Can separatism bring better governance?

On October 1, Catalonia (a Spanish region that includes the country’s second largest city Barcelona) was scheduled to perform a long-sought independence referendum. At the time of writing this article, it wasn’t clear whether Catalans voted in favour of the independence of even whether they voted at all as Spanish central government opposed the referendum vigorously. Nevertheless, Catalan separatism seems to reflect a wider centrifugal trend seen across Europe but also United States and India.

Fred Heineken's proposed redrawing of European borders.

Fred Heineken's proposed redrawing of European borders.

From Scotland to California to Telangana, separatists advocate for breaking up their states… while staying part of the continental “federation”. Traditional arguments for and against separatism revolve around national feelings and historical rights. However, the states of the EU, US and India can be also regarded simply as administrative units providing public service. And there are good reasons why to consider some of them too large or too small to perform its role.

Arguably, large member states are also simply too large and diverse to provide effective governance. At least that’s the logic behind the “Six Californias” initiative launched by venture capitalist Tim Draper in 2013. Draper would like to partition California into six parts to address differences in its economy, population growth and geography. In Europe, all large member states are already further divided into smaller parts that are responsible for large part of practical governance. Catalonia with its extensive autonomy may ask: “If we have Barcelona and Brussels – why do we need Madrid?” Conversely, tiny Delaware and Luxembourg exploit their position to become tax haven and their oversized representation in federal politics raises democratic questions.

Suggestion that European should become a federation divided to smaller parts of similar size is not new. Freddy Heineken, from the famous beer family, advocated for creating new states with 5-10 million citizens each. He believed that the reform could provide better governance for the whole continent as it would mitigate risk of large states dominating small ones and competing with each other for domination –  Europe’s painful 20th century story.

Separatism of any kind is usually abhorred internationally as it invokes memories of aggressive nationalism and even wars. But the experience of my former country Czecho-Slovakia may be a showcase example that peaceful divorce can bring improved governance without harm. Increasing urbanization and globalization shift most policy-making and administration from central “national” governments to both more global and local levels. Might large states become simply an obsolete extra layer?

In monetary policy (taught at Booth in the International Financial Policy class), Optimal Currency Area describes criteria for a sound currency union – for example, labour and capital mobility, similar business cycles and balancing transfer mechanism. Perhaps a similar concept of “Optimal Governance Area” should apply to fiscal and administration policy. Perhaps we should stop treating current states, which are mostly random products of history, as “sacred homelands” and discuss critically how they should be redesigned to provide better governance.