When The Successful Secede

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State-Commonwealth tensions, one of Australia’s most enduring features, are never far from the news, with quibbles over funding for the National Disability Insurance Scheme providing the latest outlet.

Such tensions are of course inflamed by party politics. Howard’s "wall-to-wall Labor" bogeyman after the 2007 federal election is no more than a distant memory — the Coalition parties now govern four out of the six states, although Labor has retained both territories as well as South Australia and Tasmania. There is plenty of room, then, for argument.

The notion of "co-operative federalism", always illusory, has been under attack. Recall Campbell Newman’s argument that each state ought to seek to exert its own competitive advantage over the others, dangling incentives such as lower taxes and less regulation to attract business and secure investment.

This viewpoint has of course been disputed on economic grounds. As Bernard Keane argued in Crikey "competitive federalism is a tax on any company operating in more than one state. It’s a tax that benefits no one, not even governments; it’s simply a deadweight loss".

Newman isn’t alone in his my-state-above-all rhetoric. As I’ve noted previously in New Matilda, hostility towards Canberra and "the Eastern states" has long been a staple of Western Australian politics. Recall WA Premier Colin Barnett’s statement last April that if his state’s GST share remained as it was, there would be "almost a Tea Party situation where Western Australia… will just simply engage with Asia" and "simply not deal with the rest of Australia".

Barnett, whose state is (as the ABC reports) currently "by far the best performing state in almost all areas of economic performance", also asked in 2011 "what right is there to simply take some of the spoils of the hard work in other states?"

State Governments must obviously appeal to local voters, but the statements quoted here are noteworthy for the absence of any real sense that the states are all part of something bigger. Indeed, in the traditional parochialism of the Australian states there can be discerned a trend that exists across the globe — the fragility of the nation state.

The contingency of nations is on display throughout Europe. Even as the supra-national project of the European Union itself weakens in the face of economic crisis, member states are internally divided.

For instance, Scots secessionists are hoping that the United Kingdom doesn’t stay that way for long; the Scottish Government intends to hold a referendum on independence in 2014. There has been much disputation over the precise wording of the question or questions to be put to the voters, considerable debate about Scotland’s viability as an independent state and disquiet on both the north and south of the River Tweed about the prospect of an end to the union that has endured since 1707.

Beneath political distinctions lie economic differences — the disparities between the UK’s regional economies are striking. A 2006 report concluded that key indicators — such as migration, productivity and business formation — demonstrated a "clear and growing difference" between "dynamic regions" such as London, the East, and the South East, and "challenged regions" such as the North East, North West, Scotland and Northern Ireland.

Economic performance also differs widely within other European countries; for instance the eastern regions of Germany, which formerly constituted the German Democratic Republic, continue to lag behind the more affluent west of the country . Belgium and Italy also provide examples of regional disparities — the southern regions of each perform worse economically than the north. Just as in Australia, residents of affluent areas often resent subsidising poorer locations. Witness the right-wing movements which champion the secession of wealthy regions — such as the Lega Nord in Italy and the Vlaams Blok in Belgium, although the latter also reflects a linguistic divide.

The tendency of the affluent to dissociate themselves from their fellow citizens has been termed the "secession of the successful". Writing in 2002, researcher Brian Barry suggested that "a society marked by a combination of a market economy and liberal democratic institutions is liable to have two thresholds of social exclusion", the upper of which "divides those in the middle from those who can detach themselves from the mainstream institutions".

Barry gave examples drawn from the United States where, for instance, "Henry Huntington arranged for a small municipality to be carved out in the area surrounding his estate in a then undeveloped part of what is now Greater Los Angeles…the city of San Marino…has from the start contained only large and expensive houses. This enables the city to provide excellent services, including high quality public education". This "kind of collective provision among the rich", however, did not reflect any sense of the "universal entitlement of the citizens of a country to share in a common system of public services".

Indeed, the wealthy are able to absent themselves from the nation state in some crucial respects — in a recent report, the Tax Justice Network estimates that across the globe, the super-rich elite have successfully hidden £13 trillion (over $AUD 19 trillion) in offshore accounts to avoid tax. As the Guardian noted, the "sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor".

A sense of solidarity or fellow-feeling is critical to welfare states, and although it can be both dangerous and exclusionary, the concept of the nation underpins a narrative of our duties to each other.

Nations are, as Benedict Anderson noted, no more than imagined communities and the polities that we imagine are getting smaller. It seems some of us would prefer to envision wealthier, more exclusive communities with no inconvenient poor or needy people, no regions in economic decline, and no need for a strong public sector.

If taxes were to go only to fellow inhabitants of one’s local area, what is the logical endpoint? Would secessionist Northern Italians and Belgians be satisfied with separation from their respective souths, or would they begin to look closer to home for further areas to carve out of their communities? Closer to home, some West Australians might not want their taxes going to other states, but, as demonstrated by the successful "Royalties for Regions" campaign in the 2008 state election, residents of remoter areas aren’t necessarily wild about helping to subsidise Perth either.

In other words, once we start cutting, where do we stop? Do we envision a continent formed of tiny, glittering city-states (say, the Eastern suburbs of Sydney and the Western suburbs of Perth), wealthy sub-nations (such as the mineral-rich Pilbara region) and vast tracts of poorer, unwanted hinterland?

The late historian and social democrat Tony Judt wrote in 2010 that "the practical need for strong states and interventionist governments is beyond dispute. But no one is ‘re-thinking’ the state. There remains a marked reluctance to defend the public sector on grounds of collective interest or principle."

We need to re-think the state, and what is more, we need to look beyond our own backyards in doing so.

New Matilda

New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.

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