 This is Mises Weekends with your host Jeff Deist. This weekend we're featuring a talk Jeff recently gave at a meeting of America's Future Foundation on the topic of why smaller is better. Jeff discusses radical political federalism, the Swiss model, and how every aspect of human life is becoming more decentralized, except governance. I wanted to start out just talking about a conversation I had recently, a good friend of ours from Switzerland named Claudio Gras was in Auburn visiting Claudio is a hardcore libertarian and a big gold guy he helps people he helps rich people put their physical gold and other physical assets in storage vaults in Switzerland where they're totally outside the banking system so you get you get a sense of what kind of guy he is and so we were talking about the Swiss federalist system the system of subsidiarity and it started at dawn on me more and more as I spoke to him something that I already knew and that we all already know instinctively but we don't always know clearly and that is that as we try to persuade people and as we try to win hearts and minds it's easier if we do that with fewer people right we're always wondering what's the best way to spread liberty what's the best strategy for libertarians well maybe it's smaller political subdivisions as opposed to trying to win over these big countries like America with 320 million people and so after talking to Claudio I took some time on the Swiss government's website and that's one of the handouts here on Swiss federalism and it's just unbelievable because our our Constitution gives lip service to federalism wasn't followed for very long we really only followed for a few decades but what really struck me about the Swiss government's website was the humility of this website there's so much hubris in American politics we expect these national politicians to have the answer for everything under the Sun and so you're reading this website and you realize how like humble it is it says well basically anything can be done at the local level we don't touch and we push all decision-making down and the principles of subsidiarity is what governs us and I was thinking can you imagine having hearing Hillary Clinton or Donald Trump last year on the campaign trail in you know in Jackson Mississippi or in Anchorage or in Miami or any place saying you know it's great thank you all for being here tonight I don't really know Anchorage or Jackson so what we're going to do is we're going to let you guys decide that to the extent possible so knock yourselves out and thanks very much you know this is just unthinkable in American politics we expect our federal politicians to be these omnipotent masters of health care and budgets and taxes and environmentalism and global warming and it's just an absurd system when you've got 320 million people but what what I really liked about this handout on the Swiss government's website was this this clause here in a sentence says federalism makes an important contribution to social cohesion I was thinking about that I thank God we could use some of that in the United States right now I mean we're so divided politically and there was so much nastiness really following the rise of Trump and then the entire unbearable 2016 campaign and then now since Trump selected and I think we could actually learn quite a bit from the Swiss when it comes to social cohesion and and maybe the number one lesson we could learn from them is that smaller is better and and that's not only true politically but also in terms of social cohesion and peace and that's something that's really struck me and it's something I think we don't think about enough as libertarians so there's this unpleasant undercurrent to American politics especially since Trump won the election and there's actually people on both in the left and the right talking seriously about using the word civil war and using the term secession and these aren't just people on the on the extreme fringes saying these kinds of things even people who are more mainstream conservatives and liberals the one article I would recommend to you is from a guy named Angelo Cotevilla and he wrote an article in the Claremont Review of books called the Cold Civil War now he's not a he's not a crazy guy or an Atlantis guy he he's what I would call a doctrinaire conservative on the left there was a seminal article in the New Republic called Blue Exit I don't know if you heard about this it came out in March of 2017 it was very strong to saying look these red states are crazy it's time for us to turn our backs on them it's time for us to go our separate ways and this is the New Republic this isn't some radical part of the left but but really a mainstream part of it and and of course since Trump won our friends on the left have discovered federalism and states rights in spades and they're talking about sanctuary cities and this kind of thing so let me give you a quote from this gentleman in the New Republic he says we won't formally secede in the Civil War sense of the word we'll still be a part of the United States at least on paper but we'll turn our back on the federal government in every way we can just like you've been urging everyone to do for years and devote our heart and resources to building up our own cities and states and I thought to myself that's a threat I'll take it you know it sounds a lot like Switzerland as a matter of fact so I thought I would pose to you guys a little bit of a thought experiment I don't know how familiar any of you are with the San Francisco Bay Area but I've lived there myself my wife has lived there when we were first dating we live there and we've we've actually lived there in two different times so the San Francisco Bay Area is made up of about 8 million folks in about nine counties and these are some of the bluest counties in the country they reliably vote 80 or 90 percent for Democrats and not just Democrats but Pelosi type Democrats you know very left-wing in outlook so imagine if we allowed those nine counties right here right now a wide degree of localism and subsidiary like the Swiss system imagine if those counties could decide right here right now without needing any federal governance not needing any federal laws to have the whole panoply of what most people on the left right want right now which would be climate change regulations progressive taxation maybe limits on income some kind of universal health care system within those nine counties may be very strict regulations or even prohibitions on firearms free public housing free public education make Cal Berkeley free you know would anyone in this room really object to this now we might say you know that's not going to work because for instance free public health care carries all the wrong incentives for people to over-consume and underpay and that and that there's no rational price mechanism same thing for education etc so we might say that technically that's not going to work or pragmatically that's not going to work but would anyone in this room object to them trying it or having it for themselves and my answer is is absolutely no and I don't like this idea that people in the San Francisco Bay Area have to fear the election of some what they consider redneck senator from some southern state like this guy we're apparently going to elect in Alabama yeah the former Supreme Court Justice Roy Moore I mean people in in blue states and blue cities actually that that's that that causes them fear and apprehension what kind of system is this for 320 million people you have to worry about some state three two or three thousand miles away electing someone and really at the end of the day Americans are governed by about 535 knuckleheads in Washington DC and about nine sport supreme court justices if you go back to colonial times and the number of us representatives and extrapolate forward to modern day there should be about 10,000 members of Congress unless you're really out in rural area your member of Congress live within a mile or so of you should see him or her at the grocery store they should kind of know you and they should kind of a little bit fear you in terms of in terms of having to see you after casting some vote but the system we have now every member of Congress has about 700,000 constituents it's not working and I think the Swiss system works a lot better so let's let's think about this in terms of what we see happening right now in Catalonia this is a this is a very serious situation where the central Spanish government has federal police and they're sending those federal police in violently to suppress elections to tear down polling stations to to seize ballot boxes this kind of thing this is really pretty unprecedented I happen to know a fair number of libertarians who live in Europe and I also know three or four really dedicated Spanish libertarians and they're even split on this someone like no no no Jeff you're all wrong the people behind this or left wing and they want to have a real sort of communist Catalonia they want to be really aligned with the EU their socialist and mindset and they're gonna have people are gonna have less freedom so this isn't libertarian this result is not there's nothing libertarian about this and you're out to lunch and then there's other Spanish libertarians I've talked to said no you know what I'm in Madrid let them go I can live with this but what I'd like to suggest is that there's there's a difference between the principle of secession and the question of whether secession in any given circumstance is a good idea right it's two different things one's a principle one sort of a factual question you know but Catalonia is not some back water this isn't some economically depressed part of Europe or part of Spain this is a an economically vibrant region that also happens to contain the city of Barcelona which is one of the great capitals of Europe if not the world so this isn't an academic question now it's not up to us it's not up to us as Americans and non interventionist to decide for them but I think we should embrace the idea that smaller is better when it comes to governments and political arrangements I think anytime a central government gives up power and turf whether that's over the number of human bodies they profess to govern or the number of kilometers or miles that that it holds sway over I think that's a good thing and I think the proof of this is in the pudding because central governments in Madrid in Brussels the EU in Washington DC they resist it so mightily whatever I see central governments resisting something with all their might it leads me to believe it's probably a good thing you know at some point we'd we'd buy I would imagine most of us in this room would say we ought to have seven point five billion self-governing autonomous humans on earth right now we have about 195 countries at some point we got to have 196 at some point we got to have 200 at some point we have 300 we're a long way from seven and a half billion but you know I personally think that we ought to be supporting the principle of subsidiary and secession whether or not the facts on the ground the history the ethnography the language whatever it might be argues for or against Catalonia and the outcome there so as libertarians our response to this nasty politicization of society that we really saw ramped up in 2016 is to make politics matter less correct it's to we do this by making government matter less by making government less powerful and thus less fearsome and in lowering the political stakes and the political rhetoric and the political hatred we want to create a system where people in the San Francisco Bay Area don't have to fear some redneck senator from Alabama but how we do this how we get from A to B you know it's been a tough question for libertarians I'm sure Rand didn't do as well as most of us might thought he was going to do in in New Hampshire or otherwise in Iowa Gary Johnson didn't do very very well as libertarian candidate ended up not getting into the debates but you know there's more to it than that we've become obsessed as libertarians or as liberty-minded people with this idea of national politics and figuring out how to create some 51% electoral majority to change society and in the current reality that comes out to about 65 million people that's a lot of hearts and minds and I think because of this we have risked we've lost sight of what's really this undercurrent that the dominant trend of our age which is radically decentralized systems and as I mentioned I think for libertarians smaller is better and I think for progressives and conservatives smaller is better too this isn't a zero-sum fight that we have to engage in necessarily as a matter of fact I think we ought to be doing the opposite we ought to be looking at win-win solutions so if we think about the last two big revolutions in society the agricultural revolution the industrial revolution these are actually somewhat centralizing in effect agriculture cause people to stop being nomadic to get food and come together on the farms and to work in agricultural concerns the industrial revolution took people out of rural areas and brought them into cities and big firms and big factories like General Motors and brought them together geographically into cities so those were both centralizing revolutions but at the digital revolution the revolution we might say started you can say it started in the 70s but I think it really got going in in force in the 1990s the digital revolution decentralized us it moves the world in the other direction and really every aspect of human life that we can think of is becoming decentralized commerce think of firms like Amazon all over the world business hierarchies are becoming flatter and decentralized IT not only information technology but the spread the dissemination of information itself money and banking becoming highly decentralized even even group affiliations and loyalties are becoming decentralized because if you have a particular interest or a particular hobby or particular desire or love you can connect now with people all over the world you're not just limited to the libertarians who might be in your town or the people who like your hobby might be in your town or you're looking to buy used car you no longer just stuck with the used cars in your town you've got the internet you know and this has really been the trend of our times I mean you know you go to the what do you call the freestyle machine at the fast food place you've got you know 150 different combinations of sodas just unbelievable so if we think of information as the new product of the digital age then it's increasingly dispersed so this revolution is a little bit different the digital age not only disperse us but it it changes the way organizations work and that includes government you know you think of decentralized networks like Google or Amazon and then you think of the old hub and spoke models that would particularly of governments and empires think of the British Empire in India and all of its colonies whereas today we think of servers and information and networks are kind of more clusters of lights or almost like spider webs they're more like Hulu or Netflix as opposed to you know the big three networks that we all remember from our childhood and they're they're kind of static programming so why is you know why is Google Google at least in terms of its management style well because it uses flat management it has decentralized teams that work on things and companies that do that at least at the moment are prospering and companies that are old line and they're thinking like we might look at GM they had to be bailed out or we might look at IBM which is lost it's the luster it had in our parents and grandparents age Google's Google because it uses decentralized management so the digital age if I had to put it into one word is the age of disintermediaries right both human and technological a disintermediary is anything or anyone that eliminates the middleman the middleman being the intermediary in a process so this is really the central theme of the digital age so that's why we now have peer-to-peer transactions like uber you know there's no dispatcher there's no taxi company per se we have Bitcoin which doesn't require a central bank or a state propping up a central bank Google it's sort of an either intermediary we're finding out some more and more bad things about Google but still there's no library involved there's no professor standing between you and all the information at your fingertips on your phone or whatever via Google so now without any real intermediary we have access to almost all the world's accumulated knowledge in a little device in our pockets it's amazing if you think about it or that ladies and gentlemen it is decentralization at work so if we think about the Catalan people who are who are marching in the streets right now they view the Madrid government as an unnecessary intermediary that they need to eliminate and secession for them is the process of disintermediation so at least until they replace the devil they know maybe in Madrid with the with the devil they don't know in Brussels but in in the midst of all this change of all this decentralization only one part of human life's going the other direction governance I mean it's almost unbelievable when you think about it that we allow this only governments are becoming more hierarchical and more bureaucratic we think in the United States the trend over the last 100 years have been to federalize more and more of what used to be done at the state and local level we think of Europe what used to be done in national or regional countries is now done at Brussels in the in the under the European Union or it's done in Frankfurt in the European Central Bank as opposed to independent central banks we see this this centralization in all areas of government in even in quasi government organizations like the United Nations like the International Monetary Fund these are not only centralizing federally in a certain country they're actually centralizing supernaturally amongst different or she said say supernaturally across different countries so globalism is the order of the day for governments and why on earth should libertarian support this I don't know if any of you read Michael Malice or know who he is he appears on Fox News sometimes he wrote an article he says only politics remains binary so with politics it's always either or it's always zero sum and it's always win-lose and we don't accept this in the marketplace it's amazing that we accept it in government so I want to make a distinction though when that when the political class talks about globalism as a good thing what they mean is political globalism and this is this what I would consider illiberal doctrine that what's what's good for x politically is necessarily good for y and it's it's always you notice a world run by people just like them it's never about you and what they mean by by globalism is sameness they mean universal political arrangements that are all going to culminate in what they see is kind of an approved social democracy model with with not with only nominal national sovereignty and diminishing national sovereignty but the problem with this is that political globalism is actually quite illiberal and it can even veer towards authoritarianism because it reduces the ability of the average person to have a say and how they're governed political matters increasingly are decided some place far away it's the opposite of uber and bitcoin and google so if some poor if somebody in Jackson is trying to fight a fight with the city council you know fighting that fight at the city level versus the state level versus the federal level becomes harder and harder at what's what happens when they have to fight something at the international level is their voice stronger no it's clearly weaker so in the sense of political globalism I would argue that it's illiberal and it's something we ought to oppose now this is this form of globalism is not at all what literally grand misa is met by globalism and he talks about he saw it as this economic phenomenon that actually emphasizes the differences between places not the sameness the differences expressed in the division of labor in specialization and comparative advantage between places of China can make a t-shirt for five bucks and get it to Walmart let them do it we don't need to create a $10 t-shirt in America just because I mean this is this is what Mises met by globalism was trade and trade is based on differences different comparative advantages between countries and people because if we're all the same then we'd have no reason to trade with each other we're all the same goods and services the same expertise so Mises saw the right to self-determination as the highest political value which if we allowed it to happen if we allowed the world to express itself the way the Swiss allows its cantons to express themselves what we'd have is real diversity not this phony baloney diversity that they talk about in terms of globalism so if we the people in this room if we think that people should be free as individuals to make their own choices even choices we might think are bad then they must also be free to do so as groups I think it is consistent argue and that extends to places like Catalonia so again we're talking about political globalism you know I'm not worried about globalism that arises through the marketplace whether it's economic or cultural or social to the extent these things represent market preferences to the extent the world just says hey certain things really are better we all like Diet Coke we all like Honda Accords that's fine but when these preferences are sort of installed instilled or installed in countries by nefarious mechanisms like NGOs then then I think we have a real cause for concern so you know talking to a meal earlier and knowing what I've known over the years about AFF they actually AFF to the for those who are familiar actually has a beautiful building a townhouse that they own in Dupont Circle area of DC where they hold events you know presumably the reason you're involved with AFF is because you care about about creating a more libertarian and more prosperous society but we've all struggled I think with the question of what's the best strategy what's the best tactical approach to go about this and if the answer this was crystal clear we'd we'd presumably all be doing it but there's always costs involved I'm sure a lot of you're familiar with the great Thomas soul whenever when people ask him a question he always says well compared to what that's always the question not just for us but for opponents where there's always questions that we always have to think about choices and costs involved and respond to this sort of utopia trap that we sometimes find ourselves in when people are questioning libertarianism so we can boil it down I think to really two basic choices there's a great book written in 1970 by sociologists and social theorist named Albert Hirschman it's called exit voice and loyalty little thin book about 180 pages I'm curious if anyone's ever heard of it it's one of those sleeper books I really recommend it's a little dry but it holds up really well or what's that's almost that's 45 50 years now 1970 exit voice and loyalty by a guy named Albert Hirschman so the theme of the book is that all organizations including governments tend to deteriorate over time that they their product of their service gets worse and this this of course tends to make customers unhappy or citizens unhappy which leaves them like it leaves us with two basic choices which are voice and exit either change things to make them better or leave them so you we voice our displeasure or we exit and switch to a competitor to the extent that's possible but you know loyalty tends to slow this process down loyalty to the brand to the monarch in previous centuries to the state it tends to postpone our willingness to exit it's a form of political inertia but but on the other hand the idea that we have a voice or the possibility that we have a voice to change things the possibility of exiting makes our voice more important so these two things kind of work in tandem voice and exit we all understand this with consumer products we like to think that we have choices but governments for an awfully long time have gotten away with murder both literally and figuratively because they've only given lip service to to voice while exit which means expatriating leaving the country historically has been very different very difficult for all but the most wealthy people in any given society but i think the digital age the decentralized age stands to change this profoundly and i'm optimistic about that i'm i'm encouraged about that so within this framework of voice and exit i'll leave you with with sort of the three choices we might ever three very basic choices of how we might go about making things better for ourselves and the first of course is politics and you know i understand we all have felt the desire to scratch this itch and the the thing about engaging in politics it gives you something tangible there's a filing deadline there's fundraising there's a primary there's election you you go work for rand paul in his campaign that you have you have sort of tangible primaries and tangible votos and these things whereas just promoting liberty in other ways that has a sort of vague and unsatisfactory field doing but the thing about politics is it's a really really difficult as you all know the odds are stacked against us in a million different ways not only in in what's a damnably difficult two-party system but also in the money game and just the situation in washington i mean you know when i worked for rand paul he he basically used to see it as an educational tool but when it comes to really getting bills passed or preventing bills from getting passed you know we send some good people to washington like commas massie and rand paul but it's it's a very difficult environment and you have to remind yourself that we've had a century of progressive victories you know that's the baseline in which we operate the progressives won the 20th century they won central banking they won social insurance they won the welfare state they won the interventionist military state by progressives i don't necessarily mean left i mean left and right progressives people who want an activist government and so that leaves us now a hundred years later where the sort of the the debate is always framed as what should government do about x so when that's the question liberty minded people are already on their heels because we don't accept that framework that our question is should government even be involved in x uh so we shouldn't kid ourselves about how difficult the political environment really is at least at the national level so the second approach that a lot of us use is certainly the one the mis institutes chosen to use is education winning hearts and minds now this is a little less tangible as a more vague than engaging in politics and having races but you know a lot of people would argue that this is is really what matters that politics is downstream from culture anyway so you might as well roll up your sleeves and get to work i mean it's a long game it's not necessarily for people in a hurry and there's really two ways to to view the education game top down or bottom up the top down approach was was promoted by Friedrich Hayek who said well here's what we ought to do we ought to get liberty minded scholars ought to invade academia and start to win over academics to our point of view and those academics will will set the stage and create the ideas for a media class below them to disseminate information to the masses so it's kind of a top down approach and and if we look at academia in the 20th century now 21st i don't think it's working you know there's a flaw in Hayek's thinking and that is that academics have self-interest too just like the rest of us and and for most of them the system works and they have an interest a self-interest in perpetuating it writing these dopey academic papers that nobody reads but that's how you get tenure that's how you advance that's how you become a department chair and and they're kind of comfortable it's a pretty good gig if you can get tenure so the top down approach hasn't worked so well Murray Rothbard argued for a bottom up approach he said hey let's not be afraid as libertarians to be populist in our thinking and and that rubs a lot of people are on way because we we like to think of ourselves as more of an intellectual movement and a movement that's based on ideas but but if we think about a populism isn't an ideology per se populism is a tactic you can imbue populism with whatever you want and i would argue that Ron Paul used populism very skillfully in two different senses one he said get out of iraq get out of the middle east now that's a populist message that resonated with people who were sick of these wars who didn't see an american interest in them anymore and saw the amount of money and the amount of carnage we were spending um so that was certainly a populist message the other populist messages he used to great effect was and the fed that's not complicated that appeals to the average person i mean does the average guy or gal understand the mechanics of how the fed operates and how it enriches certain people at the expense of probably not but is since when is that a crime i mean most monetary economists can't explain to you the mechanics of how the fed operates so you know simplifying things and approaching the masses and using populism i think can be a great approach just just think think of it this way when when elites get that way when elites become elites because they're state connected then being anti-elite is a okay right think think of pharmaceutical cartels think of aig and the bailouts it had as a monster insurance company after 08 crash think about wall street bonuses that are based on phony baloney uh equity market prices or just think of equity markets in general and and uh crazy real estate spikes in places like Manhattan and San Francisco um i would argue that we ought to be a little more open to a common touch and to a populist argument within within the parameters of what we know to be right so we've got politics we've got winning hearts and minds and then we've got the third approach which is secession decentralization subsidiary localism nullification basically trying by hooker by crook to apply a swiss model to our lives so this we would call exit as opposed to voice now exit can take a lot of different forms it doesn't necessarily mean in the digital age that people have to physically segregate themselves um it doesn't necessarily mean we have to have a violent conflict or a secessionist movement or that a certain region of the united states has to break off from the rest i mean there's there's a lot of ways short of that that i think people can succeed uh digitally uh just like you and your neighbor don't have to have the same cable package or the same cell phone provider it's not that hard to imagine a world 20 or 30 or 50 years now where you and your neighbor have one one of you ops in the social security and one of you ops out one of you ops in the medicare one of you ops out there's a million permutations that we could think of for this but i think that at some point we have to recognize that walking away from washington dc literally or figuratively might be more attractive to us than trying to win over that 51 percent electorate uh also known as 65 million people so in closing can this is what conservatives and progress has spent the 20th century arguing about political universalism even libertarians spent the 20th century to the extent they had a voice arguing for universal political principles we all believe in universal principles of self-ownership private property basic individual sanctity but political universalism's a different can of worms and what we're finding in the 21st century is that what we imagine to be universal norms and attitudes are not as widely agreed upon as we might think and in a really a hyper connected digital age i think elites are going to find it increasingly difficult to make the case for globalism against this this tide of secessionist movements breakaway movements populist movements i think libertarian should embrace this i think they should embrace this reality and reject political universalism for a not only a tactically superior and more palatable vision but maybe even a morally more palatable vision of radical self-determination so with that thank you very much subscribe to mises weekends via itunes you stitcher and soundcloud or listen on mises.org and youtube