The Multiplicity of Nations

Competition drives progress. Competition forces providers of goods and services to increase the quality of their products. For example, a car company might make a car with better fuel mileage to undercut a competing car company. In the process, cars get better, and consumers of cars benefit.

The same principle applies to nations. The roughly 200 sovereign states on Earth vary wildly in forms of government, legal institutions, and cultural traditions. There is a somewhat free flow of labor and citizens among these nations, though restrictions persist in much of the world.

In an ideal world, there ought to be as many possible legal jurisdictions and civil societies as there can be. Not only would this mean that individuals would be free to settle into whatever state that best fits their preferences, but also this would yield competition among states for labor, capital, and people.

Some competition between nationstates already exists. For example, the Export-Import Bank of the United States ostensibly exists to provide "financing tools" to companies exporting goods, with the intention of keeping the companies in the United States. Other countries, such as Singapore, instead rely on institutional incentives. They make it easier and less costly to operate a business in their country, whether that's through regulatory reform or other institutional processes. So, some competition indeed exists. But is it enough?

In any market, it is to the firm's advantage to raise barriers to entry, or drive their opponents out of business, if at all possible. This is why states tend to engage in empire building and conquest. The victor benefits from more customers (taxpayers), more market power, and less competition.

This also explains why most states stubbornly oppose secession. Secession creates a new competitor which automatically takes away a chunk of their business. Secession is to the detriment of the state, but not always to the individual. More states means a greater variety of laws and institutions to choose from. More states yields greater competition, which forces states to develop incentives for people to stay such as tax cuts.

States have a tendency to bitterly cling to every square inch of land they can. Secession movements, such as the recent Scottish Referendum, are becoming more frequent with limited success. Other alternatives include seasteading, the practice of creating micronations in international waters unclaimed by any nation.

The key to progress is allowing competition to fluorish. Dynamic markets are constantly in flux, which is necessary for growth and advancement to take place. Increasing competition through the mulitplicity of nations may not be the most stable solution, but it would ultimately result in more choices and more prosperity for the people of the world.