The Sovereign Individual

Most of us never really think about it but our system of government rests on a base level assumption that the individual citizens of this or any state are sovereign.

Sovereign, what does that word mean? According to Merriam-Webster's dictionary it means: "one possessing or held to possess Sovereignty," or more specifically, "one that exercises authority with a limited sphere," or finally, "an acknowledged leader."

In the case of the United States of America the Preamble of the Constitution acknowledges the supreme power or authority of the people who come together to create the government. The Preamble says in full:

"We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."

In addition to that implicit acknowledgement of the supremacy of the individual as the source of authority to sustain the legitimacy of the state, there is two other very important amendments to the Constitution appearing in what has come to be known as the "Bill of Rights:"

Amendment Nine reads in full:

"The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

Amendment Ten reads in full:

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people."

Taken together those three brief passages acknowledge the supremacy of the people as the ultimate source of power and authority delegated to the government.

Over the past couple of hundred years the pendulum has swung pretty far away from the assumptions implicit in those statements. Now the state has come to assume more and more power, the people are currently (even after the dreaded Bush tax cuts) paying about 300% of what serfs paid the Lords when power was delegated to ruling families via the "Divine Right of Kings" under which system the people were mere vassals of the state. Today the vast majority of people meekly submit to various indignities: Random searches, SWAT team raids, drunk driving traffic check points, presumed guilty till proven innocent audits by taxing authorities, significant limitations on free speech (especially on college campuses--making a mockery of the term "academic freedom"), random drug testing and even partial disrobing in order to board an airplane.

The question is how much farther can the pendulum swing before it begins to reverse course?

The evolution of technology mentioned in The Rainmaker's most recent post might be indicative of a shift in power and a return of power (sovereignty) to the people.

This shift was predicted back in 1997 by James Dale Davidson and Lord William Rees-Mogg in their book "The Sovereign Individual," which The Rainmaker has read and heartily recommends. Davidson and Rees-Mogg aren't sure that the concept of the nation state is viable. They point out that governments spouting patriotism tend to manipulate citizens into supporting social policies, monetary policies, wars and ever more intrusive government creating a swarm of unintended consequences that eventually can destroy the state's viability. When the book was written in 1995/1996 and even when the book was published this theory seemed like a stretch.

But times change and at about the same time the book hit the shelves a guy named Zimmerman released an encryption program for computer files and communications called PGP ("Pretty Good Protection"), which may prove to be the death knell of the modern nation state. Actually the more likely result is a more level playing field between the state and its citizens.

PGP together with online currencies can empower a Sovereign Individual to take real steps to assure his or her privacy, financial independence, physical safety and political liberty. Thus the equilibrium that was disturbed in the United States during the 100 years between the creation of the first national bank and the eventual imposition of the Federal Reserve System/United States Income Tax inducing the pendulum to swing towards ever greater state power at the expense of individual liberty might be checked and the pendulum could be starting to reverse its course towards greater individual Sovereignty.

The outcome is unclear. Stay tuned.

Technology and the State

According to Martin Van Creveld in "The Rise and Decline of the State," techology plays a crucial role at each end of the spectrum. Beginning in 1300 AD and continuing until 1975 the state was enhanced by technology; however, beginning in 1975 and continuing until the present the trend has been for technology to be more problematic to the state.

Advances in such diverse technological areas as printing, weapons, medical treatment, sanitation, farming, communications, media and transportation all served to enhance the state for most of the past several hundred years.

Yet in the past 38 years technoligical progress in many areas has appeared to damage the state's viability:

• Transportation: The development of the shipping container, piggyback rail cars, and jumbo jets capable of hauling large amounts of freight dramatically enhanced trade. As trade increased the interdependence of states upon each other, lowered individual state's freedom of independent action as well as each states economic independence. Increased efficiency in the shipment of data is equally challenging. For example, in the era of global currency trading that approaches $4 trillion each day, it is now difficult if not impossible for any state or group of states to actually control the value of any state's money.
• Media: The ability of the nightly news to deliver graphic images of the costs of war in real time or to show either the brutality of local police or the crackdown on disidents in totalitarian (or for that matter "democratic" societies) as well as the media's ability to deliver images of the "good life" all combined to be inherently subservisive to the power of the state. The advent of decentralized media delivered via the Internet has challenged the major media outlets and in many cases reduced their news coverage ability to the point that they are becoming little more than celebrity news services.
• The Internet: Originally the Internet was built as a means of networked communication assuring a state's liklihood of surviving modern war and weapons systems. More and more, especially with the development and implementation of encryption tools, the Internet has become the preferred means of linking political dissidents, coordinating asymetrical warfare (terrorism) and facilitating tax evadors/political drop outs. This evolution has become perhaps the most significant challange to the power of the state in centuries.
• Weapons: The proliferation of weapons of mass destruction, coupled with demonstrated state inability to reliably account for much less control the proliferation, theft and use of those weapons of mass distruciton is a real threat to the state. If the state cannot maintain is monopoly on violence to protect its citizens, what good is it?
• Entitlements: The use of entitlements based on bad economic models to buy loyalty or at least silence dissent is becoming a significant problem to industrialized western democracies who are faced with the inability to keep the promises they have made. In France successive governments have been paralyzed by general strikes and violence in the streets when they have attempted to rationalize benefits by bringing them to sustainable levels. This is likely to spread until eventually the state is unable to survive economically. Already citizens of the European Union who live in Germany are refusing to accept Euros they can see (by reading the currency) are created in less frugal member states such as France and Italy.
• Immigration: States are demonstrating an inability to control and secure their borders throughout the world. Poor people, oppressed minorities and political dissidents as well as skilled workers and tax fugitives are voting with their feet. Cultural conflicts undermining the cohesiveness of states are becoming more prevelant, whether between native born and muslim immigrants in Western Europe or illegal immigrants and the native born in the United States.
• Medical Science: Advances in medical science are significantly lowering infant mortality, increasing life expectancy and lowering birth rates. The demographic consequences of these trends are already a major threat to the viability of states such as Italy and Japan. However it's not just industrial societies that are experiencing lower birth rates. Virtually every state is experiencing this phenomena, even fundamentalist theocracies in the Islamic world and traditionally Roman Catholic societies in Mexico, Central and South America are seeing significant declines in the birth rate. Thanks to the "One Child" policy, the demographics in the People's Republic of China are making it a state with one of the most quickly aging populations populations on the planet. The implications of this are not widely understood yet but the result will likely be increased political instability around the world.

It is impossible to predict with any certainty where these trends will take civilization and whether the state is doomed or will be able to adapt. Next, The Rainmaker will consider one potential scenario, the rise of "The Sovereign Individual."

The Decline of the State

"The state, which since the middle of the 17th Century has been the most important and most characteristic of all modern institutions, is in decline. From Western Europe to Africa, many existing states are either combining into larger communities or falling apart. Many of their functions are being taken over by a variety of organizations which, whatever their precise nature, are not states." This was written by Martin van Creveld, a Professor in the Department of History at the Hebrew University, Jerusalem in his book "The Rise and Decline of the State," published by the Cambridge University Press in 1999.

Who could have imagined as they sat in Number 10 Downing Street at the end of the 19th Century that within 100 years the British Empire on which the Sun never sat, would be reduced to Great Britain and Northern Ireland or that there would be serious talk in Wales and Scotland of secession.

Who could have imagined as they stood atop the Kremlin watching the annual May Day parade in 1980 that in a little over a decade the USSR would be no more and the Berlin Wall would be dismantled by the people of a united Germany?

Czechoslovakia and Yugoslavia are no more. Belgium is in the midst of dividing itself. Ethnic groups such as the Basques and Kurds are eager to part ways with Spain and Turkey. Russia is busily dismantling Georgia, birth place of Joseph Stalin.

How many Americans are aware of the current movements in Vermont and Hawaii to secede from the United States?

To our south Mexico has been fighting for a decade or more to hang onto Chiapas, while Sonora and other northern areas find more and more in common with Arizona, New Mexico, California and Texas. In western Canada and the northwestern United States there is a growing affinity.

In "The Untied States of America," Juan Enriquez visualizes alternative realities in which the United States could grow to as many as sixty states or shrink dramatically from the current fifty within a generation. His speculation is twenty years after a similar analysis by Joel Garreau gave us "The Nine Nations of North America."

And, in his book "The Black Swan" Nissim Nicholas Taleb describes the disintegration of his country, Lebanon.

What is behind this uncertainty regarding state stability? According to the analysis by van Creveld, the state rose to dominance as it became able to achieve a monopoly on violence and the supply of money while becoming a nanny to its citizens.

The primary function of the state in van Creveld's formulation was to wage War on other states. War requires the ability to raise money, tax, organize and mobilize. War also provides an emotional bond and unifying force to bind the state. War necessitates the state. As Randolph Bourne famous essay points out in its title: "War is the Health of the State." Another meditation on this premise is "The Report from Iron Mountain" most probably written by Leonard Lewin and published in 1967.

In the context of creating an emotional bond and a unifying force to bind the citizen to the state, the Olympics are a distant second to War if for no other reason than that the stakes are so much more sane.

Once the expense of War gets to a certain point it becomes advantageous for the state to take control of the medium of exchange and store of value, the money. This enables the state to disguise the true cost of warfare as well as the true cost of the state by the convenient device of debasing the money. Eventually the costs became so high that money became decoupled from any objective measure of value. The ability of a state's money to continue as a medium of exchange is really a function of the willingness of the populace to accept the paper. Put another way, modern state money is really a confidence game.

Simultaneously, in order to demonstrate a value proposition sufficient to justify the state--while keeping the natives satisfied, stifling dissent and creating loyalty--Bismarck came up with the idea of the welfare state. His original system of Social Security, subsequently copied around the world, used the false mathemetics of the proverbial Ponzoi scheme to create the illusion of real and sustainable financial benefits for the individual citizen of the state.

A brilliant analysis of the rise and operation of the American welfare state is, "Dependant on DC" by Charlotte Twight. The Rainmaker suggests you explore Twight's book in depth if you doubt any of the assertions made here about the welfare state.

However, in the last half of the 20th Century the underpinnings of the state became more stressed.

• Beginning in 1945 the advent and use of nuclear weapons made the prosecution of the state's primary function--War--a more difficult, expensive and risky proposition. Use of these ultimate weapons was effectively denied to Superpower states such as the United States and the USSR, each of which suffered unexpected military reverses in Viet Nam and Afghanistan, but neither deployed nuclear weapons.
• Beginning in the 1970s the inherent unsustainabilty of the welfare state became apparent. For a time most states attempted the expedient of raising the taxes on workers to sustain the vaunted "Social Safety Net," but eventually with payroll taxes approaching 40% in Western Europe the carrying capacities of modern state economies maxed out, resulting in economic stagnation. The people became ever more aware that the welfare state was at best an empty promise and at worse a fraud designed to exploit citizens.
• Beginning n the 1980s the decoupling of state monetary systems from real value led to a series of inflationary spikes, speculative bubbles and collapses continuing into the 21st Century demonstrating to more and more people that currencies of nation states are often worth even less than the paper they are printed on and are really mechanisms to impose hidden taxes on citizens while hiding the true cost of government.

Finally, in the early 21st Century the planet's remaining Superpower became involved in a War with a shadowy group of terrorists that were able to resist the massive power deployed against them, evading defeat, capture and punishment for longer than the Axis powers were able to survive after Pear Harbor. In an effort to mobilize and motivate its citizens the government of the United States embarked on a concerted program of increasing state power, eroding civil liberties and symbolic measures such as forcing travelers to remove clothing and surrender toiletries in order to instill fear and justify loyalty.

The Rainmaker believes that as we move deeper into the 21st Century the relevance and power of the state will continue to wane. States in one form or another will probably continue to exist for the foreseeable future, but they will be a shadow of their former selves sooner rather than later.

Olympics and a Preview of Comming Attractions

Is there anyone else who has watched no part of the Olympics?

The Rainmaker has not seen a single instant of Olympic video. Of course even our concerted effort to avoid Olympic coverage has not been sufficient to escape some print coverage of the games.

The whole Olympic movement serves to perpetuate nationalist identity that is really obsolete as the world enters the 21st Century. Actually the more relavant measures of community are much more local and much more global. The "national" is really much less significant.

To appreciate The Rainmaker's point, read "The Untied States of America" by Juan Enriquez.

More about this over time. But to really appreciate the upcoming conversation read the book.