The Federalist Utopia versus the Nationalist Dystopia

Most African languages use the same word for “guest” and “stranger” (as James Robinson notes in his Nobel Lecture). African immigrants must be deeply disheartened when they encounter a very different mindset upon arriving in many parts of Europe. In the long run, though, I don’t think it matters much—after all, we all come from Africa.

Spain expelled Jews and Muslims in 1492, at a time when these communities were making significant contributions to the Iberian Peninsula’s culture and economy. We paid a severe cultural and economic price for that expulsion. Yet a few centuries later, we are fortunately part of the European Union (imperfect, but governed by some of the most civilized rules on the planet), we again have a Jewish community, and we are receiving new waves of migrants—including many of Muslim faith.

The creation of the State of Israel was an understandable decision by the international community to provide a home for the Jewish people after the Holocaust. But a home for the Jewish people does not necessarily mean an exclusively Jewish home or a “Jewish state,” since such a definition almost inevitably leads to discrimination against those who are not Jewish, as is happening today.

Attempts to create “pure” nation-states—accompanied by ethnic cleansing, what I call the nationalist dystopia—are nothing new. On page 51 of her recent book Indignity: A Life Reimagined, in a chapter entitled “The Unmixing of Peoples,” Lea Ypi describes the feelings of a character subjected to forced displacement at the end of the Ottoman Empire:

“That poor man didn’t choose to be born speaking Turkish or Albanian… Tomorrow he is off to where he’s told he belongs, even though he’s never seen it before; he doesn’t even know if he will make it across safely. And anyway it’s a highly dangerous precedent. Now every time there is a war they will think it’s a good idea to start swapping people around, to force them to move from one side of the border to the other, all in the name of an orderly settlement. I find it frankly terrifying.”

Many—if not all—of these once “unmixed peoples” now seek to reunite within the European Union, with its free movement of people and shared European public goods.

We are not going to solve humanity’s problems one nation-state at a time. I have more faith in universal justice than in the recognition of a Palestinian state as the sole way to stop the genocide in Gaza and the apartheid in Israel–Palestine. Two states can only be a long-term solution if they cooperate within a common confederal or federal framework, as suggested by Piketty, many other intellectuals, and people on the ground (and as envisioned in the original plans of the United Nations).

A perfect federal structure may be a utopia—but a useful and reasonable one, to borrow Javier Cercas’ words. The European Union, with all its imperfections, shows how such a project can still succeed. The analogy between today’s Israel and apartheid-era South Africa is relevant and illuminating. But recall that, although some argued for it (such as the neoliberal and racist economist Murray Rothbard), the solution was not to create a separate state for Black South Africans. It was to share the land in a democratic South Africa with equal individual rights.

Free speech as part of economic and social welfare

Karen Attiah, the woman who hired Jamal Khashoggi, has been fired from The Washington Post. Khashoggi, a journalist, was brutally murdered on the orders of the Saudi dictator for speaking truth to power. She is being interviewed by Paul Krugman here.

What is happening in the United States is worse than McCarthyism because it is broader in scope and more directly driven from the top of executive power. The attack on freedom of speech is part of a wider reconstruction of institutions in a dystopian direction.

Obama’s observation that abstract issues and the price of eggs are not separate things comes to mind in trying to explain why the attack on free speech in the United States (and, by extension, in democracies more generally) is damaging not only in cultural terms but also for economic and social welfare.

Not all the economic effects of policies and public decisions are captured in GDP or other macroeconomic indicators, though these too may suffer in the long run. Freedom of speech is one of the essential capabilities required for a free life, and therefore everyone has the right to enjoy it—just as they do housing, education, or basic healthcare. Amartya Sen’s capabilities approach emphasizes what people are able to do and to be, rather than merely the resources they possess or the utility they derive.

Free speech is part of human dignity. Education, health, nutrition, and shelter up to minimally adequate levels do not exhaust the list of fundamental capabilities. The freedom to express opinions and to criticize the powerful affects individual welfare directly—not only the welfare of creators, journalists, and citizens who want to voice their views, but also the welfare of those who benefit from consuming others’ opinions. The right to irony and sarcasm is itself part of individual freedom.

Freedom of speech also affects economic and social welfare indirectly, by fostering dialogue and creativity. Its absence does not harm only elites. Without free speech, dialogue collapses and innovation dries up: ideas eventually stop circulating, as happened under Stalinism in the Soviet Union.

As historian Timothy Snyder notes in reference to youth mobilization in Serbia: a young generation sees no future in their own country without the predictability and freedoms safeguarded by the rule of law—and once lost, these could be gone for good. Free speech is a fundamental part of the rule of law. Without it, one of democracy’s key contributions to economic and social welfare disappears.

Milei's fifth dog

A sophisticated example of what Mukand and Rodrik call “changing the relevant dimension” (to distract from income inequality) by oligarchic sectors is explained by Slobodian (2025), in a book that narrates the details of what the author considers the national-populist mutation of neoliberalism. Trumpism would not be a rectification of neoliberalism, but a pathological but very elaborate evolution of it, when its most transparent objectives are difficult to achieve through conventional democratic means. 

Murray Rothbard (Murray is the name given to one of Milei’s clonned dogs, others are Milton, Robert and Lucas, and the first is Conan, after the original), is one of the economists who star in Slobodian’s book. He was in favor of the secession of white South Africans and from neoliberal positions close to Hayek he gradually evolved towards openly racist positions. For many neoliberals, the rejection of democracy (as in Chile) was not an accident. 

Milei himself considers himself a neoliberal economist, in favor of reducing the size of the state (the “chainsaw”). The German far-right party AfD was also founded by economists. 

For Hayek’s “bastard children,” as Slobodian calls them, if international trade and capital mobility work, immigration will not be necessary. Culturally and ethnically homogeneous populations are a prerequisite for the proper functioning of markets, as is the protection of property rights. The “three hards of hard money, hard borders and hardwired culture” are central to the national-populist drift of neoliberalism, as Slobodian explains. 

New strategies to promote a hard currency, however, run into contradictions when they try to promote digital assets such as “stable-coins”, theoretically linked to real-world stable assets, but which, according to many experts, can give rise to episodes of financial instability such as those that characterized the times of existence of private currencies before the establishment of the United States Federal Reserve. 

Interestingly, Slobodian (p. 149) explains:

“The three hards of hard money, hard borders, and hardwired culture were central to the paleo ideology. It was a philosophy of exclusion… the central intellectual line of connection between old conservatives and libertarians is the theme of regionalization, decentralization, including secession. They recommended individual provinces, regions, cities, towns and villages… proclaim their status as free territories to prevent from being swamped by immigrants”