Secession

Many people are angry about the outcome of the election.  While there is some soul searching, there is also a large and growing disgust, not just with President Obama but with the electoral process and the country itself.  Out of anger and frustration, some people are calling for secession, though it’s unclear how many.

It is easy to see the attraction.  Let each “side” go its own way.  Red states can be “conservative” and blue states can be “liberal” (those terms have different meanings in America than elsewhere).  No more strife at the ballot box; let each side be governed as it chooses.

There are two problems.  First, there is not much difference between the “liberal” and “conservative” positions.  Both believe in paper money, public education, regulations and permits, transfer payments, progressive taxation, government-provided retirement and healthcare, massive taxes on inherited wealth, government-provided transportation, and many other statist ideas.

Second, these two groups are not neatly sorted out with one group on one side of a line and one group on the other side.  Even in the “liberal” state of California, the “liberals” are in Los Angeles and San Francisco and the rest of the state is “conservative” for the most part.

The situation today is totally unlike the situation in 1860 (the only time secession was attempted), in which there were distinct ideological groups and they were geographically separated.

Today the majority is unhappy with the consequences of ideas they themselves believe in.  We can see this with the “conservatives” saying that if they were elected, they would repeal Obama’s version of socialized medicine and replace it with a “common sense program to provide universal health care access.”  As if their version would somehow incorporate “common sense”.  As if there could possibly be “common sense” in taking money from some people and using it to give free benefits to others.

Secession is no solution for the any of the problems that plague us today.  Let’s look at what it would mean in reality.

The original idea behind Southern secession was that states have a “right” to allow whites to impose slavery on blacks.  Of course, states do not have “rights”.  Rights are by definition and by nature individual.  But many today hold the idea that states should have a “right” to impose the laws that the local voters desire, such as imposing religion on the population, or group-based welfare.  These ideas will fail at the local level for the same reason they fail at the national level.

Now think of what secession would mean, especially if it really picked up momentum.  Ultimately, there would be 50 countries (or more—why can’t Northern California secede from Southern California, if California can secede from the US?), each with its own diplomats and armies.  There would be innumerable borders, across which the flow of people, goods, and money would be restricted and/or taxed.

What would happen if people in each region were forced by circumstance to eat only what could be produced locally?  Once the flow of oil stopped, the people in arid western states like Arizona would perish, as there is little water without pumps powered by diesel or electricity.   And how would oil pass through so many borders between mutually distrusting (if not hostile, envious, or trade-warring) countries?

What if other consumer goods had to be produced locally?  There could be no such thing as a computer, as the chips in computers require a worldwide market.  There could not be 50 local Intel corporations.  Nor motor manufacturing, pharmaceuticals, pumps, power plants, lighting, etc.  Even if there were no wars—started because one of these little countries thought to plunder another—there would be large-scale death and a huge decline in the quality of life.

Could law enforcement exist this way, and what of respect for law and order?  It would be an environment of strained public budgets combined with mass anger.  Those who feel entitled to be given free stuff could form gangs to take it from anyone they find.

And think of your money.  You wake up one day, and the US dollars in your bank account are replaced with Texas “Stollars” or “MontanaBucks”.  North Dakota already has a state-run bank, and other states could follow suit.  The only thing worse than the current system where money is borrowed into existence, is one in which the legislature can print it at will.  Could “Dakotars” hold any value?

Breaking this once-great country into 50 remnants will guarantee that we collapse.  And this is why I am writing about secession.  The theme is the same as with the gold standard.

We must work to prevent collapse.

I don’t know if some Romans in 465CE thought that collapse would help them restore a more honest form of government.  We do know now that their civilization did not bounce back for over 1000 years after it collapsed.

The fight for the gold standard is the fight to preserve civilization and prevent collapse.  Opposing secession is part of the same fight.

This article originally appeared in The Gold Standard, the journal of Gold Standard Institute.

 Dr. Keith Weiner is the founder of DiamondWare, a VoIP software company. He has a PhD from Antal Fekete’s New Austrian School of Economics in Munich. He is now CEO of Monetary Metals, a precious metals investment fund. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. He is also president of the Gold Standard Institute USA.

© 2013 by Keith Weiner

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19 comments to Secession

  • bigmac

    Keith, another excellent post.

    IF there is economic collapse (I sure hope not) it is all up for grabs. Secession is only one scenario. The political situation would become very volatile as people would lose complete trust in current leadership (on all sides). Then, people would be willing to entertain ideas from those previously thought of as extremist (no, not the “light” so called extremists the Dems and GOP point to in each other’s camp). The power gap would then be filled by those new leaders with “new” ideas – e.g. Germany 1934.

    You make the cogent point that perhaps we all ought to look in the mirror for someone to blame for the current situation. Each side of the US political system want to regulate behavior of folks on the other. The laws get passed and these same laws get extended or used by the other side against the first side that implemented them. Folks don’t realize that the more we ask government to do, the more power we give it to regulate our own lives.

    It is no wonder that we have a system that is unresponsive to our demands – it has become its own corrupt entity. Our politicians now buy our votes, skew the law in favor of special interest groups (unions, public employees, corporations, environmentalists, etc.), leaving the “silent majority” with the tab and the consequences. Is it any wonder $1B was spent by each POTUS candidate’s campaign? Is it any surprise we see “career” politicians, and a “revolving door” between high paying jobs with special interests and bureaucrats/politicians?

    The gold standard is but one of the many things we need to be fighting for.

    Thanks for your insight.

  • roger

    Oh man, succession sounds horrible. Let’s try it anyway.

  • sam baker

    secession doesn’t mean 50 countries and automatic economic collapse. we would have saved 650,000 lives if Lincoln just let the south seceed. Weiner’s argument is a bogus slippery slope argument. what if the south seceeded in 1860 and implemented a gold standard?!??? we would have a choice beetween two countries instead of being held hostage by political and economic elites of the East Coast establishment.

    • dd

      i’m with Sam here. i am from the Northeast but i empathize with the South. took me years to unlearn the lessons taught to me in school, as the winners write the history books. i love that slavery was abolished, but that was not the first reason for the war and didn’t really become an issue until 1862. and slavery was not exclusive the South, was already in delcine and was virtually dead in the Americas by the turn of the century.

      the North was pissed at the South for selling cotton and other agricultural and raw goods to places other than the factories of the North, and the North taxed their finished goods desired by the South to the point they were too expensive. i’ll stop short of calling it “taxation without representation” but it’s not all that far off.

      that war did not need to happen, and while Lincoln achieved the admirable (if not inevitable) feat of ending of slavery, he caused unaparalled death and human suffering, to Americans, in American history when in relation to the population at the time, was many multiples of any other conflict.

  • bigmac

    Sam, interesting premise.

    You are assuming that we’d see a South that would like similar to today’s south. You are assuming that both World War’s would have seen participation of the South or that without it the outcome would still have been the same.

    I think if Lincoln let the South go, it would have had strife at one time or another. It could have come from elements within the South that would eventually overthrow slavery – perhaps their own “Civil War”. I also fear that the South’s “culture”, with potential spite/jealousy at the North’s economic success (already evident in the mid 1800s), had the possibility that they would have aligned with the Axis.

    But this is all speculation, not unlike the notion that there’d be a “choice between two countries instead of being held hostage (within the current one).

    • dd

      the South largely wanted to be left alone to pursue their agrarian society, which was to include free trade, which was squashed by the North. that’s whey they there and not the North.

      had they been allowed, i doubt any of what you said would happen. they’d be flush with savings, which would have been invested, we know where this is going.

      funny, because the “winners” are still at their old tricks. decrepit inner cites, crumbling infrastructure, no raw materials and bully tactics to anyone against their controling ways … but at least they have shopping and culture.

      • bigmac

        “the South largely wanted to be left alone to pursue their agrarian society, which was to include free trade, which was squashed by the North. that’s whey they there and not the North.”

        dd, this part may be true, but I think it is pure unprovable speculation to say what the South would look like Today had they “won”. My point was to suggest there are other possibilities that would not have been so rosy an outcome as Sam suggests.

        I’d rather look at the reality of today: A secession would be motivated out of some economic collapse, or something close. That would be a necessary trigger to cause the majority of folks (65-75%, especially from the “secessionist states”) to “completely” lose faith (as people would have to lose/give up their “skin in the game”) in the current political system (many throwing the proverbial “baby out with the bathwater” on founding principles).

        In that scenario, it can quickly boil down into chaos, and history has shown how that may play out, with people then looking for “new ideas”. There will be “leaders” coming out of the closet, perhaps most of whom have even less of our interest in mind than the current “leaders”. Secession may not even have a chance to happen.

        Short of economic collapse, I’m not sure what kind of burden/issue would trigger it for a significant majority (especially as the current administration and MSM play up the populist arguments and strategically incompetent GOP leaders are forced to acquiesce on a series of “popular” issues). But, I am worried about a “third term”. To me that would be a political signal that “rule of law / checks and balances” has completely lost all its power. If Bloomberg can get away with it (what would he have thought if Giuliani leveraged his popularity after 9/11 to change the law to keep him mayor – also because of an “emergency” – perhaps putting that to a vote?), Obama certainly will.

        • dd

          bigmac, as usual you make good points and are very reasonable. i’m not sure what would happen in the here and now under current circumstances. you may be right. i think it could work but not for sure, of course. my only point is that too many people with different opinions are bound by a baseless joke of a currency. not sustainable.

          Bloomberg represents all that is wrong with humanity, he is a control freak statist.

          my big beef is with a gross mistelling of history with regard to the Civil War. i can’t even tell the truth for fear of being ostracized … of course i do anyway. they laugh at me only they don’t know the joke is on them, and they are not prepared for the truth, which is coming.

  • Eightman

    Three points: 1)Secession was tried twice, once in 1776 (a success) and another time in 1861 (a failure). 2)The country could be divided into “Red states” and “Failed states”. To be more precise if all the “Red counties” in the last presidential election formed the 2nd. American Republic it would be viable from day one. 3)The “trigger” for this secession event would no doubt be the (inevitable) collapse of the U.S. currency. In such an occasion the currency question would be moot. Gold and silver would be the De-facto money.

    • dd

      now that’s more like what i think.

      look at europe, they got together just to make their failure come quicker. that doesn’t mean they can’t trade resources or transportation methods.

    • bigmac

      There were southern leaders and media at the time before the Civil War who were confident(and boasted such) that secession would be “bloodless”. Some northerners were equally delusional, to the point that they had civilian spectators (!) at the First Battle of Bull Run/First Manassas, thinking they’d see an “easy win”.

      It is not a straight and clean line from point A, today, to point B, the “ideal” outcome from secession. There is a very real risk we may not even get close to point B, under the scenarios that trigger “secession” to take off.

      • Eightman

        The session of 1776 was not “a straight and clean line from point A, today, to point B” either. But in the end it prevailed. But the scenario in my comment is not a replay of the failed session of 1861. My scenario starts with the collapse of the dollar and the Federal Reserve system. As Mr. Wiener has stated the purpose of the Federal Reserve is to create counterfeit credit. The Federal government is “fueled” by counterfeit credit. Without this “counterfeit coin” the present monstrous progressive state could not exist in America.

        Once the “World’s Reserve Currency” collapses it is almost certain that fiat currency and central banks will be discredited for good. Out of necessity gold and silver will resume their monetary roles. States with sound economies (net real wealth producers) which tend to be the Red States will embrace this. States without sound economies (fiat wealth/Blue States) will resist sound money policy.

        Once this is established a group of Red States will at some point form a second union for the common defense. This union will have many advantages over any possible opponent in the “Failed/Blue States” not the least of which is the ability to meet a military payroll.

        • dd

          absolutely, especially on the Reserve Currency. people mistakenly expect this to go on forever, much like housing price increases.

          also don’t forget that most of the soldiers are from Red States, at least the ones that do the majority of the fighting.

  • dd

    Lincoln achieved an incredibly admirable social result, at tremendous human cost. but i think we can all agree on the morality of that end, which is really not debateable. however, let’s just be honest about Honest Abe, he didn’t really care.

    in a letter to Horace Greeley on August 22, 1862, almost a year and half after becoming president:

    “My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union.”

    this was about States Rights and the disagreement therein.

    • JimmyG

      Emancipation only applied to slaves in states that were in rebellion and the Federalist army had to enforce freedom as they defeated the South. Besides, TEXAS is the only state that was a Republic and joined with the understanding it could succeed. The other 49 states would destroy us rather than let us go. We are all in the same whirlpool headed to the same septic tank.

      • dd

        JimmyG, another great point. the great emancipator didn’t free slaves in border states (i believe ones like MD, KY, MO, etc.) as they stayed loyal to Lincoln and the Union.

        and while this is more opinion, it would appear to me that after military usage, Lincoln wasn’t exactly empathetic or proactive in treatment of released slaves, post-War.

        • bigmac

          Both you and JimmyG have good points to make. We lose sight of the fact that the people we lionize are human beings and often have contradictions in their actions/positions vs their character/beliefs.

          Check out (google) Lincoln’s conflicted feeling and position in his letter to his slave owner friend Joshua Speed in 1855, and his disposition in his 1858 debates with Stephen Douglas.

          Still, Lincoln does get the “credit” for eventually making it happen, just like our Founding Fathers get “credit” for establishing our system founded on the notion that “all men are created equal”, while many still owned slaves.

          Names like Washington and Lincoln take on a meaning for something greater than their person.

  • kito

    The only thing worse than the current system where money is borrowed into existence, is one in which the legislature can print it at will. Could “Dakotars” hold any value?……

    exactly what is the difference between having it borrowed into existence and printing? nothing. absolutely nothing. why would you be naive enough to think differently? the fed provides whatever is needed ( and WILL ALWAYS PRINT WHAT IS NEEDED OR THEY LOSE THEIR “INDEPENDENCE”), and returns the profit on interest to the treasury….sounds like printing at will to me.

    if you think for one second that a gold standard would prevent a collapse, you are not staring at reality. a gold standard means limiting the presses, it means cutting back on spending, and this country is at the point where any pullback in spending causes the pyramid to topple. there is no solution. not a gold standard, not printing more….NO SOLUTION…only a total reset, a complete clearance of all excesses and a natural correction in the massive imbalances can eventually allow the world to move forward. the hubris of humanity to think there is always something they can do to fix something that cannot be fixed.

  • “The original idea behind Southern secession was that states have a ‘right’ to allow whites to impose slavery on blacks”

    No Sir: The “original’ idea for Southern secession was a belief in a confederated republic as opposed to a consoliadted nation. Slavery was an event born of European and New England slavers making profits providing Western Hemisphere agrarians with cheap labor.