WEBVTT NOTE The Political Economy of Centralization and Secession 1 00:00:00.000 --> 00:00:04.200 The most famous words of political philosophy ever penned 2 00:00:04.200 --> 00:00:08.500 were Thomas Jefferson's and the Declaration of Independence. 3 00:00:08.500 --> 00:00:12.900 Whenever any form of government becomes destructive, he said, 4 00:00:12.900 --> 00:00:16.400 it is the right of the people to alter or to abolish it 5 00:00:16.400 --> 00:00:21.700 and to institute a new government, laying its foundation on such principles 6 00:00:21.700 --> 00:00:24.700 and organizing its powers in such form 7 00:00:24.700 --> 00:00:30.300 as to them shall seem most likely to affect their safety and happiness. 8 00:00:30.300 --> 00:00:38.100 219 years after those words landed on King George's desk, they are still red hot. 9 00:00:38.100 --> 00:00:42.400 They still inspire fear in the hearts of tyrants everywhere. 10 00:00:42.400 --> 00:00:47.100 They still raise the possibility that no government is permanent. 11 00:00:47.100 --> 00:00:50.700 Those who threw off the yoke of socialist tyranny in the last decade 12 00:00:50.700 --> 00:00:55.540 frequently cited Mr. Jefferson as their moral authority. 13 00:00:55.540 --> 00:01:00.220 Some of these movements, as in Russia and Romania, toppled one government and replaced 14 00:01:00.220 --> 00:01:01.900 it with another. 15 00:01:01.900 --> 00:01:08.460 The more successful anti-socialist revolutions, like the American Revolution, were also secessions, 16 00:01:08.460 --> 00:01:15.020 as in Estonia, Latvia, Lithuania, Ukraine and the Czech Republic. 17 00:01:15.020 --> 00:01:20.200 The term secession derives from the Latin word for withdraw. 18 00:01:20.200 --> 00:01:26.320 It is an appropriate term for our era. The call for secession is the equivalent of saying 19 00:01:26.320 --> 00:01:35.600 we want out. Stop taxing us. Stop expropriating us. Stop oppressing us. And finally, stop 20 00:01:35.600 --> 00:01:41.940 governing us. The plea for withdrawal for secession is the plea for self-government 21 00:01:41.940 --> 00:01:48.780 and self-determination. As Mises wrote, no people or part of a people shall be held against 22 00:01:48.780 --> 00:02:18.780 Stateism, Centralism and Genocide have defined this century. But if all goes well, the struggle for individual and community liberty and devolution from central power will define the next. Despite every effort of the power elite, states are devolving into smaller and smaller units. If our concern is human freedom, self-government, a free-market economy, the autonomy of the people, 23 00:02:18.780 --> 00:02:22.780 and the economy of the family and the security of private property, 24 00:02:22.780 --> 00:02:25.780 we must celebrate this trend away from big government 25 00:02:25.780 --> 00:02:29.780 and towards what our founders called free government. 26 00:02:29.780 --> 00:02:34.780 Celebrating a trend is great, but understanding it is more important. 27 00:02:34.780 --> 00:02:38.780 And understanding is precisely what has been lacking. 28 00:02:38.780 --> 00:02:44.780 Few in the media could comprehend that socialism had not worked or why. 29 00:02:44.780 --> 00:02:46.780 They were certainly in no position to grasp 30 00:02:46.780 --> 00:02:54.780 The subject is complex and contemporary as secession, much less the political, economic and cultural forces that have given rise to it. 31 00:02:55.780 --> 00:03:06.780 If we aspire to think more seriously than Dan Rather or Bill Buckley, and more importantly if we strive to be custodians of a rich and vibrant intellectual tradition, 32 00:03:06.780 --> 00:03:09.780 we must grapple with the trends of our time. 33 00:03:09.780 --> 00:03:15.780 If we choose to ignore them out of concern for political correctness, we shirk our responsibility. 34 00:03:16.780 --> 00:03:22.780 It is not surprising that so few academics have applied themselves to understanding modern secessionism. 35 00:03:22.780 --> 00:03:27.780 Most professors are as cautious and as stale as government bureaucrats. 36 00:03:27.780 --> 00:03:32.780 They don't like to think about new subjects. They don't like to change their theories about the world. 37 00:03:32.780 --> 00:03:34.780 They don't like to admit error. 38 00:03:34.780 --> 00:03:39.780 Far safer to teach and write about the significance of Maya Angelou's profound poem, 39 00:03:39.780 --> 00:03:42.780 A Rock, A Tree, A River. 40 00:03:42.780 --> 00:03:50.780 Most of all, modern academics don't want to admit that what their theory of history says is impossible, history itself is making possible. 41 00:03:50.780 --> 00:03:59.780 With their Marxian paradigm, liberal intellectuals view secessionism as a reversal of history and therefore were the only of being ignored or denounced. 42 00:03:59.780 --> 00:04:07.780 They say secessionism takes history off its predetermined path, away from what they call progress and towards what they call reaction. 43 00:04:07.780 --> 00:04:13.200 Reaction. Rather than scrap their outmoded Hegelian notions, they continue to preach 44 00:04:13.200 --> 00:04:18.680 the doctrine of socialism and planning. But those with intellectual integrity must look 45 00:04:18.680 --> 00:04:23.980 beyond such failed doctrines. Ludwig von Mises, for example, reexamined socialism when the 46 00:04:23.980 --> 00:04:29.740 entire world of ideas thought it irrefutable. His treatise shocked his contemporaries and 47 00:04:29.740 --> 00:04:32.180 wrecked his career. 48 00:04:32.180 --> 00:04:35.700 Murray and Rothbard took up the subject of statism in the broadest sense and hammered 49 00:04:35.700 --> 00:04:39.700 about a theory of liberty, the state and the conflict between the two. 50 00:04:39.700 --> 00:04:41.700 He too was marginalized. 51 00:04:41.700 --> 00:04:44.700 Yet the defiance of fashion by these two great men 52 00:04:44.700 --> 00:04:49.700 produced a body of work that has remarkable explanatory power today. 53 00:04:49.700 --> 00:04:52.700 They are personal examples as well. 54 00:04:52.700 --> 00:04:55.700 It is morally necessary to pursue truth as they did, 55 00:04:55.700 --> 00:05:01.700 although more so when prevailing opinion says it cannot and should not be done. 56 00:05:01.700 --> 00:05:06.700 This is why we must examine the economics, history and philosophy behind this devolution 57 00:05:06.700 --> 00:05:09.780 away from central power. 58 00:05:09.780 --> 00:05:16.020 All experience hath shown, wrote Mr. Jefferson, that mankind are more disposed to suffer while 59 00:05:16.020 --> 00:05:20.960 evils are sufferable than to right themselves by abolishing the forms to which they are 60 00:05:20.960 --> 00:05:23.000 accustomed. 61 00:05:23.000 --> 00:05:28.040 We are here to discover why so many have recently decided to put an end to their suffering, 62 00:05:28.040 --> 00:05:33.240 Why they have abolished old forms, why they have erected new ones, and why this trend 63 00:05:33.240 --> 00:05:36.420 will and should continue. 64 00:05:36.420 --> 00:05:41.240 As one of the few independent sources of ideas in the country, the Mises Institute has chosen 65 00:05:41.240 --> 00:05:45.920 to sponsor this conference because we believe in the power of ideas. 66 00:05:45.920 --> 00:05:50.260 As the first modern public academic meeting on the subject of secession, this gathering 67 00:05:50.260 --> 00:05:53.560 is already the source of much controversy. 68 00:05:53.560 --> 00:05:57.680 Yet our call for papers on secession netted some of the best academic work on the subject 69 00:05:57.680 --> 00:06:02.680 I've seen, and I'm sure you will agree. We will hear from some of the best minds working 70 00:06:02.680 --> 00:06:08.060 in the social sciences today. At the conclusion of this conference, you will have become familiar 71 00:06:08.060 --> 00:06:12.560 not only with the cutting edge in secession scholarship, but also with the bulk of existing 72 00:06:12.560 --> 00:06:17.800 scholarship on this crucial topic. Our heartfelt thanks go out to the wonderful donors who 73 00:06:17.800 --> 00:06:22.320 made this all possible, some of whom are here with us today. 74 00:06:22.320 --> 00:06:27.560 We begin with Hans-Hermann Hoppe. Professor Hoppe teaches economics at the University 75 00:06:27.560 --> 00:06:33.400 of Nevada Las Vegas, where he was Murray Rothbard's close friend and colleague. He is a senior 76 00:06:33.400 --> 00:06:39.240 fellow of the Mises Institute, co-editor of our Review of Austrian Economics, author of 77 00:06:39.240 --> 00:06:43.520 a number of books, many papers, The Theory of Socialism and Capitalism, The Economics 78 00:06:43.520 --> 00:06:47.520 and Ethics of Private Property, just two of his books. And Professor Hoppe is going to 79 00:06:47.520 --> 00:07:16.960 A State is a territorial monopolist of compulsion, an agency which may engage in continual, institutionalized 80 00:07:16.960 --> 00:07:25.960 Property Rights Violations and Exploitation in the form of expropriation, taxation and regulation. 81 00:07:25.960 --> 00:07:38.960 Assuming no more than self-interest on the part of government agents, all states or all governments must be expected to make use of this monopoly 82 00:07:38.960 --> 00:07:43.960 and thus exhibiting a tendency toward increased exploitation. 83 00:07:43.960 --> 00:07:50.960 On the one hand, this means increased domestic exploitation and internal taxation. 84 00:07:50.960 --> 00:08:00.960 On the other hand, and it is this aspect in particular that will be of interest, it means, of course, territorial expansionism. 85 00:08:00.960 --> 00:08:06.960 States will always want to enlarge their exploitation and tax base. 86 00:08:06.960 --> 00:08:12.960 In trying to do so, however, they will come into conflict with other competing states. 87 00:08:12.960 --> 00:08:23.960 The competition between states as territorial monopolists of compulsion is by its very nature an eliminative competition. 88 00:08:23.960 --> 00:08:30.960 That is, there can be only one monopolist of exploitation and taxation in any given area 89 00:08:30.960 --> 00:08:40.960 and thus the competition between different states can be expected as promoting a tendency toward increased political centralization 90 00:08:40.960 --> 00:08:45.960 and, ultimately, one single world state. 91 00:08:45.960 --> 00:08:53.960 A glance at Western history suffices to illustrate the validity of this conclusion. 92 00:08:53.960 --> 00:09:01.960 At the beginning of this millennium, for instance, Europe consisted of thousands of independent political units. 93 00:09:01.960 --> 00:09:07.960 Now only several dozen such units remain in existence. 94 00:09:07.960 --> 00:09:17.020 To be sure, there existed also some decentralizing forces. There was the progressive disintegration 95 00:09:17.020 --> 00:09:24.160 of the Ottoman Empire from the 16th century until after World War I and the establishment 96 00:09:24.160 --> 00:09:32.580 of modern Turkey. The discontinuous Habsburg Empire was gradually dismembered from the time 97 00:09:32.580 --> 00:09:41.580 was at the time of its greatest expansion under Charles V until it disappeared and modern Austria was founded in 1918. 98 00:09:41.580 --> 00:09:48.580 And only recently, before our very eyes, the former Soviet Empire has disintegrated. 99 00:09:48.580 --> 00:09:54.580 However, the overriding tendency in history was in the opposite direction. 100 00:09:54.580 --> 00:10:10.580 For instance, during the second half of the 17th century, Germany consisted of some 234 countries, 51 free cities and 1,500 independent nightly manors. 101 00:10:10.580 --> 00:10:22.580 By the early 19th century, the total number of all three units had fallen to below 50 and by 1871, unification had been achieved. 102 00:10:22.580 --> 00:10:26.580 The scenario in Italy was essentially the same. 103 00:10:26.580 --> 00:10:35.580 And even the small states, currently small states, have a history of expansion and centralization. 104 00:10:35.580 --> 00:10:43.580 Switzerland for instance began in 1291 as a confederation of three independent cantonal states 105 00:10:43.580 --> 00:10:50.580 and by 1848 it was a single federal state with some two dozen cantonal provinces. 106 00:10:50.580 --> 00:11:00.580 Moreover, from a global perspective, mankind has come closer than ever before to the establishment of a world government. 107 00:11:00.580 --> 00:11:09.580 Even before the dissolution of the Soviet Union, the United States had attained hegemonical status over Western Europe, 108 00:11:09.580 --> 00:11:17.580 most notably over West Germany, and over the Pacific Rim countries, and most notably over Japan. 109 00:11:17.580 --> 00:11:23.860 This is indicated by the presence of American troops and military bases, by the NATO and 110 00:11:23.860 --> 00:11:29.300 Seattle Pact, by the role of the American dollar as the ultimate international reserve 111 00:11:29.300 --> 00:11:35.820 currency and of the United States Federal Reserve System as the lender or counterfeiter of last 112 00:11:35.820 --> 00:11:43.660 resort, as well as by institutions such as the International Monetary Fund, the World 113 00:11:43.660 --> 00:11:48.620 World Bank and the recently established World Trade Organization. 114 00:11:48.620 --> 00:11:54.520 In addition, under American hegemony, the political integration of Western Europe has 115 00:11:54.520 --> 00:12:01.280 steadily advanced, and with the establishment of a European central bank and a European 116 00:12:01.280 --> 00:12:07.260 currency unit, the European community will likely be complete before the turn of the 117 00:12:07.260 --> 00:12:08.620 century. 118 00:12:08.620 --> 00:12:14.660 At the same time, with the so-called North American Free Trade Agreement, a significant 119 00:12:14.660 --> 00:12:20.280 step toward the political integration of the American continent has been made. 120 00:12:20.280 --> 00:12:25.980 In the absence of the Soviet Empire and its military threat, the United States has emerged 121 00:12:25.980 --> 00:12:32.300 as the world's sole and undisputed military superpower and its top cop. 122 00:12:32.300 --> 00:12:40.140 According to the orthodox view, centralization is generally good and a progressive movement, 123 00:12:40.140 --> 00:12:48.140 whereas disintegration and secession, even if sometimes unavoidable, represents anachronism. 124 00:12:48.140 --> 00:12:55.400 It is assumed that larger political units and ultimately a single-world government imply 125 00:12:55.400 --> 00:13:09.400 And as evidence of this, it is pointed out that economic prosperity has indeed dramatically increased with increased centralization. 126 00:13:09.400 --> 00:13:20.400 However, rather than reflecting a truth, this orthodox view is more illustrative of the fact that history is typically written by its victors. 127 00:13:20.400 --> 00:13:26.400 Correlation or temporal coincidence do not prove causation. 128 00:13:26.400 --> 00:13:38.400 In fact, the relationship between economic prosperity and centralization is very different and in fact almost the opposite of what orthodoxy alleges. 129 00:13:38.400 --> 00:13:48.400 Political integration or centralization and economic or market integration are two completely different phenomena. 130 00:13:48.400 --> 00:13:57.400 Political integration involves the territorial expansion of a state's power of taxation and property regulation. 131 00:13:57.400 --> 00:14:07.400 Economic integration, on the other hand, is the extension of the interpersonal and interregional division of labor and of market participation. 132 00:14:07.400 --> 00:14:17.400 In principle, in taxing and regulating private property owners and market income earners, all governments are counterproductive. 133 00:14:17.400 --> 00:14:23.400 They reduce market participation and the formation of economic wealth. 134 00:14:23.400 --> 00:14:34.400 Once the existence of a government has been assumed, however, no direct relationship between territorial size and economic integration exists. 135 00:14:34.400 --> 00:14:42.400 Centralization can go hand in hand with either economic progress or with economic retrogression. 136 00:14:42.400 --> 00:14:51.400 Progress would result whenever a less taxing and regulating government expands its territory at the expense of a more exploitative one, 137 00:14:51.400 --> 00:14:59.400 and if the opposite occurs, then centralization would obviously imply economic disintegration and retrogression. 138 00:14:59.400 --> 00:15:08.400 However, a highly important indirect relationship exists between size and economic integration. 139 00:15:08.400 --> 00:15:22.400 A central government ruling over large-scale territories and even less a single-world government cannot come into existence up over from the very beginning. 140 00:15:22.400 --> 00:15:33.400 Instead, all institutions with the power to tax and regulate owners of private property must start out small, territorially small. 141 00:15:33.400 --> 00:16:01.400 A small government has many close competitors, and if it taxes and regulates its own subjects visibly more than these competitors do, it is bound to suffer from the emigration of labor and capital and a corresponding loss of future tax revenue. 142 00:16:01.400 --> 00:16:20.400 Contrary to what orthodoxy alleges then, it is precisely because Europe possessed a highly decentralized power structure composed of countless independent political units that explains the origin of capitalism in Europe. 143 00:16:20.400 --> 00:16:26.400 That is the expansion of market participation and of economic growth in the western world. 144 00:16:26.400 --> 00:16:44.400 It is not by accident that capitalism first flourished under conditions of extreme political decentralization in the northern Italian city-states, in southern Germany and in the secessionist low-countries, that is nowadays the Netherlands. 145 00:16:44.400 --> 00:16:52.400 The competition among small states for taxable subjects brings them into conflict with each other. 146 00:16:52.400 --> 00:17:00.400 As a result of interstate conflicts, historically drawn out over the course of several centuries, 147 00:17:00.400 --> 00:17:08.400 a few states succeed in expanding their territories, while others are eliminated or incorporated. 148 00:17:08.400 --> 00:17:15.400 Which states win in this process of eliminative competition depends of course on various factors, 149 00:17:15.400 --> 00:17:24.400 In the long run, the decisive factor is the relative amount of economic resources at a government's disposal. 150 00:17:24.400 --> 00:17:31.400 In taxing and in regulating, governments do not positively contribute to the creation of economic wealth. 151 00:17:31.400 --> 00:17:35.400 Instead, they parasitically draw on existing wealth. 152 00:17:35.400 --> 00:17:41.400 However, they can influence the amount of existing wealth negatively. 153 00:17:41.400 --> 00:18:09.400 Other things being equal, the lower the tax and regulation burden imposed by a government on its domestic economy, the larger its population tends to grow for internal reasons, as well as for immigration into its territory, and the larger the amount of domestically produced wealth on which it can draw in its conflicts with neighboring competitors. 154 00:18:09.400 --> 00:18:17.040 For this reason, centralization is frequently, economically speaking, progressive. States 155 00:18:17.040 --> 00:18:23.400 that tax and regulate their domestic economies little, that is, liberal states in the European 156 00:18:23.400 --> 00:18:29.940 sense of the word liberal, tend to defeat and expand their territories at the expense 157 00:18:29.940 --> 00:18:35.560 of non-liberal states. This accounts, for instance, for the outbreak of the Industrial 158 00:18:35.560 --> 00:18:40.560 The Revolution in Centralized England and in Centralized France. 159 00:18:40.560 --> 00:18:47.520 It explains why in the course of the 19th century Europe, Western Europe, came to dominate 160 00:18:47.520 --> 00:18:52.560 the rest of the world rather than the other way around, the rest of the world dominating 161 00:18:52.560 --> 00:18:59.040 Europe, and why this colonialism of the European nations was generally progressive. 162 00:18:59.040 --> 00:19:05.340 Furthermore, it explains also the rise of the United States to the rank of superpower 163 00:19:05.340 --> 00:19:11.940 in the course of the 20th century. However, the further the process of more liberal governments 164 00:19:11.940 --> 00:19:19.100 defeating less liberal ones proceeds, that is, the larger the territories, the fewer 165 00:19:19.100 --> 00:19:26.140 and the more distant the remaining competitors, and thus the more costly international migration, 166 00:19:26.140 --> 00:19:32.540 the lower a government's incentive to continue in its domestic liberalism will be. As one 167 00:19:32.540 --> 00:19:42.540 When one approaches the limit of a one-world state, all possibilities of voting with one's feet against a government disappear. 168 00:19:42.540 --> 00:19:48.540 Wherever one goes, the same tax and regulation structure applies. 169 00:19:48.540 --> 00:19:57.540 Thus relieved of the problem of emigration, a fundamental rein on the expansion of governmental power is gone as well. 170 00:19:57.540 --> 00:20:01.540 This explains then the course of the 20th century. 171 00:20:01.540 --> 00:20:13.540 With World War I and even more so with World War II, the United States attained hegemony over Western Europe and became the heir to its vast colonial empires. 172 00:20:13.540 --> 00:20:23.540 A decisive step in the direction of global unification was taken and a Pax Americana was established. 173 00:20:23.540 --> 00:20:40.540 and in fact throughout the entire period of the 20th century the United States and Western Europe and most of the rest of the world have suffered from steady and dramatic growth of government power, taxation and regulatory expropriation. 174 00:20:41.540 --> 00:20:49.540 In light of these theoretical considerations then what would follow seems to be a plea for the session. 175 00:20:49.540 --> 00:21:03.540 Now, initially, the session is of course nothing more than a shifting of control over the nationalized wealth from a larger central government to a smaller regional one. 176 00:21:03.540 --> 00:21:12.540 Whether this will lead to more or less economic integration and prosperity depends largely on the new regional government's policies. 177 00:21:12.540 --> 00:21:24.540 However, the sole fact of this session has already a positive impact on production insofar as it reduces or eliminates forced integration. 178 00:21:24.540 --> 00:21:34.540 As a result of centuries of centralization, not only were hundreds of distinct cultures literally wiped out, 179 00:21:34.540 --> 00:21:40.300 The process of centralization has also led to the superstratification, that is, the economic 180 00:21:40.300 --> 00:21:46.940 exploitation and cultural domination of one ethnic, linguistic, religious or cultural 181 00:21:46.940 --> 00:21:53.380 group by another, of the Irish, Scots and Welsh by the English, the Slovenes and the 182 00:21:53.380 --> 00:22:00.940 Croats by the Serbs, the Estonians, Lithuanians and Latvians by the Russians. 183 00:22:00.940 --> 00:22:16.940 Forced integration, as it is also illustrated by measures such as busing, affirmative action and anti-discrimination laws, forced integration invariably creates tension, hatred and conflict. 184 00:22:16.940 --> 00:22:23.940 In contrast, voluntary separation leads to social harmony and peace. 185 00:22:23.940 --> 00:22:34.940 Under forced integration, any mistake can be blamed on a foreign group or culture, and all success can be claimed as one's own, 186 00:22:34.940 --> 00:22:41.940 and hence there is no or little reason for any culture to learn from any other. 187 00:22:41.940 --> 00:22:56.940 Under a regime of separate but equal, one must face up to the reality not only of cultural diversity, but in particular of visibly different ranks of cultural advancement. 188 00:22:56.940 --> 00:23:08.940 If, as a sessionist, people wish to improve or maintain its position vis-à-vis a competing one, nothing but discriminative learning will help. 189 00:23:08.940 --> 00:23:25.940 It must initiate, imitate, assimilate, and, if possible, improve upon the skills, traits, practices and rules characteristic of more advanced cultures, and it must avoid those characteristics of less advanced societies. 190 00:23:26.940 --> 00:23:37.940 Rather than promote a downward leveling of cultures as under forced integration, the session stimulates a cooperative process of cultural selection and advancement. 191 00:23:38.940 --> 00:23:48.940 In particular, the session can also eliminate the immigration problem increasingly plaguing the countries of Western Europe and the United States. 192 00:23:48.940 --> 00:24:00.940 Now, whenever a central government permits immigration, it allows foreigners to proceed, literally on government-owned roads, to any of its residents' doorsteps, 193 00:24:00.940 --> 00:24:06.940 regardless of whether these residents desire such proximity to foreigners or not. 194 00:24:06.940 --> 00:24:11.940 Free immigration is thus to a large extent forced integration. 195 00:24:11.940 --> 00:24:18.940 The session solves this problem by letting smaller territories have their own admission standards 196 00:24:18.940 --> 00:24:24.940 and determine independently with whom they will associate on their own territory 197 00:24:24.940 --> 00:24:28.940 and with whom they prefer to cooperate from a distance. 198 00:24:28.940 --> 00:24:36.380 moreover, although everything else depends on the new regional government's domestic 199 00:24:36.380 --> 00:24:43.980 policies and also no direct relationship between size and economic integration exists, there 200 00:24:43.980 --> 00:24:50.860 is again an important indirect connection. Just as political centralization ultimately 201 00:24:50.860 --> 00:24:57.940 tends to promote economic disintegration, so the session tends to advance integration 202 00:24:57.940 --> 00:25:04.940 and Economic Development. First, the Cession always involves increased opportunities for 203 00:25:04.940 --> 00:25:10.940 interregional migration, and the Cessionist government is immediately confronted with 204 00:25:10.940 --> 00:25:18.220 the spectre of emigration. To avoid the loss in particular of its most productive subjects, 205 00:25:18.220 --> 00:25:26.060 it is under increased pressure to adopt comparatively liberal, in the European sense, liberal domestic 206 00:25:26.060 --> 00:25:36.240 policies and is forced to allow more private property and imposing a lower tax and regulation 207 00:25:36.240 --> 00:25:43.580 burden than its neighbors do. Ultimately, with as many territories as separate households, 208 00:25:43.580 --> 00:25:51.320 villages or towns, the opportunities for economically motivated emigration would be maximized and 209 00:25:51.320 --> 00:25:55.520 and government power over a domestic economy minimized. 210 00:25:55.520 --> 00:26:02.920 Secondly, the smaller the country, the greater will be the pressure to opt for free trade 211 00:26:02.920 --> 00:26:05.680 rather than protectionism. 212 00:26:05.680 --> 00:26:11.880 All government interference with foreign trade forcibly limits the range of mutually beneficial 213 00:26:11.880 --> 00:26:20.240 interterritorial exchanges and thus leads to relative impoverishment at home as well 214 00:26:20.240 --> 00:26:27.440 as well as abroad. But the smaller a territory and its internal markets, the more dramatic 215 00:26:27.440 --> 00:26:33.480 will this effect be. A country with the size of the United States, for instance, might 216 00:26:33.480 --> 00:26:41.680 attain comparatively high standards of living even if it renounced all foreign trade, provided 217 00:26:41.680 --> 00:26:49.880 that it possesses an unrestricted internal capital and consumer goods market. In contrast, 218 00:26:49.880 --> 00:27:12.880 We are a single household as a conceivably smallest secessionist unit. By engaging in unrestricted free trade, even the smallest territory can be fully integrated into the world market and partake of every advantage of the division of labor, and its owners may well become the wealthiest people on earth. 219 00:27:12.880 --> 00:27:17.880 The existence of a single wealthy individual anywhere is living proof of this. 220 00:27:17.880 --> 00:27:25.880 On the other hand, if the same household owners decided to forego all interterritorial trade, 221 00:27:25.880 --> 00:27:29.880 abject poverty or death would result. 222 00:27:29.880 --> 00:27:34.880 Accordingly, the smaller a territory and its internal markets, 223 00:27:34.880 --> 00:27:38.880 the more likely is it that it will opt for free trade. 224 00:27:38.880 --> 00:27:44.880 Lastly, the session also promotes monetary integration. 225 00:27:44.880 --> 00:27:49.880 I think that is a topic that Professor Salerno will speak in more detail about tomorrow. 226 00:27:49.880 --> 00:27:55.880 The process of centralization has resulted not only in the formation of an international, 227 00:27:55.880 --> 00:28:04.880 American-dominated government cartel of managed trade and migration, ever more invasive and burdensome governments, 228 00:28:04.880 --> 00:28:12.080 Alliance, Globalized Welfare-Warfare Statism and finally Economic Stagnation or even declining 229 00:28:12.080 --> 00:28:20.040 standards of living. It has also resulted in monetary disintegration, that is the destruction 230 00:28:20.040 --> 00:28:27.440 of the former international commodity gold standard and its replacement with the dollar 231 00:28:27.440 --> 00:28:34.080 A popular dominated system of freely fluctuating government paper moneys, that is a global 232 00:28:34.080 --> 00:28:43.080 US led counterfeiting cartel. However, a system of freely fluctuating paper currencies, that 233 00:28:43.080 --> 00:28:50.960 is the Friedmanite monetary ideal, is strictly speaking no monetary system at all. It is a 234 00:28:50.960 --> 00:29:00.960 is a system of partial barter, dysfunctional of the very purpose of money, of facilitating rather than complicating exchange. 235 00:29:00.960 --> 00:29:07.960 This becomes obvious once it is recognized that from the point of view of economic theory, 236 00:29:07.960 --> 00:29:13.960 no special significance attaches to the way that national borders are being drawn. 237 00:29:13.960 --> 00:29:30.960 Yet if one then imagines a proliferation of ever smaller national territories, ultimately to the point where each household forms its own country, Friedman's proposal is revealed for what it is, that is an outright absurdity. 238 00:29:30.960 --> 00:29:38.960 Because if every household were to issue its own paper currency, the world would be back squarely at barter. 239 00:29:38.960 --> 00:29:47.960 No one would accept anyone else's paper, economic calculation would be impossible, and trade would come to a virtual standstill. 240 00:29:47.960 --> 00:29:58.960 It is only because of the fact that, due to centuries of political centralization, there exists actually only a relatively small number of countries and national currencies, 241 00:29:58.960 --> 00:30:05.680 Currencies, and hence that this integrative consequences and calculational difficulties 242 00:30:05.680 --> 00:30:11.480 are far less severe that it could have been overlooked that this proposal is actually 243 00:30:11.480 --> 00:30:12.480 absurd. 244 00:30:12.480 --> 00:30:19.420 Each country cannot but abandon the current fiat money system, which has been responsible 245 00:30:19.420 --> 00:30:25.800 for the greatest worldwide inflation in all of human history, and adopt once again an 246 00:30:25.800 --> 00:30:31.520 and international commodity money standard, such as the gold standard, which historically 247 00:30:31.520 --> 00:30:37.720 led to the opposite, that is a gradual appreciation increase in the value of money.