Borders are old-fashioned

In May of last year, Boeing, the enormous defense contractor and aerospace company, threatened to take its headquarters out of the country if the Export-Import Bank wasn’t reapproved by Congress. You can argue if the Export-Import Bank is a good idea or not but it is painfully obvious that Boeing’s ability to move out of the country is a grave challenge to American sovereignty. The true power of corporations in the modern world, especially in wealthy countries, is not their financial might, but their ability to employ thousands of people. Politicians know that if unemployment rises, if the economy retracts, their positions are vulnerable. This weakness gives corporations a huge advantage over states in this century.

States and their governments are restricted and defined by their borders, and borders are old-fashioned. Globalization, communications technology, and the rising economies of previously impoverished Asia and Africa are allowing large corporations to move around the globe to better serve their bottom lines. Another problem with states (and many corporations’ biggest gripe)? Taxes. Governments rely on taxing residents, goods, property, and commerce within their borders in order to fund their services, edifices, and institutions. But how can you tax a corporation if they’ll just leave? We often see this within the United States, corporations will relocate to a state with lower tax rates, and the states that those corporations move to are willing to trade tax revenue for employment. All of this gives rise to the impression of inequality: “the sovereign corporation gets whatever it wants but I have to slave away and bear an enormous tax burden.”

Another obvious example of the weakening position of the nation-state is the continuing rise of non-state actors. The gold standard for this was al-Qaeda before, ironically because of their aspiration to nationhood, the Islamic State. ISIS has destroyed the boundary that separates Syria and Iraq, a line set by the Sykes-Picot agreement between the British and French during the First World War. Few nation-states have arisen organically, most have had lines drawn for political reasons, Iraq and Syria, before the French and British drew their borders, were not nations but provinces of the Ottoman Empire. Communications technology and entropy has allowed non-state actors to gain power and redefine the physical spaces in which they operate. The decentralization of power is a key feature of the modern age.

Leave a Reply