26 July 2006

Federalism in Greece: an Evolutionary Argument

I think it was Robert Wright that first suggested that we can apply evolutionary principles to explain the amazing outbursts of cultural and economic progress throughout human history. How else can we explain the mind-boggling cultural achievements of Classical Greece? What was the driving force behind the Italian Renaissance? Historians may provide tens of different reasons but there is one common factor (or the lack of it) behind all these historical “anomalies”(1). It was pure darwinian evolution at work: survival of the fittest, arms race and all that.

Think about it: in classical Greece there were tens of independent city-states in a region that apart from the physical proximity, it provided a common language and a common market. The above created an evolutionary “lab” where progress of the independent city-states was a matter of life or death. And they did progress. Strong evolutionary pressures pushed human achievement to the limits and in the case of Greece they resulted to the invention of the western civilization. Slightly similar is the story with Renaissance in Italy.

The closest modern form of such a Darwinian progress machine is federalism, US style. Independent and competitive states in a wider market created this phenomenon of modern human history, the American society which, in terms of impact to the human civilization, is the modern equivalent of Classical Greece.

In few years we will have again the opportunity to change our constitution. Now, instead of lagging behind the rest of Europe with minor reforms, how about being radical pioneers for once? How about introducing federalism?
We can split the country in 6-7 regions-states with substantial independence (2), and the ability to have their own policy in education, taxes, environment etc. We can inject competition between the regions-states for attracting business and creating regional economic growth by almost eliminating financial assistance from the central government (3).
After implementing the above, labor and capital mobility will put to the states the dilemma: reform and prosper or stagnate and starve.
The result maybe a new Greek renaissance, wouldn't that be cool?

1. A reverse example is China. The most progressive and powerful country in the 15th century, China “hibernated” in the subsequent centuries. The reason was that after many wars, a peaceful empire was formed and there were no more evolutionary pressures.

2. Forget Kossovo, Greece is nationally homogenous to a great extent; the non-Greeks are mostly immigrants that can have no claim in the total autonomy of a specific region. The muslim population in Thrace will be a minority in the region-state of "Thrace-Macedonia".

3. Come to think of it, that is an indirect and neat way to curb central spending and starve the monstrous “Ελληνικό Δημόσιο”.


S G said...

federalism is not always good. If the regions are too small they just lose the economies of scale of bigger states.

Plus there is not guarantee that total taxation will fall. In Argentina for example, a big part of the fiscal trouble comes from reckless borrowing by the regions...

Konon said...

Interesting comments.

Switzerland and UAE are very small but federalism worked fine there.

Argentina and Brazil are two countries where federalism did not succeed, but I believe it has to do with wrong calibration of the system -maybe in these countries provincial power is too thinly spread or maybe financial checks are too weak.

Given that the current tax rate is at the wrong point on the elasticity curve (too high, substantially suppreses economic growth and thus does not maximize total tax revenues), competition between the regions should correct it at a lower level -hopefully :)

In any case, federalism is not a panacea, but in principle as long as it provides more choice and competition in a country, I am all for it.

Παντελής Αθανασιάδης said...

Εκτός από την ομοσπονδοποίηση μπορούμε να αναπτύξουμε και πολιτική ανάπτυξης των περιφερειών σε ένα ενιαίο κρατικό σύστημα, με παράλληλη αποκέντρωση ουσιαστικών αρμοδιοτήτων στις περιφέρειες.

Anonymous said...

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