The Pin Factory Blog

My colleague Geoffrey Taunton-Collins argues that nationalism is a force for good, as the loyalty and fellow-feeling it generates are necessary to create high trust law-abiding societies. He says that examples of atrocities committed partially in the name of nationalism—the Rwandan genocide, the second world war and Holocaust, strife in the middle east—are all better explained by ethnic tribalism or religion. I disagree. Firstly I'm sceptical that successful modern societies are driven by nationalism, secondly I think it's impossible to disentangle the nationalist element in many of the terrible occurrences he lists, and thirdly I think that nationalism underlies some very bad policies adopted by many modern societies.

Why does an individual obey the law? One obvious reason is that the penalties for disobedience, weighted by the likeliness of their being incurred, often outweigh the benefits from breaking the law. A second reason, is that individuals believe there is some sort of justice in the laws. This is why people give "because it is against the law" as a reason independent of any further explanation for why a course of action ought not to be followed. Anecdotally, the arguments people give for the duty to obey the law—if these can be taken as also being the reasons they actually do obey the law—seem to go against Geoff's claim, centring on reciprocity, universality and fairness. And the cases where people disobey the law appear to go with my analysis. Consider illegal downloading: some estimates say PC games are illegally downloaded as many as 20 times as they are bought legally. People seem unswayed by the laws—brought about by the authority of the nation state they are supposedly loyal to—requiring them to buy games (or films, television programmes, music) legally. Because others are not following the law, and because the likelihood of punishment is low, they don't themselves.

Can nationalism and ethnic strife be disentangled? Certainly Hitler's regime looked no more favourably on the many proudly German Jews who had served the Kaiser honourably in the first world war than they did on any with Jewish ancestry. And certainly Nazism was centred on the idea of a Volk—a people—united despite the borders of Weimar Germany. But the purest form of an ideology is rarely what gets through and propagates throughout society, and the Dolchstosslegende—the idea that Germany didn't really lose the first world war, but was stabbed in the back by a Jewish-Bolshevik conspiracy—was a vital part of the Nazis' appeal. I think the general bleeding of racialist, ethnic and religious ideas into nationalism and national identity is inevitably tied into Middle Eastern conflicts and the two major central African genocides.

And finally, look at the policies nationalism produces. True, as Geoff points out, there is no necessary reason why nationalism should exclude anyone born outside the country, if they are willing to switch their loyalty to their destination nation, but in practice we know that's what happens. Taking the UK as an example, the tide of anti-immigration feeling has been rising and rising since Gordon Brown's 2007 pledge to provide "British jobs for British workers", culminating in the rise of UKIP and Tory policies like the 99,999 or less net inward migration pledge. Surely it can't be denied that a sense of nationalism, that the UK is collectively owned by only its current inhabitants, a sense of insider and outsider, is intimately connected to this ethically indefensible and economically incompetent trend?

As far as I can tell, actually-existing nationalism is not responsible for our generally law-abiding society, cannot be disentangled from many gross moral horrors, and is responsible for bad policy. Therefore I conclude that nationalism is a force for bad.

The nation state is—in its fundamental nature—a free and tolerant political system. National loyalty requires only fondness for a geographical location (and its history) which can be acquired by anyone who moves to a nation, as well as those born and brought up there. In principle national loyalty requires no significant revision of values, nor does it exclude people on the basis of their family, colour or any other unsavoury criteria. It is, taken on its own, a remarkably benign form of attachment.

Loyalty is necessary for political institutions to uphold their laws. Laws protecting private property, free speech and so on do not hold sway because they have been written down by a legislator but because those subject to them believe they are authoritative. This requires general acceptance of their content and the body charged with enforcing them, which in turn requires a loyalty and trust for that body and for other citizens. In non-nationalistic countries such as Kazakhstan trade can rely on its participants' having particular reason to trust one another. Nationalism avoids such pitfalls by enabling a trust of a pool of strangers – something which characterises flourishing societies.

The strongest ties among humans have proved to be religious, tribal-ethnic and national. They are typified by attachment to that which is familiar. The first two of these however, when elevated into political form, are intolerant of differing values and of differing bloodlines. The conflict between family love and religious obedience has characterised some of the worse strands of the Middle-East's history. In Africa tribal loyalties have underpinned devastating atrocities – in the 1994 Rwandan genocide for instance the Hutu people massacred the Tutsi (a group seen to have different physical characteristics). Twenty-two years earlier the Burundi Genocide had seen a reversed tragedy. Similarly fascism is not an extreme form of nationalism but an extreme form of tribalism—members of Hitler’s Aryan race were identified by their appearance and bloodline, not their attachment to a particular nation. We would do well to celebrate our often mocked pride for the rolling hills. Other attachments have proved much less tolerant of our differences and freedoms.

Another reason is philosophical. Where we happen to have been born and brought up is certainly arbitrary from a moral point of view – but this is no good reason to rule it out as mattering. Which mother we happen to have been born to is arbitrary, and yet no one claims we should shun her on that basis. Similarly we come across our friends arbitrarily, even if they have been chosen carefully from those we’ve met. My point is not that we should consider important all aspects of our lives that aren’t up to us, but rather that their being arbitrary shouldn’t be a reason not to think them important. In other words, arbitrariness should give us no reason to feel uneasy about the benefits that national attachment brings.

"Most of the Irish establishment is sadly mistaken in thinking that our problems are rooted in rogue banking behaviour or lax political oversight. The real problem was systematically mispriced credit resulting from our EMU membership." So says Cormac Lucey at Liberal Ireland, who argues that the factors in Ireland's ruin all seem to have one point of origin — the euro. Here's a graph of Dublin property prices, before and after entry to the euro:

The problem is that nobody can know what the natural rate of interest should be to prevent excess savings or borrowing. I am probably in a minority of people who think that euro rates were both too low during the boom, and are now too high — the worst of both worlds and a major factor in the Eurozone's continued recession. Contrast that with a country like Sweden, which has managed to keep nominal GDP fairly steady over the last few years and has avoided the worst of the global recession. As a less-bad option, the case for lots of different central banks with their own currencies trying lots of different monetary policies grows.

The cover of Figaro magazine says it all.  “They are leaving for London, Brussels or New York,” it says, and asks, “Why are they leaving France?”  It then talks of “the ravages of fiscal banishment” and “the youngsters who leave to succeed elsewhere.” The young people shown seem to be happily waving goodbye to France’s punitive taxes.  It bears remembering that there are misguided people in Britain who tell us that taxes do not make people change their behaviour…

3. The ASI enthusiastically supports giving goods from developing countries unrestricted access to developed world markets.  The Left should appreciate our stance in firmly and publicly supporting the one thing that can make people in poorer countries wealthier.

Some campaign for more aid, but the ASI's line is that trade is more important.  Humanitarian aid is fine, and we should give generously to support victims of natural disasters, to help provide clean water, and to fund health programmes.  We do not, however, support development aid that is designed to boost state investment in industry or state direction of emerging economies.  Every country that has gone from poor to rich has done it through trade, and none has done it without trade.

Some of those who piously call for more development aid also support the tariffs and subsidies by which some developed countries prevent poorer countries from selling their goods in rich world markets.  We express our support for nations struggling to become wealthier with a three-word mantra: "Buy their stuff."  When others were wearing wristbands that said "Make Poverty History," we produced and distributed thousands that proclaimed "I buy goods from poorer countries."  The former expressed a hope that other people would do something, but ours declared something the wearer was actually doing to bring about change.

When we buy goods from developing countries, we become wealthier by having cash left over after buying their lower-priced produce.  They become richer from the money we pay for their goods.  It is a win-win process that is rapidly lifting most parts of the world above subsistence poverty.

Recently, Kier Martland produced an article in The Libertarian attacking Sam Bowman's take on immigration, suggesting an alternative libertarian view on the issue – using Hoppe to back up the position. I think this view is entirely mistaken. Indeed, Anthony Gregory and Walter Block take apart Hoppe's position here and Block again here.

The position taken by Hoppe is that nobody should be able to make a claim on the state without 100% consent from those paying for it, including for goods such as roads. The issue is that the state does exist, so long as there is government we should seek to ensure a policy of least damage done. By having high costs or even bans to hire migrants, the state would be taking away people's right to freely associate and make contracts. Further, by increasing the cost of labour, and doing other such damage to the economy as described in Bowman's article, restrictions on immigration do damage to the taxpayer. Hoppe's “second best” position simply doesn't hold true.

If one group in society objects to immigration, that does not mean migration is wrong because they pay a small percentage of the cost (even though, again, immigrants are a net positive for the tax collector). Indeed, the same argument would hold true for economic nationalists or greens who wished for only local goods to be sold in the economy. By importing foreign products, one would be initiating trespass on the roads by transporting goods unwanted by third parties. The same could be said of any good transported that an individual disapproved of, whether alcohol, meat products or any other “vice”. Similarly, Christian Scientists or others who disapprove of modern medicine might insist that taxpayer roads not be used for transporting any related materials. The position is ridiculous, you cannot support absolute rights to reject immigration whilst not supporting the same absolute right to reject other goods and services people might disapprove of.

By suggesting an increase in government control of migration, both Martland and Hoppe are going the wrong way on this issue – it is not about defending the taxpayer. Increasing the scope of the state, and the cost to taxation in policing it, as the Hoppeans propose, is damaging. What about those who pay taxes that DO want immigrants to use government services such as roads? Are their rights lesser than those who are for government restriction? Even if the costs and size of government are larger to be more restrictive? Should they be forced to fund border forces in this way? The Hoppean position on immigration is illogical; you do not reduce the scope of the state by increasing it and the number of tasks it undertakes. We should be looking at ways to limit the damage and cost of government now, and not sit in ivory towers trying to fudge a philosophical position that takes away the right of free association.

I've just been re-reading Jean-Paul Floru's "Heavens on Earth."  (I should declare an interest in that I am one of two that the book is dedicated to).  It is a superb book, not least for being highly readable and packed with engaging anecdotes.  More importantly, though, it puts its message across with a wall of supporting evidence.  The message is that microeconomics works.  Every single country that has tried to achieve rapid economic growth by cutting taxes and red tape has succeeded. 

The formula is simple.  You don't achieve growth by massive public works and government spending.  You do it by making it easier for private people to innovate, to invest, to spend on what they value, and to build for the future.  Whether it is post-war Germany, the US, Hong Kong, China, Chile, New Zealand, Singapore and industrial revolution Britain, it has always worked.  It achieves all of the choices and the chances that wealth brings with it.  It creates "Heavens on Earth," and you do it by motivating people, by increasing the rewards of success, and by removing the barriers that stand in the way of human achievement.

I really wish that some well-to-do business-person would fund the cost of sending a copy of this book to every Member of Parliament.  If sufficient numbers of them dipped into its pages or told their assistants to read it and summarize its findings for them, the governance of this nation would be much improved.  I am recommending to everyone I meet that they should read it and absorb its lessons.

The 21st Century may well be Africa’s Century – not Asia’s

What the chart shows: The chart shows the 25 countries with the fastest forecast population growth over the next 25 years. Only one – number 25 in the list – is not African.

Why is the chart interesting: Demographics are not an absolute science, but the trends are broadly easy to forecast. With numerous exceptions, population growth should lead to economic growth and that in turn to a rise in political importance. Economic growth is also over the medium and long term a pre-requisite for return on investments. We are frequently told that the 20th Century was the American Century and the 21st will the Asian. But from a demographic perspective, Asian countries are almost in the same bad state as European. The fastest population growth over the next generation will be in Africa. This is also where we are already seeing some of the fastest economic growth. Whether Africa’s governments and peoples will build on this is impossible to say – but the conditions for growth are there. The 21st Century may be Africa’s.

Chart and comments provided by Stein Brothers (UK), www.steinbrothers.co.uk.

The people in charge of economic policy in the EU appear to believe that they can create economic reality by passing laws and reaching decisions through negotiation.  Their knowledge of human psychology seems to be even more flawed than their understanding of how markets actually work in practice.  The decision they forced upon the Cyprus government is flawed on many levels.  The bank levy punishes savers but leaves the bond-holders untouched, violating the principle that small savers should be protected, while the bond-holders who knew they were taking a punt should take a hit.

It is also a wealth tax, violating one of the principles of fair taxation that it is OK to tax transactions such as making money or buying goods, but not OK to take money from someone simply because they have it.  A state might claim to justify a transaction tax by saying that it provides and maintains the infrastructure that makes it possible for people to deal with each other to mutual advantage, but not a wealth tax.

If the Eurocrats had studied game theory or psychology they could have anticipated the anger and outrage that their move has provoked.  People mind losses more than they value gains.  They mind precipitous losses more than they mind gradual ones.  They mind visible losses more than invisible ones.  People do not like it if their €200 in the bank will, through inflation and currency fluctuations, only buy them €180 worth of goods in the future.  But they dislike it almost infinitely more if government removes €20 from their savings account.  Indeed, 'dislike' is too mild a word.  They are outraged because their government has stolen their money, even though they were not responsible for the crisis.

The signals this move sends out are that it is foolish to save, and foolish to keep money in banks.  These signals are spreading to countries other than Cyprus.  A precedent set in one place could be followed in another.  It is entirely possible that this action will set in motion runs on several banks as savers seek to place their funds beyond the reach of predatory governments.  The reaction of outsiders to this move can only be one of shocked incredulity.