But I want to focus on something else. I can’t shake the idea that we’re way out of equilibrium in terms of optimal country size. If this idea is correct, then at least some of our problems could be the result of a mismatch between reality and the unexamined assumption that we all have to be in this together.
…if economic integration prevails regardless of political integration—say, tariffs are low and shipping is cheap—then political integration doesn’t buy you much. Many of the other public goods that governments provide—law and order, social insurance, etc.—don’t really benefit from large populations beyond a certain point. If you scale from a million people to 100 million people, you aren’t really better off.
As a result, if economic integration prevails, the optimal country size is small, maybe even a city-state.
In his book American Nations, Colin Woodard argues that North America is actually composed of 11 distinct cultures, each dominant in different parts of the continent. Many of our internal political divisions—over gun control, the death penalty, abortion, the welfare state, immigration, and more—may actually reflect these cultural differences.
Given what we know about optimal country size, a monolithic America makes less sense today than it did a century ago. What made America into the superpower that it is today is its massive internal free trade area. Now that trade barriers have declined worldwide, this is less of an advantage than ever before. It’s not at all clear that this diminishing advantage outweighs the cost of our divisive politics based on unshared cultural assumptions.
Truth and Traditions 