Tuesday, July 4, 2017

Working on the complexity of sovereign conflicts

Branko Milanovic has a very interesting post criticizing the excessive simplicity of views in what he calls civil conflicts, by which what he means are basically secessionist movements. In particular, he mentions the much quoted article by Alesina and Spolaore "On the number and size of nations." This article and related work were widely publicized and translated into Catalan some years ago by nationalist leaders in Catalonia. Their idea that the benefits of small independent nations increase and their costs decrease in a globalized economy is one of the cornerstones of the Wilson Group of neo-liberal pro-secession economists. My conjecture is that Alesina and Spolaore came up with their ideas in the heyday of the Northern League, when it was becoming mainstream in economic circles around Milan that sharing a state with Southern Italy was a drag on the potential of the "really productive Italians." That was before the Northern League lost its initial reputation by tainting its programs with racism and blatant populism. The ideas of Spolaore and Alesina, as well as those of Sala-i-Martín and other neo-liberal Catalan secessionists amount to a coherent way of solving Rodrik's trilemma, by choosing (among democracy, globalization and the nation-state) a world with an internationally integrated economy where small nation-states compete by lowering taxes and regulatory standards, of course making impossible to fulfill the will of the majority of expanding the welfare state and protecting the weak. It is the world that the Chancellor of the Exchequer in the UK candidly described as a B Plan in case the negotiations for a reasonable Brexit failed. Milanovic points to a basic weakness in the analysis of Alesina and Spolaore, namely that similar societies do not have necessarily similar preferences, as the endless conflicts between very similar communities illustrate. There are other weaknesses in the analysis of the Italian authors, for example the fact that they do not consider other ways of organizing jurisdictions beyond the nation state, an error that Milanovic himself avoided in an old paper that he links in his post. And for example the fact that they asume that humans are organized in sets of lots of homogeneous communities that are heterogeneous among themselves but uniform inside. Anyone who is familar with the current social division in Catalonia (despite mixed marriages, etc.) would take issue with that. The old paper by Milanovic shows a much richer way of analyzing the complexity of these issues, explaining why there may be a trade-off between sovereignty (something that is not a discrete variable, but a continuous one) and income, which may explain why jurisdictions that want to secede, after a short while also want to become integrated in an even larger jurisdiction. It is the same paradox as secessionist Catalans willing to secede from the rest of Spain but willing to join a more integrated Europe (with a common currency and increasingly a common fiscal policy) where Spain is a key member. Perhaps it would be more productive for Catalan elites (including economists in the bourgeoisie) to work for a European Union where member states gradually lose their sovereignty and regions that are efficient, defeat corruption and contribute to solving collective problems (local and global ones) acquire more power.

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