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.

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

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