Is the concept of a nation state even relevant anymore?

Did you know that prior to 1914, there were only two countries in the world (Czarist Russia and the Ottoman Empire) that required you to have a passport if you wanted to enter the country? It was only after the outbreak of World War I, that European governments started issuing passports, and even then, they were issued primarily to control the emigration of citizens with useful skills.

Passport requirements stayed in place after the end of the war, and led over time to the worldwide limitation of travel without the permission of governments.  According to Dollar Vigilante, there are now 196 “tax farms” (er, countries) in the world, each which require a passport for entry. But are passports even relevant anymore? How about the concept of a nation state itself? According to The Economist (of all publications), the answer may be “not so much”…

“Seen from the state’s point of view, multiple citizenship is at best untidy and at worst a menace. Officials would prefer you to be born, live, work, pay taxes, draw benefits and die in the same place, travel on one passport only, and bequeath only one nationality to your offspring.”

Well, no surprise there… Of course they would. It’s incredibly difficult for the state to lay claim to the productivity of a stateless individual. But as The Economist points out, today “life is more complicated than that.” In fact, it posits that “the old notion of one-man, one-state citizenship looks outdated” and points to the fact that more than 200 million people now live and work outside their birth countries. More from The Big E:

“The wrong response to this is political protectionism, with states forcing citizens to choose one nationality only, or hampering their right to multiple passports. This seems an odd approach, given that citizenship is so easily acquired. In some countries it is, in effect, on sale. In others, such as America, it may be an accident of birth, with no conscious choice involved. Rather than making a fetish out of passports, a better approach would be to use residence (especially tax residence) as the main criterion for an individual’s rights and responsibilities.

Lets face it, the world today is awash in immigrants and emigrants moving to and fro in search of a better life, more money, a better job, or better opportunities. Take little-old Panama for instance: The country’s first immigrants hailed from European countries like Italy and Spain. Canal workers were imported from the Caribbean and China and stayed. Today, immigrants are flooding into the country from the U.S. and Canada (expat retirees and entrepreneurs), Venezuela (those fleeing Chavez’s socialist experiment) Colombia (those seeking employment and a better life) and all other corners of the globe.  For the most part, the country has welcomed expats and immigrants with open arms, offering a variety of residency programs and allowing six month stays for regular tourists.

I used to live in Sierra Leone in the late ’90s, and even though the country was in the midst of a brutal civil war, the immigrant situation there was very similar as well: Lebanese and Indian merchants ran the economy — some of the most hard core business negotiators I’ve ever encountered — and “citizens” from The Gambia, Ghana, Guinea, and Senegal made up a substantial part of the local population. Interestingly, what united them was not some artificial nation-state created arbitrarily by colonial powers (check out the bizarre finger-like border of The Gambia sometime), but much deeper tribal affiliations that went back hundreds maybe thousands of years.

Immigrants searching the globe for opportunity, escaping oppressive governments, or simply looking for a better life are becoming the norm. It used to be said that the United States was a nation of immigrants, but today, that applies to the entire globe.

Smart countries are taking advantage of the trend. I’ve already discussed Panama, but countries like Singapore, Brazil, Uruguay and others have liberalized their citizenship requirements to encourage immigrants to take up residence on their shores as well. Why? In part, I believe it’s because of what I call the Nigerian Cabbie effect. As I wrote sometime ago about my encounter with a Nigerian cabbie in Washington DC, new immigrants have an uncanny ability to identify economic opportunities that native-borns simply can’t see.

My Nigerian cabbie friend for instance, had several successful businesses in the U.S. that most native born Americans would scoff at — used clothing exports, Palm oil imports, a nightclub that catered to West Africans, even an apartment rental business catering to other new African immigrants.

But the Nigerian Cabbie effect works in reverse as well: I had dinner with a friend here in Panama last night who is a recent college graduate from the U.S. He sees opportunities everywhere in this tiny little country that most native-born Panamanians just aren’t interested in. He’s looking into starting a hospitality school to train local Panamanians in world class hospitality, and is already outclassing local Panamanian marketers with his novel approaches to marketing the country’s many resort developments.

I’m not disparaging Panamanians by the way. I’m simply pointing out a fact: Immigrants tend to see everything as new and novel, and consequently can ferret out economic and business opportunities that native-born citizens just don’t see. And that is how economies grow and prosper.

Sadly, in ways both large and small, America is going in the absolute opposite direction. America’s policies of taxing its citizens wherever they are on the globe while intimidating foreign banks from even accepting Americans as customers is particularly perverse. The way we discourage new immigrants or even foreign visitors by treating them all as potential terrorists is positively retrograde. As a nation of immigrants, our national policy seems to be geared towards keeping citizens from leaving while preventing new immigrants from entering. Such protectionist policies will lose in the end to smart countries with a more fluid view towards citizenship, residency and immigration.

As The Economist points out, multiple citizenship is inevitable, and, at heart, rather liberal. It enables self-empowerment by allowing immigrant productivity and talents to flow to where they will be most encouraged and rewarded. And as that happens, the very concept of a nation-state is going to change dramatically.

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2 Responses to "Is the concept of a nation state even relevant anymore?"

  1. Uschipanama says:

     Austrian tax system is based on residency, meaning, only if you have the focal point of your life here in Austria (and therefore wan to use all the wonderful benefits of a social state) are you supposed to pay taxes (mind you, on your WORLD income…). But on the other side the also need to do a lot more to make it a more attractive place for those entrepreneurs, that bring in outsiders’ views and different ideas…

  2. Sometimes I think you two are living in my head. It’s uncanny. Except…you take it further and with more commitment. I sit in admiration.

    One day, I’ll be showing up at your stoop for some in-depth conversation. And while I’m there, I’d be happy to share some of my 20+ years in the hospitality arena with your friend. I’m sooo passionate about that.

    All the best!

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