One can imagine that in principle states should have an optimal size for the human species based on factors like population and geography. This is, however, clearly not the case, since the size of states varies over time and space. There were times in which large, centralized states dominated and times in which small states or strongly decentralized states were predominant. There are continents where large and small states co-existed for long periods and others where that was not the case. At first glance it would seem that such differences are just quirks of history.
The following analysis, however, reveals that a number of factors do influence the size of states. Geographic conditions have a role to play. Flat, easily traversable terrain is difficult to defend and simplifies the development of larger states. Mountainous and inaccessible terrain, as well as islands, are easily defended and improve the chances for the survival of small states. Over the course of history we see still other factors besides geography which influence the size of nations. Military technology and transportation systems play a decisive role. In the middle ages, for instance, military technology favored defense, when high city walls provided ample protection and the transportation infrastructure was very poor. Both of these factors were optimal for either small states or decentralized ones like the Holy Roman Empire. On the other hand highly developed siege technologies and efficient transportation systems permitted the development of large, centralized states like the Roman or Chinese Empires.
To study how states originated in the absence of written records we must rely on the study of the surviving archeological records of stone age cultures. As far as we can tell, pre-agrarian stone age cultures developed only small states with regard to the area and the number of people living there. Nevertheless there is evidence that extensive trade relations appeared very early. Shells, stone tools and similar items were traded over great distances. The emergence of agriculture some ten thousand years ago marks the establishment of small, as yet unfortified cities as trade centers. Shortly thereafter fortified cities were built in the region stretching from modern Turkey to Egypt in the so-called fertile crescent. These city-states appear to have been frequently at war with each other. The first large empires appeared along great rivers like the Nile, the Euphrates and the Tigris. Large rivers permitted shipping routes and thereby trade, irrigation of fields and a thriving agrarian economy. Transportation by water extended beyond rivers to seas and oceans and naval warfare was another byproduct of these developments. Homer describes the siege of Troy as having lasted for years. Troops had to be transported, relieved, and otherwise supported. The transport of personnel and materials over water, compared to ground transportation, was already in ancient times much cheaper and safer. The first empires in China also arose on the banks of great rivers, although a little later than in the Near East.
The horse and the invention of the wheel facilitated ground transportation considerably. Nevertheless there is evidence of road networks even before these developments. Furthermore native American cultures, which knew neither horses nor wheels, had a well developed system of roads for trade and military use. The Inca Empire had an extensive network of roads over high mountains and through thick jungle areas.
With favorable geographic conditions small city-states could survive behind high fortified walls for centuries. The fragmented political landscape of ancient Greece is a good example. However, if one of these small city-states succeeded militarily against any of its neighbors and brought a ground or naval transportation system under its control, or created one, it could establish a large empire quite rapidly.
A good example from ancient times of which historians have good knowledge is how the Roman Empire came to power. A small city in the middle of a politically fragmented Italy gradually united its neighboring city-states with a combination of diplomatic and military skill as well as considerable endurance. The Romans recognized early the importance of roads for military expansion and built the most efficient infrastructure the world had ever seen. Once they had conquered Italy and built a dense network of roads they assembled a huge fleet to conquer the Mediterranean. They constructed still more roads and harbors along the coasts and rivers from North Africa to England and from Spain to Romania. The Romans controlled this enormous empire with relatively few troops, because they could quickly move them from one trouble spot to the other. Geographic barriers like the Alps or the Pyrenees, which were difficult obstacles for armies before and after, were quickly overcome and integrated into the Roman Empire. A visit to the almost impregnable Jewish fortress, Massada, gives some insight into the effectiveness of the Roman Empire even in the periphery of the Roman Empire. In a region of little economic, political or strategic importance, the Romans did not hesitate to build an enormous ramp on the mountain leading up to Massada and after a long siege it was finally conquered.
After the fall of the Roman Empire other still larger empires arose, rapidly established by the equestrian armies of central Asia. Nevertheless, as rapidly as these empires arose, they disappeared again just as quickly. The horse was ideal for work and transportation across the Asian steppe with their large grazing plains. Equestrian peoples like the Huns, the Magyars and the Mongols were optimally situated to perfect cavalry as an instrument of war. In densely populated, agricultural regions like Europe, the Mediterranean and South Asia, on the other hand horses were a luxury, afforded only by a privileged few. The vast majority of soldiers in these regions were infantry, and, compared to the equestrian armies of central Asia, the cavalries of the middle ages were small and far more expensive. The narrow confines of Western Europe were also not ideal for a purely cavalry-based military. Many strategically important regions were mountainous, for example, like the Alps and the Pyrenees, so that a cheap infantry had a military advantage over cavalry. The Habsburg cavalry faced this very problem as well in Switzerland during the fourteenth and fifteenth centuries.
It is interesting to ask why the militarily superior equestrian armies of Asia and their leaders were unable to establish stable empires like Rome’s. These empires were often hereditary monarchies in which the line of succession was unclear. This could lead to the division of the empire by the founder’s various successors, with conflicts tantamount to civil wars, as was the fate suffered by Alexander the Great’s empire after his death. The Roman Empire became later a hereditary monarchy, where the rule of succession was often unclear. Rome had, however, the advantage of a justice system and an oligarchy that could at least govern and these factors sustained the empire through its crises. Rome’s judicial and legislative systems were developed at the time of the republic and gave the empire a political stability even at times when the monarch was incompetent. Rome had another advantage over the empires of central Asia, insofar as for long periods its government was legitimized by its religion.
This is perhaps the decisive reason why the equestrian armies of the Arab world succeeded where the Asian armies failed, namely in establishing an empire which was stable for a longer period of time. Islam gave a legitimacy to the rulers and their governments and also motivated their armies: whoever fell in the righteous war was sure of a place in heaven. Islam was, however, also more tolerant than other religions and this helped their leaders to find allies among groups oppressed by intolerant rulers. Certain Christian rulers persecuted not just other religions but indeed even those Christians whom they considered to have strayed from the true beliefs of Christianity. Consequently there were Christian ethnic groups in the Arabian peninsula and the Near East which supported Islamic rulers. Even today there are Christian minorities in states which have been Islamic for centuries. Until the establishment of the state of Israel there were substantial, important Jewish communities in the Islamic states whose ancestors, fleeing from Christian persecution, had been welcomed by Islamic rulers.
The equestrian armies of the Arabic world were, nevertheless, as unsuccessful as their central Asian counterparts when it came to establishing stable political and judicial systems, which would have been necessary to have made sustainable economic growth possible in the regions which they ruled. It is possible that the orthodox interpretations of Islam’s economic and political rules posed a greater obstacle to economic development than Christianity. There was also not the opposition between the pope and the emperor and between spiritual and temporal power which led to the creation of that political and economic freedom in parts of Europe, which was the basis for the economic upturn in Europe. In any case the Islamic Empire lost its political and religious unity and broke into provincial states, governed only weakly by the Caliphs in Baghdad. Consequently, the Mongols conquered much of the Islamic world and in 1253 they also conquered Baghdad. The Islamic world survived the Mongol invasion but it never regained political unity, just like Christianity after the fall of the Roman Empire.
In the long period from the beginning of the first fortified cities about 8000 B.C. up to the end of the middle ages there was an unstable balance between fortification technology on the one hand, with which cities and small political units could defend themselves, and on the other hand siege warfare as well as transport capacities. In fortified cities and castles a few people could defend themselves against much larger forces. A successful siege normally was difficult, requiring not just a superior military force on site but also effective means of transportation. Infrastructures for ground transport were particularly expensive to build and maintain. Sea transport, though less expensive, was dependent on wind, weather and on a larger scale on good harbors in the case of large transport volumes. During the millennia up to the end of the middle ages, probably the use of horses for military purposes had the greatest impact on the size of states. During this period of history, however, it was easier to conquer than to govern. A military advantage which helped carve out an empire had little role to play in transforming such an empire into a politically stable, economically successful state which would last for centuries. Until the end of the middle ages, the Egyptians, Romans and Chinese were successful but few others.
An era which had lasted some ten millennia finally came to an end around the year 1500. In 1453, Turkish artillery destroyed the city walls of Constantinople and transformed military technology more radically than the horse had ever done. The development of artillery shifted the military balance decisively in favor of the aggressor and thus paved the way for the large state.
The Turks had already displaced the Arabs from key military positions under the Caliphate of Baghdad. The Turkish leadership understood early on the significance of artillery which they therefore developed rapidly. In the 15th and 16th centuries the Turkish Empire expanded rapidly over a large part of the Islamic world without succeeding, however, to conquer and unify the whole of the Islamic states. They also conquered South-Eastern Europe, which was Christian, and even besieged Vienna at the end of the 16th century, and again at the end of the 17th century, but were unsuccessful in both instances.
The military significance of artillery was also quickly recognized by the Europeans and an arms race began in this area. Smaller states, even the wealthier Italian city states, did not last long in the ensuing arms race. The existing large states such as France and the Habsburg Empire were soon superior. Sweden developed its natural iron-ore resources and metallurgical skills towards the end of the 16th century and rapidly became a major political player in Europe. The possibilities of expansion within Europe were, however, clearly limited, and European powers used their military advantage to build colonial empires beyond Europe’s borders. The Spanish and the Portuguese were the first, but the English were the most successful. They all benefited from the fact that significant progress had been achieved in shipping and that ships were outfitted with artillery and converted into sailing fortresses which enabled the successful attack of fortified costal cities from the water. City walls and forts offered increasingly less protection from such assaults and it grew ever more difficult to defend cities against these well-armed invaders, especially when outnumbered. Artillery thus shifted the balance decisively towards the large, centrally governed states which had sufficient resources to compete in the escalating arms race in artillery.
Soon after the arrival of artillery, another development reinforced the advantage of the large centrally governed states: industrialization. Before industrialization, smaller states had the economic disadvantage of having less raw materials, and having thereby a greater dependence upon trade. Larger states, however, had no advantage in terms of production costs. It seems that the advantage of industrial production was already recognized in the Roman Empire; long before the industrial age, pottery was mass-produced and transported throughout the Roman world. After the fall of Rome, however, pottery reverted to being a cottage industry for the local market.
Large states, especially colonial empires, had an advantage not only because they possessed almost all raw materials within their own borders, but also because of their large domestic markets. In these large states, industrial production often began in state-run factories which manufactured luxury items along with weapons. The large domestic markets arose following the abolishment of internal tariffs and other trade obstacles as well as the introduction of standard weights and measures and a single currency. The development of the internal transportation systems in these states were concentrated on the construction of canals since transport by water, as already mentioned, was less expensive than on land. Ground transportation developed late. In fact, it was not until around 1800 that the European road system was probably finally as advanced as the one built by Rome, some 1300 years before.
As already mentioned the Turkish Empire could still besiege Vienna in the 17th century, but by the 18th century it lagged behind the Habsburg Empire. Although it was one of the leading powers worldwide at the time when artillery was developed, the Turkish Empire was no longer in a position to follow with industrial development. This had not only economic but also military effects, since only an industrial state could produce large amounts of weapons with a high quality at low costs. It would soon become clear that the states which took the lead in industry were those in which not the government, but rather the market and private commerce played the dominant role. The Turkish Empire and the rest of the Islamic world were unable to build a functioning market economy and private sector, despite their geographic and intellectual proximity to Europe. The Turkish Empire soon came to be called “the sick man of the Bosphorus.”
Well into the 19th century, it seemed as if industrialization was some sort of a Christian privilege. Until the 16th century China was in many areas as advanced or even much more advanced than the European powers. Around this time, however, China fell behind due to the rapid development of Europe. It was the sudden industrialization of Japan at the end of the 19th century, however, which proved that a non-Christian culture was in a position to industrialize and become a major power. The war of 1905, in which Japan defeated the Russian fleet, was a shock for Russia and Europe.
Like China, Ethiopia and Thailand, Japan was saved from European colonization. There were several reasons for this. Japan was distant from Europe and had none of the natural resources or riches which were of interest to the European powers. By the time Japan had any contact with Europe, it already had a highly developed, well organized political system, and was able for quite some time to protect itself from foreign influence. Only when the USA succeeded in integrating the western part of the American continent, did they begin to extend their influence across the Pacific to Japan. In 1853, an American fleet under the command of Commodore Matthew Calbraith Perry forced diplomatic and trade relations upon Japan.
The American success led to a radical change in the policy of the Japanese leadership. The new Japanese leaders realized that applying the European and American models of success to Japan could guarantee Japan a position of equal power on the world stage. Young Japanese were sent to Europe and the USA for their education. Japan’s apparent mimicry of the west even became the object of European scorn until the crushing defeat of the Russian fleet in 1905 which had obviously grossly underestimated its opponents. At the beginning of the 20th century, the world was largely divided among the colonial powers, so that Japan extended its influence at China’s expense. Korea and large parts of China fell under Japanese control and remained so until the end of World War II.
The First World War was undoubtedly ignited by a series of unfortunate coincidences, but sooner or later it would have been probably unavoidable. War was seen generally as a normal tool of politics. The wars of the 19th century had shown that superior technologies, tactics and strategies ensured swift victories. The Napoleonic wars were the precedent: they showed that it was possible to use general conscription to build a massive army and to supply it in the field and a combination of artillery and cavalry guaranteed rapid territorial gains. The Prussian-Austrian war of 1866 and the German-French war of 1870 brought decisive victories in a very short time at comparatively little cost. Compared to the Napoleonic wars the supply problem of the massive armies was further eased by the introduction of the railways. Every European power had a number of optimistic battle plans up their sleeve foreseeing quick victories. The Russian defeat by the Japanese led to Russian ambitions in the West; the Russians realized that supporting Slavic nationalism in Europe could lead to Russian expansion and that this would be at the cost of the Turkish and Habsburg Empires.
But there was a new development in military technology which was underestimated by military strategists: the machine gun. The infantry suddenly had a relatively cheap, light and long-range weapon that could be used not just against opposing infantry, but also most significantly against their more mobile opponent, the cavalry. For a brief moment in history, defense once again had the upper hand. Offense was no longer the best defense: defense was the best defense. The First World War marked a return to a time when there was no cavalry, and aggressors had to invest in long and costly sieges requiring large quantities of troops and material. When quick victories did not materialize at the beginning of the First World War the Habsburg and German Empires were besieged by the Western and Russian allied forces. The Turkish Empire, allied with the German and Habsburg Empires, was economically and politically too weak to play a decisive role, and at the end of the war the Turkish Empire finally broke apart.
In contrast to a city or fortress siege of the middle ages, the First World War offered the defenders a wider geographic area and granted the aggressors little mobility, since the cavalry was by and large disposed of by the machine gun. Even if the aggressor was able to break through those lines of defense with the massive use of artillery and infantry, it was not possible any more to use the cavalry to penetrate deep into enemy territory and to bring the whole front of the defender to collapse. The defending army could always set up a second line of defense a few miles further back. The gain in territory was only a few square miles. In the age of fortresses and city states such a loss would of course have meant a total defeat, but for a large empire the loss of a few square miles meant little. The German and the Habsburg Empires were victorious on the Eastern front and the war ended with the collapse of the Russian monarchy. However, the war was decided on the Western front, when the USA entered the war and was able to pour in large amounts of fresh troops, arms and supplies.
During long wars new weapons, technologies, tactics or strategies are always developed which are applied at the end of the war; although their significance is mainly lost at the beginning, they are decisive for the next war. Tanks and airplanes, for instance, were used in the First World War, but had little influence on the course of events. This was to change fundamentally in World War II.
The military and political leadership in Germany recognized the importance of these new weapons earlier than others, and realized that the new technologies would fundamentally alter the art of war strategically and tactically. When the Nazis seized power, their first priority was to build up a new army. At the beginning of the war, the Third Reich’s opponents had more tanks and airplanes, but strategically and tactically, they were stuck in a World War I mindset. In just twenty years, however, the balance shifted decisively once again in favor of the aggressor. No long defense lines with trenches were required any more, but mobile tank formations with high fire power which were able to either break through or avoid these defense lines. Machine guns were able to stop the cavalry but not a tank formation. The Third Reich’s mechanized armies were able to take huge territories even faster than the cavalries of a bygone era.
However, the Third Reich was no more successful than the equestrian armies of the past in establishing in the conquered territories a politically stable, economically thriving political system. Hitler’s forecasted “Thousand Year Reich” was finished after just five years of war. Impressive as the military successes of Hitler, Napoleon, Genghis Khan and Attila may seem, when all is said and done they offered little more to human history than short and bloody episodes, when compared to the durability of the Roman or other empires.
Already during the Second World War, new developments were to give the defenders weapons which would again shift the balance in their favor. Anti-tank weapons, the so-called “Panzerfaust” or “bazooka”, were developed for the infantry and inflicted heavy losses upon tank divisions, especially in terrain that offered infantry concealment such as cities and forests. The battle of Berlin, for instance, saw weak infantry forces inflicting heavy losses upon Soviet tank divisions.
The success of the bazooka at the end of the Second World War led to the development of anti-aircraft missiles for infantry. Although the anti-aircraft missiles for the infantry were only effective against low-flying aircraft or helicopters, they granted infantry significant protection against air attacks in favorable terrain. Anti-tank and anti-aircraft missiles were substantially cheaper to produce than tanks, airplanes and helicopters both with regard to production as well as the training in respect of such weapons.
By the time of the Korean war, just ten years after World War II, mobility on the battlefield was so reduced as to seem like a return to the static warfare of the First World War. A surprise assault by the communist forces of North Korea, supported by the Soviet Union and China, took nearly all of South Korea. They were, however, quickly repelled, by UN forces led by the USA. Both sides then dug into their positions and neither side could make any decisive territorial gains even though the UN forces soon controlled the airspace. The border region between the north and the south was mountainous and thus not suited for mechanized divisions. Eventually both parties agreed to a cease-fire, and the border between North and South Korea is to this day based on the cease-fire line.
In the two Vietnam wars, first the French and then the Americans suffered crippling defeats by a well-equipped and trained infantry army, which was both tactically and strategically very well organized. The terrain provided ample cover and concealment for their forces, and, perhaps more importantly, they were willing to take heavy losses. Air supremacy and tanks were useless against infantry under such conditions and in such terrain. The Soviet experience in Afghanistan was much the same.
The wars after 1945 show that major gains in terrain and quick victories with mechanized formations can only be achieved in the appropriate terrain and against the appropriate opponent who has built up his defense also on mechanized formations and on an air force. Whoever succeeds at the beginning of the war to achieve air supremacy has won the war as a general rule in such a situation Mechanized divisions with their supply lines are easy targets in open terrain for aircraft even from a relatively high altitude. The wars between Israel and its Arab neighbor states as well as both Iraq wars are good examples of the importance of this.
However, if the opponent with a well-equipped and modern infantry is prepared to defend cities and terrain which is less suitable for mechanized formations, no quick victory can be gained with tanks, absolute air supremacy and the major use of helicopters. On the contrary: the chances are high that the whole affair will end with a defeat for the heavily armed aggressors. Such a defense strategy is, however, sustainable only under the following conditions:
1. Anyone who is willing to use infantry to defend cities has to be ready to sustain very heavy civilian casualties and the large-scale destruction of the cities as well. The only way out of this is either to have a strong civil defense, such as the Swiss have, or to evacuate cities prior to military engagement.
2. Defending a city with infantry, where there still is a civilian population, requires the support and cooperation of this civilian population; otherwise there is nothing to prevent civilians from acting as informants for the aggressor.
3. The aggressor has to respect the human rights in its treatment of the civilian population. If however an aggressor is comfortable with using weapons of mass destruction, he will take the city or the most inhostabile terrain. Saddam Hussein, for instance, was willing to use chemical weapons against the Kurds, soldiers and civilians alike.
It is always difficult to foretell how new forms of military technologies, strategies, tactics and means of transportation will impact warfare and the size of states in the future. It is easier to form a general idea of where such new technologies, strategies, tactics and transportation systems are most likely to occur. When, for example, the horse started to gain a key role several thousand years ago for military purposes, the people of the steppes were in a favorable position. There large numbers of horses could be bred and therefore used generally by the population as transport and working animals. From the steppes of Asia and the Arabian peninsula armies of cavalry rose which were in a position to conquer large areas in a short time since they were superior to the military formations of the agrarian states and empires. With the emergence of artillery, those regions with the necessary natural resources and metallurgical skill had the advantage. Industrialization was the further prerequisite for mass producing weapons, and that does not seem likely to change in the foreseeable future.
It is therefore possible to eliminate those regions of the planet which lack a broad and highly developed industrial base. The economic collapse of the Soviet Union showed that an efficient market economy is also necessary today. This may surprise some readers, but I believe that from a military standpoint, neither China nor India can compete with the USA in the foreseeable future. China and India have the necessary industrial basis; they have nuclear weapons and long-range missiles, but an arms race with the USA would undoubtedly bankrupt them sooner or later just as it did the Soviet Union. The U.S. military research budget according to some estimates is greater than that of the next ten states combined. The private sector also invests far more heavily in research, compared to China or India. Much of this civilian research, such as in communications and information technology or aircraft design, for example, also has military applications.
The other industrial states like Japan, Germany, France and Great Britain are just as unlikely as China or India to pose a threat to US military supremacy during the next few decades. None of these states has a weapons industry which can arm its own troops with cutting edge technologies. The USA supplies these countries with whole weapon systems, or at least with their most advanced components, which makes these armed forces heavily dependent on the USA. They need American satellites for intelligence and reconnaissance and they need military American transportation to move troops and supplies over long distances. Over the decades, the absolute dominance of the American arms industry has only increased in terms of both quantity and quality and there is every indication that this trend is bound to continue in the coming decades.
An enthusiastic European may argue that Europe is on its way to creating the United States of Europe and will be America’s equal in military power. When political leaders of Western Europe planned and made attempts to found a European Defense Community fifty years ago, this project was still credible. Western Europe was justifiably afraid that the other military super-power, the Soviet Union, might occupy Western Europe. After the Second World War, the Soviet Union had occupied after all the whole of Eastern Europe and parts of Central Europe and amassed an impressive arsenal of both conventional and nuclear weapons on its western frontier, which left no doubt as to the Soviet capability to annex also Western Europe. Western Europe was totally dependent on the military protection of the USA, but the U.S. army was preoccupied first with Korea and then with Vietnam. The threat to defend Europe, if necessary with nuclear weapons, was not totally credible in the eyes of many Europeans, because in a nuclear war the USA would have been destroyed too. Nevertheless, in spite of this military threat, efforts to form a European Defense Community failed in 1954. A European Economic Community of six states emerged a few years later as an economic and not a military entitiy. Its founders hoped that economic cooperation would one day lead to the United States of Europe with a military capacity strong enough to defend itself against a possible Soviet aggression without American help. The United States of Europe did not, however, arise.
Clearly what could not be achieved under the constant military threat posed by the cold war, will not be achieved today either, following the collapse of the Soviet Union. How can the European voter of today be convinced to take on the enormous financial cost of building Europe into a military super-power, just when no military threat for Europe can be seen on the horizon? A military superpower is no protection against a terrorist threat. Even if a United States of Europe is one day possible, its military power will be dwarfed by America’s, and this is exactly the way it should be. In the past thousand years, we Europeans have waged more than enough unnecessary wars both in Europe and outside Europe. If there is one thing we should have learned from the past millennium, it is to find a more intelligent goal than becoming a military superpower just so that we can compete in this area worldwide with the USA. Europe has more to offer to the world and should concentrate on working with the USA to make the world a safer, freer and more prosperous place.
In the coming decades, humanity will find itself in a fortunate, and from the standpoint of history, quite exceptional, position. For the first time, the world will be dominated by one military superpower which has no ambition to expand its territory. American policy can of course be criticized, and mistakes are certainly made from time to time. But a close examination of American military interventions in the twentieth century reveals that America never had the intention of conquering territory. In some instances the USA or its allies were attacked; at other times, American leaders believed they had to promote freedom and democracy in one state or another. Sometimes American interventions succeeded in promoting freedom and democracy, and, all too often they failed. In all cases, however, the USA eventually withdrew, which was not always what the country it had occupied may have wanted. If the USA has a worldwide network of military bases today, it is in agreement with the states in question, with the exception of Guantanamo in Cuba. In the midst of the Cold War, France for instance demanded the withdrawal of USA and NATO forces, and they quickly complied.
Whoever criticizes the USA today for the Iraq war should not forget that Saddam Hussein was one of the most brutal dictators since Hitler and Stalin. He invaded Iran and Kuwait for their oil fields. He used weapons of mass destruction against Iran and his own population. A more justifiable accusation may be that the USA did not do more during the first Iraq war to bring down Saddam Hussein, which would have spared the Iraqi people tremendous suffering. It is also clear by now that little thought was given to developing a sensible plan for building a truly democratic, constitutional state in Iraq. European states were, however, not much more successful with their former colonies in this regard. The failures of the past should therefore be analyzed, and new solutions formulated.
Surprises are, of course, to be expected at a time of radical technological and political change. At the beginning of the twentieth century no one could have predicted the political revolutions this century would bring. The rise of an aggressive military superpower, while improbable, cannot be ruled out. Technological breakthroughs and political cataclysms could bring about another superpower, unlike the USA, without a democratic constitution and a market economy, driven by military expansion and the subjugation and assimilation of conquered populations. Such a super-power would eventually fall, but in an age with weapons of mass destruction it could take a staggering part of the world’s population along with it. The equestrian armies of Central Asia took many lives and depopulated large territories in their conquests, and their weapons were far more primitive than those of today. We now have the opportunity and the necessity to develop a clear concept of how to build democratic constitutional states and integrate them into the global market economy. Europe squandered the same opportunity at the beginning of the 20th century, when it governed most of the world. Instead, Europe caused two World Wars. Hopefully in the 21st century we Europeans can work with the USA and other democratic constitutional states and succeed now where we failed miserably a hundred years ago.
What should the state of the future look like, so that it can fulfill the needs of humanity in the third millennium in an optimal way? The analysis of human history shows that mankind has been shaped in his genetics and in his social behavior by a long history and by a long selection process. In order to draft the model for the state of the future, one has to start out from the realities of our past, whether we like these or not. Too many state utopias in human history have failed miserably because they started out from an idealistic picture of humanity which did not correspond to reality. Communism is just one of those utopias which caused much suffering to people. There is a proverb which says that the road to hell is paved with good intentions.
States or state like entities, which were small and had a small population, became large states with very large populations initially through the agrarian and later through the industrial revolutions. Compared with the long history of humanity those revolutions took place very quickly and therefore hit humanity unprepared both socially and genetically. In the large states monarchs and oligarchs, elected or not, succeeded in securing for themselves and their descendants a privileged position, firstly through religious legitimation and later by indirect democratic legitimation, mixed up with an ideological legitimation on the basis of nationalism and socialism.
A globalized world shaped by a worldwide communications network and highly efficient transport technology is now experiencing the next step in human history. States are joining together in international organizations to cooperate worldwide in areas which are of importance for the whole human race. We are living at a time of profound changes, comparable with the transition from the hunter-gatherer societies to the agrarian age. The transition process into the agrarian age lasted several thousand years. The transition process from the agrarian age into the globalized industrial and service society and into the space age is taking place over decades rather than centuries. This is a major challenge for humanity and one can only hope that it will not end in a catastrophe but will be handled successfully.
Two world wars, and an enormous increase of knowledge, which gives even small groups the possibility of producing weapons of mass destruction, should make us think carefully about our future. As worldwide knowledge of nuclear, bacteriological and chemical weapons has grown during the last fifty years, so the costs of producing these weapons have fallen. The Nuclear Non-Proliferation Treaty has not been able to prevent the arising of new nuclear powers. Even a small state like Israel has, according to consistent information, possessed atomic weapons for years. A very poor state like North Korea is clearly at the point of becoming a nuclear power. In fifty to a hundred years it may be possible to produce weapons of mass destruction of which we today do not have even a theoretical notion. In 1930 even the leading physicists of their time could not imagine the production of an atomic bomb, but only fifteen years later it came to be used. Humanity must gradually forget about the idea of solving its problems on the battlefield, weapons in hand. There are probably only a few decades left to steer international politics towards avoiding a catastrophe in the third millennium, compared with which the two World Wars will have been harmless disputes.
The challenge for the third millennium will be to develop a state model which fulfills the following conditions:
1. A state model which prevents wars between states as well as civil wars.
2. A state model which serves not only a privileged section of the population, but which serves the whole population inside the state.
3. A state model which is geared to the competition of the age of globalization.
4. A state model which offers the people a maximum of democracy and the rule of law.
5. A state model which fulfills all those conditions and is nevertheless stable and able to act politically.
Those goals can only be reached if the state is seen as an organization which has to serve the people and not the other way around. The state has to become a service company which has to face peaceful competition and not a monopoly which gives the customer only the alternative either to accept a bad service at the highest price or to emigrate. In this context one has to remember that in the so-called people’s republics emigration was more or less prohibited and to flee the republic was a criminal offence, which was punished by long prison sentences. Many people were killed trying to flee such republics and in the People’s Republic of North Korea this is unfortunately still the case. But even where the people are allowed to flee their countries, there is the problem that for the large majority of the people emigration is hardly possible, because the possibilities for immigration have been drastically reduced. In addition, for many people emigration is not an attractive alternative. Before they emigrate, they are therefore willing to accept many disadvantages including a bad service from the state at an excessive price. The alternative for many desperate and hopeless people is not emigration, but violence, terrorism, revolution and civil war.
Even in democratic constitutional states there are again and again minorities who, rightly or wrongly, feel themselves disadvantaged. One need only think of Northern Ireland, the Basque Country, South Tirol, Québec or the aboriginal populations of Australia and North and South America. In a democracy the politicians orientate themselves towards the wishes of the majority so as to win elections and the majority decides. Majority decisions can be unfair and the majority is not always right. A relatively homogeneous majority which defines itself by ethnicity, religion, language, culture or politics can in certain circumstances bring about an “ethnic cleansing” of the state’s territory by disadvantaging the minority for so long in the economic, cultural, religious or political fields that it either emigrates or is compulsorily assimilated. In the USA of the 19th century, a democratic state with the rule of law, the native Indian population was even subjected to massacres in which women and children were not spared.
A state model which is to secure peace, the rule of law, democracy and the welfare of the population has to withdraw from the state the monopoly on its territory. The “emigration” of the population is only a realistic alternative in our world if the affected population can ”emigrate“ with their territory. To withdraw from the state the monopoly on its territory, the territory has to be divided into small units, so that even very small groups of people have the possibility to “emigrate”. The smaller the unit, the smaller the probability that the affected population will decide lightly to “emigrate”. For very small units it is difficult to create a democratic state with the rule of law which works and which offers the population a higher welfare than the old state, when the old state worked reasonably well. Nevertheless, the pressure for political reforms on a state which works badly increases dramatically, otherwise the state falls apart.
The larger the political units, whether they are called provinces, federal states or cantons, the greater the danger that they will exercise their right of self-determination to leave the state. The greater also is the danger that inside the new states there will be minorities, who are discriminated against and who will fight violently against independence. However the smaller the political units which are allowed to exercise their right of self-determination, the smaller the danger that the state will break apart and that within the new states minorities will emerge who are discriminated against.
The smallest political unit in most states, which are more or less defined politically and territorially, are the local communities like villages and cities. In the past local communities were sometimes divided like the city of Berlin, but it is questionable if that makes much sense. There is much to be said for treating local communities as political units which should not be divided territorially any further. A community can consist of a village with a few hundred inhabitants and a few square kilometers or of a large city with several million inhabitants and several thousand square kilometers. In a local community disadvantaged minorities can also emerge, if the majority of the population votes to withdraw from the existing state. Nevertheless, either such minorities are better integrated in their community, or otherwise emigration to a neighboring community is easier. In a small community it will always be very difficult to convince a majority of the population that the withdrawal from the existing state is the right solution.
For a successful ministate like the Principality of Liechtenstein with its approximately 35.000 inhabitants and eleven communities conditions have been extremely favorable both historically and geographically. In the past, even in Liechtenstein there were persons who doubted that sovereignty and the associated right of self-determination made any sense. Nevertheless, there was always a clear majority of the Liechtenstein people who wanted to maintain the country’s sovereignty also, for example, in the critical years between 1938 to 1945, when the Third Reich was our neighbor. In the last analysis, however, the sovereignty of the Principality of Liechtenstein was only preserved over the centuries because of the close and good relationships with the two neighboring states and the political and financial support of the Princely House. The independent political units in the neighborhood, which still existed in the middle ages, were integrated into either Switzerland or Austria.
The right of self-determination and therefore of sovereignty at the level of the local communities is certainly the most unusual and controversial proposition in the new model for a state in the third millennium. The majority of today’s oligarchy who command a privileged position in the existing states will fight it tooth and nail. That part of the oligarchy which looks beyond the next election might perhaps recognize that they too have some chances in the new state and might even count themselves among the winners. A state which is politically decentralized and more competitive in the age of globalization is in their interest too. Even if an old state breaks apart peacefully, because it has lost its competitive edge in the eyes of the population, the old oligarchies have a good starting position if they join the process of independence early enough.
Let’s take a glimpse into a distant future, when the states of this world have become service companies. which are in peaceful competition for their potential customers. There the customer is king and can choose. Just as he can choose today if he wants to buy his hamburger at McDonald’s or Burger King or fry it himself or what airline he wants to fly with or if he prefers to travel by car. What are the duties left to the state in the third millennium, which cannot be solved better and cheaper by private enterprise or by the communities themselves?
During the last two hundred years states have taken over many other duties besides the maintenance of the rule of law, foreign and defense policy. These other duties are financed with the money of the taxpayer and one can rightly raise the question whether those tasks could not be performed more efficiently in the future by private enterprise, the local communities or regional associations of the local communities.
This contribution can only give a brief overview of some of the many tasks the state has taken over and how those tasks can be fulfilled in a different and probably better way.
The welfare system is one example. In most democracies the welfare system is by far the largest item in the state budget. Many resources are wasted in the way on how transfer payments are channelled to those who may or may not need those payments.
The welfare state has, in addition, helped the state oligarchy to have access to the private lives of citizens, to demand higher taxes from them in order to finance the state bureaucracy and to create mountains of debt, which will burden future generations. Experts have warned for some time that the welfare state in its current form cannot be afforded for much longer, but prior to elections politicians buy votes by promising further expansion of the welfare state. Until now the politicians, who make these promises, could count on generous retirement packages for themselves. One can pity those politicians who win the election, just when deep cuts in welfare are unavoidable.
The problem started at the end of the 19th century, when Chancellor Bismarck promised to the citizens of the newly formed German Empire a state pension from the age of sixty-five. Sixty-five was, in fact, the life-expectancy at that time and since the pension itself was modest funding the plan with taxes seemed to be no problem. Since then, however, life expectancy has sharply increased as well as the pension payments, whilst the retirement age has been reduced. In the meantime almost all industrialized countries have adopted the German system and now share the same financial problems.
Only a few states have been able to ensure that at least a portion of the pension funds are saved ahead of time. But even in these cases mistakes were made due either to failures of supervision or failure of the regulations. What has happened in industrialized countries over the last century shows that the management of pensions should not be one of the state’s duties. The danger of abuse at the cost of future generations is simply too great.
In addition, state pensions funded by the so-called pay-as-you-go policy are probably contributing to the falling birth rates in almost all industrial states. In the past, for most people, their children provided their retirement pension. Children are not only a source of joy for their parents, but they can also be a burden financially and timewise. Why should people take on the cost and trouble of having children, when, on the one hand, they are required by the state to pay for the pensions of people they do not know and on the other hand, the state guarantees their pension as well? However, the awareness is slowly emerging that the state cannot take on this responsibility, since the materialistic fun society produces no heirs.
For our western civilization life-long work means a fundamental shift in attitude, even though the state pension system is a relatively new achievement. Therefore a sudden cessation of state pensions is politically impossible, except in a serious crisis. People who are already retired or about to retire need their state pensions to survive, since it would be very difficult for them to find work. However, under those circumstances increases in pension payments above the inflation rate are unjustifiable, since future generations will have to finance their pensions themselves to enjoy the life currently enjoyed by the retired.
In order to prevent greater crises, the retirement age will have to be increased and the pension system will have to be changed, gradually, from the current unfunded pay-as-you-go system to a funded pension system. Once the system has been changed to a funded pension, each individual can decide when to retire. Regulations which make the employment of older workers unattractive must be rescinded. Society will have to come to terms with the fact that increased life expectancy will allow people to work longer. In fact, working past the usual retirement age seems to contribute positively to mental and physical health for as long as the work itself is not physically taxing. This is an advantage for the individual and his environment. The funded pension system even allows individuals the option of passing on their savings to their children if they partially or even completely forego their pensions.
Opponents of a funded pension system often claim that it is socially undesirable, since it only benefits people who can afford to contribute part of their earnings. This is not correct, since a general contribution duty can be required by law, just as in a pay-as-you-go system, which can lead to a redistribution in favor of people with low or no income. Already today in the pay-as-you-go system people with a high income have to contribute much more to the costs of the pension system than people with a low income. People with no income make no contribution and still receive a pension. The question whether the pension system is funded or unfunded can be completely separated from the question who finances it.
Another argument brought forward by the opponents is that private pension systems, especially those run by companies who invest their funds in their own company, are particularly exposed to abuse and loss of capital. In principle, private pension systems run by a company should not be allowed to invest the pension funds in their own company. Unfortunately, however, mismanagement and losses occur also in a state run pension system. Appropriate regulations and efficient oversight can greatly reduce such problems.
Just as in the private pension system, it would also be possible to institute a minimal insurance covering accidents and sickness with a social component. It would make sense to have a sliding scale for premiums, according to risk factors. Most insurance plans today have surcharges for high risk sports, where the risk of injury is relatively high. It is unjustifiable to charge all payers for the higher costs of insuring those who choose unhealthy lifestyles, such as excessive smoking, eating, drinking or too little exercise. On the other hand, insuring those with uncontrollable risk factors such as age, gender or congenital health conditions ought to be a shared responsibility.
Accident and health insurance is always beset by the possibility of excessive expenses and abuse. Patients and doctors share an interest in optimizing medical treatment, since at stake for the patient is his health and for the doctor his income. Doctors also need to protect themselves from malpractice suits, which can arise from insufficient diagnosis and treatment. Consequently, patients and doctors are inclined to the medical equivalent of a Rolls Royce and this should not be surprising since a third party, namely the insurance company, carries the costs. Under those circumstances it is astounding that the health care costs are not much higher in the industrialized states.
It is, however, possible to reduce the danger of excessive expenses and abuses of accident and health insurance. For instance, patients could have an excess, just as in other forms of insurance such as automobile insurance. For people whose income is at the subsistence level, the public authorities, whether this be the state or the community, will have to pay for the minimum insurance and the excess. One can ask a car owner to pay the minimum insurance and the excess, since the car owner can give up his car if necessary. However, it would certainly be against the social, ethical and religious principles of the state in the third millennium if the poor were required to give up their health.
In many industrial states with their generous welfare system unemployment was for a long time no major problem. Today it is a problem and will remain so for the foreseeable future because of the rapid structural changes of the world economy. The structural changes from the agrarian society to the industrial society and from the industrial society to the service society affect not only the individual but sometimes whole sectors of the economy or whole regions. Therefore private unemployment insurance is faced with a fundamental problem compared with private accident or health insurance. What private insurance company is willing or able to insure the farmers in Third World countries against unemployment?
The best insurance against unemployment remains a state economic policy which makes attractive the creation of new jobs in companies capable of competing in the globalized world economy. In the past this was only possible with a liberal economic policy with low taxation, little bureaucracy and maintaining the rule of law as well as a well-educated population. It does not seem that this will change very much in the third millennium.
Can the state of the third millennium delegate the support of the unemployed to the local communities? In principle yes, if one looks at the Principality of Liechtenstein with its 35.000 inhabitants. One has to bear in mind, however, that Liechtenstein has applied the liberal economic policy as described above for decades and enjoys today a strongly diversified economy with a substantial number of companies, which can compete on the world markets without subsidies. Nevertheless, much can be said in favor of transferring the responsibility for the unemployed to the local communities, even in states whose economy has not yet reached the level of Liechtenstein’s. However, before such a transfer of responsibilities to the local communities takes place, the state will have to reform the labor market and the unemployment support system.
In many states the minimum wages and the social security contributions are too high, which makes the creation of new jobs difficult. An important reform goal would be to reintegrate the unemployed into the work force as rapidly as possible, since experience has shown that the longer someone is jobless, the harder it is for him to find work.
The high costs of the welfare state are becoming more of a problem the more time goes by. On one hand young and capable people try to avoid the increasing tax burden by emigrating either physically or financially. On the other hand the generous welfare state attracts people who are hardly able or willing to finance the welfare state, but who want to claim its benefits. The obvious discrepancy between the high financial benefits of the welfare state and the ridiculously small amounts needed to save lives in the Third World leads not only to illegal immigration but, over time, increasingly to political tensions, which raise the danger of conflicts throughout the world.
There is much to be said in favor of the state of the third millennium gradually retreating from the welfare system altogether. The first step would be a gradual transition from an unfunded to a funded pension system and a higher retirement age. The second step would be a reform of the labor market. The third step would be to transfer the entire welfare system to the level of the local community.
At the local level the feeling of solidarity is stronger, problems are recognized early and therefore also the solutions. Decisions can be made swiftly and abuses are easier to confront. It is up to the communities to decide how far they want to merge for such tasks into regional associations and how much they want to subsidize their welfare system. If the state transfers the entire welfare system to the local communities and the private sector, it will have to create a certain legal framework and monitor it in order to prevent abuses. Within this framework local communities should, however, be able to compete and have the possibility of introducing innovative solutions. The Principality of Liechtenstein with its 35.000 people, is not much larger than a small town and has an efficient welfare system, with the largest part of its pensions financed through a funded pension system. Transferring the welfare system from the state to the local level will require, of course, a complete reorganization of the taxation and financial system.
Another important item in most state budgets is the whole education system. During the 19th and 20th centuries the public authorities gradually took over the whole education system. Insofar as there were church and private schools, which still existed and were not nationalized, they were integrated into the state school system. If one takes into account that a modern economy and a modern state cannot be run by illiterate people, state authorities have to concern themselves with the education of their population. In our modern world an illiterate person is very much handicapped and for such a person it is nearly impossible to find a well-paid job.
Nevertheless, one can well ask the question whether it is one of the main responsibilities of the state to run the whole education system in the future. As with the welfare system, there are good reasons either to privatize the whole educational system or to delegate it to the local communities. The state would still have the duty to set up the legal framework for the educational system and to monitor it. To manage and to own the educational system from kindergarten to university would be the task of private business, local communities, associations of local communities or a joint venture between private business and individual local communities. As far as the education system is financed by the state, this should be done through a voucher system with the children or the parents of the children as beneficiaries. Politically, it is not a very popular system, but it gives children equal opportunities whether they are from poor or rich families.
The philosophy behind an educational system financed through vouchers is the following: the public authorities, be they the central or local government, finance today the whole educational system through direct subsidies from kindergarten to university. This is an inefficient and very often unfair system. Someone, who has the bad luck to live in an area where the schools are bad, will have to accept the fact that his children will receive a bad education if he cannot pay an expensive private school for his children. This is very unsocial, but fits into a nationalistic and socialistic ideology which supports all kinds of state institutions with the taxpayers’ money, but prevents or hinders on the other hand private institutions.
Instead of using the taxpayers’ money to finance the education system, it is much better to subsidize the parents or the students, so that they can themselves choose the school which in their opinion, is the best for them. Well managed schools, which are able to meet the expectations of the parents and the students, will be successful and the others will have to adapt or they will disappear from the market. In order to prevent abuse by parents and schools, the subsidies for the parents and the students should not be paid out in cash, but rather in vouchers, which are redeemed in those schools which fulfill a minimum standard. Parents should only be allowed to cash in those vouchers if they make a commitment towards the state that they will educate their children themselves or privately. Already today, a number of states release children from compulsory school attendance, if it can be proven that the children will receive an education equal to that provided in a publicly maintained school.
Schools, like other institutions managed and owned by the public authorities, tend to become bureaucratic and inefficient sooner or later. Politicians are reluctant to dismiss headmasters or teachers, who are no longer able to fulfill their task. In many cases a dismissal is very difficult and, according to the law in a number of states, only possible after long and public court proceedings. Politically influential teachers’ unions are a further obstacle to an efficient school system, because the welfare of the teacher is in their eyes, of course, more important than the welfare of the students. The political resistance against voucher systems is usually organized by those powerful teachers’ unions.
The fact that parents and students are willing to pay substantial amounts of money to finance education in private schools and universities, which are usually far more expensive than the public educational system, shows that in many cases the public educational system from kindergarten to university does not always meet the expectations of parents and children. Nevertheless, despite their financial sacrifices, the state forces those people to finance with their tax an inefficient school system which they do not want to use. Even after the introduction of a general voucher system it will take some time until all parents and students will be completely free in their choice of schools and universities, because probably several years will be required to establish a comprehensive educational system on a purely private basis.
The state should, and will, continue to play an important role in a voucher system, but a role which will support social justice in society and not hinder it in contrast to the educational system of today. The legal framework set by the state through law or decree will have to clarify a number of questions like the minimum value of a voucher, how long parents or students are legally entitled to a voucher, what are the minimum standards for schools, which may redeem vouchers as well as a number of other questions.
The local communities should have the freedom to decide for themselves if they want to use their tax revenues for a more generous education system and increase the value of the voucher or use them for their welfare system, for culture or some other areas. Some local communities might prefer to have rather low taxation, because they want to maintain or create jobs. Those are all decisions which directly influence the life of the citizens and therefore should be taken as close to the citizen as possible at the political level of the community through direct democracy, instead of at a remote high level through a restricted indirect democracy.
Should transportation be a duty of the state? Nationalists of the last century took it for granted that the state needed national highways, national waterways, national railroads, national airlines, a national automobile industry, a national airplane industry, and so on and so forth. This policy of national transportation has wasted hundred of billions of taxpayers’ dollars worldwide and still continues to waste them today. Very small states like the Principality of Liechtenstein have fortunately never been able to afford such wasteful, expensive infrastructures at the cost of the taxpayer, with the exception of road construction.
Worldwide one can now find examples of all kind of transportation systems which have been privatised successfully. Modern technology offers electronically charged tolls not only on highways but even for normal roads. The whole road system could be privatized and the burden of direct and indirect costs could be placed directly on the drivers, who incur the costs in the first place. A noise pollution surcharge could be applied to roads where noise pollution is particularly problematic and with which the property owners most affected could be compensated. A privatized railway system could again become competitive with a privatized road system, which has to bear all the direct and indirect costs.
Other state duties could be mentioned which can be either privatised or turned over to the communities or associations of communities. If the Principality of Liechtenstein with its 35.000 inhabitants and some other small states have been able to fulfil those state duties over decades efficiently and with a low tax burden there is every reason to believe that cities and associations of small villages are also able to do it. Still a rather poor agrarian country at that time Liechtenstein was one of the first European states in 1921 to introduce a modern court system with an administrative court and a constitutional court. In addition to those tasks Liechtenstein has also to manage its foreign policy and is an active member of international and European organisations like the UN, the WTO, The Council of Europe, the European Economic Area and others.
Public finances will be an issue for a state whose duties have been basically reduced to foreign policy, the rule of law, the administration of a voucher system for education and perhaps defense. The state will have to transfer the major part of its tax revenues and its tax sovereignty to the local communities if these have to take over additional tasks. There is much to be said for leaving indirect taxation to the state, with the local communities obtaining authority for all direct taxation.
A constitutional state with its own foreign policy is a separate economic area, even if it is fully integrated into the world economy through membership of the WTO and into the European economy through membership of the EU (European Union). As far as customs duties are concerned, they have to be collected by the state or an organization like the EU, which has received its authority from the member states, but it would not make much sense to give this kind of authority to the individual local community. Indirect taxes on goods and services, for instance a value added or sales tax, are also better collected by the state, for otherwise there would be distortions in competition which would damage the whole economy. In such a case the goods and services would not be manufactured, provided and sold where they are best produced or where the customer is located, but where the taxes are the lowest.
Compared to direct taxation it is much easier to raise indirect taxes. Much can be automated and the state needs only few civil servants for this task. A centralized administration for indirect taxation would be the most practical solution, even if the tax authority would lie with the local communities. For this reason the authority to raise indirect taxes should lie with the state and the authority to raise direct taxes with the local communities.
There have been a number of publications and discussions about the rate of indirect taxation as, for instance, the value added tax. More important than the level of the tax rate seems to be that the rate should be uniform. Nevertheless, politicians love to choose different levels of tax rates, with the surprising justification that this is socially fairer. The highest tax rate is applied to luxury goods or what politicians decree as being luxury goods whilst lower tax rates are applied to other goods and services down to total exemption from indirect taxation. This turns the rather simple system of indirect taxation into a complicated system which needs additional civil servants. This, of course, gives the politicians the possibility of employing their friends and fellow party members as civil servants. In addition, it gives politicians and parties unlimited possibilities to buy votes, not by handing out taxpayers’ money but rather through tax advantages. The influence of the state on the economy and with it the influence of the politicians is increased, because the politician can now put this product or that service into this or that tax bracket.
Different rates in indirect taxation have as little to do with social justice as the devil with holy water. Because they consume more, lower taxation rates on certain products and services are usually much more in favor of the rich people than in favor of the poor people. The poor people from time to time also consume products or services, which politicians have defined for unknown reasons as luxury goods. It costs the state and the taxpayer a significant amount of money without helping the poor people in society, if the politicians pursue a social policy with different tax rates in indirect taxation. Anyone who wants to help the poor people in a society must help them directly.
If the authority for direct taxation lies with the local communities and for indirect taxation with the state, there are good social, political and economic reasons not only for a uniform tax rate, but also for a rather high tax rate. Indirect taxation will then be the only instrument for a limited redistribution of income within a state between richer and poorer regions. A state whose responsibility is restricted only to foreign policy and the maintenance of the constitutional state needs less tax revenues. With high revenues from indirect taxation the state should be in a position to achieve substantial surpluses. Part of the surpluses will be needed to service the national debt and to repay it over a certain period of time. The state should also sell all state property, which is not needed for its main tasks any more, in order to pay back the national debt as quickly as possible. The aim is a state without debts, so that the surpluses from indirect taxation can be distributed fully to the local communities according to the number of their inhabitants. These allocations per capita of the surplus revenues from indirect taxation should give the local communities the possibility of covering at least a part of their expenses. The rest has to be covered by direct taxation or other income.
Such a division of the tax authority would have the major advantage that the local communities and the whole population within the state would have a very strong interest in the state’s behaving as economically as possible and not putting itself more into debt. Only then would the local communities and their population benefit from surpluses of indirect taxation. On the level of the local communities and with direct democracy the population has a much better control over the use of the taxpayers’ money than it does at state level.
Such a division of the tax authority could stop the trend towards the continuous strengthening of the central power to the detriment of the local communities and regions, which can be seen again and again in human history. As soon as the state tries to extend its political influence by taking over additional tasks, it reduces the income of the communities and its population from indirect taxation.
To prevent the state from financing its tasks through debt, it is important to introduce an article into the constitution, which makes it very difficult for the state to raise any loans. Neither should the state of the future give any guarantees, particularly to the local communities. Only if a community can go bankrupt and its existence be threatened, will the large majority of the voters support a long term solid fiscal policy at the community level. The danger of bankruptcy will also force creditors to follow a prudent and responsible loan policy towards the communities. Up to now in a number of states companies and banks have sold exaggerated projects and loans to respected but inexperienced councilors, knowing that in the last resort the state will have to pay.
Only in this way will the state over time become a well managed solid service company for the benefit of the people. What has been achieved by the state of Liechtenstein, which was originally a very poor state without natural resources, as well as a few other states, namely to be without debts, should with a solid fiscal policy also be possible for other developed states.
A state without debt, with foreign policy and the maintenance of the constitutional state as its only duties will again become a lean and transparent state, which can be financed by a small percentage of the gross domestic product. The surplus from the revenues of indirect taxation would flow directly to the local communities, which would have in addition the authority for direct taxation. Those would be taxes on companies and individuals, real estate, dogs, cats or whatever taxation a local politician can think of. In principle, a community could have the possibility of raising in addition to the state an indirect tax on certain products or services. To reduce consumption for health reasons, a community might put an additional tax on alcohol or tobacco. A market economy will always ensure that those tax rates will not increase beyond a certain limit.
The financial subsidies of the state from indirect taxation and the tax authority over direct taxation should enable communities with even limited resources to finance at least a basic welfare and school system, especially if the educational system is mainly financed by the state by means of vouchers. It should be possible to reduce the financial burden of the pension system by raising the retirement age and by encouraging the increase of private pension systems. Nevertheless, this is very much dependent on the employment of the population and economic development. Such a fundamental reorganization of the state should ease the financial burden on private business, give a new impetus to private consumption, accelerate the growth of the economy and therefore increase the demand for additional labor. This would especially be the case for those local communities, which structure direct taxation and social programs in such a way that it will be again attractive for people to work and for companies to employ additional labor.
The fear that a race to the bottom for the lowest tax rate will start between the different communities is unfounded. The example of Switzerland and Liechtenstein shows that different tax rates between communities lead only to a limited migration of companies and people from communities with higher tax rates to communities with lower tax rates. For people and companies tax rates are just one of many reasons why people and companies settle where they do. For companies other reasons are more important, like the availability of a work force, a well developed infrastructure, proximity to the political decision makers, etc. For most people the tax rate is usually not the decisive reason for choosing where to live. Other reasons are more important, like the proximity of the work place or good schools for the children. A community with high taxation and bad service will nevertheless lose people and companies in the longer term. In a direct democracy it will be then up to the citizens to decide how attractive their community should be for people and companies.
The state of the future will give the people in their community much more freedom on how they want to shape the future for themselves and their descendents. There will be communities which will require higher taxation but will offer a better service. Other communities will shape their service according to the needs of the elderly people and other communities to the requirements of young families. Through taxation, social programs, school and transportation systems, cultural programs, building regulations and the availability of building sites etc. the communities in the state of the future will have considerable freedom to look for the best solution according to the wishes of their population and the possibilities of their geographical area.
If the authority for direct taxation is transferred from the state to the local communities, it is to be recommended that the state should establish a certain framework within which the communities can raise their taxes. Without such a framework the different communities would have to conclude double tax treaties between themselves. This would overburden most communities and lead to unnecessary complications for the people and the economy within the state. Within the legal framework each community would be free to decide about the type and the rate of taxation. Large communities e.g. cities would probably have their own tax administration and smaller communities would combine their tax administration or transfer it to third parties.
Decisive for a favorable tax framework is the question of how much tax competition is still possible between different local communities and different states. The more competition, the better for the citizen and the taxpayer. Tax competition does not ruin the state and society, but the dishonest politician who tries to buy votes with the taxpayer’s money.
At the end of this contribution a few remarks on how such a state of the future could be realized might be appropriate. One would be for the existing democratic constitutional states, where the people have a certain influence on the future of their state, at least indirectly by electing the parliament. The other strategy is for those states where the people have no influence on the future of their states, neither through elections nor through popular vote.
The strategy for the democratic states is simple, at least in theory. Firstly one has to convince the majority of the people that it is necessary to reform the political structures of the state and then the elected politicians will carry out the wishes of the people. In reality this is, of course, not so simple. In most cases the people are not very interested in politics and the willingness of the politicians to fulfill the wishes of the people is quite limited.
Nevertheless, if one studies the history of mankind, one sees examples which show that the people can suddenly become intensively interested in political problems and bring about a change of the political system. In such a case it is an advantage if a new constitutional concept has already been worked out and which can be discussed. Some ideas discussed in this contribution have already been integrated into the constitution of Liechtenstein like the right of self-determination on a community level. Other ideas are presently discussed and might be realised over the next few years.
Many politicians see direct democracy and the right of self-determination on a community level as a threat to their own position and to the program of their party. This was also the case in Liechtenstein but luckily a restricted direct democracy like in Switzerland had already been introduced in the constitution of 1921. Therefore it was possible to extend direct democracy and to introduce the right of self-determination on a community level.
In an indirect democracy where the people cannot decide themselves but have to elect the representative it is more difficult to turn the state into a service company for the people. Politicians and parties have usually used the taxpayers’ money to buy votes or made promises which are difficult to fulfil. The tendency of politicians and parties is therefore to increase either taxation or the national debt. In an indirect democracy it is easy to blame the politicians and the parties for their behaviour but the guilty party is much more the system of indirect democracy which more or less forces the politicians and parties to buy votes with the taxpayers’ money and promises difficult to fulfill.
The democratic constitutional state has at least at its disposal more or less all the rules through which it can be transformed peacefully and without revolution into a service company which serves the people and not the politicians. It is more difficult in those states which do not have those democratic rules or in states where such rules are not worth the paper on which they are written and which call themselves democratic constitutional states only because it is fashionable. The German Democratic Republic (GDR) called itself a democracy, but was a prison and when the door of that prison opened the people started to flee from the self-appointed paradise for workers and farmers.
In cases of serious violations of human rights or of genocide the democratic constitutional states have to ask the question of when does one stand by and do nothing and when does one intervene. In a globalized and electronically integrated world with a multitude of personal contacts from tourism, trade, the service industry etc., it will become more and more difficult for politicians in the democratic constitutional states to stand by and to do nothing. Seventy years ago it was still possible to send back Jewish refugees whose lives were seriously threatened in their home country. Today one can still send back refugees from Africa or Asia. The question is: for how long? On the one hand the pressure of public opinion to save those poor people will become stronger and stronger because of the global integration of the media and the many personal relations in a globalized world. On the other hand, there has not been a successful recipe up to now for turning a dictatorship into a democratic constitutional and economical successful state by military intervention. The successful transformation of Germany and Japan after World War II into democratic constitutional states with indirect democracy and a successful market economy was mainly the famous exception which proves the rule. Subsequent military interventions as well as the whole process of decolonialization were, with few exceptions, unfortunately less successful.
One has to remember that military interventions by the USA took place in Latin America again and again over decades already before World War II, usually with the aim of toppling a dictatorship and introducing indirect democracy according to the American model. Nearly all these attempts failed miserably and some corrupt oligarchies and dictators got back into power.
The traditional democratic constitutional states have finally to accept the fact that for decades their medicine has turned out to be deadly in 90% of the cases and that there will be patients where it is simply not possible to stand by and to do nothing. If the people in democratic constitutional states watch the mass murder of innocent people on television in another state without emotion and without asking for intervention, it would be a reason to worry about the situation in these constitutional states. Will the same people not also stand by and do nothing in their own state, when a perhaps unpopular minority is murdered? In a globalized world we shall have to take into account that the people in the democratic constitutional states will over time put more and more pressure on their politicians to intervene in dictatorships, where sections of the population are being expelled, oppressed or murdered. Compassionate speeches, some prayers and a few sanctions which do not harm anybody will not be sufficient in the long run. To simply take in all the refugees is no solution either.
Ideally, the democratic constitutional states should agree within the framework of the United Nations under what conditions another member state of the United Nations should be subjected to a military intervention and how it can be ensured that after such an intervention a state would emerge which is democratic, follows the rule of law and is economically successful. Only politically and economically successful states will not produce political and economic refugees who will flee to the democratic constitutional states. Perhaps I am too pessimistic, but it does not look as if in the foreseeable future such a concept can be worked out within the framework of the United Nations.
I therefore want to propose an alternative, which might have a better chance of success, knowing very well that it is controversial. Since I have already started as a student and continued during my time as head of state to make politically controversial statements, I am not too much afraid of controversy now, following my retirement from active politics. My experience has been that controversial discussions very often produce better results than too much diplomacy. If someone produces a better solution to this problem than what I propose, then all the better.
Realistically only the USA as the last remaining superpower has the military, financial and political potential to carry out a larger military intervention worldwide in a relatively short time. The USA have recently shown in Iraq that they can, under difficult circumstances, carry out successfully a military intervention in a short time. From a military standpoint the allies were not needed; probably they made the military intervention rather more complicated. The rapid progress in military technology might well complicate the coordination of military forces from different states in the foreseeable future. Much can therefore be said in favor of leaving the purely military side of such an intervention from the very beginning to the USA, whereas the other democratic constitutional states could concentrate on the transformation of such a state into a politically and economically successful state following the military intervention.
This would, of course, mean that finally only the government of the USA would decide about a major military intervention, but in reality this is already the case today . Nearly all democratic constitutional states, which have the military capability to intervene in another state, are more or less dependent on the USA regarding their military technology, military intelligence and transport capacities. The more time goes by, the less it will be militarily possible to intervene in another state against the will of the USA. Already back in 1956 the United Kingdom, France and Israel had this experience, when they occupied the Sinai and the Suez canal. Under the pressure of the USA they had to retreat.
As it is up to the American government to decide when, where and how a military intervention should take place, I have refrained from wasting many words on this subject. Nevertheless, a military intervention by the USA will only be a long-term success if it is possible to establish a more or less functioning democratic constitutional state. Therefore it is advisable for the USA to reach an agreement beforehand with other democratic constitutional states about the circumstances in which a military intervention should take place and what has to happen immediately afterwards. For a dictatorship which despises human rights, such an agreement and its publication would act as a deterrent. Those dictatorships would have to reckon with a more or less automatic military intervention and the transformation of their state into a democratic constitutional state, whenever they violate human rights in a serious way.
There are good reasons to separate the military intervention in a state like Iraq from the other tasks. The highly mechanized American task forces are trained and equipped to eliminate as fast as possible the military forces of the enemy with a minimum of casualties on their own side, to gain territory as well as to reach tactical and strategic goals. Even if at the beginning the population welcomes such an army as a liberator, historic examples have shown again and again that foreign military units are not equipped and trained to maintain law and order and to build up a democratic constitutional state and an efficient market economy, which can be integrated as far as possible into the world economy. In addition, there are domestic and foreign policy reasons why it is advisable for the USA as the leading world power to withdraw as fast as possible after a successful military intervention and to leave those other tasks to a partner who is well prepared for this.
The EU could be the ideal partner for taking over the task of building a democratic constitutional state with a market economy following a military intervention by the USA. Nearly all former colonial powers are now members of the EU. Through these former colonial powers the EU has at its disposal a diverse and extensive network in all continents. Worldwide the EU is the largest trade bloc and the euro is the most important currency next to the dollar. The EU has established laws for its members, which also give to non-members the possibility of a far-reaching economic integration within the framework of the European Economic Area (EEA). Instead of maintaining a multitude of smaller military forces in the individual EU sates, which cost a substantial amount of money and which have doubtful military value and are more or less dependent on the USA, it would be more appropriate to set up a new type of force, which would be in the position of transforming the state in question into a democratic constitutional state immediately after a military intervention.
What should such a task force look like? It should include highly mobile police units, which could maintain law and order immediately after the fighting has ended. These require helicopters and surveillance drones in order to control large territories. They require people who know the conditions in the area as well as the language of the local population. One unit would be needed to train or retrain the local police force. Police units, which have been trained and used by a dictatorship, have to be retrained if they are to be used in a democratic constitutional state. If the external security of this state is guaranteed by the USA and the other democratic constitutional states, the army of that state could be dissolved. Armies are an economic burden for those states, are often a threat to the domestic policy of a young democracy and might be a threat to neighbors. The members of the dissolved army should have the possibility of becoming members of the new police unit after adequate retraining. This would prevent that soldiers, who have been trained in the use of weapons, remain unemployed and become a reservoir for recruits of national and international terrorist organizations.
Police units are not enough to keep up law and order in such a state, but in addition courts are also required, which have to be guided by a constitution and laws which correspond to the standards of a democratic constitutional state. This means that before a military intervention takes place, a new constitution for this state has to be worked out and the existing laws have to be adapted. It would be recommendable that lawyers who are citizens of this state be retained as advisors. In many cases these will be personalities who are close to the political opposition or have been in exile. Since an opposition in exile is very often deeply divided and not representative of the whole population, it should not be up to them to take the final decision about the new constitution or the adaptation of the existing laws. The decision about a new constitution or the adaptation of existing laws should rest with the EU or with those democratic constitutional states, which have taken on themselves the responsibility for maintaining law and order and rebuilding a democratic constitutional state. There is no reason not to publish the new constitution and the adapted laws long before a decision on a military intervention has been taken. On the contrary: this increases the political pressure on the dictatorship to reform.
In a dictatorship the state has usually taken on many duties which can be better taken care of on a community or local level and by private enterprise. The constitution and the laws should therefore correspond to the state of the future as described in this article, because it will be difficult enough for a new democratic constitutional state to maintain the rule of law and to be economically successful. To achieve this, transitional regulations have to be worked out. Property must be returned to those people, who have been expropriated by the state. Where this is not possible, compensation should be paid from the proceeds of all the state property which will be privatized.
The police, the constitution and the laws are just one side of the democratic constitutional state. A constitutional state needs independent courts and well-trained judges. The EU with its cultural and linguistic diversity, should be able to provide a team of lawyers who would be available as independent judges and as instructors in such a state for a number of years. It is especially important for such a legal team to follow closely the decisions of the highest courts. The best constitutions and laws can, intentionally or unintentionally, be deprived of their force through one-sided interpretations or false decisions by a court.
Apart from the solution of the security and legal problems the EU would have an equally important role to play in the economic stabilization and development of a new democratic constitutional state. One such possibility would be membership of the EEA (members: the EU, Iceland, Liechtenstein and Norway). This would give a new democratic constitutional state free access to the whole European market and, in addition, would guarantee the implementation of the economic legislation of the EU as well as its interpretation by the administration and the courts. Experts from the EU or EEA will be required to advise and to train the administration of such a state on how to implement all these regulations. From an economic point of view this would be of interest for this state and for the EU. The EU would gain better access to the markets of this state without having to grant it EU membership, which would be politically difficult and would cost the EU much more because of the high subsidies for agriculture and for other areas.
The EEA offers the possibility of imaginative and flexible solutions. As the example of Liechtenstein shows, it is, for instance, possible to have permanent restrictions on the free movement of people. There is also a possibility for industrial products or services, which are subject to different regulations to compete side by side. The Principality of Liechtenstein is a member of the EEA and Switzerland is not, but Liechtenstein has a customs union with Switzerland. In Liechtenstein, products which correspond to the specifications of the EU can be sold freely on the Liechtenstein market, but if they do not correspond to the Swiss specifications they cannot be exported from Liechtenstein to Switzerland. On the other hand, there are Swiss products which cannot be exported to the EU because they do not correspond to their specifications, but can be sold without problems in Liechtenstein. To be able to sell products and services corresponding to different specifications in parallel on the same market is even more important for a member state of the EEA outside of Europe than for the Principality of Liechtenstein, because regional trade with non-EU-states will be much more important in most cases than for Liechtenstein.
How large should such a task force of the EU be to carry out such a task? If one takes a state of the size and the population of Iraq as an example, such a task force consisting of police, judges and other experts would probably have to be at least in a range of two hundred thousand people in order to restore law and order as rapidly as possible. This would probably amount to about 10 peacekeeping persons per thousand inhabitants. There are experts who say that one needs up to 25 persons per thousand inhabitants. Experience has shown that peacekeeping forces with less than 10 persons per thousand inhabitants were also successful. Success is probably less dependent on the number of personnel than on the political goals of the intervention, the strategy followed, the leadership, the training and the equipment of the total task force and of course on the terrain. However, at the beginning it is better to err towards the high side than towards the low side as in Iraq.
The police would be by far the largest unit in such a task force. However, this number could be reduced rapidly as soon as local police units were available. How long the other experts would have to remain, depends on how long it takes to build up a democratic constitutional state, which is also economically successful. The courts might also have to deal with the difficult problem of judging possible crimes by the old dictatorship. Much tact and sensitivity would be needed in order not to open old sores, to prevent acts of revenge or to avoid turning criminals into martyrs. In such a situation, the local population would probably have more confidence in the objectivity of foreign judges than in the judges of the old regime.
If one compares such a task force of about two hundred thousand members with the much larger and more expensive military forces of the EU member states, the result is that such a task force would be a much smaller burden financially and personnel wise, but would have a much more positive influence in the world today. The costs could be further reduced if the members of this task force were mainly recruited in the Third World. An additional advantage would be that people from Third World countries would receive a good training and education, which would be useful when they return home. The members of the task force would have an international makeup, especially from states and regions where they would be most likely to be deployed. The language of the task force would have to be English, not least because of the close cooperation with the USA. As the task force would be active in different regions of the world, language skills are important. Ideally each member of the task force should speak at least one other language besides English.
What would have been different, for instance in Iraq, if the concept as discussed here had been available? Already years before the intervention a new constitution for Iraq could have been worked out and laws adapted as far as required; furthermore, all this could have been published. Refugees from Iraq could have been recruited and trained as policemen, judges and lawyers. At the beginning of the military intervention this task force of the EU could have taken over areas liberated by the military forces of the USA and introduced law and order. The population could have been informed by the media and leaflets about their rights and duties, including those concerning the military forces of the USA and the police forces of the EU. If the EU wants to set up a democratic state, it must grant the population in the states in question the same rights as to its own population in order to prevent unauthorized acts on the part of its own police units and the intervening army of the USA.
In those areas controlled by the police units of the EU one should start immediately with the registration of the population and give them forgery-proof identity cards with the usual personal information, including the address of residence. After the end of the fighting, at the earliest possible date, local elections should take place in areas which are reasonably safe. Such local elections are important as a first step, because a stable and working democracy has to be built from the bottom up, particularly in a state which has never been a working democratic constitutional state, or where a dictatorship has destroyed those structures. Through local elections the EU gains partners who enjoy the support of the population. If one tries, however, to build a democracy top down, by having first a general election for a parliament or a constitutional convention, this gives the old or the new oligarchy the chance to take over the political power. Then the state will not serve the people but some oligarchy, and in the worst case the state returns to a dictatorship after the task force of the EU has left.
Such an approach after the end of the fighting would have immediately given the Iraqi people at least a local administration with a democratic legitimation in a large area of its territory. This would have been possible in the areas of the Kurds, the Shiites and in part even in larger areas of the Sunnis. We all know that a different solution has been applied. Military units with an excellent training for fighting a war, but without any experience in training as a police force, were supposed to keep up law and order immediately after the fighting had ended in a state where the rule of law had been destroyed decades ago. In such a situation the army of the liberator becomes very rapidly the army of occupation. Without doubt, this made it much easier for the supporters of the old dictatorship in Iraq, together with other extremist forces, to organize an armed resistance.
Only after local elections have been held and the local administration has the possibility of starting to work at its new tasks and the newly trained local police forces and judges have taken up their responsibilities, does it make sense to hold parliamentary elections and to appoint a new constitutional government. Until then a provisional government would be in office, which would have to cooperate closely with the representatives of the EU.
Even with the proposed concept it might have been difficult for the police units of the EU to restore law and order within a reasonable time frame and at reasonable cost inside the so-called Sunni Triangle. Experience shows that it is not too difficult to start acts of terrorism and guerilla warfare in cities or in difficult terrain with the support of a part of the local population. In such a situation, probably the best strategy is to cut off and to isolate the region and to prevent a spreading of terrorist activities to other regions. Refugees should, of course, have the possibility of leaving the region and strictly humanitarian aid should be let in. Highly mobile police units equipped with helicopters, surveillance drones and other high-tech equipment should be able to cut off those areas with the support of American military units. Step by step areas which are easier to control would be occupied, with the aim of isolating the different centers of terrorism and of giving the refugees the possibility of returning. However, it will take time and patience until law and order is restored in all regions and local elections can be held.
It would therefore be wrong if development towards a democratic constitutional state were to be slowed down significantly or stopped in all regions only because it was taking so much longer in another region. If, for instance, it was not possible to restore law and order in one part of the Sunni Triangle within a certain time span, this area should be separated from the rest of Iraq. In the more peaceful part of Iraq the elections for the parliament could take place and the government appointed and, step by step, the state of the future would be realized with its responsibilities for foreign policy and the maintenance of law and order. Only when this process had come to a positive end should the EU withdraw its last police units and judges and give the local communities the right to leave the state. In the state of the future there would probably be no reason even for the Kurdish communities in Iraq to leave the state, all the more since the Kurds have always been politically divided and have been fighting each other not only politically. Many Kurds might be afraid to find themselves again as prisoners of a nationalistic and socialistic Kurdish state and might prefer to remain citizens of the state of the future.
A politically and economically successful Iraq, integrated into the world economy and a member of the EEA, would become more and more attractive for those areas of the Sunni Triangle where it was not possible to establish democracy and the rule of law. Support for the terrorists would decline, because they would never be in a position to offer any future for a population which was completely dependent on humanitarian aid from the outside.
It would be a very positive development if the EU could somehow manage to realize such a concept during the next few years. The example of Bosnia-Herzegovina, admittedly on a smaller scale and closer geographically to the EU, shows what can be achieved by a combination of the use of military and police task forces and the possibility of integration into the EU. The people in the failed states would be happy, the USA would be happy and the EU could show to the world an exemplary economic and political success. Perhaps other economic associations like NAFTA or ASEAN might join in the economic reconstruction of those states by offering either a direct or indirect membership in their associations. As the example of the Principality of Liechtenstein shows, membership of the EEA does not exclude membership of other economic associations with the parallel competition of industrial products and services subject to different regulations.
Nevertheless, for a long time there will still be states with serious violations of human rights, where military intervention is not possible for several reasons. As with the former Soviet Union, the democratic constitutional states will have to content themselves with standing by and trying to prevent the further spreading of such dictatorships, which violate human rights.
There is always the hope that sooner or later a leadership might emerge which is willing to make fundamental reforms, as in the Soviet Union. The model of the state of the future, as described here, gives the political leadership better chances to reform the state rather than to destroy it, as happened with the reforms of Gorbatchev.
Hopefully humanity will have accepted by the end of this century that states should be service companies who should serve the people and not the other way round. Like service companies states come and go and there are very few states which have existed inside their present borders 300 years ago. The Principality of Liechtenstein is one of the few exceptions. The fate of states and their borders have been usually been decided by the weapon in the hand on the battlefield. Wars of aggression when states and empires would grow, civil wars when states and empires would fall apart. With the advances of science it is even for small states possible to build weapons which are much more dangerous than in the past and which one day could perhaps wipe out a large part of humanity. We have to think now about ways on how we can introduce the rule of law, democracy and the right of self-determination worldwide so that the future of states are not decided anymore with the weapon in the hand on the battlefield but rather with the ballot paper in the hand at the ballot box. States will have then to compete peacefully like any other service company for their customer – the people.