was created in the U.S. between 1939 and 1945. Its substructure was created during and following World War I when the responsibility of the state for the welfare of its citizens became widely accepted. It was "essentially finished in its full bureaucratic and fiscal form" by 1949.
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