Liberal Nationalism in a Competitive Market for Governance
This post by Brad Taylor is part of Secession Week 2010: Culture And Secession
As I suggested in today’s introductory post, we seriously undersell the advantages of political decentralization and endogenous boundary-making when we ignore group identities and focus exclusively on the potential of jurisdictional competition to increase the quality and range of products in the governance market.
People treat governments as much more than mere service-providers. The people’s romance, as Dan Klein calls it, sees government not simply as a set of rules but as the expression of some mystical general will. The desire among the Québécois, Flemish, Southern Sudanese, and numerous other groups to break away from the states which currently govern them can be explained only partially in terms of a desire for a different bundle of policies. To a large extent, consumption of a particular rule-set, like the consumption of many other goods, is socially motivated.
The knee jerk reaction of many liberals and libertarians is to reject exclusionary group identities as irrational, harmful, and inadmissible in our intuitive cost-benefit analyses. This, of course, is itself highly illiberal: people care about identities and it’s not our place to prevent their expression.
While parochialism might always cause problems, its harm is amplified in the large democracies we see today. As Bryan Caplan has argued, democracy provides no check on our evolved xenophobic prejudices. Politics isn’t about policy, but status: we vote to increase the status of our tribe at the expense of the other guys. Democracy tends to exacerbate this tendency.
Given that our parochial stone-age brains are here to stay, we should prefer those institutions which minimize the costs of the people’s romance. Rather than fighting nationalist movements seeking to align state borders with the boundaries of group identities, we should be supporting them. John Stuart Mill made what remains the best argument for this type of nationalism 1861: when you allow each nation to have its own state, you reduce the tyranny of the majority:
Free institutions are next to impossible in a country made up of different nationalities. Among a people without fellow-feeling, especially if they read and speak different languages, the united public opinion, necessary to the working of representative government, cannot exist. The influences which form opinions and decide political acts are different in the different sections of the country. An altogether different set of leaders have the confidence of one part of the country and of another. The same books, newspapers, pamphlets, speeches, do not reach them. One section does not know what opinions, or what instigations, are circulating in another. The same incidents, the same acts, the same system of government, affect them in different ways; and each fears more injury to itself from the other nationalities than from the common arbiter, the state. Their mutual antipathies are generally much stronger than jealousy of the government. That any one of them feels aggrieved by the policy of the common ruler is sufficient to determine another to support that policy. Even if all are aggrieved, none feel that they can rely on the others for fidelity in a joint resistance; the strength of none is sufficient to resist alone, and each may reasonably think that it consults its own advantage most by bidding for the favour of the government against the rest.
While we want to carefully avoid arguing for the necessity of culturally pure states, we need to take the problems caused by diversity in a democracy seriously. The problem with simply insisting that we need nation-states, of course, is that national identities are never well-defined (and many group identities are not geographically-concentrated). Identity groups overlap and we each belong to many groups at many different levels. How can we to make states match salient group identities without creating pointless ethnic segregation at the behest of a few racists? In general, we need to make state boundaries more dependent on individual preferences.
Given sufficiently low barriers to secession, libertarians shouldn’t treat nation-states merely as something of instrumental value in preventing the tyranny of the majority. People get genuine satisfaction from having their state represent their tribe; we should not begrudge people their nationalist sentiments if they can be indulged without causing harm.
Since the power of exit will make individuals pay the cost of intergroup violence and place limits of preference heterogeneity, a decentralized competitive market for governance will produce a more harmonious world – even if everybody chooses to retain their tribal identities.
Let A Thousand Nations Bloom 
Great stuff, as ever. I would add that it’s not merely that we have stone age brains; it is also that group identification is a relatively simple thing to establish. Raise a flag, cheer for a sports team, become a member of a team. We are hard-wired for this to be sure. But we are not hard-wired (much) for the instantiation–i.e. the “what” of the group. So let a thousand tribes emerge. A macro-system that allows more sub-systems (i.e. groups) easily to form and persist is the one that is likeliest to engender peace, prosperity and pluralism.