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IP: A nationhood under seige: Is the nation obsolete?

Holy shit. The Fourth Estate figures it out.

Of course, the answer to the question, "Omigawd! There's gonna be no
nation-states, dude!", is, the same answer to the question "Egad! The
Church has no more earthly power!"

Which is, "So?".


Mort a le infame, as Voltaire used to say...

Bob Hettinga

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Subject: IP: A nationhood under seige: Is the nation obsolete?
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A nationhood under seige: For 350 years, the world has been governed by
the pri
A nationhood under seige: For 350 years, the world has been governed by
the principle of national sovereignty, but the new global economy
respects no national borders, laws, or interests. Is the nation
Three and a half centuries after the nations of the world won the power
of self-rule, a new force has come along to erode that power and
undermine the democratic rights of their citizens.
That force is the global economy, which is relocating the economic
decisions that frame the lives of citizens far beyond the reach of the
voters and their voice.

There's a sort of cruel historical irony here, that at the very moment
when liberal democracy has finally triumphed over all rival systems of
government, the power of markets - the other half of the post-Cold War
triumph - has come along to leech that democracy of much of its

This weekend is the 350th anniversary of the Peace of Westphalia, a
treaty signed in 1648 by the Holy Roman Empire with France and Sweden
and, especially, with the princes of the various German principalities.
This treaty not only ended the Thirty Years' War, but also severely
limited the ability of the Empire and the church of Rome to intervene
in the affairs of the German principalities.

In other words, Westphalia proclaimed the sovereignty of the
principalities, the right of the princes to rule their territories
without outside interference.

This idea of sovereignty has echoed down the three and a half centuries
since then and is the basis both of self-government and of
international relations.

Considering all the massacres, pogroms, persecutions, gulags and
holocausts of the past 350 years, this principle of sovereignty leaves
something to be desired. But it's what we have, the magnetic pole of
the international system.

More important for those lucky enough to live in democracies,
Westphalia is the basis of democratic self-rule, the idea that the
average citizen has a say in the decisions that affects his or her
life. Somebody else may make the decisions, but citizens have the right
to cast their votes and state their opinions, confident that these vote
and opinions will be heard by the decisionmaker who, one way or
another, must pay attention.

It's this right and this confidence that are vanishing in the face of
the global economy, which is the one really new thing under the sun.

The reason is that democracy is national and so are its institutions.
Governments are national and their power to make and enforce laws is
national. The power of the vote is felt at national levels, but not

But the nation-based industrial economy that underwrote the growth of
democracy is being replaced by a global economy, powered by global
capital markets and global communications, answering to the needs and
demands of global corporations and investors who can and do ignore

In short, an extremely important part of public life _ the economy _ is
going global in a way that politics and government have not, and so is
moving beyond any kind of democratic control.

As Americans and the rest of the world have learned in the past year,
impersonal global markets can and do cast instant judgments on entire
societies, dictate the spending decisions of government and unravel the
social contracts that used to bind corporations with their employees
and their societies.

Peter Drucker, the founder of modern management, has written that we
are in an ''age of social transformation,'' one of those historical
eras that happen ''every few hundred years,'' when, ''within a few
short decades, society rearranges itself _ its worldview; its basic
values: its social and political structure: its arts: its key

Such transformations, like the global economy itself, are not innately
evil forces. Instead, they are amoral but immensely powerful movements
that change civilizations. But all such movements are created by humans
and potentially controllable by humans, for good or for ill.

A century after the Industrial Revolution, societies tamed the economic
forces generated by this revolution and turned them into the market
democracy that enhanced the past 50 years of Western history. No such
taming of the Global Revolution _ or even a debate on how to do it _
has begun yet.

The old economy was built on a national consensus that economies exist
for societies, not the other way around. Over the past half-century,
the democracies created social markets _ capitalist structures that
insisted the companies share the cost of citizenship.

Tax laws required companies to pay their fair share to the places where
they made their money. Other laws gave rights to unions, protected
worker safety and the environment, and mandated good health and pension
plans. Companies accepted these laws, however grudgingly, if only
because it cost them no competitive edge: all their rivals, subject to
the same laws, faced the same costs.

Now, not only capital markets have escaped into cyberspace, beyond the
reach of national regulations. There are about 50,000 global
corporations who see the globe as a single market and ignore national
borders and regulations.

These are no longer multinationals, with most of their operations in
one country but with a few foreign branches. The global economy is
being driven by global corporations who see the globe as a unit. They
have their headquarters in one country, research and development in
others, accounting in still another, manufacturing scattered across the
world, with sales wherever there are customers.

These companies have gone global because, with the advent of global
communications, they can. But in the process, they have left behind
their old home and its laws.

Too often, companies now pay taxes and wages where the rates are lowest
and the laws loosest. In many countries, environmental or benefits
regulations are nonexistent. Many other countries are willing to waive
them for companies that will invest there.

In this atmosphere, businesses argue they can no longer afford the
social costs imposed on them by society, when their rivals may be
operating halfway around the world, in a place where the average wage
is $1 per day and environmental laws don't exist. Either, they say,
they must be allowed to break the social contract, busting unions and
negotiating easier regulations and dumping health and pension plans, or
they must go abroad themselves.

Often they do both. Good jobs go away and the ones that are left
somehow pay less, are more unstable and are less likely to come
equipped with pension or health plans.

Wolfgang Reinicke, a senior economist at the World Bank, has written
that this is an attack on ''internal sovereignty,'' the ability of an
elected government to really govern.

The laws remain intact, but the ability to enforce them disappears.
Government exists but its effectiveness and efficiency are eroded. The
economy rolls on, but the public's ability to insist that it benefit
society is eroded. Elections are held and votes counted, but the power
of that vote to promote particular policies wobbles and wanes.

The economic rights won by citizens over the centuries, from collective
bargaining to decent wages to job stability to pensions, often
depending on the power of national governments to enforce them. As this
power withers, so do the rights.

Small wonder that government is held in such low esteem these days and
politics derided. A government that cannot enforce its own laws is a
government fit only for scandals and other sideshows. The main event is
going on somewhere else, and neither Washington nor its subjects knows
where it is.

There oughta be a law, a global one replacing the national laws and
bringing this economy back under democratic control. In fact, there are
laws, lots of them, with more being written every day, but the voters
aren't being asked to help write them.

Around the world, bureaucrats, experts, lawyers and lobbyists are
writing a new web of global regulations, on stock markets, accounting,
banking, investment, even auto safety and drug trials. These talks
aren't exactly secret but the government isn't going out of its way to
publicize them. They are highly technical and, frankly, pretty boring.

But they're important. They're writing the rule book for the 21st
Century. New global tax laws haven't been written yet, and
environmental or labor regulations are barely a gleam in a bureaucrat's
eye. But they'll be written someday, if only because the global economy
otherwise will be a jungle.

But when they are written, they'll look a lot like the regulations
already framed. That is, they will be technical exercises, focused on
efficiency and the well-being of corporations, not on democracy or the
public health.

Nations and corporations have different interests. Nations want to
raise the living standards of their citizens, while corporations want
to raise their profits. The glory of the past 50 years rests on the
creation of the social market, with the drive of capitalism tempered by
the needs of society, enabling both to thrive.

This 20th-Century thrust has focused on the rights of citizens, as
individuals or as classes. The new rule-making focuses on the safety
and efficiency of markets and corporations. They are making the world
more secure and predictable for investment and trade, which is vital
for the creation of an honest market. But it caters to the needs of
global actors, not the folks at home.

De-regulation nationally is being replaced with re-regulation globally.
But in the process, governments are giving away power from national
bodies to global institutions. But governments exist by democratic
sufferance. These global bodies do not.

The growth of the global economy requires global governance. But
increasingly, as Reinicke has written, this is turning into
''governance without government,'' public functions wielded by bodies
with no public control.

Pat Buchanan, the commentator and onetime presidential candidate, has
called for a ''new economic nationalism'' that, essentially, calls for
derailing the global economy with barriers on trade, limits on
immigration and an all-around isolationism that, apart from its basic
selfishness, is a national solution to a global problem and, hence,

The right answer is to recognize that the global economy exists and
won't go away, and to tame and temper it with a new social market,
composed of new laws and rules in which the public, for a change, has a
voice. For a start, the government should never negotiate new global
rules that supersede national rules without making a sort of democratic
impact statement on what this will mean to the rights of citizens.

This is a ''new economic internationalism'' in which American
democratic institutions would cooperate with the democratic
institutions of other countries to recapture the sovereignty of both.

(This is an adaptation of the Richard W. Leopold Annual Lecture that
R.C. Longworth, a Chicago Tribune senior writer, delivered at
Northwestern University this month.)

KRT PERSPECTIVE is a forum for essays by staff writers from
contributing papers.

(c) 1998, Chicago Tribune.


Visit the Chicago Tribune on America Online (keyword: Tribune) or the
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AP-NY-10-28-98 0611EST<   -0-
By R.C. Longworth
Chicago Tribune

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Robert A. Hettinga <mailto: [email protected]>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'