Too Big to Succeed

10/04/2011 10:46 am EST

Focus: MARKETS

Igor Greenwald

Chief Investment Strategist, MLP Profits

The disparate nations that make up the United States are trapped in a futile war of ideas. It would be better to call a truce and go our separate ways, writes MoneyShow.com senior editor Igor Greenwald.

It’s easy to believe the European Union is doomed, as the 27-nation confederation seeks unanimous consent of its members for an underpowered bailout fund, which will then front whatever debt purchases the European Central Bank deems necessary to save French, Italian, and Spanish banks.

That is, if recalcitrant Slovakia is willing, now that foot-dragging Finland has been appeased. Otherwise, it’s premature kaput for German plans to turn Greece into a Mediterranean outpost of Teutonic discipline.

This is a long-running farce, and watching it from across the ocean, it’s easy to feel smug. How silly Europeans were to adopt a single currency without a fiscal union!

The whole unwieldy enterprise has turned into a German export-protection racket, with Germany’s less efficient trading partners denied relief by way of devaluation. Not only is this economic model plainly broken, but European institutions clearly aren’t up to the task of repairing it—not while German decisions on the rescue fund are subject to a Maltese veto.

On the other hand, if the US any guide, a sovereign union hardly guarantees a functional government, much less prosperity. Washington is a battlefield of two political parties with distinctly regional power bases that hardly speak the same language any more, cling to mutually exclusive values, and can no longer agree on budgets, the fitness of appointees, or fundamental economic precepts.

Geography is destiny. Europe’s modest size has led the many peoples crammed into its peninsulas and heart to pursue confederation as an alternative to ruinous wars. Meanwhile, the vastness of our continental empire is nurturing division and discord.

As the chairman of the Pennsylvania Republican Party said two months ago in regard to Rick Perry’s then-prospective candidacy, “Texas is really far from Pennsylvania, [and] not just geographically. We don’t relate at all.”

This is one Republican discussing another. What hope, then, does Perry, a native of a nation author Colin Woodard calls Deep South, have of getting along with Ben Bernanke, a native of the south who spent his formative years at Princeton and MIT, those citadels of The Midlands and Yankeedom?

As Woodard points out in his new book, American Nations: A History of the Eleven Rival Regional Cultures of North America, New England-centered Yankeedom has for hundreds of years put faith in government to engineer a better society. Deep South, in contrast, mixes authoritarianism with a deep distrust in government initiatives.

It’s no accident the loudest challenges to the Federal Reserve’s economic stewardship have come from the two presidential candidates from Texas, as well as other Southern politicians.

Within the Fed, the most prominent critic of the current interventionist policies represents Texas as well. In contrast, Bernanke’s biggest backers among the regional Fed presidents hail from Boston and San Francisco.

Woodard is hardly the first to cover this ground. Thirty years ago, Joel Garreau’s The Nine Nations of North America was a bestseller. But whether there are nine of them or 11, those nations have kept drifting apart in the intervening decades, and today their failure to agree on fundamental values is the principal cause of the federal government’s gridlock.

I’ve beaten around the bush long enough, and have a confession to make: I’m a secessionist. By this, I don’t mean that I don’t love my country, or am pursuing some crackpot project for its formal division in the next few years.

But I do believe that all of North America would be better off if my adopted Yankeedom wasn’t roped into an endless values debate with Deep South and Tidewater, to keep borrowing from Woodard’s map. I do believe that New Netherland, as he calls the greater New York metropolitan area, has more in common with the old Netherlands than it does with the much less distant Appalachia.

So, no, Lincoln’s misguided war didn’t entirely wipe out the secessionist sentiment that’s simmered on and off in my neck of the woods since the early part of the 19th century. I know of those precedents, in part, because they’ve been researched and popularized by the right-wing Southern states-rights advocate Thomas J. DiLorenzo.

He and I could probably agree on nothing, besides the fact that we belong to different nations and should live in different countries.

The age of empire building has come and gone. Ours cost us plenty of blood and treasure, and continues to do so to this day. But continental empires are far from ideal decision-making units.

In fact, secession is the order of the day across the globe, and not just in benighted places like Sudan and Timor. The Czech Republic and Slovakia are both better off after their friendly divorce, and better placed to cooperate within the European Union. Scotland is ruled by a party that favors independence from the United Kingdom.

The centrifugal forces pulling the United States apart will not cause a breakup tomorrow, or next year, of course. But don’t put too much faith in our 235-year experiment, either. When these things go off the rails, they do so fast.

I should know, after growing up in another empire that no longer exists. Kiev, the city of my birth, was Russian- or Soviet-ruled for more than 300 years before transforming into a capital of a sovereign state. Ten years before that watershed, the very possibility was seen as science fiction. Today it’s an established fact.

If the United States eventually transforms into something else, it will be no one’s fault, besides history’s and geography’s. And its formerly warring nations might get along better once they’re on their own.

As our common ancestors knew, good fences make good neighbors.

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