Syria has joined a list that begins with Rwanda, Sudan and Iraq. The countries that torment the world’s conscience tend to have design flaws. Their borders were misdrawn by colonial powers, leaving certain peoples cut off from their brethren and others feeling submerged among strangers.
The question of how best to draw a country’s borders is being asked more frequently, not just by strategists despairing over Syria but also by sunny-minded separatists in Scotland and Catalonia. The counsel in both cases seems to point in the same direction: Smaller is better.
The five countries with the highest gross domestic product (GDP) per capita, according to the International Monetary Fund, are Qatar, Luxembourg, Singapore, Norway and Brunei — none with a population of more than six million.
How big a country ought to be is a complicated matter. It depends on who lives there and what the country aims to do. Contemporary economists — Alberto Alesina, Robert Barro and Gary Becker prominent among them — have thought hard about the optimum country size. They see a trade-off between two kinds of efficiency.
Big countries prosper because of economies of scale in both private markets and public services. Small countries prosper because they have more trust and lower transaction costs. Big countries have many advantages. They usually have more moderate business cycles, because parts of their economy that are doing relatively well can pick up the slack for parts doing poorly. Big countries can also spread the cost of public goods. Consider the EU’s attempts to create more ‘pooling and sharing’ in defence.
In theory, it is more efficient to fund research, logistics and development for one powerful navy, say, than for two dozen mediocre ones. But in practice this advantage may not materialise. If Europe’s nation states cannot agree on what a navy is for, they will get no military capability at all.
These are cultural questions. They can make bigness a disadvantage. Big countries have more diverse populations. A theme that runs through Alesina’s work, whether it focuses on development or welfare, is that the costs of diversity can be high.
Among politicians, diversity is almost invariably held to be an enrichment.
Economists often view it as a burden. Where cultural differences are great, wasteful political horse-trading is required to allocate the most basic goods. Because diversity is held in high political esteem, some of the liabilities of bigness have been obscured.
Until the Kosovo war in the 1990s, the US had a distrust of separatist movements — perhaps, Barro once speculated, because it fought its bloodiest war in order to defeat one. “If the US were to support the right of secession in some other part of the world,” he wrote, “we would then force ourselves to reconsider whether the enormous cost of the civil war was worth it.”
The US continues to benefit from its scale. In other countries, though, the advantages of bigness have waned. Big countries have a leg-up when defence is the top public-spending priority (because they can afford more of it) and when trade is restricted (because big nations have large internal markets).
But neither of those conditions holds now. In fact, the world has been rebuilt according to small countries’ dreams. “Smallness tends to encourage openness,” Barro wrote, because small states must trade to survive.
According to Alesina, “the ‘viable’ size of [a] country decreases with economic integration”. It decreases with political integration, too. Scotland and Catalonia find it easier to envision independence from the UK and Spain because they see the prospect of remaining members of the EU. That is why it has been a tactic of those who oppose their independence to argue that the breakaway states would need to reapply for EU membership.
José Manuel Barroso, the European Commission president, and Herman Van Rompuy, president of the EU Council, have both made versions of this threat, although the Mannheim university economist Roland Vaubel has noted that it has “no basis in the European treaties”.
It is bluster.
But it is bluster built on a premise secessionists would do well to heed: Trade is fickle. Just five years ago, Alex Salmond, leader of the ruling Scottish National party, was trying to sell independence as a way to join Iceland and Ireland in an “arc of prosperity”. It is not certain that the wheeling, dealing small states of Europe and Asia could survive a shock to their global economic connections as severe as the one Cuba suffered when its Soviet subsidies ran out at the end of the Cold War.
This is a wonderful era for small countries. But small countries are dependent on an intangible resource — the goodwill of big ones — that may not always be as plentiful as now.
— Financial Times
Christopher Caldwell is a senior editor at The Weekly Standard.