Fabio Andreotti, board member Hayek Club Zurich
Political turmoil as a chance for change
Majority voting inevitably alienates large parts of a population. Since Swiss citizens go to the polls as often as six times a year, I’m well aware of that fact. This may be the price of a more direct form of representative democracy. But in Switzerland it has also led to an increasingly emotional upset within the population because of conflicting visions for society.
As far as I can see, US citizens don’t react so differently: The election of Donald Trump as president-elect of the United States has not only raised discussions about the workings of the electoral college but also about a possible exit of California from the union (“CalExit”). Since a considerable 61.5%-majority of Californians voted for Hillary Clinton, some of them have deemed a separation to be the indispensable response to a Trump presidency. Such a devolution of power seems like a political endeavor worthy of support.
But why is that?
Rooted in the thought of Renaissance humanism
The early legal scholars already acknowledged the significance of the right of secession, based on natural law. The German Calvinist Johannes Althusius argued in his “Politica” (1603) that citizens have a right to secede from the king in the case of an abuse of power. He considered this right to be derived from the general right of resistance. However, secession, meant to act as vertical checks and balances in the early European absolutist states, shall not be done on a whim. To Althusius as well as to others, secession remained ultima ratio. First and foremost, the state should be organized from the bottom in accordance with the “principle of subsidiarity”. Taken to its extreme, secession is nothing else than the ultimate consequence of subsidiarity.
Subsidiarity comes from the latin “subsidium” that means “support” or “reserve”. It is a principle of social, political and economic organization. It holds that society is primarily based on self-determination and personal responsibility of the individual person, his family and private associations of individuals (cooperatives). Only if they are not able to come up with solutions to their problems privately, the local government will deal with the issues. If the local level is unable to do so, the regional state takes over or assists the local government. And finally, the central government or the king steps in if the federated states struggle to do it themselves. The principle thus holds: Any higher level of organization is subordinate to any lower level. The main advantage of a multi-level order is that people themselves make decisions that affect them, or at least delegated decisions are taken close to the citizens. This implies that those affected are able to keep track of the implementation of a policy.
Furthermore, subsidiarity allows for “trial and error” and competing regulation and governance within a liberal framework in the Hayekian sense:
“It is this flexibility of voluntary rules which in the field of morals makes gradual evolution and spontaneous growth possible, which allows further experience to lead to modifications and improvements.” (Friedrich August von Hayek, The Constitution of Liberty: The Definitive Edition, Chicago 1960 , p. 124)
Paths taken that turn out to be successful can thus be adopted by any other territorial entity or authority. Only this type of “political fragmentation” can preserve cultural diversity in the long run and lead to institutions, such as the competition of ideas, which ultimately serve individual freedom.
To Althusius, power and authority properly grow from the core of society – i.e., the individual person and his family – to more general associations. Althusius’s main insight was that the higher institutions are required to rely on the consent of the more local levels as well as the voluntary associations. Their powers can only be derived from the consent of the people, who must remain able to revoke it whenever necessary.
Johannes Althusius was a radical in terms of political subsidiarity. Located in Emden, a German town at the crossroads of political and religious activity at that time, Althusius’s ideas must be interpreted in the light of the Calvinist Dutch Revolt against the Catholic King Philip II of Spain, which de facto ended in 1609 and initiated the „Dutch Miracle“, a century-long period of economic, scientific, and cultural growth, thereby laying the foundation for the rise of classical liberalism. It had taken nearly two centuries before the concept yielded further results: It was the upheaval of the thirteen colonies against the British Crown and with it the foundation of the United States of America in 1776, and later Switzerland in 1848, that properly incorporated the principle of subsidiarity in their constitutions for the first time. In Switzerland, as a result still valid to this day, the federal state derives all its powers from the consent of its 26 member states (“cantons”).
Unfortunately, the same people who are now in strong support of “CalExit” would probably think differently, if, say, Hillary was elected back in November. Not to mention how they would react to an announcement of Northern California (which is more Republican), or the city of Los Angeles wishing to exit from the Golden State. Yet, it’s woeful they can’t see the similarities.
The gap between Europe’s high regional fragmentation and political will
The great wave of nation building in 18th and 19th century Europe has brought forth somewhat disparate countries. In Europe, as a result, separatist movements are so common that we would easily run out of space if we attempted to describe all of them. Just take Spain: The Reino de España has seventeen autonomous regions. Each of them has ambition to leave the Kingdom. Prima facie, seceding single-handedly seems only manageable for economically potent regions, such as California whose economic output has even surpassed that of France recently. However, such a shortsighted perspective does not take account of the fact that smaller territories can represent successful break-aways: Precisely because of the lack of economic self-sufficiency, secession would necessitate a policy of free trade. In the case for instance of Murcia, an autonomous region in southeast Spain, its weak economic performance would require its government to open up the markets in a beneficial way, both for its population as well as for its trading partners.
The Murcians feel different from the population in the rest of the country (not only from the Madrilenians in the capital city). For example, they have developed a dialect, much of which is derived from the Aragonese, the Catalan and the Arabic language. Given the great differences among the autonomous regions, it’s no wonder that the Spanish constitution explicitly guarantees the exercise of their traditions and culture. However, compared with the rest of the country, Murcia is a poor region with a rate of unemployment of over 25%. The Murcian economy hasn’t been capable of generating the same economic output in the past as the Catalan area with its “power house” Barcelona, for example. As a consequence, the Murcian people have been suffering a tougher economic slump than the Madrilenians or Catalans. This implies that they should have been able to follow a different approach with regard to fiscal policy to fight the repercussions of the euro crisis. However, today, it’s mainly the governments in Brussels and Madrid that are trying to deal with the economic recovery of Murcia. Additionally, the European Central Bank in Frankfurt is in charge of tackling the Europe-wide recession with an arsenal of unorthodox monetary policies. There is no guarantee that this will end well for the people of Murcia, let alone that they will see a cent of the zillions of Euros spent. The same is true for the separatist Sardinians, the independence-seeking Scots, the Flemish Belgians, or the people in Veneto Italy, to name but a few.
Bad incentives for politicians
In federal states, many people are upset at the idea of some regions permanently living at other people’s expense. Therefore, financially strong regions usually intend to untie their commitments to the federal state by seeking autonomy, and eventually formal secession. In the German fiscal equalization system, for example, only four states (“Länder”) out of sixteen (not even half of the German population) foot the bill for the entire population. The originally unintended consequence of this perverse system of income redistribution is that the politicians in the taker “Länder” have no incentive to change their policies for the better, while “Länder” paying into the system have no way of voting against those policies or monitoring the spending process. Politicians can run unprofitable projects at the expense of the giver “Länder”, such as the embarrassing Berlin Brandenburg airport, for which the cost has tripled to 6 billion euro. Unsurprisingly, the Bavarian separatist movement has gained traction in the face of such bad administration of public funds. However, it has recently suffered a defeat when Germany’s Federal Constitutional Court choked off any attempt at a separation
As a result, centralization via a redistribution scheme between member states, be it in Germany or on the EU level, is a poor policy design for citizens. They can’t expect a careful handling of their tax money under these circumstances; the logic of the system also kills off the incentives to engage in regulatory and tax competition because it doesn’t pay off, in particular not to the state that has to pay into the “pot of solidarity money”. Germany’s faulty system design is probably the main reason why chancellor Merkel has acted skeptical towards a Europe-wide “transfer union”, that would benefit Southern European countries the most.
Problems facing federal structures
The European Union has explicitly enshrined the principle of subsidiarity in its main agreement, the Treaty on European Union. Article 5 says:
“The use of Union competences is governed by the principles of subsidiarity and proportionality. […] Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”
However nice the wording, the EU Commission can easily come up with any justification for the use of a non-exclusive competence. And even if they wanted to question the Commission, individuals as well as member states’ municipalities and regions will have difficulty to meet the requirements for nullifying an EU law. Moreover, the European Court of Justice, financed and justified by the acts of the European Union, is well-known as the “motor of integration”. There is little to expect from the efficacy of the EU’s principle of subsidiarity, and looking at the numbers, there hasn’t been a single action brought forward by a member state or a private person so far.
Switzerland is hardly better in this respect. According to the Swiss Federal Supreme Court, the constitutional principle of subsidiarity (article 5a, 43a) is not enforceable. It’s only a political guiding principle in favor of a strong federalism. However, Switzerland is far smaller in terms of size (less than 16’000 square miles) and population (8.4 million) than most European countries, let alone the supranational EU. Yet, the Swiss Confederation possesses three layers: The federal level, the 26 cantons and the 2,300 municipalities. The system has developed historically, and given the cultural and linguistic diversity (German, French, Italian and Romansh), it has been the most appropriate response to the challenges of the country in the past.
However, Swiss federalism is in decline as well: In 2016, the number of municipalities was down to 2,300 from 3,200 in 1848, when the Swiss federal state was founded. It’s mostly for economic reasons, such as cost savings, that municipalities have recently started merging faster than ever. However, these alleged “cost savings effects” are, to use Bastiat’s words, only the “seen effects” while the “unseen effects” can’t be perceived easily. For instance, the loss of closeness to citizens and the increase in their rational apathy towards political commitment might well be causing a multiple of the costs saved by municipal mergers.
Unlike many outside observers, I doubt that we should credit the relatively small size of government in Switzerland to the more direct form of democracy alone. (If anything, it has also contributed to the expansion of the federal government lately.) Swiss limited government is, as Dan Mitchell also points out, mainly owed to the consistent implementation of the principle of subsidiarity, leading up to a relatively high degree of decentralization (“federalism”) and with it to sensible policies, such as the “debt brake” and cantonal tax competition. In terms of a government’s geographical scope (as well as size), smaller seems to be more beautiful.
Subsidiarity as a guiding principle
What follows as a possible solution is that countries should be organized in strong compliance with the principle of subsidiarity. Most human affairs should be entirely private. As far as government is concerned, autonomy on the local and state level should be as high as possible, meaning that all functions, except for military defense, the supreme court and maybe trade policy, should be pursued by local or state representatives. Moreover, the tax system should be fully and exclusively restored on the local and state level. Therefore, each state would be solely responsible for its revenues and expenditures. Only then have citizens a reliable picture of the government’s service quality, and only then are they systemically able to monitor the politicians in a sensible way.
Whenever someone disagrees with a policy or the advocated values a political system implies, they can vote with their feet by leaving their present domicile, as it is done frequently by corporations and individual persons in(to) Switzerland. Regulatory and tax competition would ensure an attractive environment for each and everyone. As a matter of last resort, say there is an undue burden set on people willing to move away, the constitution should formally grant the right to secede from the union and/or the respective state.
Silver lining Liechtenstein
The Principality of Liechtenstein is to my knowledge the only country in the world that grants the right for secession in the constitution (article 4 II). Prince Alois of Liechtenstein seems to be serious about the principle of subsidiarity:
“The fact that we have a right to secede in our constitution is a strong signal that the government can’t simply do as it pleases.” (article in German).
The effective enforcement of the principle of subsidiarity is an important safeguard for freedom. Government should be backed by a real permanent consensus about the shared values of the community it operates in. Britain (“Brexit”) and maybe California appear to be such cases in which the consensus has begun to crumble. And there are many more to be found in Europe.
If cultural cohesion changes, we should not only allow communities to secede, but also leave it up to the single individual to move on and vote with his or her feet. This is more necessary than ever in today’s fast-changing world, and since we all depend on respect for diversity, rules governing us should be the first we should be able to choose freely.
A shorter version of this article was published on www.fee.org.