The Power and the Money

Make Canada Greater: What would change if New York joined Confederation?

I am reading “Divided We Fall” by David French. He may be the first thoroughly mainstream commentator to seriously posit that the American federation may break up under the weight of our political differences. Cheery reading for another happy election day, or not.

Even a mutual breakup of the United States would be a tragedy, but not because of American exceptionalism or any such thing. No, any collapse of a political union is a tragedy. It means that differing peoples could not share a fate or manage a common endeavor. It means shrinking horizons and cramped futures. Even when divorce is better than the realistic alternatives, it is still a tragedy. 

But there is one way that the American federation could break up and avoid such a tragedy! Instead of retreating into smaller polities, blue American states that wanted out (or were being thrown out) could replace one expansive continental dream with another. They could link their fate with their better-governed neighbors to the north!

Such a move would also be amazing validation of the Great White North—for Canadians to reject it would show a lack of confidence and a fear of dreaming big. Canadians should have confidence and dream big! (Yes, I thought Maximum Canada was a great read, why do you ask?)

One Canadian certainly has no fear of success: the Prime Minister invited American states to join as new provinces!

But enough with the blather. Let’s say something happened to crack the American federation. What would a switch entail in practical terms? In order to get my mind off the damn election (and grading exams) I decided to take a preposterous idea seriously. What would happen if New York State became the Province of New York?

The name

Well, first, NYS would not need to rename itself. Canadian law can handle a province that calls itself a “state” as easily as the U.S. constitution handles states that call themselves “commonwealths.” But let’s call the new jurisdiction “New York Province” anyway, just to make things easier.

Integrating the judicial systems

The biggest issue isn’t the one you’d think. (Although I’m getting there.) The biggest issue is that under current Canadian law, state criminal law will be replaced by the Canadian federal criminal code. The transition would be tough. State judicial elections would go out the window. I think you could continue to elect the Attorney General, but her authority would shrink considerably. You could probably continue to have elections for sheriff, but it would also be a departure from Canadian norms. The Canadians would also have to decide how much leeway to give New York in its civil codes. If they mandate that New York conform to the Canadian system, then civil courts will lose much of their power and many trials that were previously decided by juries will switch to judges.

Integrating the two systems would be a major headache for judges and lawyers. I have no idea how long it would take them to adapt. One year? Two? Ten? Canada would have to agree to long phase-in period during which the New York court system would be linked to Canada’s but not integrated into it. During this time every lawyer in New York State will have to effectively retrain. Law schools would also have to revamp their curricula.

Alternatively, the Canadians could work out an exception for the new province(s). Conceptually, such an exception would be relatively easy to implement and administer. (Australia and the United States do it and New York allows certain municipalities to create their own criminal offenses.) It would be a departure for Canada but it would not mean that the federal criminal code would cease to apply to New York. Rather, it would mean that New Yorkers were subject to two (or three) separate criminal codes, much as they are today.

Business ownership

In some industries, American companies operating in the state that weren’t locally owned would be required to pull out and sell their assets in that state to a Canadian company. (Canada would of course now include New York and any other states that made the switch.) These industries are pretty broad, including transportation, airlines, railways, shipping, publishing, financial services and telecommunications.

Telecoms and airways are pretty straightforward. U.S.-owned airlines would need to divest their operations for point-to-point flights between New York and other parts of Canada. Ditto, telecoms companies would need to sell or spin off their New York operations. Canada has been pretty liberal with allowing foreign ownership of transportation companies, so there shouldn’t be major problems for trucking or railroads. Some retail chains might want to spin off their New York operations, but that won’t be that difficult.

Some banks with equity of $8 billion or more and large demutualized insurance companies would need to be restructured. Canadian law requires that no person may own more than 20 percent of any class of voting shares or 30 percent of any class of non-voting shares. In addition, a majority of the board of directors and the CEO of every bank or federal insurance company would need to be Canadian residents.

Publishing is a weird one. Existing operations would only need to sell their operations to Canadian buyers if they intended to acquire an existing Canadian company. But it’s equally likely that you’d have big New York publishing houses would not qualify for Canadian subsidies or be able to acquire smaller Canadian competitors. It would probably get weird very quickly, but there shouldn’t be any constitutional problems. The Canadian government could continue to protect small Canadian operations against large New York-based Canadian operations. Of course, how long that would last once the New York representatives from the federal branch of the Working Families Party entered the Canadian parliament is a different question …

Unions

New York employers are going to be unpleasantly surprised. Most New Yorkers are going to love it. Of course, a lot depends on what the politicians in Albany do with their liberation from the strictures of American labor law.

Gun laws

There may be some disquiet in parts of upstate (as there is in rural Canada) but most New Yorkers are going to love this as well.

Fiscal federalism

Canada channels significantly fewer resources through its federal government than does the United States. Gross federal spending in New York (sans interest payments and direct purchases of goods and services) came to 13.2% of state GDP; the equivalent number for Ontario was only 10.9%. (The high level of direct purchases in Ontario is due to the fact that the federal government is based in Ottawa.)

Let’s take each category in turn. For retirement spending, the transition would be smooth. Canada could take over Social Security payments for existing retirees without much problem while transitioning younger workers into the Canada Pension Plan and Old Age Security.

For other transfers (not including medical care) the Canadian federation is about as generous as the United States, giving a bit more directly to individuals and a bit less to the governments of rich provinces like Ontario. (The whole thing is actually distorted by Alberta’s oil money, but let’s leave that for now.) On the margin, New York Province will receive a bit less non-health federal aid than New York State.

Federal spending and taxation as a % of jurisdictional GDP

	Retire-ment	Medical care	Revenue sharing	Individual transfers	Goods and services	Total spending	Gross federal taxation	Surplus to Feds
Ontario	5.1%	1.7%	1.8%	2.2%	4.0%	14.8%	(18.2%)	(3.4%)
NY State	4.6%	4.7%	2.5%	1.5%	1.4%	14.7%	(16.3%)	(1.6%)
NY Province	4.6%	1.1%	1.6%	2.2%	1.4%	10.9%	(18.2%)	(7.2%)

But health care … oh boy. A back-of-the-envelope calculation (using 2014 numbers, so at the beginning of Obamacare) shows that public and private entities in New York state spent about 8.4% of GDP on covered medical services. That’s more than most Canadian provinces, since health care is more expensive in the USA, but not prohibitively so: the Province of Ontario spent 7.1% of GDP in 2014.

New York is going to have a problem under the Canada Health Act. Medicare and Medicaid transfers from the U.S. federal government will dry up, and here (somewhat perversely) the United States is way more generous than the Canadian confederation. New York will lose Medicare and Medicaid money worth 4.7% of GDP. The Canadian Health Transfer (CHT) would come to only 1.1% under the current formula, blowing giant holes in the New York provincial budget. New York State currently spends about 2.0% on Medicaid, but adding the Canadian Health Transfer to that leaves a minimum budget hole of 5.3% of GDP (8.4% covered spending that will need to be made free – 2.0% existing spending – 1.1% CHT.)

And that figure of 5.3% is a minimum since Medicare and Medicaid are (again, perversely, I know) more generous than Canadian health care, even though they require co-pays. (More generous for the minority of people that they cover, that is.) You can’t tell seniors that they are going to be worse off now that they are Canadian, can you? That would be thoroughly un-Canadian!

New York Province could fill the hole with a VAT rate of 12% on top of existing sales taxes, or a tripling of state income taxes, or some combination thereof. That’s not an impossible thing. In this world where the U.S. peacefully divorces passing some version of Medicare-for-all should be popular. But it would be very expensive. Add to that the fact that the province would be passing upwards of 7% of GDP to Ottawa and becoming Canadian looks like a bad deal, even with all the benefits from being part of a big continental federation. 

Only there is here the outline of win-win deal for everyone involved, which is simply that New York Province is going to be a huge net payer into the Canadian federal budget.

The Canadian federal government could sign a Medicare Accession Grant Agreement (MAGA) with New York Province that would kick back, say, half the cost of establishing single-payer system. New York would get a federal tax point transfer worth 4.2% of GDP, and the Canadian taxpayers would still come out ahead with a net transfer of 3.0% of New York’s GDP. Win-win for everyone!

TLDR: Joining confederation would be a headache and New York would lose some fiscal revenue from the federal government. But if Ottawa is willing to be flexible it could be a win-win for everyone involved. 

I leave the effect on Canadian politics as an exercise for the readers ...

National officials do not like to feel like imperial proconsuls

When we left the Catalan secession crisis last October, the secessionists had backed down. They decided that setting up a parallel state would come at too high a cost. But we warned:  “There is the possibility that the crisis will flare up again. Possibly of its own accord. ... Right now Madrid should let people calm down and vote against the nationalists in the next election.”

That did not happen. Parties in favor of an independence referendum won a majority. The party that organized the unconstitutional referendum nominated Quim Torra to be the new premier; two weeks ago he finally cobbled together a 66-65 majority in the legislature. Torra included indicted politicians in his cabinet, and so (then) Prime Minister Rajoy continued to exercise direct control over the territory via Article 155 of the Constitution.

Madrid finally lifted direct control yesterday and the new Catalan cabinet contains nobody under indictment. But the central government continues to control the purse strings in order to insure that Barcelona spends no money on secessionist activities. 

So far, so nothing. So why a blog post? Well, a Catalan political scientist pointed out a disturbing undercurrent: Spanish bureaucrats no longer want to serve in Catalonia. A full 40% of Treasury officials working in the province have requested a transfer out. (Only 13% have succeeded.) Of the last 200 national officials assigned to Catalonia, fully 86% had to be ordered to go. Judges are also requesting transfers, including from Catalonia’s superior court. I am told that all of this is new.

Two quotes, for whatever they are worth: “Catalonia was a cosmopolitan society, open, plural and respectful. People now live in an atmosphere of confrontation. It will be hard for us to make this attractive.” And, “The tension is obvious. Agents’ children are picked out if their parents don’t go to certain demonstrations called by the schools.” 

It is a bad sign if national bureaucrats feel alienated from the place where they work, more like imperial proconsuls than public servants. Obviously, I do not want to exaggerate these reports, and I do not have the sort of time series data that would let us know how seriously to take them. But as someone (newly) bothered by nationalism and (for a long time) opposed to secession from democratic states, it is brightly flashing yellow light on the dashboard. 

¿Aburrimiento en la madre patria?

Well, so far it looks like Rajoy’s bet is paying off. Catalan officials are obeying orders; Catalan ministers are leaving their posts. Puigdemont is in Brussels when he could be in Barcelona leading a revolt. Crisis over!

Except ... no.

This was a dumb game for Rajoy to play. As I said in comments three days ago, there are only three ways to rationalize his decision:

1. He did not realize that a strategy of restraint before the referendum would succeed. That, however, would also require him to be stupid, and the Prime Minister is most certainly not stupid;
2. Rajoy is playing an entirely different game;
3. Rajoy believes that the Catalan resistance will fold with probability 1 ... and he believes that his actions will lessen rather than increase the probability of future secessionist action in the future.

I can see why he would believe (3), but he is incorrect on both counts. Which isn't to say that the probability of the Catalans folding is zero! It ain't. It's high. But it ain't one.

His brinksmanship was stupid from the point of view of Spanish unity. Rajoy could have undercut the secessionists by playing it cool, leaving them looking silly. Instead he sacrificed certain success in the short-term in order to have a lower probability of success in the long-term. That is not a typo! The crisis could come roaring back. We are one crisis or stupid political stunt away from its return. 

Put that way, his decision is still a bit inexplicable. Even if the gamble pays off, why do it? Andrei Gomberg suggests that the answer is (2): Rajoy is looking to cement his position in Madrid by playing the patriotism card. It is not a bad card to play. 

But there is the possibility that the crisis will flare up again. Possibly of its own accord. But my real fear is that some overzealous Spanish judge will start arresting Catalan politicians. That would be exciting. But excitement is precisely what needs to be avoided. Thankfully Puigdemont has blinked twice now. Right now Madrid should let people calm down and vote against the nationalists in the next election. Boring. 

Catalonia: What is the game?

I have been trying to figure out the game Rajoy is playing. It is not immediately obvious. Backwards induction led Puigdemont to back down from declaring independence. Backwards induction should then have led Rajoy to accept Puigdemont’s “suspension.” Rajoy should have said, “Thank you for not declaring independence, note that doing so would be illegal, much obliged.” End of crisis, at least for a while, start of talks on constitutional revision.

But that is not what Rajoy did. Instead Rajoy refused to accept the out Puigdemont offered him. He pushed Puigdemont into a corner. Never push anyone into a corner.

Even after that, Puigdemont behaved rationally. (I must note that this has been a marked departure from Puigdemont’s behavior up until this point.) The Financial Times reported that Puigdemont tried to find a last-minute out but Madrid rebuffed him. 

So now we have a declaration of independence. Madrid will invoke Article 155 and take over the community. 

Why did Rajoy choose to go down this path?

There are three hypotheses.

1. “Never attribute to malice what can be attributed to stupidity.” There are governments to whom that adage applies. I do not think the Rajoy administration is one of them. Oh, they are incorrect, but I don’t think it’s because they are stupid.
2. Internal constraints. Rajoy may realize that he has been ineluctably creating a secession crisis, but he may also believe that a hard line is the only way to hold together his coalition. I do not believe this to be true, but it is a reasonable hypothesis.
3. Rajoy believes the Catalan opposition is unitary and rational. He has played down the game tree and backwards inducted. His (correct!) conclusion is that Catalonia is always screwed and screwed badly in the even of a contested divorce. He therefore assumes that his Catalan opponents will back down in the end. 

And therein lie his two errors. His first error is that he assumes that “less costly for Madrid” means “no cost for Madrid.” Accepting Puigdemont’s climb-down had no cost to Madrid. Engaging in economic warfare or (worse) fighting in the streets of Barcelona will be terribly costly for Madrid. The risk of either would have been zero had he reacted less strongly.

His second error is to assume that he is dealing with a unitary Catalan opposition. He is not. Puigdemont has already punted responsibility over to the Catalan legislature. Now it will be up to individual Catalans whether and how to resist. Catalan officials could choose to stay at their posts. Catalan police could refuse to obey orders from Madrid. There might be mass demonstrations, but that would be a sideshow to the real non-violent civic disobedience: bureaucrats continuing to stay at their posts but refusing orders from the Congress in Madrid. 

Here is what Rajoy should do, given where we are: show restraint. Fire recalcitrant bureaucrats but refrain from making arrests. Wear down the opposition. Take civil action, sue for breach of contract, insure that businesses keep paying their taxes. Essentially bore the Catalans into submission. Even if there is mass resistance from the bureaucrats, keep it civil. Reason being is that it is one thing to have mass walkouts by bureaucrats. It is quite another to have them actively set up a parallel state enforcing parallel laws and collecting parallel taxes. Once that happens, the jig is up, and the only responses Madrid will have on the table are (1) impose crushing sanctions or (2) break heads. 

Human nature being what it is, I do not think (1) or (2) will work, at least not at the level of pain that voters in Castilla and Andalucía and Aragón and Extremadura will be able to countenance. (I hope.) If we go there, then, Spain will disintegrate but with much human suffering along the way. So let us hope that Rajoy realizes that the only solution is boredom.

Demasiado largo, no lo leí: Catalonia needs Spain

Here is the TL;DR version of the last post.

Catalonia runs a budget deficit with the rest of Spain. That is disguised because Madrid kicks back a large chunk of Catalonia’s tax revenue in the form of soft loans. In other words, Catalonia has been taking debt owed private investors as it comes due and transforming it into debt owed to the central government. (This far to the tune of €52 billion.) That means that an independent Catalan state would need outside financing if it declared independence as its debt came due, to the tune of €4 billion per year; such financing would be impossible in a contested divorce. Even if Catalonia renounces its share of the national debt, Spain can lock it out of financial markets. The result will be crushing ... and that is before accounting from the trade shock that will come from Catalonia’s hard exit from the European Union.

(Note that tax revenues are lumpier than spending: even a state with a budget surplus needs access to short-term financing to make its payments. Losing access to finance will be crushing.)

Rough numbers for Spain:

Explanation: Spain in 2014 received a net transfer from Catalonia worth 0.8% of GDP. Losing the territory would cause an increase in spending of 0.3% of GDP, since the new smaller country would have to cover the same burden of fixed costs. (Defense, foreign affairs, regulatory authorities, public research, etcetera.) If Catalonia also renounced its share of the national debt, then the rest of Spain would also have to assume an addition 0.6% of GDP in interest costs. The total cost, then is either 1.1% of GDP or 1.7%, depending on what happens to the national debt. 

Rough numbers for Catalonia:

Explanation: with independence, the soft loans go away. Catalonia will be in deficit unless it renounces its share of the national debt or allows net taxes to rise substantially. Note, however, that Catalonia will still need access to short-term financing. Also note that these figures make no account for the inevitable trade shock that Catalexit from the E.U. will bring. That trade shock will depress revenues and raise spending, making access to capital even more critical. 

La economía de la secesión en la madre patria

We have moved down the game tree one step towards sensibility! Premier Puigdemont declared that Catalunya has the moral right to secede but will not declare independence. Relief!

Except, well, now the Spanish government needs to decide its response. The sensible thing, of course, is to do nothing. Either nothing nothing, or possibly a more active form of nothing where nobody speaks about secession but Catalan representatives in Parliament meet with other parties to see if they can hammer out an acceptable constitutional reform. Some politicians, like Socialist leader Pedro Sánchez, are doing just that. Prime Minister Rajoy, unfortunately, appears to be doing his best to push the Catalan leader into a corner by insisting that he loudly and unequivocally back down.

It is never a good idea to leave your opponent with no face-saving exit, especially when you have just won. I would bet on Puigdemont trying to give Madrid what it asked for without a full about-face.  (After all, Puigdemont has to keep his own hardliners onside.) 

Rajoy should accept the offer. 

But if he does not and we re-enter the conflict, it is worth discussing what is at stake. The answer: less downside than you might think for Spain, and rather more for Catalonia. 

First the figures for Spain. Catalonia is a net payer into the national budget. The reason that Catalonia is a net payer is that individual Catalans are richer than elsewhere.  

The baseline calculation is straightforward. Spain in 2014 ran a budget deficit of 3.5% of GDP. Excluding Catalonia , the Spanish state collected €305 billion and spent €345 billion, over a GDP of €840 billion. That implies a budget deficit of 4.8% without Catalonia .

Except, well, it seems plausible that Madrid would assume all of the fixed costs of the Spanish state: defense, foreign affairs, research and development, debt interest and the like. That would increase spending to €353 billion and the deficit to 5.7%. That is not comfortable, but it is far from an economic disaster.

So there you have it, a net cost of 2.2% of GDP ... with one more complication. Spain currently provides a fund to help the autonomous communities. The fund lends cheaply to the communities, as in at zero interest for three years and 0.834% thereafter. These expenditures do not count as part of the Spanish State’s budget deficit since they are technically loans: the central government increases its public debt in return for accounts payable given to the communities. That said, the account represents a flow of resources that somehow needs to be financed. Along with sundry other loans from the central government, Catalonia received €4.7 billion in such soft credits in 2014. If it seceded, Spain would no longer need to borrow that money. That said, this should probably not be counted as a benefit to Spanish taxpayers, considering as the costs are (in theory) borne by Catalan taxpayers. Of course, if you do not believe that the debt will ever really be paid back, then the calculation changes and losing Catalonia would cost only 1.6% of GDP.

What about the Catalan side? Total spending at all levels of government there currently comes to about €66.3 billion, while taxes amount to €70.4 billion. That would give the Republic of Catalonia an additional 2.1% of GDP. 

But it gets more complicated. The Spanish treasury assigns Catalonia a share of fixed costs and interest payments. Right now, that comes to about €2.6 billion in fixed costs and €5.0 billion in interest payments. 

The €2.6 billion share of fixed costs is about 1.3% of Catalonia’s GDP. That is less than the independent country would have to spend to set up its own army, foreign service, statistical agency, tax authority, additional courts, weather service, competition authority, securities regulator, and everything else now done by the central government. In the long-term, you are looking at a rise of about 0.2% of GDP (bringing it up to roughly what Spain spends). 

In the short-term, you are looking at much higher expenses as Catalonia ramps up, but I have no idea how to estimate that. So let’s run with a baseline saving of 1.9% of GDP. This is not small, but it is less than transformative. 

Except, well, those pesky financing operations from the central government. They give Catalonia about €4.7 billion every year. Even if you expect Catalonia to pay back the loans, they represent a liability that will need to be financed somehow. Which means independence would blow at least a temporary hole in the Catalan budget on the order of 2.4% of GDP. There go the cost savings!

So independence would cost 0.5% of GDP? Not exactly. What would actually be happening is that borrowing from the Spanish central government would need to be replaced by borrowing from other sources. In a mutual divorce, nothing would change save a small rise in the interest charged on the loans. 

But in a contested divorce, it would mean that Madrid has some substantial leverage. Rather more than the headline figures would indicate.

What about the national debt? If Catalonia assumes its share of the national debt, then Spanish expenditures rise to €348 billion: for an additional cost of 1.6% of GDP compared to the status quo. On other hand, if Catalonia dumps the entire current national debt onto Madrid, then (as calculated above) Spain’s fiscal burden will rise by 2.2% of GDP. 

Catalonia, on the other hand, would save €5.0 billion in interest payments. That is more than enough to cover the loss of financing from the central government. Hooray!

Except ... well ... this will get ugly. Spain can tie the new republic up in legal knots, made worse by the fact that the republic’s banks will have all moved their headquarters to Spain. Interrupted payments, attached accounts, you name it. The fiscal squeeze will be immense. 

The good thing, ironically, is that if its banks flee to Spain proper then they will still have access to ECB support. So that would slightly lower the pressure on Catalonia, since depositors will not have to fear an Argentine-style corralito. But they would still face corralónes: the Catalan government will likely limit withdrawals to prevent capital flight. And the new republic would also find itself unable to finance its current level of operations, and that would be horrendous.

Anything else for a Catalexit? Yes! Even assuming that Spain does not close the border, Catalonia will crash out of the E.U. with no WTO schedules and no trade agreements. In other words, Catalonia will suffer all of the effects that a hard Brexit would impose on the U.K., only with the added problems of having no independent currency and no way to access capital markets. Spain would also suffer a recession, of course, as trade fell with Catalonia ... but Spain will only have problems with Catalonia whereas Catalonia will have problems with everywhere. 

TL;DR: Both Spain and Catalonia will lose on the long-term fiscal side, even if independence is negotiated. But Catalonia borrows a lot more than people realize, and losing that in a unilateral secession will crush its national economy. The result will be a terrible financial crunch (even if the banks survive by relocating to Spain). Falling out of the European Union will add insult to injury. Spain will be battered, but as long as the ECB supports it the impact will be less than the 2008 crisis ... while Catalonia goes the way of Greece.

¿Qué sigue en la madre patria?

The Catalan election descended into utterly predictable chaos. The secessionists won, on poor turnout. But the Spanish national police idiotically decided to wade in wearing full stormtrooper gear, and now nobody knows what will happen. The Catalan premier, Carles Puigdemont, has been coy about whether he will issue a unilateral declaration of independence (UDI, to use the abbreviation first used in 1965). 

So what will happen? Last night, in a bit of insomnia, I jotted down a game tree to help me think this through. I present it below. You can click to enlarge it. I have colored the boxes with the flag of the party making the decision to make things clear. (I am sorely tempted to write, “time for some game theory.”)

Right now the Catalans are deciding whether to declare independence. Their other option is to begin negotiations with Madrid on the precondition that secession will not be on the table. If they take that option, we can breathe a sign of relief: what follows will be contentious but not catastrophic.

But what if they declare independence? The ball goes into Madrid’s court. The Spanish government will have three options. The first would be to agree to negotiations. With a UDI in the background, that seems unlikely ... but if they agreed would could again breathe a sign of relief. 

The other options, however, are more likely. One is to do nothing, the bottom tree on the chart above. The other is to invoke Article 155 of the Constitution and suspend the Catalan government. What if Spain does nothing? Literally, just lets Catalonia go ahead and declare independence but takes absolutely no positive steps to remove Spanish authority. Well, that would give the Catalan authorities two choices:

1. Do nothing as well. That would leave Catalunya in a sort of limbo, with an autonomous  community exercising nothing more than its constitutional authority as part of Spain while claiming to be independent. Weirder things have happened. Life would go on, taxes would be collected, services would be delivered. Eventually they would talk.
2. Organize a parallel state. That would mean having Catalan bodies and bureaucrats take over functions currently carried out by the central government. Eventually, of course, there would be a conflict: a firm would refuse to pay Spanish taxes, two police forces would quarrel, a court order would be ignored, something. 

That would throw the ball back to Madrid. Assuming that voluntarily acquiescing to Catalan independence would not be an option, the Spanish government would have two choices:

1. Crack down with the full authority of the state. We got a taste of that yesterday.
2. Uncooperative withdrawal. Pull out without recognizing Catalan independence. 

Here is where backward induction is helpful. In both cases, the Catalans would have to deicde: give in to Spanish pressure or hold their ground. Problem is, by this point backing down would be political suicide. People would be angry. But resisting a crackdown means civil war. Not necessarily a repeat of 1936-39, but sustained political violence. 

And resisting an uncooperative withdrawal means complete economic collapse. First, the banks would fail as their headquarters pulled back operations; without ECB support euros would become scarce. Second, all contracts would be tied up in legal knots, dropping a paralyzing web of uncertainty. Third, all transfer payments from Madrid would stop; Catalunya would have to replace them ... only Catalunya would not have euros. So it would introduce a proto-currency, which would plummet in value, fueling a wave of defaults ... and so on, until you have something that looks like Greece, at best.

Except, well, backing down by the point would end the career of any politician who tried it, Thus, the big X’s through that option.

The lower tree does not look good. What about the upper one, where PM Rajoy invokes Article 155?

Well, that would give the Catalans a choice: acquiesce and fight it out inside the institutions of the Spanish State or organize mass civil disobedience. The first gets us into a nicely talking world. The second put Madrid in the position of deciding whether to negotiate in the face of mass resistance or resist Catalan demands. If they resist we are ... back on that lower game tree. (The upper and lower tree are the same after that point.)

The implication is that this is a no-win situation for the Catalans. Resistance ends in civil war or economic collapse. (Ironically, the European Union makes it easier to impose that economic collapse: the ECB cannot support Catalan banks if Catalunya is no longer a member.) The smartest thing is to do nothing. If there must be a UDI, then nobody should do anything. Nobody speak, nobody get choked!

Meaning that nobody should do anything, even if the other side does something. Nothing is the  best option. Do nothing at all. Nada. Nothing. 

I am hopeful that in this case that strategy will in fact dominate. But, well, game theory does not really a good record in these sorts of situations. If it did, the morons in Madrid would have never gotten us to this point. (In fact, I suspect that the Catalan nationalists are surprised at their own catastrophic success.) But here we are, so we can only hope that the politicos backwards induct correctly.

Unless ... gulp ... unless the game tree missed something, some option or payoff that makes the bad state good for someone. In which case we are jodi ... thoughts?

Pendejadas en la madre patria

I am beginning to believe that PM Rajoy wants to push Catalonia into a unilateral declaration of independence. For he is snatching defeat from the jaws of victory and it makes no sense. 

Around the time of my last post, before the earthquake, the Spanish State was winning the battle. Public opinion polls were trending against as late as June. Local officials were negating support for the referendum. Madrid was in a perfect position to sit back, watch the vote, and shrug its shoulders even if happened. A few kind words in favor of autonomy would have killed the whole damned thing.

Instead ... and I am posting this only because I suspect some of you do not read Spanish news obsessively ... Spanish national police just raided Catalan government offices and arrested 13 officials. This is ... crazy. If I were Catalan that would not get me to support secession, but by God it would make me angry.

In that, I suspect I am pretty well normal. But in my absolute ideological rejection of secession I do not think that I am pretty well normal. Meaning that you could not do better to push people towards secessionism than to raid their government offices and arrest their politicians. 

Imagine this in an American context. Calexit, somehow, gets on the ballot. Instead of ignoring this bit of West Coast silliness, the Trump administration starts insulting everyone in the movement. This is followed by Jeff Sessions mobilizing the National Guard to confiscate all pro-Calexit posters and pamphlets, ordering USPS and Fedex to suspend sending out any California election material, and sending in the FBI to arrest Californian officials. They grab a bunch of high-placed people in John Chiang’s office, grab a bunch of Betty Yee’s advisors for good measure, and top it off by arresting Gavin Newsom’s right-hand man. 

That could turn a sideshow into a serious independence movement. But Catalonian independence is already more than a sideshow. Madrid should be very quiet right now. They should be quietly making an active case for Spanish unity, with no reference to the illegal referendum. Government spokespeople shouldbe quietly pointing out that independence would bring economic disaster, but they should only point that out when asked. They should put out short declarative statements that the referendum is nice but of no import, but again only when asked. And ... end.

Instead, we have what looks like, what, an attempt to have a second Civil War? What in the name of God and the madre patria are they thinking over there?

This is all beyond stupid.

Els límits de l’autonomia a la mare pàtria*

The impending mess in Spain would not be happening save the People’s Party’s decision to take the 2006 Statute of Autonomy to court and the resulting court decision. That is not to say that the current impasse was inevitable given the decision; it is to say that the decision was a necessary component.

So what did the Constitutional Court actually do? (The decision is at the link.)

Other than the fact that the above picture was taken in Barcelona three years before the 2010 court decision, it captures my reaction fairly well. I’ll start with the parts of the decision that were more-or-less if-you-squint reasonable:

1. The Court let Catalan keep its “preferential status” in the schools, but insisted that it had to remain co-equal with Spanish in “public administration.” This is pretty much exactly the way Canada treats French in Quebec. (Had the court gone further and given Catalan the same de facto status that Spanish has in most American states or that French has in the rest of Canada it would have done a lot to assuage secessionism. But they did not, and to be fair, there was not really any legal reason for the court to do that.)
2. The Court upheld a provision stating that the Statute could call upon the central government to spend a portion of its infrastructure spending in Cataluña “proportional to the percentage of Catalan GDP in relation to the overall Spanish GDP,” but it also stated that a law passed by an autonomous community would not be binding on the national government. 
3. The Court overturned the provisions creating a Catalan supreme court, pointing out that the creation of courts was not one of the powers that the Constitution let the national government devolve to the communities. Unlike the other two, this one was contentious (and seems silly to American, Argentine, Australian, Brazilian, Canadian, or Mexican observers). Still Articles 148 and 149 Spanish constitution place the judiciary among the reserved powers of the central government. 

If this had been the whole thing, then I doubt that the country would be in the current mess. (Although #3 is pretty drastic and the court could have gone the other way.) But, sadly, it was not the whole thing. It also:

1. Gratuitously re-wrote the Statute to state that Catalans were not a nationality and had no inherent right to self-government, even though silly little Navarra (the land of my maternal grandfather’s ancestors) is a “historic nationality” gets to call its agreements with the national government “treaties”);
2. Weirdly insisted that Cataluña cannot set up its own tax administration (unlike Navarra and Basque Country, Basque constitution in English)
3. Prevented Cataluña from chartering its own municipal or county governments;
4. Insisted that Cataluña cannot have a direct bilateral relationship with the national government, unlike Basque Country and Navarra;
5. Was written in a most obnoxious and confrontational manner. (Link to the English text, which manages to capture the tone in slightly watered-down form.) The court insisted on discussing every single objection raised by the People’s Party at long and sympathetic length, even when the ultimate decision upheld the Catalan position.

The whole thing was a massive WTF. The Court could have written a limited decision, mildly stating that some language had no constitutional meaning, striking down the disputed clauses, and leaving the rest alone. Hell, given the vagueness of the principles being invoked, it could have just said, hey, obviously Cataluña can enjoy any autonomy that Navarra enjoys, why discriminate?

Sometimes courts really do need to follow the election results. The Spanish constitutional court decided that it would not. And now the result is this illegal election barrelling down upon us, putting the whole of the Spanish State at risk. Has there been a bigger own-goal in a judicial decision since Dred Scott?

* Forgive my Catalan. I understand no Catalan. It is close enough to Castilian to puzzle out simple written sentences, but unlike Portuguese the spoken version (or writing of any complexity) is not comprehensible. In other words, linguistically speaking, Castellano is clearly a different language from Catalan, whereas Castellano is merely a dialect of Portuguese. ☺

The Spanish government is making a serious mistake

Cataluña ... Catalunya ... is going to vote on independence on October 1st. The vote is sanctioned by the Catalonian regional government but is illegal under Spanish law. A Spanish court, therefore, just blocked the referendum.

So far, fine. Spanish courts need to uphold Spanish law. More generally, as I have said elsewhere, I am opposed to secession from democratic states save when recent violence has made reconciliation impossible. In concrete terms, that would limit the historical cases of justified secession from a democracy to only three: Ireland 1922, Algeria 1961, and Kosovo 2008. Cataluña does not clear that bar.

But the above did not count on Prime Minister Rajoy’s unerring ability to alienate Catalans. He wasn’t satisfied to let the judicial system do its work. No, he had to order his attorney general to publicly announce that any Catalan legislators who voted to allow the referendum would be prosecuted. Get that? It is not enough for judicial review to invalidate an unconstitutional law. The people who voted for that law need to be thrown in jail. 

And this is a pattern. The only reason independence is getting this far is that Rajoy filed suit at the Constitutional Court to overturn Cataluña’s Statute of Autonomy. Some background. The Spanish State is not a federation. Article 2 of the Constitution maps out the powers that the Spanish State can devolve to the autonomous communities. Article 155 makes it clear that the central government retains power over the communities. In practice, Parliament has voted to devolve to the communities many more powers than retained by states in many genuinely federal countries. 

The Statute of Autonomy that kicked off this whole mess had to be approved by the Catalan parliament, the Spanish parliament, and a Catalan referendum. It passed the Spanish parliament with a 58% majority. So it had broad support inside and outside Cataluña. The People’s Party did not need to take a case to the Constitutional Court. It chose to, meaning that it chose to inflame Catalan public opinion.

The Spanish government should just sit back, let Cataluña have its referendum, and then ignore the results. Independence might not win. Even if it did, the Spanish government could just refuse to negotiate.

But even if PM Rajoy finds that unacceptable, threatening to arrest nationalist politicians is the absolute stupidest thing he could do.

Not Trinidad, but schadenfreude

More Trini posts coming. But right now, behold the failure of the Calexit nonsense.

And as California resident (but not native, as he will angrily point out) Will Baird (hat tip!) pointed out, you cannot help but relish the way the organizers’ obvious ties to Moscow brought the whole thing down. I don’t blame the Russian government: why not throw a hail Mary against an apparently-vulnerable opponent? But this was all too stupid for words on the part of anyone who took it seriously.

As opposed to transferring membership from the United States to the Dominion (:p) of Canada. That, well, that does not involve the creation of any new countries, to which I am opposed, and that I could get behind. It’d be more like annexing Canada than joining it, anyway. The entire northeast could follow, and what would there be to not like? Although I would be sad should New York and Pennsylvania wind up in different countries.

(Says the man who joined the U.S. Army out in order to be a human hostage to U.S. foreign policy, as then-2LT JKR pointed out in far pithier language.)

What makes a nation?

Florida is a bizarre state. Not only is it different in extreme from the rest of the country; different parts of Florida are different in the extreme from each other. It just should not work. But somehow it does. Every so often somebody idly proposes splitting the state, but it’s never gone anywhere. Ditto secession. Despite the enthusiasm with which non-Americans jump on news of secession movements in California, Texas, Hawaii and Vermont, none of them show even the slightest sign of going anywhere.

Why then is the European Union in trouble or the United Kingdom under threat? It isn’t political oppression, despite what the people in England (regards Europe) or Scotland (regards England) might tell you. Both polities are acceptably democratic, no matter what objections you might have to the constitutional particulars. Is it language? Obviously not in the case of the United Kingdom, and almost-certainly not in the case of the people demanding Brexit, since the European Union has done nothing to weaken English. (Nor any other language; quite the reverse, by demanding full translations from everything into everything.) 

So what is it? Why is the U.K. under strain and why is the E.U. under strain? The obvious answer is that the cultural splits in Europe are much bigger than their equivalents in the United States. 

Alberto Alesina (Harvard), Guido Tabellini (Bocconi), and Francesco Trebbi (U. of British Columbia) decided to answer that question. What did they find? Well, simply put, cultural differences within Europe are less than within the United States. You got that? Texans and New Yorkers differ more in their beliefs about family, religion, trust, sexuality and the state than do Castillians and Dutch or Greeks and Germans. Moreover, cultural differences within European states are bigger than the differences between European states. 

(Amusingly, you can use their methodology to compute the most European part of Europe. You get Germany and Austria. But you also get the Belgium, the Netherlands, and oddly enough big chunks of Spain and Portugal. So much for stereotypes.)

In summation:

A comparison between the E.U. and the U.S. suggests that fundamental cultural differences among Americans are not bigger than that amongst Europeans. Along this dimension, if Americans can share a well functioning federal union, so could Europeans. Needless to say, the United States had 250 years of nation building and 150 years have gone by from the Civil War. Europe has had a much shorter common history and only 70 years have gone by since the last inter-European war. Americans share a common language and geographic mobility in the U.S. has been much higher than within Europe, or even within individual European countries. Mobility helped creating a melting pot and thus a common identity, but apparently did not dampen cultural heterogeneity.

In other words, you are left with nationalism as a defining force by itself. Which leaves you with two possible implications:

1. It might be easier to build a European polity than the current troubles imply;
2. Building any multinational polity is impossible. Two political communities can be identical in every respect, but as long as they define themselves as nations then it will be very hard to create a shared polity;
3. We are reading too much into all this. The stability of the United States and the problems of the United Kingdom are both contingent. Give the U.S. a few bad breaks or give the U.K. better politicos and none of this would be happening. 

Thoughts? It certainly seems as if nationalism has a mysterious strength of its own. But maybe not! Maybe it is all on (3): political communities grow and disintegrate in hinky contingent ways; nationalism follows (or doesn’t.) Frex, you can’t get the near-identical West Indies to unite but you have no problem holding the unbelievably diverse United States together. 

This “news” is striking, even for Politico

Politico reports that President Trump “has come through on three big asks” for California. That was an interesting headline! So I read the story. And it turns out that the “three big asks” are disaster declarations. 

Think about that. It is newsworthy that President Trump didn’t set what’s left of his presidency on fire out of pure spite. And make no bones about it: denying disaster assistance to a state experiencing natural disasters would sink his presidency right quick. Not to mention the shot-in-the-arm it would give to that fundamentally ridiculous secession movement. 

Yet it was and remains plausible that he would do such a thing. What a goddamned time we live in.

More on the Calexit bubble

The sudden spread of the “California secessionism” bubble shows how the Internet has weakened our political discourse for the worse. First, if a multi-millionaire had wanted to announce that he was funding a referendum in 1995, he would have had to have called a press conference. (He would likely have had to do that as late as 2005.) Calling a press conference is not hard, of course, but it meant that nobody besides his drinking buddies would have seized upon an offhand remark.

Calling a press conference isn’t hard, of course. But the need to do so meant that stupid ideas from rich people that wouldn’t survive the cold light of day couldn’t get out to the press. Now, though, it goes out to millions of potential viewers, and just as importantly (still!) the press.

The tweets that started the brouhaha are now down, I should add.

Second, the Russian press could have covered a fringe secession movement as much as it wanted, but the American press would never have picked up the story. Any Russian stories would have been noted as dubious and ignored. 

Poof, a non-story.

Now, this particularly story is not all that important. But it seems to me that it points out a worrying weakness in our national anti-bullshit immune system. Is there a corresponding gain or a way to combat the vulnerability?

Strange phrasing in an article about Calexit

Okay, “Calexit” is strange phrasing by itself. But that’s not what I’m talking about.

The New York Times ran a story on a fringy California secession movement given newfound momentum by the election result. California secession, whatever, terrible stupid immoral idea. And predictable bloviation, considering the election outcome. No cause for a blog post.

But what I noticed was the way the Times discussed the secession process. They actually laid out how it would work. “California cannot, of course, just pick up and leave. Even if the state wanted to, an exit would require two-thirds approval of both the House and Senate in Washington, along with the blessing of 38 state legislatures — a feat analysts say is implausible.”

Something seemed ominous in actually laying that process out. Not about the prospect of a divorce, but about the state of mind of the people interviewed by the author. 

A counterfactual Ireland

 The history of Ireland after 1920 follows a pattern that’s fairly familiar: anti-colonial struggle results in a flight of capital and a loss of skilled labor as the colonial elites flee. The ideological efflorescence of the pre-independence period quickly disappears, and the new state’s politics are tightly constrained by a narrowly nationalist ideology developed in the aftermath of the colonial struggle. This ideology is not particularly consistent with rapid economic growth, so development stalls for decades.

Many key industries are fully or partially state-owned; while this is not necessarily a bad thing, the new state is not always such a great manager. The former colony also goes through a period of protectionism combined with mostly unsuccessful attempts at import substitution. Trade with the former colonial power continues to be critical, despite repeated efforts to diversify. For decades after independence, the economy remains dominated by agricultural exports.

Eventually, though, the country sets out on a period of rapid economic growth that provides rising standards of living for most of the population. This also includes a belated diversification of the economy along with a concomitant diversification of trade — the former colonial master is still important but is no longer absolutely dominant. Inward investment soars. This exciting period is unfortunately marred by massive corruption among the former colony’s political elites.

Ireland after 1920 — but also a bunch of places in Africa and Asia since the mid-20th century.

* * * * *

— So. Lots of these what-ifs depend sensitively on the initial condition. Let’s assume Home Rule is somehow moved forward by a year, so that the Curragh Mutiny etc. happens in August 1913 instead of 1914. Let’s further assume that the Liberal government, when cornered, suddenly grows a spine. The suppression of the revolt may be bloody, but it’s all over by Christmas. By the time the Archduke heads to Sarajevo the new dispensation is well in place.

Okay, so: avoiding the Civil War and its economic consequences mean that right off the bat, Ireland is a fair bit richer. How much richer is hard to say, but based on modern colonial struggles I’m guessing Irish incomes sank by 10% to 20% — a pretty conservative estimate for a civil war followed by independence. This is complicated by the question of how banged around Ulster has been, and also by the fact that some of that income is actually rents belonging to Ascendancy Protestants in the south (who in this world have not been burnt out or otherwise forced to flee). But still: British Ireland in 1922 is going to be a lot more prosperous than the Irish Free State.

Figure 1 in the paper mentioned in the last post is the go-to on this, but unfortunately it starts in 1921 and not a few years earlier, so it misses most of the effects of the Civil War. Even so, it shows a relative loss of about 5% of per capital GDP (compared to Britain) in the years immediately following the war.

More generally, Figure 1 shows what all of us already knew: that Irish independence was a goddamn economic disaster for almost 50 years, after which things suddenly flipped into reverse and Ireland began growing faster than the U.K. or most other advanced economies. In fact, weirdly enough, Irish growth really took off in the mid-1970s ... right around the time everyone else was saw growth dramatically slow. I’m guessing there are some second-move and center-periphery effects here that could be fun to pick apart.

Probably coincidentally, the 1970s are also when Ireland began to receive prodigous amounts of direct support from the European Community, later Union. (See figure from page 19 here, shown at right.) While large in international terms, however, a net inflow of 3% of GDP is on the order of the net federal transfers received Wyoming or Arizona over the past 20 years and a third of that given to truly poor states like West Virginia, Mississippi, or New Mexico. (Data here.) Flows to Scotland are on the order of 10%; British Ireland would likely receive something on that level, starting well before the 1970s. Note that national insurance likely remains funded by London under Home Rule. 

But anyway: with a point of divergence in 1913 and no Civil War, the Irish economy in 1921 is going to be a lot better off than it was in reality. I said 10% to 20%. Going with that, we have to look at Figure 1 and imagine a horizontal line around 1.1 or 1.2. That’s the default GDP for British Ireland, assuming it simply tracks British GDP growth (which I don’t really believe it would, but hey — it’s a starting point). That horizontal line intersects the real-world Irish relative-GDP around 1995, give or take a couple of years. This leads to the conclusion that an Ireland that stayed with Great Britain would have been much better off until the late 20th century. Then, it would have been worse off for the last 20 years or so.

Obviously this is a grossly simplistic back of the envelope calculation that ignores all sorts of stuff, from monetary policy to E.U. membership.  And yet ...

The importance of counterfactuals

Here is a paper which attempts to assess how Ireland has done since separating from the United Kingdom. It’s title: “The Old Connection Sundered? Ireland and the U.K. since 1916.”

The problem is that the only counterfactuals posed are the expectations of three independence-era economists. Which tells you precisely nothing, save that Ireland became neither a socialist country nor practiced strong import-substitution. There is no attempt to answer the question posed in the title: how would Ireland have performed had it remained part of the United Kingdom?

I am disappointed. 

Rajoy is not making sense on Scottish secession

What else would you talk about in Alabama besides Brexit?

Well, lots of things, actually. Like airplanes! But I did spend a lot of time talking about Brexit with the mavens at the Air War College here at Maxwell AFB. My big contribution to the discussion resulted in this tweet: 

Scottish secessionists need to watch Spanish politics very carefully if they expect to remain in the E.U.

— Noel Maurer (@noel_maurer) June 25, 2016

It seems as though the Scottish government is exploring ways to remain in both the E.U. and U.K. simultaneously, although European officials were reluctant to so anything as simple as declare England an overseas territory of the U.K. Their reasoning makes sense: it is early and they do not want to get drawn into an internal British dispute. 

Unfortunately, the Spanish premier, Mariano Rajoy, is dead set against letting Scotland remain. He is afraid of giving the Catalans more ideas. But that seems stupid. After all, Scomain is intended to keep the United Kingdom united, even if it results in a customs barrier running a little bit north of Hadrian’s Wall. Refusing to comprise on the issue raises the chances of Scottish secession, which is the real precedent that Rajoy should be refusing to set. 

I do not pretend to understand the People’s Party.  They started the current support for Catalan secession by opposing the Statute of Autonomy, going so far as to petition the Constitutional Court to declare it unconstitutional. (The court obliged.) I understand wanting to keep Spain together; I even understand refusing to countenance any sort of secession referendum. But I do not understand the resolute opposition to extending quite reasonable grants of autonomy ... and I certainly do not understand what Rajoy thinks he will accomplish by opposing any Scottish attempts to remain in the E.U. without formally seceding from the U.K.

Could Irish independence and the civil war have been avoided?

 Ireland celebrated the 100th anniversary of the Easter Rising on March 27th. (The rising actually started on April 24th, 1916.) The Rising started the process of gaining Ireland its independence from the United Kingdom. The revolt was not popular in Ireland and the British easily suppressed it, but the heavy-handed British response after the violence mobilized Ireland in favor of independence. The rest was history.

But was it inevitable? There was a Home Rule deal on the table in 1914 that was highly favorable to Ireland. Moreover, the U.K. was in the process of creating the modern welfare state; the bill kept National Insurance in U.K. hands. Ireland could take it back ... but why would it want to? It was a pretty good deal. Ireland would have kept fiscal stabilizers, a full banking union and access to centrally-funded social insurance. 

On the other hand, history. The U.K. was slow to enfranchise Catholics, it tolerated discrimination until the bitter end, and the Famine. Memories of wrongs on that scale run deep. Moreover, the final 1914 home rule bill excluded northern Ireland for six years, which would have likely become permanent and become a running sore. It is entirely plausible that at some point after 1916 the United Kingdom would have split up despite any advantages for the residents of Ireland. 

So here is my question: had Britain been more intelligent in the aftermath of the Easter Rising and avoided the idiotic Conscription Crisis of 1918, would Ireland have remained part of the United Kingdom through the Second World War? Or was Home Rule destined to fail once the First World War postponed its implementation? 

P.S. I have read Fatal Path: British Government and Irish Revolution 1910-22, by Ronan Fanning. He makes a solid case that partition was inevitable but does not really address the question of whether southern Irish independence was inevitable. He argues that no British government would have implemented the act (even without the war) but I do not quite grok why he believes that. Since I do not unfortunately regularly talk with Irish historians, this post is an honest call for schooling.

Scotland, befuddling

 It looks like the United Kingdom will not be sending a women’s soccer side to the 2016 Olympics. The reason? The Scots have thrown a hissy fit over the idea of a single British side, but current Olympic rules only allow for countries with U.N. seats to participate. (Before 1996 the rule was more flexible and non-U.N. countries have been grandfathered in: thus we have teams from Puerto Rico and Bermuda.) 

And so, the British women, despite their amazing performance and heartbreaking finish, will stay home next year. The bad guy is an asshole named Stewart Regan. Here he is: “A significant proportion of Scotland fans have made their feelings very clear on the matter – they want to stay under the Scotland banner. We don’t believe football should be played under a Great Britain banner and the sovereignty issue has always been a threat. The decision that was made surrounding London 2012 was a one-off decision as London was hosting the Olympics. There was never any plan to have a permanent British team and we made that very clear, as did the Welsh and Northern Irish.”

That is just completely fucking ridiculous. Sure, the Olympic rules should be changed. But absent that, you’re going to fuck over a bunch of hard-working athletes because it somehow threatens the sovereignty of Scotland? That makes no sense. FIFA is not going to eliminate English and Welsh membership because Britain fields a female Olympic side. London is not going to refuse Devo-Max because Britain fields a female Olympic side. It is a hissy-fit that certainly shows “a cramped nationalism that is too close to tribalism for comfort.”

 

So I would like to thank England for providing an excellent match last night, and give a giant raspberry to everyone in Scotland, Wales and Northern Ireland who is preventing that side, leavened with even more excellent players from the other three nations, from playing next year. Pfft!!

A bad argument about the causes of the Civil War

 As mentioned in my last post, Dave Evans of Georgia took issue with my characterization of the Confederate flag as the “slaveowning banner.”

I should point out that Mr. Evans isn’t alone in thinking this. Even comparatively-normal Texas has this completely backwards monument to the Southern Confederacy on the lawn of the Capitol. “Confederate dead,” it says, “Died for state rights guaranteed under the Constitution. The people of the South, animated by the spirit of 1776, to preserve their rights, withdrew from the federal compact in 1861. The North resorted to coercion. The South, against overwhelming numbers and resources, fought until exhausted.”

So it is a common belief that the war was about something other than preserving the abomination of slavery. But Mr. Evans presents one of the silliest possible arguments in favor of that proposition. Over to him:

If it really had been “all about” slavery then why did Lincoln endorse and get the Northern dominated Congress to pass the Corwin Amendment which would have enshrined slavery in the US constitution making it irrevocable? Why did the original 7 seceding states not readily agree to re-enter the union with irrevocable slavery protected by the US Constitution?

The Corwin Amendment was a strange constitutional amendment that made it out of Congress in the dying days of the Buchanan Administration. A last ditch effort to prevent secession, it banned any future constitutional amendments to alter slavery: “No amendment shall be made to the Constitution which will authorize or give to Congress the power to abolish or interfere, within any state, with the domestic institutions thereof, including that of persons held to labor or service by the laws of said state.”

It was strongly backed by William Seward and President-elect Lincoln endorsed it in a letter. Why would they do that if they hated slavery?

Simple: they knew the Corwin Amendment would be toothless. In 1861 there were 15 slave states. That was enough to do a pretty good job of preventing any anti-slavery amendments to the Constitution, at least until the number of free states hit 45 ... which was not going to happen anytime soon. (There were 19 free states at the beginning of the war.) Even you think that Delaware and Maryland were going to abolish slavery in the immediate future, then the abomination of slavery would still be safe from constitutional amendments until the number of free states reached 39, even without the Corwin Amendment.

In other words, the Corwin amendment was complete bullshit. It prevented Congress and the states from doing what the current constitutional set-up already prevented them from doing. Devoted abolitionists knew that they were giving away precisely nothing by endorsing it. What it was, was a political Hail Mary pass ... maybe the secessionists would be dumb enough to be conciliated, even though it did nothing to guarantee the expansion of slavery and it did nothing to prevent Congress and the free states from continuing to whittle away at forced labor short of changing the Constitution. 

The South did not fall for it.

There was a real “compromise” proposal out there that would have satisfied the South: the Crittenden compromise. It allowed for the expansion of slavery and insured that escaped slaves would not become automatically free in the North. The Republicans were not having any of that. So it foundered.

Note what nobody offered to try to make peace: a deal to reduce tariffs. Not even an agreement to, say, turn over tariff revenues to state governments rather than fund internal improvements. That is because secession had nothing to do with trade policy or infrastructure spending. 

I doubt that much of this is new, although most of the easily accessible stuff fails to point out why the Corwin Amendment conceded nothing to the South. So I hope that I have added at least a little value. If not, enjoy the pictures of Austin!

Further thoughts always welcome.

Devo Max 1.0, circa 1914

 This is a bit of a shaggy dog post about Ireland a century-ago and Scotland today, but I want to put it up anyway.

In 1914, the British government finally passed a Home Rule bill for Ireland. Unfortunately, World War I intervened and London never fully implemented the law. That helped fuel the Easter Rising of 1916. Britain and Ireland still might have remained united even with London’s botched response to the revolt but for the government’s misbegotten decision to extend conscription to Ireland in 1918. My understanding of Irish political history is limited, but finally put paid to the possibility of a peacefully united British Isles seems to have been the combined one-two-three-four punch of (1) suspend Home Rule; (2) put down the Rising with brutal force; (3) shoot the leaders of the rebellion; and (4) finally try to draft the Irish who had in fact already volunteered in large numbers . 

How many Irish volunteered during the war? We know that 140,456 enlisted in the armed services over the course of the conflict. Of those, 55% gave their religion as Catholic, according to Keith Jeffrey in Ireland and the Great War.  That would come to a little under 15% of the 1911 Catholic male population aged 15-35. To that one should add the rough 58,000 Irishmen who were already serving the armed forces in 1914, but religious figures for them are hard to come by. A random guess of half would place the number of military-age Catholic men in the war at 20%.

That is not small. It is twice the percentage of military-age male Americans who served during the Vietnam War, and that war involved conscription and a far far lower risk of death. In fact, less than half of all military personnel actually went to SE Asia in 1965-73. 

Anyway, to the point: many have argued that had Home Rule been implemented, then Ireland would still be part of the U.K. today. Which makes it surprising that the actual text of the act is so hard to track down! But I finally did. So what were the provisions of the Home Rule act and does it provide a model for Scotland?

Irish Home Rule, circa 1914:

Trade: Ireland would be part of the United Kingdom for commercial and customs purposes. 

The West Lothian question: Home rule cut the number of Irish MPs from 103 to 42. That cut Ireland from being overrepresented (15% of seats against 10% of population) to underrepresented (6% of seats), but those MPs still had full voting privileges. Nothing EVEL here. 

Tax collection: U.K. bureaucrats would continue to collect and administer all taxes. The funds collected in Ireland would then be remitted to the Irish parliament. This would save autonomous Ireland from the need to set up an internal revenue service.

Courts: The Privy council would remain the chief court of appeal, but it would now be the only court of appeal. In this, Ireland would become like the nominally-independent countries of the modern West Indies.

Services: The bill kept the U.K. in charge of the following: old age pensions, national insurance, post office banks and friendly societies. (But not the actual post office, which would fall under Irish control from the start.) The Irish parliament could take the reserved services over whenever it wanted with a one-year warning. The Royal Constabulary would move to Irish control after six years, although local police, prisons and courts would come under Dublin immediately.

Infrastructure: One service, however, would never be devolved: road-building. Under Article 19, Irish petrol taxes and car license fees would continue to go into the all-U.K. fund and Irish projects would be funded just as elsewhere under the Development and Roads Improvement Fund Act of 1909. The thing is, in practice the Road Fund simply returned car taxes to the county where they were collected. In other words, not a hidden subsidy.

Finance: This part got complicated. Basically, under Home Rule the imperial government (that is the phrase used in the act) would pay Ireland the cost of all Irish services as of 1912 plus £500,000. (Measured as a % of the British GDP, that would be the 2013 equivalent of £340 million.) The surplus was then slated to fall to £200,000 within six years. The Irish government could vary tax rates or impose new ones; if it cut taxes, the transferred sum would fall commensurately and if it raised them it would rise. The £500,000 was in addition to the existing net transfer of £1.5 million, for an initial subsidy of £2 million.

So far, so simple. But there were a few catches. First, £2 million was a realtively small amount of money even for the time. It came to 16% of all government spending in Ireland and only 1.5% of Ireland’s nominal GDP in 1912. (From Ó Gráda, Ireland: A New Economic History.) 

Second, if Irish expenses grew for any reason, then Dublin would have to finance them from new taxes or by borrowing. Increases in the revenue from existing taxes (say from economic growth) would go to London. Ireland could borrow on the markets, but that was a limited recourse and under an implicit British veto. Of course, the arrangement also provided security against a fall in revenues. The problem, really, would have been that the transferred sum was neither linked to economic growth nor inflation. It would not therefore have provided much of an automatic stabilizer for the Irish economy. 

Third, the whole set-up was transitory. Article 26 stated that once all combined Irish and imperial tax revenues collected in Ireland exceeded all combined Irish and imperial expenses in Ireland over three consecutive years, then Parliament would revisit the finance question. In short, once Irish tax revenues exceeded expenses, then London would have a license to cut all subsidies. On the other hand, if revenues fell further behind expenses, then Ireland would be on its own unless Parliament acted.

Of course, Ireland would still have representation in the national parliament, so it might be able to defend (or even expand) its subsidy. Absent faith in the political influence of its representatives in London, however, the Irish parliament in Dublin would have to be nuts to take over the reserved services from the U.K. 

Defense: Note that defense was not included. Ireland would pay nothing for the protection of the British army and Royal Navy.

Scottish Home Rule, circa 2014:

Under modern Home Rule, with some adjustments for scale and context, Scotland would see its current fiscal relationship swapped for a lump sum equal to the amount of current U.K. non-defense spending in Scotland plus 4%, presumably adjusted for inflation. 

That is really not all that different from the current set-up, under which Scotland gets a block-grant for devolved functions set at 10.03% of English spending on those functions. The big difference is that under a Home Rule-like proposal the grant would no longer be effectively indexed to U.K.-wide economic growth ... and who would want to accept that?

In addition, a modern equivalent of the 1914 Home Rule act would cut Scottish seats in Parliament from 59 to 36. That is less than a solution to the West Lothian question. Moreover, Scotland is barely overrepresented at Westminster in 2014, whereas Ireland was massively overrepresented in 1914. 

The current status of Scotland, then, looks a lot like Irish Home Rule with a more generous funding formula. Devo Max, which cuts Scotland off entirely from the U.K. fiscal regime, is rather more autonomy and not a whole lot less insurance. There are better arrangements than Devo Max (consider either American or Canadian fiscal federalism) but the Home Rule proposals of a century ago are not one of them.

Of course, nobody is saying they were! I just ran across a copy of the bill and got curious as to why the precedent never seemed to come up in the modern debate. And now I know.

Slovakia and Scotland

 Over at Charlie’s place, a fellow named Cdodgson brought up the split between the Czech Republic and Slovakia as an example of a  “peaceful secession from more or less democratic states which the people involved don’t regret and don’t want to reverse.” The context, of course, was Scotland.

The basic description is true. The Velvet Divorce was peaceful and the countries were more-or-less democratic. But the Velvet Divorce holds few lessons for Scotland. 

The history of the Velvet Divorce does however hold lessons for the Velvet Divorce: namely that it was a sleazy breakup of a perfectly functioning country that benefitted no one save the two politicians who arranged it and forced it through: Vaclav Klaus and Vladimir Mečiar. Neither of them did their country any good, before or after the split.

Did the January 1, 1993, division of Czechoslovakia reflect popular opinion? Of course, the answer has no bearing on the benefit of small states or the morality of breaking up democratic polities, but it is interesting ... because it didn't! In 1991, polls showed only 9% of Czechs and 15% of Slovaks favored a split. (Page 252.) By December 1992, support had risen ... to only 36% of Czechs and 37% of Slovaks. 

Moreover, Czechoslovakia already showed a rather impressive level of decentralization: in 1992, the federal government controlled only 22% of public spending. (See Table 6.1.) An additional 0.5% of spending went through the federal government to the two states via federal grants. (Table 6.5.) It is true that fiscal grants from the federal government had dried up as an almost accidental response to de-communization. That might have annoyed some Slovaks ... only the polls didn't show it.

The deal was hashed out between Klaus and Mečiar with no popular input. Neither politico was a particularly admirable person. Both leaders refused to hold a referendum because they believed that they would lose.

A continuing federation would have eventually led to more fiscal transfers. It also would have ended Mečiar's ambitions. So Klaus threw out the poorer chunk of the country and Mečiar escaped the limits of the federal system. Win-win for them.

Did the split leave anyone else better off politically or economically? On the Slovak side, the answer is pretty clearly “no,” although the country managed to survive the Mečiar years. It came close to some ugly outcomes, though. (See Hungary for a bad but-still-not-worst-case example of the bullet that Slovakia dodged.)

Lose-lose for everyone else. Trade collapsed despite a customs union, and both countries went through a painful adjustment. (Page 60.) It worked out OK in the end, but at grave risk to democracy and the gratuitous sundering of a political community. The Czechs and the Slovaks certainly seem to feel that it was pointless: two decades later, only 41% of Czechs and 29% of Slovaks think the Velvet Divorce was the right thing to do. Given status-quo bias, those numbers are astoundingly low.

There is a value in democratic political communities. They bind people through something more than impersonal market exchanges. It is hard to see why they should be broken up unless they are turning undemocratic (which would include systematized ethnic discrimination) or have such histories of intercommunal hatred that they cannot be made to work without violence.

It may be the case that some members of a democratic community have so soured on the others that they wish to share none of the responsibilities of being in a community. But that is parochial and cramped.

To return to Scotland: the breakup of Czechoslovakia was nothing like the proposed breakup of the United Kingdom. It had no popular support (unlike Scottish independence), led to great economic dislocation for both new countries (unlike Scottish independence, which will likely have no impact on England), occurred in a situation of low fiscal transfers (unlike Scottish independence), led to a near-breakdown of democracy in one of the countries (unlike Scottish independence), and did not occur after several decades of divergent policy preferences (unlike Scottish independence). 

Comparisons between Scotland and Slovakia are best avoided, I think, unless the discussion is solely focused on short-term economic effects.

More on why Scottish secession does not mean Tory dominance of the U.K.

 Over at Charlie’s place, two fellows named Tim and Barry raised the old canard that Scottish secession will lead to unending Conservative control of not-as-great Britain. They were unconvinced by (or ignored) the evidence contained in the previous post. 

Are they right? After all, U.K. elections are decided using first-past-the-post. National vote shares matter only inasmuch as they translate into victories in individual constituencies. In the United States, for example, Democrats can win the national House vote by almost 2% and still lose the chamber, which is what happened in 2012. Is the U.K. similar?

Short answer: no. 

Longer answer: losing Scotland knocks Labor down to 217 seats, versus 306 for the Tories. Parliament shrinks from 650 to 591. That means Labor needs to capture 45 seats to outsize the Conservatives and and 79 to gain an outright majority.

Is that doable? Well, the way to find out is to look at Tory constituencies and ask how much of a swing would be needed to flip the weakest 45 and the weakest 79. If the required swing is huge, then the Tories would indeed have a lock on the 2015 election sans Scotland.

And whaddaya know? The Conservatives are facing at least 82 swing seats. See here and here and here. Translation: It won't take much of a swing to knock the Tories off their perch. The polls are already showing a 7-point swing even if Scotland walks away. If the Liberal Democrats remain the number-three party, then Labor will not a hard time putting together a winning coalition in 2015. The rise of UKIP, of course, is more worrying ... but only if it wins enough seats to put together a majority with the Conservatives.

To sum up: the U.K. parliament is more responsive to the popular vote than the U.S. House of Representatives. Even without Scotland, Labor would be able to win a parliamentary majority as long as it remains ahead in the popular vote. And right now, it is ahead in the popular vote in England and Wales.

This is amateur psephology, of course. I welcome data that shows why the above analysis is wrong. (And I think I now need a British Isles tag.)

If Scotland leaves the U.K., then the U.K. will not leave Europe

 If Scotland votes to leave the U.K., then Brussels has made it clear that it will also leave the European Union. Scotland would need to apply like any other potential member state.

But what about the rest of the U.K.? Would it vote to leave the E.U. without Scotland? Many observers are worried.

I do not think that they should be. 

The Tories will be up for reelection in 2015, unless there is a vote-of-no-confidence. That election will be weird. The Scottish government wants to wrap up the independence negotiations by March 2016, so Scots might still be able to vote in the U.K. election. 

That said, it would entirely reasonable for Parliament to disenfranchise Scottish voters before then. Would that swing the 2015 election to the Tories?

Probably not. I played with the crosstabs from this poll. Here are the results:

	Weight	Weight w/o Scotland	% Tory	% Labor	% UKIP
London	13%	14%	37%	36%	9%
South	32%	36%	35%	28%	21%
Midlands/Wales	21%	23%	37%	33%	15%
North	25%	27%	29%	48%	13%
Scotland	9%	--	18%	34%	4%
Total U.K.			33%	36%	15%
Without Scotland			34%	36%	16%

My general impression from the literature is that the district boundaries in England (I mean England England) generally favor Labor, even after the recent redistricting. So Labor is likely to win. Labor opposes holding a referendum on the European Union. That would make Brexit moot.

Moreover, my gut feeling, which could be entirely wrong, is that allowing Scotland to secede will kill Cameron and hurt the Tories at the election. After all, Cameron allowed the election to happen and Cameron took off the option of giving Scotland the powers of your typical Canadian province. So he really will be to blame.

Absent some sort of black swan, Labor will be more likely to win, and Brexit will be moot.

This analysis fails if the Tories pick someone popular to replace Cameron. But I have no idea who such a person would be.  

On the other hand, if the Tories pull off reelection, then Britain is likely out of the E.U. The above analysis, from this poll:

	Weight	Weight w/o Scotland	% Brexit	% E.U.
London	13%	14%	34%	50%
South	32%	35%	42%	37%
Midlands/Wales	21%	23%	45%	37%
North	24%	26%	39%	40%
Scotland	9%		30%	65%
Total U.K.			39%	41%
Without Scotland			40%	39%

Any Cameron-replacement is likely to demagogue the Europe issue and the voters south-of-the-border will be pissed. The momentum will be towards withdrawal and the polls will likely move that way.

But I would bet against a Tory election victory in the wake of Scottish secession, and thus against Brexit. Investors and bankers relax! The Labor Party will save you.

On the other hand, I think that the Spanish government is going to be much bolshier about letting Scotland in than I did a few months ago … they won’t veto, but they will drag things out, and Scotland is going to hurt. 

Was the Constantine Plan a reductio ad absurdum, with applications to Crimea

Randy McDonald, who has a blog well-worth following. In it, I discovered a post from Windows on Eurasia claiming that Russian nationalists will be upset by all the concessions that the Russian Federation has made to the Tatar minority in Crimea.

I have no doubt that President Putin intends Crimea to remain part of the Russian Federation until the fourth millenium. His concessions to the Tatars are almost certainly made in good faith, at least in the limited sense that he wants the absorption of the peninsula to go smoothly and easily.

What are the Russian nationalists so excised about? Well, Tatars appear to have received the lion’s share of the plum patronage appointments, in addition to cultural autonomy.

I am reminded of the Constantine Plan, which was the Fifth French Republic’s attempt to win over Algerian public opinion. Except it also appears to have been part of De Gaulle’s plan to convince the population of the Hexagon that the price of victory was too much. The plan committed France to spend huge amounts to develop Algeria. It also in effect put the kibosh on further European integration by employing trade restrictions to help develop Algeria. And ...

... it imposed a 10 percent requirement that all new public positions in France go to Muslim citizens. You heard that right. Not in just the three Algerian departments. In all of France.

For some idea of its extent, see page 155 here, page 18 at this contemporaneous World Bank assessment, and most clearly on page 50 of this must-read book.

The historical questions are obvious. There are two big ones. The one which is irrelevant to this post but more important to, uh, everything else is the following: what happened to the Algerians hired under the affirmative action programs?

The one which is less important but relevant to this post is: how did the metropolitan French-speaking population react ? I cannot help but think that De Gaulle intended the policy as a way to bring around the Hexagon to the need to decolonize. “Look, people,” he seemed to be saying, “keeping Algeria as part of a democratic France without violence means integrating Muslims into every part of your life. Here is what that means. I doubt you want that. So back me in letting this place go.”

I am sure that Putin is not thinking along those lines. He intends Crimea to be part of Russia until the human race is replaced. But since he seems to be a rational man, he may reduce enthusiasm for Russian imperialism nonetheless by extending to the Tatars the minimum needed to keep them a peaceful part of a greater Russian Federation.

Thoughts?

A sporting dilemma?

So I’m in Jerusalem, watching el Clásico. The Israelis find my Spanish cursing amusing. The Real fans from Spain, slightly less so, but only slightly. A good is had by all, not least because the good guys win it 4-3, albeit aided by a bullshit call against Real.

Which brought me to a thought. I am opposed to Catalan independence. Barça has become known as a symbol of Catalan independence. But no one descended from fighters on the losing side of the Spanish Civil War can support Real Madrid. Real was not politicized at the beginning of the war (its manager was in fact a Communist) but afterwards it became a symbol of the Francoist regime.

So I am a Barça fan. Regardless of the whole secessionist thing. Lo, lolololololo, lo lo!

The E.U. just put the nail in the coffin of Scottish independence

I have been bemused at the debates over Scottish independence at Crooked Timber. I mean, uh, well, there is this:

So it isn’t likely to happen.

And now it is less likely to happen with E.U. Commission President José Manuel Barroso saying what we all knew already, which is that an independent Scotland would have to apply for E.U. membership, just like Iceland or Norway. The negotiations will not be easy, even through Madrid will likely agree to allow the application.

I am opposed to Scottish (or Catalan or Texan or Québécois or Regiomontano or Camba or whatever) independence because I am opposed in-general to secession from democratic states. First, secessionism generally requires a cramped nationalism that is too close to tribalism for comfort. Second, it smacks of democratic failure: you don’t like national policies, but instead of trying to build a majority to change them you pack up your marbles and leave. Finally, it is (albeit probably not the Scottish case) selfish, a way for richer people to dissolve their historic bonds of community with poorer ones.

I read the Crooked Timber thread. The positive arguments for smaller states boiled down to (1) We do not like the way that the U.K. votes as a whole, so screw it; or (2) nationalism, just because. (By that definition, I should be a huge proponent for the Republic of New York and New Jersey Only with the Annoying Bit of New York Removed and Maybe Horse Country Too.)

If there are unreconciliable historical wrongs in play, then I could be persuaded to support the partition of a notionally-democratic state. For concrete examples, see Ireland circa 1922, Algeria circa 1961, or Kosovo circa 2008. But those are extraordinary cases that involved a horrible combination of long-standing ethnic discrimination and very recent bloodshed. Moreover, electoral democracy in the modern sense was a recent arrival to all three mother states: the U.K. in 1918, France in 1958, and Serbia in 2000.*

Absent that, however, I say no. Secession should be off the table.

But I might be wrong to say no! Counterarguments very welcome.

* The Fourth Reform Act of 1918 introduced more-or-less universal suffrage to the U.K., although female suffrage remained limited until 1928. The French Constitution of 1958 granted full voting rights to all Muslim residents of the Algerian departments. Slobodan Milošević fell in 2000, after which Serbia (which remained notionally united with Montenegro until 2006) has held basically free elections.

The French won in Algeria, and that is why Assad will lose in Syria

A few posts ago, I noted that the French won the Algerian War militarily. My co-blogger has scolded me for being deliberately misleading. He is correct. The discussions with Lebanese army officers that produced the post were actually discussions about why the French experience illustrates why Assad is going to lose.

The French Army had three key advantages that Assad does not have. Moreover, at least one of the reasons why De Gaulle decided to abandon that military victory also apply. First, what advantages did the French have that Assad does not? First, French troop levels (proportional to the Algerian population) were four times the levels that Assad can muster. In theory, Assad can call up reservists and increase draft calls. In practice, that will not work.

Second,the French Army could draw on the resources of the Hexagon. In effect, it was financed by a large industrial power. Assad has ... nothing, except in Michael Ignatieff’s fever dreams.

Finally, troops could not and would not defect during the Algerian War. No matter how far morale declined (and it actually did not decline all that far) defection was simply not in their opportunity set. That is not true of Assad.

There are two more differences, but they are actually an epiphenomena of the above three French advantages. The French could credibly commit to remaining in control indefinitely. That commitment reduced the willingness to fight among the Algerian population. (That commitment turned out to be wrong, of course ... but in 1958 it seemed much more likely that France would be sovereign in Algeria in 1968 that it does that the Baath Party will still rule Syria in 2022.) In addition, the French army had the resources to engage large-scale population resettlements ... something far beyond Assad’s reach.

In other words, the reasons why France won in Algeria show why Assad is going to lose.

The problem is that he is going to lose slowly. He can easily fight on for another few years, although the correlation of forces has turned against him. De Gaulle abandoned the victory because of international pressure and because there were no real advantages (other than access to oil, which the Evian Agreements let France keep) to hanging on. The first applies to Assad. The second not so much.

What could change that timeline? Large-scale support for the rebels, which still does not seem to be happening, or a coup.

I see no signs of a coup, but I am not a Syria expert.

Somalia irredenta

 Somalia is a desperately screwed up corner of the world — war, poverty, anarchy, mass famine. It’s also a significant haven for terrorists. So we’re likely to see it in the news a bit over the next little while. That being the case, I thought I’d pass along another one of my personal idiot tests. Here it is: anyone who discusses Somali politics without at least mentioning Ethiopia probably doesn’t know what they’re talking about.

Something that mostly gets missed: Ethiopians are the traditional enemies of the Somalis. The reasons for this are complicated, but here’s the big one: back in the 19th century, Ethiopia clawed off a big hunk of Somalia. Sometimes called Ogadenia, it’s an Arizona-sized territory, mostly arid, with a population of around 4 million people, almost all ethnic Somalis.

This might have worked out OK if the Ethiopians had treated their new Somali minority well and integrated them. Alas: up until the 1990s, various Ethiopian regimes treated the Somalis of Ogadenia with varying degrees of oppression and contempt. The Somalis, of course, responded with guerrilla movements, insurgencies, and rebellion. At one point in 1977 the government of Somalia actually sent troops over the border into Ethiopia to help the Ethiopian Somalis try for independence, It failed, but you can believe it’s remembered in Ethiopia.

I said “until the 1990s” because the current Ethiopian regime — while dictatorial, brutal, and obnoxious in all sorts of ways — actually has a surprisingly good track record in Ogadenia. It’s given the Somalis there limited autonomy under traditional leaders, and has mostly quit oppressing them. This has gone far (not all the way, but far) towards appeasing their grievances. There are still anti-Ethiopian conspiracies in Ogadenia, but they’re fairly small (for now). It doesn’t hurt that Somali is currently such an anarchic hellhole that few Ogaden Somalis want to join up, nationalist sympathies notwithstanding. The Ethiopian government may be a brutal dictatorship, but at least it’s an actual, more or less functioning government.

But! On the Somali side, taking back Ogadenia — whether the Ogadenians want it or not — has become an unquestioned tenet of Somali nationalism. No right-thinking citizen can question it, and all political leaders vie with each other in the intensity of their anti-Ethiopian rhetoric. And as Somalia descended into anarchy back in the 1990s, various leaders decided to show their chops by supporting insurgencies in Ogadenia, raiding across the border, etc. etc.

(BTW, I said that Ethiopians are the traditional enemies of the Somalis. That’s true, but the converse is not. Somalis see Ethiopia as an imperialist power that grabbed a third of their country and that remains a menacing, existential threat. Ethiopians see Somalia as an intermittent annoyance — sometimes negligible, sometimes an obnoxious nuisance. A rough comparison might be, say, Georgia and Russia.)

Anyway: back in 2007, Ethiopia eventually lost patience with this and invaded. Nominally, they were doing it to support the Somali “government” against “insurgents.” This was nonsense; the Somali “government” was just another armed group, and not one of the stronger ones. From Ethiopia’s POV, the invasion had nothing to do with supporting one group over another. It was more about throwing Somalia against a wall, hard. The idea was to demonstrate that Ethiopia was strong, Ogadenia wasn’t going anywhere, and Somali cross-border fun and games would carry a very high price tag. And arguably the Ethiopians succeeded at this, albeit in a way that generated massive negative externalities for all other players. A lot of people died, Somalia got even poorer and more anarchic, and the government that Ethiopia was “supporting” ended up even weaker than it had been, because they’d allied themselves with the hated Ethiopians. But the border quieted down.

Anyway: if nothing else, knowing the history gives you a useful bullshit detector. If someone starts nattering on about the conflict and either (1) never mentions Ogadenia, or (2) tries to frame the Ethiopia-Somali relationship as a religious conflict (as opposed to a classic nationalist-territorial one that Somali jihadism is making worse), then they’re talking crap.

More generally, you can’t talk about Somalia in isolation. That’s true of most countries, of course, but in the case of Somalia its lawlessness and open borders have encouraged all sorts of intervention, good and bad — okay, mostly bad — by outsiders. Kenya shares a border and mostly supports the government, but is wary because there’s a large Somali-speaking minority in Kenya too. (Back in the 1960s, the Somali government supported an insurgency in Kenya. It didn’t work out.) Eritrea supports the largest anti-government group, the Taliban-like Shabab, and other groups that are ferociously anti-Ethiopian. (That’s because Eritrea hates Ethiopia, and the two have their own little regional mini-cold war going.) The Chinese are quietly looking for oil. Even Uganda has a presence in Somalia. (Which resulted in Shabab blowing up a crowded restaurant in Uganda’s capital Kampala last year.) So it’s just impossible to separate Somali politics from regional politics.

But while Somalian politics is fractally complicated and dominated by violent conflict between different armed groups, Somalian political ideology is much more consistent: Somalia should be a united state, the state should be formally Islamic, and Somalia should recover its lost territories — most particularly, the Ogaden. The warring parties may disagree on the details (formally Islamic like Pakistan, or like Iran, or like Saudi Arabia? Attack Ethiopia right away, or wait until they’re weak?) but they’re in firm agreement on those essentials. Somalia has managed to maintain a very high level of intense, ferocious nationalism despite the near complete absence of a functioning state. This may explain why only Somaliland in the north has tried formal secession. And Somali nationalism is still going strong, despite the continuing political violence and some desultory attempts to imitate the Somaliland example.

Incidentally, the government — after a bewildering series of twists and turns — seems to be on the upswing at the moment; they drove the Shabab out of the capital last month. I wouldn’t count on that being a harbinger of much, but it isn’t a bad sign.

Department of Obvious: Syria is not Libya

 This has become a fairly handy idiot test.

Short version: intervening in Syria would be much, much harder and more expensive than intervening in Libya. This was true back in March, and it’s still true today.
 
(1) The uprising in Syria has never remotely approached the success of the uprising in Libya. Syria has seen a bunch of large, sustained protests and demonstrations. That’s great! But Libya saw the effective secession of almost half the country. By the middle of March, the rebels controlled the country’s second largest city. About a fifth of the country’s area and maybe a third of its population had passed completely out of government control. Major government military units had gone over to the rebel’s side. Nothing like that has happened in Syria.

(2) Syria has an actual, functioning air force. This is in sharp contrast to Libya, which did not. Syria actually has late-ish model planes, pilots who know how to fly them, and some semblance of a professional administrative and logistical infrastructure to support them. No, the Syrians couldn’t stand up to a sustained war with NATO — but they exist, and would have to be dealt with.

(3) Syria has an actual, functioning air defense system. Again a sharp contrast to Libya. As with the air force, it could be dealt with — but it would take time, and would likely cost casualties.

(4) Syria’s in a much, much more delicate and complicated location. Just look at a map. Taking Gaddafi out was relatively easy — Egypt and Tunisia just had their revolutions, and nobody cares much about Chad. But Syria? Israel, Iraq, Turkey, Lebanon. What a nightmare. Do I need to spell out why this makes everything much harder and more fraught?

(5) Assad is much less diplomatically isolated than Gaddafi. By 2010, the Brother Leader had managed to alienate or annoy pretty much everyone. Even the Arab League openly despised him. His nominal “friends” in the Mediterranean — most notably Berlusconi’s government in Italy — turned out to be fair-weather indeed. Russia restricted itself to tut-tuts from a distance. Only in Sub-Saharan Africa did he have any real allies left, and the plain sad fact is that Niger and Senegal just don’t count for much when you’ve got the United States, United Kingdom, and French Republic all lined up against you. With bombs.

Assad, on the other hand, is a respected member of the international club. He’s a dictator, but he’s not a flake. He’s a reasonable neighbor. (Well, unless you’re Lebanese. More accurately, a Lebanese of a certain political flavor.) The Arab League is never going to pass a resolution approving force against him. And the Russians are likely to veto anything in the Security Council — they’re much closer to him than they ever were to Gaddafi. They’ve had a small naval base at the Syrian port of Tartus since the 1970s, and they’ve sold weapons to the Syrians since forever.

In fact, the Russians were just closing a deal to sell Syria a bunch of Yakhont antiship missiles when the uprising started. The Yakhont is basically a bigger, dumber Exocet; a supersonic cruise missile designed to kill large ships from far away. Israel vigorously protested the deal, for fear Syria would pass a couple along to Hezbollah. (Hezbollah blew a massive hole in an Israeli corvette a few years back using a crappy little Chinese C-802, and my co-blogger will eventually post something about his research on the brewing conflict over Israel’s new offshore gas fields,  so it’s a quite reasonable fear.) Remember how in Libya, we had capital ships hanging around just offshore from Tripoli, and the Charles de Gaulle parked conveniently just a bit further out? That wouldn’t happen in Syria; even the faint possibility of shore launched cruise missiles would make any sane admiral pull his ships well back over the horizon.
 
Oh, and he’s got the Iranians on side, at least for the moment. I think the Iranians would switch sides in a flash, if they thought it was in their interest — but until they reach that point, they’re backing him firmly. (They just replaced their ambassador to Damascus with a hardliner with ties to the Revolutionary Guards.)

(6) Assad is much less physically isolated than Gaddafi. Libya looks like a solid block of territory, but in fact it’s like Canada — a long, thin populated strip and a vast empty hinterland. 90% of the population lives within 100 km of the coast. The civil war cut that strip in two, east and west. Gaddafi had an open path to the south, but as supply lines they were meaningless; an 800 km drive across desert, and then you’re in Niger. (A country whose major resources are under French control.) With NATO controlling the seas, virtually everything in Gaddafi’s territory had to come in or out through Tunisia, most of it on a single coastal road. The moment the rebels cut that road was the moment when everything changed for good.

There’s nothing like this in Syria, which has well-developed land links to all its neighbors except Israel. And most of Syria’s coast is actually Lebanon. Nobody’s going to blockade Lebanon. As with the air defenses, this is a solvable issue — but it makes everything much, much more difficult and expensive.

So, to summarize:

• Military intervention in Syria would be incredibly expensive and difficult, would have to overcome serious diplomatic obstacles, and would likely involve significant losses and casualties. This has always been true, and will probably continue to be true for some time to come. Therefore, it is very unlikely to happen.
• Because military intervention is unlikely, any uprising against Assad will have to succeed or fail without it, as did the uprisings in Tunisia and Egypt. I judge this unlikely, but that’s an issue for another post.
• If someone says “our intervention in Libya prevented us from intervening in Syria,” then you may immediately begin heavily discounting, or completely ignoring, anything else they have to say on the topic. (This goes double if they suggest that the reason is “Syria has no oil.”) If someone suggests that we should intervene in Syria, same-same.

I wish the Syrian people good luck in getting rid of the loathsome Assad regime. But the plain fact is, they’ll have to do it without direct military help from us.

Invade Mexico?

 I’ve heard second and third-generation Mexican-Americans in Manhattan call in frustration for the United States to invade northern Mexico. I did not expect to hear it from the Governor of Texas. (Hat tip: Gancho.) This is the same guy who has called for secession, and in the linked interview he doesn’t, well, come across all that well. “Shermanesque? Help me on that one,” said Governor Perry. When told that it meant that if nominated he wouldn't run, and if elected he wouldn't serve, he came back with, “How about Perryesque?”

 

But Governor Perry’s record of odd statements doesn’t make the idea less worth debunking. First, the U.S. is not menaced by what’s happening across the border. Second, while the U.S. Army is increasingly designed around counterinsurgency, that is not quite the same thing as policing, and it is hard to see what the soldiers would actually do. Conduct investigations? Arrest malefactors? Patrol streets? I’d favor allowing U.S. law enforcement personnel to operate in Mexico, but when Perry says “Any means we can to run these people off our border and to save Americans’ lives, we have to be engaged in,” you get the impression that he means something more expansive. Like a free-fire zone? It isn’t clear. Finally, well, Perry didn’t call for American troops to help reduce violence; he called on them to “defeat” the cartels. What does that mean? The complete disappearance of organized crime in northern Mexico? Well, by that yardstick, organized crime is undefeated in Texas.

In short, a non-threat, fought with unclear tactics, for a vague goal.

Overwork, French neocolonialism, and the economics of labor migration

 One thing that truly does suck is being in Paris on a rainy weekend with your wife and being utterly unable to enjoy the city, let alone take that side trip to the south of France, because a chapter of your next book (and an article for a conference) is taking much longer to write than it ought to. This post therefore gets a leisure tag, because of the lack thereof. But now you know why I haven't finished the Dubai posts (one more is waiting about Iran) or said more about nuclear power, the reason for my trip.

One thing that doesn't suck is Doug Muir's explanation of Comorian independence. It may be unsatisfying, but so is reality. It does leave me wishing that Julius Nyerere, a heroic man of heroic accomplishments, hadn't been so ... well ... unyielding in his anticolonialism. The world, I think, would be a marginally more happy place with 800,000 additional French citizens in the Indian Ocean, rather than 800,000 poor victims of lousy institutions wedded to French neocolonialism.

Something that doesn't suck but is, I think, incorrect, is Charlie Stross's analysis of the economics of restrictions on labor mobility. The discussion gets started at comment #27. Go, argue!

Of course, I have a dangerous streak of Francophilia, and am therefore not to be trusted.

Near-recolonization in the Comoros

 Oh, gosh, the Comorian story gets weirder. I knew that one of the Comorian islands, Anjouan, had to be invaded by the African Union (with much French support) in 2008 when Mohamed Bacar refused to step down as the president of the province following a disputed election. I also knew that Anjouan had declared independence in 1997 and was reluctantly coaxed back into the Union, which contributed to the crisis 11 years later.

What I did not know was that the separatists did not actually want independence. Rather, they wanted reunion with France. In all seriousness, the rebels raised the Tricolor and asked to become an overseas collectivity. Paris said no, of course. It would wreck relations with Africa and cost no small amount of money. And where would it end? Still, I can't imagine that nobody in Paris was tempted; one hell of a compliment, that. I don’t know of any British ex-colonies petitioning to re-become a Crown Colony. 

To be fair, the story isn’t completely unique: Cape Verde tried to get into the European Union back in 2006, and given how reluctantly it accepted independence I suspect that a vote to reunite with Portugal would probably pass. That said, I’m still not sure what to make of the Anjouan story. Probably nothing, truth be told. But it does bring home to me the overall weirdness of the initial vote to secede from the French Republic. Puerto Rico, Samoa, the CMNI ... most American possessions with status akin to an overseas collectivity do not seem to want independence. The few that did (e.g., the TTPI, whose residents were neither American citizens nor nationals, whereas the Comorians enjoyed full French citizenship before 1975) carefully negotiated a limited form of independence that preserved the benefits of association with the United States. So what happened in the Comoros to push its leaders into not only accepting independence, but a very badly negotiated independence deal with a French government that would have been happy to keep the islands within its orbit?

And don’t say nationalism, because many places are nationalist yet eschew sovereignty when the costs are high enough. They certainly were high in the Comoros, and it would seem that by the 1970s those costs should have been manifest. Why then did Comorian nationalism drive its leaders towards secession ... a decision a good chunk of the nation’s people seem to regret?

What's the matter with Texas?

  Nothing, really. Oh, the governor seems to have gone a little crazy, but that’s because his party has decided to do its damndest to commit long-term suicide, and he's got to be crazy in order to win the primary. Have you read its platform? 

But Texans aren’t crazy. First, the percent who support secession is less than the Crazification Factor. Second, if you’d asked the question in November 2004, I think you could’ve easily gotten a similar percentage of Californians or New Englanders to say they support taking up their marbles and leaving.  Remember the “United States of Canada”? Finally, unlike most of the red states, Texas does in fact generally pay more to the federal government in taxes than it gets back. Red are payments, blue are receipts, all data in 2008 dollars.

Now, these figures are rough estimates. Pre-2005, the data are from the Tax Foundation; for 2006-07, they come from me using the same methodology. And they leave out a lot. Frex, a lot of federal spending comes from borrowing, rather than taxes, and these figures have made no attempt to allocate the future tax liabilities generated by borrowing. They also leave out a chunk of federal spending:  mostly interest payments, which aren’t allocated to states (and much of which goes to foreigners), but also foreign aid and imports purchased by the federal government. 

In addition, of course, joining a fiscal federation gets you more than just net tax payments. It makes Keynesian policy much easier: European countries, for example, have trouble using this tool because so much of any stimulus will leak away to the neighbors. It adds insurance against asymmetric macroeconomic shocks: if something bad happens to the economy of your jurisdiction, your residents will pay fewer federal taxes and get more federal benefits. Finally, it allows for economies of scale in the provision of public services. All three are why it probably makes economic sense for Iceland to become a Commonwealth, even at a fiscal cost of $109 million per year. 

In short, (1) Texans are no crazier than anyone else, and (2) the Republican Party is really going off the rails. It isn’t just Governor Perry; it’s state legislatures in Georgia, Oklahoma, and South Dakota, which have taken to voting in favor of secession.  In another country, these might be worrying in terms of national unity. In this one, there’s no worry about national unity.  (Although I recommend these comic books anyway.) Rather, there is a worry about the emergence of a de facto one-party democracy. I know I’ve got readers who still aren’t sure that the GOP is in on the road to suicide, but even they have to admit that the Tea Parties and aftermath are a big step down that path. Right?

Going south?

Cooler heads may not have prevailed in Bolivia.  I'm not sure what to make of this report from Pronto, but is sounds doubleplusungood:

From email from my parents (who live in Santa Cruz): Evo has just announced an alleged a coup plot between Goldberg (the US ambassador expelled a few days ago), Costas (the Santa Cruz prefect), and a number of high-ranking military officers. Meanwhile, reports from Pando suggest that five of the bodies were Venezuelan soldiers, who are being repatriated. Costas has also asked Evo to call of the MAS protests who are still marching towards the city of Santa Cruz; he’s also called for a suspension of labor & a public assembly in the main plaza for a cabildo (a “popular assembly”) to decide what to do. (FYI: The last Santa Cruz cabildo proclaimed Costas “governor” & demanded regional autonomy.) Also, as of now, the 24 de Septiembre celebrations are cancelled — the first time that has happened in more than 50 years. This doesn’t look good at all.

The part about “Venezuelan soldiers” is particularly perplexing.

   

The good news is that it seems as though Evo agreed with Costas and got the marchers to stop.  So sanity still might prevail.      

Old news from Santa Cruz

So Hugo declared on September 12th that he was prepared to intervene militarily if Bolivia's constitutional government came under threat.  The reaction in Santa Cruz?

As a patriotic American, I can't tell you how much it warms my heart to see demonstrators burn somebody else's flag.

UPDATE:  It gets better!  When the commander of the Bolivan troops sent to Pando arrived at the Cobija airport, he had to insist to an angry mob that he was not heading a Venezuelan invasion force.

No, it gets much better.  Chile's foreign minister, Alejando Foxley, publicly complained that President Chávez's antics nearly wrecked the Unasur summit.

Thankfully, Evo realized that Caracas wasn't helping him, albeit belatedly, and told his defense minister to reject Venezuelan overtures.  (It obviously would have been a bad idea for Evo to have done it himself.)  So far, negotiations with the Media Luna provinces seem to be going well.  Here's hoping. 

Cooler heads prevail

  An agreement has been reached to settle the conflict in Bolivia, at least for the time being.  The “Great National Agreement” is, IMHO, a thing of great beauty.  Basically, everyone involved realized that they were all going to lose if the violence escalated and decided to take a deep breath and calm down. 

Judge for yourself.  

The Great National Agreement:

1. Basis for a national dialogue:

(a) The dialogue will cover the following agenda:

•IDH - royalties:  The national government, in accordance with current law, recognizes the right of the provinces to share in the Direct Hydrocarbon Tax.  The national government, while guaranteeing the payment of the Dignity Pension, repeats its decision to respect the current distribution of royalties to the provinces. 
•Provincial autonomy: The national government expresses its respect for the autonomy of the provinces of Pando, Beni, Tarija y Santa Cruz.
•The new constitution.
•Institutional pact: congressional vacancies, electoral rolls, voter ID distribution, and the election process.

(b) The objects of the dialogue's agenda will be detailed in three working roundtables and one central session that will approve all agreements.

(c) Unasur, the Catholic Church, the European Union, the OAS, and the United Nations are invited to facilitate.

2. Reestablishing social peace under the rule of law:

(a) All public offices and petroleum installations that have occupied due to the conflict by non-authorized personnel will be turned back.  Discussions about the new territorial administration of such office and institutions will be undertaken. 

(b) All road blockades will be lifted. 

(c) The national government will suspend the Congressional vote on a referendum for a new constitution for one month, which may be lengthened in accordance with the results of the national dialogue.

(d) In order to shed light on the tragic events in Pando, investigators from impartial national and international organizations and a Congressional committee will be dispatched to the place when the events took place.

(e) No judicial actions that might have political connotations will be taken.

(f) The Governor of Tarija, representing the five mobilized provinces, asks that the state of emergency in Pando be lifted. 

3. The national dialogue will officially begin on Thursday, September 18, 2008, in the city of Cochabamba, and conclude in the city of Tarija.

Things could still go very wrong, of course.  The devil is in the constitutional details.  But so far, so sensible. 

I am very curious as to how all this looks from elsewhere in the world.  Is this sort of mutual stand-down, where everyone throws stuff under the bus, easier or harder in the Balkans and Caucasus?   

Full moon rising?

Cooler heads may be prevailing in Bolivia.  The Army has taken control of Cobija, the capital of Pando province.  Governor Leopoldo Fernández has fled, accused of masterminding a massacre of government supporters.  Meanwhile, the National Democratic Council, which consists of the five governors of the Media Luna provinces (including Chuquisaca), announced that it will call off the roadblocks, although their supporters still occupy government offices outside Pando. 

Council representatives met throughout last night with Vice-President Álvaro García and the Vice-minister for Decentralization, Fabián Yaksic.  They seem to have arrived at an accord, which while not a resolution of the dispute, is at least an agreement to sit down and talk about it. 

Hugo Chávez, unfortunately, is being his own typically helpful self.  He's declared that Venezuela will intervene if Morales falls.  He's hurled accusations of treason at the head of the Bolivian armed forces, General Luis Trigo.  “I am willing to die for Bolivia,” said the President of the Bolivarian Republic. 

The president of Uruguay, Luis Alberto Lacalle, had an interesting response.  “Careful.  We've got Chávez, who suffers from verbal incontinence.  It could occur to him tomorrow to send a soldier to Bolivia, and that could cause a horrible conflict in the region.” 

Half moon at bay

The consequences of persistent inequality are with us today. They appear to be pushing Bolivia towards civil war in slow motion. Today there was a brief flutter of news about the situation because Evo expelled the American ambassador, and the U.S. followed suit, but in general you've got media silence in America. The split is between the central government and “autonomists” in the “Media Luna,” which is marked off in dark green in this map taken from Mark Weisbrot: 

Things are bad. How bad? American Airlines just stopped flying to the country. Autonomists in Santa Cruz have seized control of most federal offices in the province. Tarija — which produces 60% of Bolivia's natural gas — experienced bloody riots yesterday, where autonomists seized the customshouses and airport and federalistas (my term, not a Bolivian one) blew up the governor's parking garage. Meanwhile, the nightmare that my Brazilian and Bolivian colleagues discussed in Venezuela? Well, it came true for about 12 hours. 

Brasilia is reacting in a manner that could best be described as confused, but understandably so. On Tuesday, the Brazilian foreign minister committed a Kinsley, when he stated that if Morales can't secure the pipeline, then his government will be forced to open relations with the Media Luna. Today, however, the Brazilian national security advisor reiterated Brazil's position that Bolivia has but one government and intimated that his government might send troops to support Evo. 

So what's it all about?  I'm sure you all can guess, but a rough overview is below the fold. 

Alaska is American!

I just want to say, unequivocally, that I oppose the independence of Alaska, and should a minority of that state impose secession, I will rejoin the Army and risk my life, fortune, and sacred honor to keep it part of the United States.