November 10th, 2014

Secession Update: Catalonia and Veneto

Barcelona_Iglesia_Sagrada_FamiliaOn Sunday, the Catalonia region of Spain held an “informal” or “symbolic” referendum on Catalonian independence.  It was “symbolic” because Madrid politicians have declared it to be illegal, and  ”a sterile and useless sham.” The Guardian concludes that a legal one is now inevitable.

Catalonia is one of the most industrialized (and consequently) most lucrative areas of the country from which to extract tax revenue that can subsidize poorer and less-productive regions of Spain.  Naturally, those who benefit from such coerced largesse are enthusiastically opposed to Catalonian independence. (The centralists claim that Catalonia agitates for more government spending in Catalonia, and is thus living off the Spanish taxpayer, although it appears fairly clear that the region is simply attempting to get the central government to spend more of Catalonia’s money in Catalonia.)

As a political tactic, the Catalonian vote appears to have been at least moderately effective. More than 1.8 million people appear to have voted for independence (80 percent of those who voted) . Such numbers are hardly the last word (there are 5.4 million voters total), but if Madrid continues its current stance, it will become more and more difficult to describe as a position that amounts to anything other than “might makes right.”

According to Reuters, the Madrid government has now decided that maybe it should actually negotiate with the separatists, rather than merely dismiss them as sterile and useless.

Italy is currently using a similar tactic with the recent independence vote in Veneto. PressTV reported last week on the latest moves from the pro-independence movement in the region:

“The Veneto is self-governed as an independent state – it was called La Serenissima, an organization that has a distinguished history, and that had nothing to do with Italy for 1,100 years. Meanwhile our attachment to the Italian state is no more than 148 years. It’s absurd compared with our history,” [Alessio Morosin] added.

Morosin said Venetian officials are concerned that Italy’s paralyzing economic crisis would also affect Veneto, adding that the region’s independence from Rome will improve its economic situation.

We’ve noted some of the details of the Veneto referendum here at

I reported on the Catalonia situation this last week, and for a fun time, check out the discussion on the topic at the Mises Institute Facebook page. The Spanish centralists are out in full force, and they’re angry.

Military Socialism

3472515814_044f66ec69_bThere’s a long history of comparing market competition to warfare. Game theorists, for example, sometimes use metaphors borrowed from military strategy to talk about competitive decision making, and martial analogies are even more explicit in the popular business literature, where writers often interpret competition using classic strategic manuals like Machiavelli’s The Prince or Sun Tzu’s Art of War. However, while the prose of these writings has dramatic appeal, Mises, Rothbard, and others have clearly shown that entrepreneurial competition couldn’t be more different from military conflict. This point needs to be stressed repeatedly; if we lose sight of it, we run the risk of thinking of entrepreneurial competition as destructive, or worse, of military competition as benign.

In order to understand how military conflicts work, and the destruction they cause, we need to understand their economic organization. The fundamental difference between markets and militaries is that the latter, like socialist economies, have no rational method of allocating resources. Military decision making represents an enormous calculation problem that can’t be solved without recourse to the market. How do military leaders know, for instance, what munitions to produce, or the best methods of producing them? The answer is, they don’t. (Of course, if the process of entrepreneurial calculation were ever applied to the military, we’d quickly discover that the organization itself, and all its works, failed the market test.)

The lack of calculation is one reason the armed forces are bureaucratic and wasteful of both resources and lives: without entrepreneurs’ decisions to guide them, they must resort to management via an arbitrary system of rules. This also explains why, since ancient times, strategists have emphasized the need for a strict hierarchy within the military, along with clearly-defined incentives for all members—in the absence of the price system, motivation through rewards and punishments is basically the only available method of organization. It’s hard to overestimate the impact of the lack of calculation on the military. Instead of increasing consumer welfare (which war as such can never do), commanders try to achieve essentially arbitrary objectives that at best serve the political needs of the ruler.

Yet despite this vital economic difference, military thinkers have often talked about generalship in ways that make it sound like entrepreneurship. The analogy shouldn’t actually come as a surprise, as it’s been around for a long time; in fact, Renaissance military innovators and mercenary armies were among the first people to be called “entrepreneurs,” well before the term was applied in the market economy.

It’s this kind of common heritage that tends to attract the attention of the business world; the success of the path-breaking visionary is a part of both the mythology of warfare and romantic views of entrepreneurship. Furthermore, history often lends support to the comparison via countless stories and legends about generals who grasped a fleeting opportunity, innovated in an unexpected way, or used “unorthodox” methods to wrest victory.

Despite the rhetoric, military leaders are more like socialist central planners than entrepreneurs. Thinking of entrepreneurship and war making in similar terms misses differences so vital they make the difference between humanity’s greatest achievements its most staggering brutalities—and that’s why we can’t afford to get lost in sensational analogies between warfare and business.

Lesson from the Election: People Want Less Government

The lesson I draw from the Republican victories in the 2014 election is that people want less government. Since 2009 the number of Democratic Senators fell from 58 to 45, the number of democratic House members fell from 256 to 192, and the number of Democratic governors fell from 28 to 18. I’m not the first to observe that these big Democratic losses are directly related to the unpopularity of President Obama’s big government agenda.

But wait… didn’t he come in with a mandate? Both the House and Senate went Democratic in 2006, prior to Obama’s election, and he ran as a big government candidate, more or less. Actually, I’d say less. He ran on a platform of “hope and change,” an anti-Bush campaign. He was running against what he called “the eight failed Bush-McCain years,” rather than running on his own platform. Yes, he talked about health care reform, but mostly, he campaigned against Bush (who. at that point, wasn’t running for anything).

It appears that Bush’s waning popularity in his second term was also a sign of opposition to big government. Bush initiated two wars and a major Medicare expansion, turned a budget surplus when he took office into a substantial deficit when he left, and completely eroded any notion of fiscal conservatism. In 2000 he appeared to be a principled supporter of limited government. By 2006, when the Congress turned Democratic, he appeared to be a big-spending foreign interventionist.

Remember a few limited government promises Obama did make on the campaign trail: end the wars in Iraq and Afghanistan, and close the prison in Guantanamo. Those promises sounded good to American voters, but six years later, they haven’t materialized.

There is more here than just the idea that presidents grow unpopular after six years in office. Both Bush and Obama generated voter backlash because of their big government policies. The problem is that for both Republicans and Democrats, the people who run for office are people who believe the government can solve our problems. If people really do want to curb the power and influence of government, the best thing they can do is vote for divided government and hope for gridlock. That’s what voters did.