Adam Smith Institute

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This argument about Catalonia is true but incomplete

Catalonia, as we've seen, has a number of people in it who would like to be independent of Spain. Whether this is a good idea or not is not for us to decide. But, as this Spanish writer puts it, it is possible to construct an argument about it:

I live in Pozuelo, a municipality in the outskirts of Madrid, where I commute daily. Pozuelo is the richest city in Spain, with an average household income of €73,000. Pozuelo is full of good private schools. Many of my neighbors use neither the public school system nor the public health system.

Let’s imagine one of my neighbors starts a movement for Pozuelo’s “right to decide”. His proposal to the neighbors is simple: we will remain in the EU, but we will be independent from Spain.

He would explain that the over €35,000 in taxes that each of our households currently pay (including over €20,000 in income taxes) finance services that we don’t consume. He would tell them that Carabanchel is stealing from us, just like the Andalusians and the people from Extremadura steal from us. He will promise a fiscal dividend of €20,000 per family.

OK, yes, that could be true. Further:

I hope, dear reader, that the argument is clear. The right to self-determination is not compatible with a welfare state and high-quality public services, especially in a single and integrated market. The rich will always have an incentive to benefit (single market, freedom of movement) without paying for redistribution to the poor.

That’s why Europe cannot, must not, allow these self-interested demands to succeed. Tuscany or Bavaria would reap great benefits if they could split, without cost, from their states to the detriment of their fellow citizens in Southern Italy or East Germany.

That would also be true. As the arguments about Scottish economic independence show us, there are indeed cross subsidies within the nation states. 

But that's not the end of the chain of logic at all. We all do agree that we've different redistributional responsibilities to different groups. No one at all thinks it odd that we redistribute more to the children in our households, less to those in other households in our same nation and very much less to those in other nations. If this were not so then there wouldn't be all that fuss about whether Germany should be paying Greek government expenses or not. Or within nation redistribution would be that 0.7% of GDP that we distribute as overseas aid.

We all do indeed agree, the occasional moral philosopher aside, that the volume of that cash flow is going to be different according to whether the recipient is perceived as in-group or ex-. Yes, we do still argue about how large the flow is but the basic idea of it being different is well founded. 

The argument about secession and redistribution then becomes, well, who is in-group and who is ex-? It is entirely true that if one of the richer parts of Spain leaves Spain then poorer parts will get less redistribution. But we cannot just say that it must not happen therefore - we've got to have a justification ofwhy the different parts are all to be considered in-group.

And if we're honest about it it's really not clear at all that current national borders do indeed usefully define who is in- and ex-. As Ireland leaving in 1921, Scotland arguing about it now, Yugoslavia breaking up, the implosion of the Soviet Union and all the rest show. 

Just because the lines on the map are as they are isn't a sufficient justification for the insistence upon redistribution across that total grouping. For that's just not how people work, is it?