by Thomas R. Wells
There is no good reason for small countries to exist, and we should stop making more of them.
The World Bank classifies 40 countries as ‘small states’ on the basis of having a population smaller than 1.5 million. Some are as small as 11,000 (Tuvalu), and the total population of all of them put together is only 20 million. Nevertheless, each of these countries has ‘sovereignty’ – meaning that the organisations that rule over the populations within these territories has special and equal rights under international law – to exploit the resources that fall within their exclusive economic zone, for example, or to vote on matters of global importance at the United Nations, or to make up their own regulations about corporation tax and secrecy.
This is absurd, but also far from harmless.
Small countries do not make economic sense in their own right because their populations are too small to sustain the large scale markets required for specialisation and economies of scale and hence the economic productivity required for real prosperity. The lack of real economic opportunities leads many of their citizens to want to leave. Hence most of these countries are very poor, simply because the borders have been drawn around too small a population.
It is true that some small states manage to prosper despite their singular disadvantage. But the ways in which they do so provide no general justification for the existence of small states.
Most of the small states who prosper do so by exploiting the only thing they have in abundance: the legal sovereignty gifted by the international order. Most obviously, they use their right to make their own laws to convert crimes into opportunities for money laundering and tax avoidance for international companies and wealthy individuals. This is economic parasitism because it contributes nothing of economic value to the world. It only creates problems for the rest of the world by allowing corrupt individuals (often in Global South governments) to hide the loot they have stolen, thus encouraging them to steal more; and forcing governments to raise taxes on people and activities that are harder to hide abroad, with all the economic distortions and unfairness that implies.
On the one hand one can see why this strategy makes sense to the small states that pursue it – there is literally nothing else they have a competitive advantage in. On the other hand – when considering whether it makes sense to have small states in the first place – the fact that this ‘good for us – bad for the world’ strategy is the only real way for them to prosper seems like a good argument not to have them.
(And yes – various larger states and non-state territories also abuse their sovereignty privileges in this way – and this is also a bad thing that should be ended. My argument extends easily to ending the privileges of non-state territories, such as the tiny remaining fragments of Britain’s empire. If they can’t find a way to prosper that doesn’t harm the rest of the world, then they don’t deserve to retain political independence. Regarding larger countries that engage in large scale tax haven like operations – like The Netherlands, Ireland, and Switzerland. These countries do have real economies next to their tax haven operations and so could prosper even without them.)
Some small states have improved their situation by joining larger confederations and thereby reducing the burden that political borders pose to economic development (most notably, states like Luxembourg, Malta, and Cyprus within the European Union). However, the fact that being too small to be economically viable can to some extent be made up for does not justify creating states with such a structural handicap in the first place. The people in these places would generally be even better off by being part of proper countries. And the other people in these unions would be better off without having members whose economic development policy is selling access to their block’s economy (money laundering, golden passports, etc); undermining their policies (Cyprus and Malta have been repeatedly implicated in helping individuals and organsiations to dodge international sanctions); or just making it harder for their neighbours to fund education and health care by ‘outcompeting’ their corporate tax rates.
It is often claimed that small countries are a natural political development, of a people demanding a country of their own. This argument is popular among the fantasists who believe in culturally coherent and persistent nations enduring and evolving over time. This is a fantasy because it has things exactly the wrong way round. The evidence seems very clear that political entities come first – governments and borders – and then identity follows. All the nations now taken for granted as real – such as the English, French, Chinese, Japanese, and so on – are are the product of a colonialist type process that ended up successfully convincing its victims that the history of their subjugation was the history of their development as a nation. (James Scott is particularly good on this – see chapter 1 of his ‘Seeing Like a State‘.)
What I am getting at here is that the fact that a bunch of people feel strongly that they are a particular and distinct people is not particularly interesting or significant, because this sense of identity is extremely malleable. If even the victims of literal conquest can come to see themselves in the terms that suit their rulers within a couple of generations, then anyone can come to see themselves as a member of any normal political nation state in much less time (so long as the government reciprocates by treating them as citizens rather than as enemies – i.e. exceptions apply in cases like East Timor). So the people living in one part of a larger country, who feel more connected to some of their neighbours than others, can draw no real justification from this to demand their own state just for the people like them – especially if it would result in a state too tiny to work except as a kind of criminal enterprise.
It is also sometimes claimed that small countries are more responsive to the needs of the population. While it might indeed be rather pleasant and convivial to be on first name terms with your prime minister and see the foreign minister trying to work off his winter weight at your gym, here again the smallness of the population makes it unlikely that such a government could be very effective. A small population impose severe limits on the capacity and sophistication of governments just as it does on the economy. What can the government of a small state do to protect its people against invasion for example? Or to cope with the aftermath of a natural disaster? They would have to call for help from some of the real countries around them that have developed such additional capacity (‘resilience’). Once again, smallness is a structural handicap, not an advantage. For that matter, even the economy itself is likely to be vulnerable in all sorts of ways since it is so tiny, but still too big (because overconcentrated in one sector, such as tourism or tax evasion), for the government to be much help in the case of a shock.
Thomas Wells teaches philosophy in the Netherlands and blogs at The Philosopher’s Beard
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