In Part 1 we gave a general definition to what world government, or ‘monopolis’ as I’ve suggested, was. Key to our definition was that a monopolis was neither inherently libertarian nor anti-libertarian. Some readers might scratch their heads and wonder if such a vague definition is of any helpful. After all if a standard dictionary were written in similar vague terms we would have entries that read like:

Broccoli: noun. A vegetable that can taste nasty except when it doesn’t.

Nonetheless I argue that my definition of monopolis is invaluable in that it clarifies that whether a world government is desirable or not depends on the details. This is an advancement over the extreme positions that world government, or any other ‘large’ government, is inherently bad or good in that it allows us to attempt to reach a middle ground. In other words the size of government has a bell-shaped curve relationship in terms of efficiency. Larger governments benefit from returns to scale, but there is a point where these returns to scale become decreasing or even negative. The ideal size of government is at the middle point – but it is unclear where exactly that middle point is.

At heart I am an anarchist and would prefer a world composed of countless city-states that freely traded with one another. One would still be part of a government, but which government you were part of would be no more important than what baseball team you rooted for. If possible I’d do away with the city-states as well and allow individuals to contract with one another directly but alas we have not yet reached the conditions necessary for that!

Even in my anarchist utopia though there would be the need for a federal government that promoted inter-city trade. Without a strong federal government local states could easily erect trade barriers to protect themselves from outside competition. A federal government’s chief benefit would be in that it would act to reduce transaction costs between member-states.

At the same time there would be a cost to introducing a federal government in my anarchist utopia. A federal government strong enough to defy member-states can use the same power to give itself more duties. Indeed, the individuals who compose federal governments have strong personal incentives to grant themselves further powers. How else can the growth of the United States federal government be explained? At its inception the United States was little more than a trade and common defense pact – it didn’t even have the power to levy taxes and had to request funds from the constituent states. Compare that to today’s US federal government, whose tentacles can be found in almost every aspect of life.

Federal governments do nonetheless face internal and external constraints to what they can do. Federal governments have the ability to defy individual member-states, but they have less ability to confront several local elites at once. Take for example the Real ID act; passed in the early 2000s the Real ID act would have created a de facto national ID in the United States but it has thus far been stalled due to the opposition of several state governments. Externally federal governments are also constrained by competing federal governments. The United States federal government cannot devote itself entirely to dominating its constituent member-states, it must also pay attention to the actions of Russia, China, India, and other rival powers.

It is due to the latter reason that I do not favor world government; I fear that in the absence of competing federal powers the remaining federal government would be able to devote itself to centralizing power away from local elites.
I concede that there are two scenarios where my concerns would be lessened.

1. In the first scenario the constituent member-states are strong enough that a small fraction of them can restrain the actions of the federal government. This would require a few member-states to be both significantly larger than the other constituent member-states and to have conflicting views on public policy than the federal government. A world federal government would need a ‘California’ or ‘Texas’ if you would.California and Texas could both become independent nations and safely be great powers. This position has allowed them to defy the federal government on several occasions as there is an implicit understanding that they could secure their independence if their long run interests differ sharply from the United States’ interests. Brandon Christensen has often pointed out the importance of allowing member-states to secede from their federations, and here I agree fully with him.

   The existence of a ‘California’ or ‘Texas’ is tricky though. Member-states will only stay in a federal government if they benefit from doing so and there are several scenarios where a member-state like ‘California’ might actually secede. Secession, done rightly, could induce the federal government to seek compromise or internal reform. Or it might attack ‘California’ and assert that secession is illegitimate. Peaceful secession, such as the break up of Czechoslovakia, is certainly possible but they are rare.

2. The second scenario would be one where the federal government was constrained by its future self. Let us posit a monopolis, a world government, that was secure in its rule. Would the rulers of such a monopolis set tax rates at 100%? Not if they were concerned about future revenues. A monopolis would likely prefer to smooth its consumption over time and to do this it would have to find a tax rate that did not hinder future economic productivity of its citizenry too much. This scenario however would only arise if the ruling elite at the top of the monopolis governing structure were assured that they and their descendants would continue to be ruling elites for the foreseeable future. A monopolis would have to be a monarchy in essence.

In summary, a monopolis would be desirable if the details were properly adjusted to avoid reaching decreasing or negative returns to scale in efficiency. A monopolis would have to face constraints of some sort, which in the absence of external competitors would have to be either strong member-states that could achieve independence if desired and/or a ruling elite that was strong enough that it had no serious concerns about being overthrown. If these conditions could be met then a monopolis would be well worth it.

I for one am skeptical about our ability to achieve these prerequisites, but the argument is no longer a theoretical one. The question of whether a world government is desirable has become an empirical question as we need to find some way of measuring the likelihood of achieving the above mentioned perquisites.

Thoughts? Comments? Disagreements? Comment below.