"Here one suspects that the Icelanders are about to find out how the EU works. If they dare vote no in a referendum, they can always be asked to vote again, and again and again. Until they get the right answer."
Martin was of course alluding to the sham that was the second Irish referendum on the European Constitution Lisbon Treaty, where the Irish were bullied by the Brussels power elites and mammoth bureaucracy into going along to get along. The people of France and the Netherlands had previously rejected the European Constitution, and it was renamed "Lisbon Treaty" and rammed through Europe's parliaments as a mere emendation to the Treaty of Rome thus avoiding the nastiness of democracy. The Irish Constitution required a referendum for Ireland to ratify Lisbon, and as a result it was the only country to actually subject the document to a referendum.
Ireland rejected Lisbon in the first referendum, and a second one was held late last year, when it was at last ratified under heavy pressure from the European machinery.
This situation, and something not dissimilar on the horizon for Iceland beg the question--does federalism really serve its stated purposes?
As somebody who has traditionally been a committed believer in federalism, I now must express serious doubts. There is certainly great benefit to small, local government. The massive success of the modern city states of Hong Kong, Macau, and Singapore attest to this, as does the relative success of the smaller Soviet successor states like Estonia compared to larger ones such as Ukraine. This is not to say that smallness is an economic panacea, as there are plenty of examples of large successful countries and small poor ones.
The United States was historically the shining example of federalism's success--a perfectly struck balance of power between the national government and its 50 constituent parts. But Progressivism (especially with the advent of the Income Tax, the Direct Election of Senators, and the creation of the Federal Reserve) followed by the two World Wars and the New Deal substantially eroded this balance, and the subsequent decades only exacerbated this process, supported by a series of complicit Supreme Courts' universalist interpretation of the Commerce Clause.
The U.S. Congress is now the embodiment of federalist bullying, with the representatives of the various states being bribed and threatened to support legislation or risk being excluded from the doling out of fiscal goodies, which self-serving members of Congress rely on to secure their own re-election.
The justification behind federalism is a deluded belief that political union with other economically interested peoples is necessary to foster economic cooperation and coordinated security policy. This was the reason the thirteen sovereign republics of Atlantic North America abandoned their confederation in favor of a federation. This was the reason the culturally and economically diverse peoples of Europe originally began the process of integration. But as soon as power began to flow from Paris, London, and Berlin into Brussels, the people controlling Brussels had a sudden interest in expanding the size and scope of the political union, and threatened those who dared oppose that expansion with "exclusion" in much the same way heretics were excommunicated by the Papacy as a method to eliminate threats to its political power.
If this is the ultimate reality of federalism, it is no wonder that small republics like Chile have outperformed larger federations like Argentina and Mexico.
We should learn a distinct lesson from this as we make prescriptions for the world's economic ills:
"Cooperation" is all too often a political euphemism for coercion.
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