In The Armchair

Is the State Obsolete?

Posted in Armchair Ruminations by Armchair Guy on October 5, 2008

I had a very interesting discussion yesterday about whether the concept of the state (i.e., country) is now obsolete. The basic premise is that the world is flat, and that national boundaries are irrelevant in the current global economy. The arguments were roughly along the following lines:

  1. Corporations Corporations act in ways that benefit people of all countries. The basic unit of society should be the corporation, not the nation. An American country that lays off people in America frees them up to do better, more imaginative, more creative, more cerebral work. The same company, which hires replacements in India, improves the lives of those Indians, who would otherwise have been unable to find work that paid them so well.
  2. Brain Drain The argument was be taken further: brain-drain is not really a drain at all, because national boundaries don’t matter. Thus top brains and talent moving from India to the US is not a concern. It is better to use your brains in the US than to underuse them in India. And India benefits from this: foreign remittances to India are higher than to any other country in the world.
  3. America There is only one country in the world, the USA, which has an inherent culture of innovation and discovery. (Or perhaps two or three others at most, Germany being a possibility.) This is why no innovation happens in India, and cannot happen in India — because the people, by nature, lack innovativeness.
  4. India India, more than any other place, doesn’t deserve nationhood because of the diversity of its people. An Indian feels like a stranger in a different part of his own country. The US feels more like home than India.

I didn’t agree with these points. My answer yesterday to the question: “What is the point of nations?” was “Bargaining power”. Here’s a Q & A:

Q01: What is the point of nations?
Ans: Bargaining power. A nation is nothing more than a collective that bargains in order to increase the standard of living (SoL) for its citizens. It is the same concept as that of a workers’ union.

Q02: What is the point of nationalism?
Ans: The reason a citizen should support his nation (and the concept of nationhood) is that it increases his chances of a better SoL. Nationalism increases a nation’s ability to bargain, by increasing the nation’s unity.

Q03: Then why shouldn’t everyone in the world pledge their loyalty to those nations that have the highest chances of improving their citizens’ SoL? Specifically, the USA?
Ans: If an individual’s goal is to increase his SoL, he should indeed attempt to become a citizen of the country most likely to increase its citizens’ SoL. The reason this doesn’t happen in practice is countries like the USA realize it is not in their best interest, and have laws in place to prevent easy access to citizenship.

Q04: Which laws?
Ans: To become a citizen, one has to demonstrate both competence (through employability) and American nationalism (through a test and residence). America realizes that notions of the world being flat (in the sense of nonexistent national boundaries) are not in its best interests.

Q05: Why is “no boundaries” not in America’s best interest?
Ans: For Americans to remain prosperous, there needs to be a vastly larger population of non-Americans. There needs to be someone to bargain with, someone to exploit.

Q06: Huh?? Why? What do you mean by “exploit”?
Ans: American power has many immediate reasons, but it can be traced back to a form of imperialism. America’s prosperity relies on the exploitation of non-Americans, just as the prosperity of every other major power throughout history relied on exploitation of other populations. Unless a vast population of non-Americans exists, it will be impossible to use America’s bargaining power to acquire various raw materials from them at prices much lower than the cost it takes to extract them. This is not a bad thing; it is what every major country in the world is trying to do, and is what every trader in a market attempts to do on a daily basis. It’s just that America is better at it than other nations.

Q07:  Rot!  Trade is better for all parties involved.
Ans: Not if one party is in a much stronger position than another. Large nations work very hard to prevent a truly level playing field. It’s very hard for a small, poor country to walk away from a tough deal.

Q08: Even if nations are relevant, why don’t we stop at Indian states? Why shouldn’t Rajasthan, West Bengal and Tamil Nadu be separate countries? Why do we need the whole of India to be one country?
Ans: Because larger countries have more bargaining power than smaller ones.  It’s possible to get too large — when there are not enough foreigners to exploit and internal management becomes hard.  But until we reach that point, it is best to grow larger.

Q09: Then why shouldn’t India annex more land and become an even bigger country?
Ans: If we can, we should. China knows this; that’s why China seized Tibet. But we need to make sure the negative consequences of such an action don’t outweigh the gains.

Q10: Well, the USA can certainly annex more land. Why doesn’t it do so?
Ans: The fallout from such an action would have an unjustifiable cost for the USA. It is so stable and has such a high SoL that managing a population of unwilling conquerees would lower the overall American SoL.  Even integrating willing conquerees into American society would be very costly.  Increasing the American SoL at this point is much more easily accomplished by projection of soft power.

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