Wednesday, August 23, 2006


In Italy several teams in the top soccer league, including the titan Juventus, have been caught up in a match-fixing scandal. Juventus has been relegated to the third division, but wants to exercise the right available to all Italians to sue to have the judgment overturned.

Not so fast. The governing body of world soccer, FIFA, has threatened to ban not just Italian club teams like Juventus but the Italian national team from international competitions it controls if Juventus pursues the appeal. This is an extraordinary thing in a way – a transnational group is engaged in a struggle with a long-established nation-state over the legal options available to a group incorporated within that nation-state. It is an example of the increasing global phenomenon of transnationalism, whose growth holds both promise and peril for humanity.

The Oxford English Dictionary traces the first use of “transnational” to 1921 (referring to a “transnational economy”), and the first use of the comprehensive word “transnationalism” to 1973. So the idea is nothing new. But the threat transnational groups pose to nation-states is. The transnational moment has arrived. In many ways – in commerce, in international negotiations, and in warfare – the nation-state is being superseded by individuals who (facilitated by lower communications costs facilitated by such developments as faxes, the Internet, and the rise of English as the world's second language) join across national lines to pursue some activity that they find in their interests, often seeking to subvert national governments to their will. On the one hand citizens are employed by large corporations operating in many societies, who face national governments made less and less able by globalization to constrain their employment and sales practices. On the other, citizens form transnational pressure groups (often called, deceptively incompletely, “non-governmental organizations”) to make national-government policies conform to their goals. It turns out that the context of transnationalism makes all the difference with respect to how healthy it is.

One form of transnationalism seeks to pursue private goals through capture of the nation-state. The most well-known transnationalism of this type is the non-governmental organization. People all over the world who wanted to eliminate land mines organized a global campaign to pressure governments to sign on to a treaty doing just that. Feminist groups (and, increasingly, anti-feminist groups) use international conferences in places like Beijing and Cairo. Environmentalists organize conference in Rio de Janeiro and craft treaties in Kyoto to control the conduct of national governments.

It is easy to dismiss NGO transnationalism because of its comically bureaucratic nature; the UN Web site has over 5000 pages on the Cairo population conference. But what makes this form of transnationalism so dangerous is the claim by NGOs that they are "representative" in the same sense that, say, a parliament would be. In fact, an NGO is not representative at all but is instead simply a pressure group – a group of people with similar objectives formed to apply political pressure to a government. They pose as representatives because it sounds nobler, but in fact they are no different from the gun or steel lobby in U.S. politics (save for the holy aura that is sometimes affixed to them by the global media). They seek private benefits through the crafting of government policy – they rent-seek, in other words. Since the ability of political institutions to balance the conflicting desires of various public factions fades as we move from city council to state to national government to the United Nations, the ability of such pressure groups to short-circuit more local politics by going straight to the top is costly. Such centralized decision-making favors those able to quickly organize to wage media and lobbying campaigns, and so the inefficiency of having the UN decide what national governments should do about, say, family law is at least as bad as the inefficiency that allows car producers to lobby much more effectively than car buyers. In both cases, there is on the one hand a small group with much at stake per person, therefore generating much more effective political pressure. On the other is a very large number of people with at least as much at stake in total but very little per person, making their willingness to organize much lower.

So too global political structures can be transnational, and again this favors the highly motivated small group over the dispersed large one. The European Union has been able to amass power over national governments despite substantial public opposition because the governing and intellectual elite believe (accurately) that a more powerful but less politically sensitive EU will enable them to more productively rent-seek than if they must confine their political pressure to national governments with well-developed interest groups to counter them. Sometimes, as in the FIFA case, the rewards to subverting national politics are purely about money. Sometimes, as in the EU case, the rewards are more about power. Even the global jihad movement benefits from the ease of transnational coordination among the highly motivated. It is very easy for jihadis in London, southern Lebanon and Anbar to use modern communications technology to propagandize and recruit new enthusiasts. Plodding nation-states, in contrast, find it much harder to coordinate an effective response they all agree on (especially since each nation's preferred policy is a function of its own unique political dynamics).

The one exception (on balance) to transnationalism as rent-seeking is the multinational (or “transnational,” as critics prefer to call it) corporation. At the national level corporations can and do rent-seek all the time, procuring import restrictions, ethanol subsidies and so on. But the MNC's global reach actually serves to subvert these kinds of inefficient restrictions. To the critics of MNCs they limit the power of nation-states to regulate their behavior (even as the same people are most enthusiastic about NGO transnationalism). But in fact those restrictions typically serve to frustrate mutually beneficial trade – when anti-"sweatshop" activists frustrate the ability of shoe workers in desperately poor countries to gain more control over their own lives, for example. And so the rise of the MNC is so far a tremendous benefit for mankind because global competition and the ease of moving production facilities anywhere limits the ability of pressure groups to rent-seek at the national level. But if such corporations master the art of pressuring the EU or the UN (unlikely in the latter case at least for now, given that the UN and its admirers are more concerned with taxing global commerce than facilitating it), it will be a different ballgame.


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