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The Case for Exit Rights Federalism

The ongoing controversy over the United Kingdom’s withdrawal from the European Union raises a basic question: Should federations have exit (secession) clauses? To elaborate, how does a right of regions to secede, like the one EU member states enjoy, affect the development of federalism, particularly with respect to personal rights and freedoms?

The majority of federalism scholars have opposed the inclusion of exit clauses in federal constitutions. Certainly, if one values the continuation of the federation as an end in itself, providing a means by which the federation can be dissolved is harmful, but political institutions are designed for people, not people for institutions. Another argument against such clauses is that they allow regions to blow up everyday policy disputes into threats to leave, holding the federation hostage to unreasonable demands. But the threat to secede is risky as a tactic. An exit clause is a giant, red EJECT button on the constitution, and rational regions will push it only in direst need.

A more persuasive argument holds that central governments make very long-run investments in particular places, but they might fear doing so if those investments could be stranded by secessions. But this is an argument merely for placing some limits – or perhaps a “price” – on secession, rather than proscribing it altogether.

Secession clauses have some desirable properties. Providing for a legal path to independence encourages secessionists to eschew extra-legal protest and rebellion and to work through the political system. Such provisions also provide clear criteria in advance of controversies and give private actors more guidance about the legal future.

Central governments tend to overpower subcentral governments in federations over the long term. This has happened in the U.S., Germany, Austria, Mexico, India, Malaysia, and Russia, often with the connivance of at least some of the regional governments (not, notably, in Canada, where there is a credible exit threat). An exit right protects each region to some extent from central exploitation, even when it is not exercised.

Another way to protect minority regions is to give them a veto right over federal policies. The European Union had this constitutional feature during the many years of unanimity rule in the Council. Preference outliers like Great Britain certainly got a European Union more to their liking under this regime, but unanimity also got in the way of effective decision-making and would have been unworkable after enlargement.

An exit right is therefore a moderate constitutional alternative to both the radical solution of veto rights on the one hand and the status quo situation in most federations of gradual central government usurpation. But exit rights are actually closer to the status quo on this spectrum of alternatives than to veto rights. Vetoes are nearly costless to exercise; exits are costly, as Great Britain is discovering. Vetoes can be exercised on an issue by issue basis; the exit alternative amounts to an all-or-nothing, take-it-or-leave-it choice. Exit rights will be rarely exercised where available.

In support of this last claim, I have investigated the frequency and intensity of secessionist support around the world in my book Secessionism and a recent paper. In all the high-income democracies of Europe, North America, and the Pacific Rim, there is only one region in which parties clearly favoring near-term independence have won an absolute majority votes in any recent election: Scotland. And even here, “Yes” lost the 2014 Scottish independence referendum, and polls still show that a majority of voters oppose independence. Around the world as a whole, only about 40 percent of ethnonational minorities have a secessionist organization of any kind, however small. In India, where secessionist parties and candidates are banned by law, we can use election boycott data to estimate support for independence, since secessionist movements there routinely call for such boycotts. I find that there is no plausible interpretation yielding a figure greater than 20 percent support for independence in any state (and that is reached in Jammu and Kashmir, which was coerced into the union).

The example of the European Union also shows how exit rights can help federations grow to include new members. The clear specification of an exit right in what would become Article 50 certainly helped Central and Eastern European (CEE) states decide to continue with accession after the adoption of Qualified Majority Voting. The evidence for this is that delegates from CEE countries were far more likely to vote in favor of Article 50 than other delegates at the European Convention.

But what kind of federation will exit clauses generate? Regional governments are far from the “good guys” in the federalism story, after all. To answer this question, we need to know which regions are most likely to want to secede.

My research shows that, apart from obvious factors like regional language and history of independence, regions that are far from the capital, especially by water, richer regions, and ideologically distinctive regions are more secessionist. These are precisely the regions most likely to seek fiscal autonomy.

The model of competitive or market-preserving federalism championed by many political economists depends critically upon the fiscal autonomy of the subunits – their right to raise significant tax revenues and their duty to fund own expenditure largely out of own resources, not grants from the center – but fiscal autonomy remains the element of a federal order that central governments are least likely to concede. Fiscal autonomy gives regions an incentive for fiscal rectitude: they have to tax their own citizens for most of what they spend. It also provides the possibility of beneficial fiscal competition among jurisdictions, as in Switzerland.

If central governments had to try a little harder to appease secessionist regions due to a codified exit right, then they would have to concede more fiscal autonomy, just as Westminster has done for Scotland and to a lesser extent Wales in the four years since the Scottish independence referendum, leading not by conscious design but by political necessity to a more functional and prosperous federal system.

Regions that want to feed off the central fisc or handicap regional competition in order to maintain corrupt or damaging economic policies at lower cost cannot get what they want by threatening exit, because the exit threat in their case is not credible. They would get less of what they want with independence.

In my own work, I have investigated the statistical relationship between states’ constitutional stance on secession and their governments’ willingness to decentralize taxation powers. I find that governments operating under constitutions that explicitly proscribe secession, such as France, Spain, and Italy, are much less likely to decentralize taxation in response to secessionist challenges than governments operating under constitutions that are silent on secession, such as the U.S., U.K., Canada, Denmark, and Belgium.

Only two constitutions in the world expressly authorize a secession procedure in an operative clause that their governments actually respect: Saint Kitts and Nevis and Liechtenstein. (The Union of Serbia and Montenegro used to have such a clause, before it broke up.) Perhaps more federal constitutions should have such a clause.

Reader Discussion

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on December 03, 2018 at 10:10:04 am

The majority of federalism scholars have opposed the inclusion of exit clauses in federal constitutions.

What did the scholars in 1776 have to say about our exit from the British constitution? Enquiring minds want to know!

Another way to protect minority regions is to give them a veto right over federal policies.

It always comes back to Calhoun, doesn't it?

Prediction: if one or more US States attempt(s) to secede from the Union, provided they don't fire on Fort Sumter again, the federal government will not send in the military to prevent it/them. Negotiation will center on the exit fee to the federal government. Now that would be something to alleviate our political ennui!!!

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QET
on December 03, 2018 at 13:01:49 pm

"Now that would be something to alleviate our political ennui!!!"

Clearly, it would be anything BUT boring!

I think Mr Sorens analysis, useful perhaps as a structural roadmap of 'de-federalizing", is off-point as it misses the true driver of the taxation "cart and buggy".

It is WHAT is to be done with those taxes? who is to determine their distribution and their extent?

Sorens also fails to consider the role of tribal (read here as a *national* tribe) loyalty and fealty to shared history and customs as a, if not the most, salient factor in a decision to exit a federation.

And while nations may engage in all manner of economic strategies / negotiations, it must be remarked that while man is not homo economicus, it is also true that nations are not patria economicus.

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gabe
on December 03, 2018 at 16:16:52 pm

Contrary to the assertion that the US constitution is "silent on secession," Lincoln proved that the constitution is loud and clear on the matter, and the Civil War answered the question with a finality that can never be reversed (except by the people amending the constitution) by recognizing in blood an implicit constitutional principle: the serious assertion of a state right of exit is an existential threat for the nation and its people and, hence, is prohibited.

That decision transcends the possible exercise of unilateral judicial power by the Supreme Court, legislative power by the Congress and Executive power by the President and cannot be challenged or appealed by one branch of government or the other. It can never be reversed except by the people because to do so would be to invite the danger of national death by suicide or subversion. Once a state's assertion of its so-called "right of exit," becomes inseparably, inevitably and unavoidably entangled with national existence and national security, as it was in 1861, is now and will always be for each and every of our 50 states and the United States, there can be no state right of exit as the constitution is now written.

The conclusion that the constitution is not a suicide pact has been vouchsafed by Congress, presidents and Supreme Court Justices in time of war and peace, all of whom have acknowledged Jefferson's admonition "The laws of necessity, of self-preservation, of saving our country when in danger, are of higher obligation " than "strict observance of the written law."

A Congressionally-authorized right of exit for Puerto Rico and Guam, yes, but for any of the states, never, ever, ever.

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Pukka Luftmensch
on December 03, 2018 at 17:24:29 pm

If the governed are ultimately sovereign and if political legitimacy is indeed the result of the consent of the governed, then you are wrong.

It happens that this very issue was debated for a year in the Bay Colony in 1635 when Thomas Hooker and John Haynes petitioned the Massachusetts General Court for leave to move most of the Newtown (Cambridge) and a good part of the Dorchester settlers to Hartford. There were risks involved but a decent respect for Independent principles prevailed and Connecticut was founded.

Further, the natural right of popular self-determinaton is memorialized in both the Atlantic and United Nations Charters.

Have you heard of Michael Winship’s “Godly Republicanism” (2012)? It’s excellent on the evloution of puritan notions of popular self-government after 1560. I had no idea the old time puritans were debating religious self-government and civil checks and balances, in those very terms, as early as 1604.

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EK
on December 03, 2018 at 19:18:51 pm

"Further, the natural right of popular self-determinaton is memorialized in both the Atlantic and United Nations Charters."

And going "further" it may be salient to point out that NEITHER Charter has any relevance to the US sovereignty, nor do wither, or both, replace or negate the US Constitution. It is the UNITED STATES Constitution which is deemed to be the Supreme Law of the Land.

That being said, it is arguable that COTUS is silent on secession. Some have argued that Art IV, Section 3 implies (imputes?) to the Federal Government, i.e. the Legislative Branch the authority to create and or deny a new state. Some legal and creative scholars may argue that the following text, "nor any state be formed by the junction of two or more states, or parts of states, without the consent of the legislatures of the states concerned as well as of the Congress" is sufficient authority to deny secession.
Arguable, OK!

As a practical matter, Pukka is correct. One need not consent to one's own murder / suicide.

It would seem that some would liken Brexit and the *de-federalizing* that Sorens discusses.
Yet, one would be remiss were they to elide discussion / consideration of one rather significant difference between Brexit - EU and USA - secession. The American Federal Union was organized amongst and between culturally similar peoples, each of which had endured and experienced the same threats to their individual and joint existence. In the formation of the American Union, they became one people, albeit with specific limits on the powers granted to the Federal Government. The surrender of "sovereignty" was both voluntary and legitimate.

AS for the EU, we find something quite, indeed dramatically different. We find an body of pre-existing sovereign States, many of which have been recognized for a millennium, serially assembling for certain specific purposes. Each of these States had specific and unique cultural, political and religious histories and traditions. Each of these States assumed that those histories and traditions would continue to influence their own internal polities. It is decidedly unclear whether any of these States voluntarily surrendered their sovereignty in any areas other than trade and customs regulations. Rather, the assault upon the sovereignty of these States was surreptitious and quite frequently in direct opposition to the stated preferences of the citizenry of the subject[ed] States.

The ability to remove oneself from such a "supranational" Federation (some would say "aspiring empire") ought to be no more problematic than removing oneself from a United Nations construct, the WTO or the IPCC. We are here considering fully sovereign States with rather long presences upon the world stage.

Somewhat different than the Federal Republic of the United States.

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gabe
on December 03, 2018 at 19:44:13 pm

Crucial, correct distinction you make between us and them. Voluntary associations of nations, like a marriage, are matters of contract which, like treaties, can be voluntarily undone according to the pre-enacted/agreed upon rules of disengagement.

I would argue that the US constitution and founding are legally sui generis among nation states, that by virtue of both its language and the nature of its adoption by the people in convention of the people the constitution makes the people sovereign subject only to the powers delegated by the constitution and that the states once admitted to the union are bound to the constitution and cannot leave without approval of the sovereign, which, per the constitution requires a constitutional amendment approved by the people.

And, further, only force of arms by a seceding state(s) could seriously challenge my assertion, a challenge which might well have succeeded when it was tried and failed in 1861 but which would not be asserted today because it could not possibly succeed.

Constitutional restraints, in effect, are of no consequence. A state in our union could not be allowed to leave for the same reason that Chechnya and Crimea will always be a part of Russia: national security.

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Pukka Luftmensch
on December 03, 2018 at 20:45:52 pm

What a chucklehead I am. I forgot another critical distinction.

Britain is being asked to surrender its sovereignty, as would be France, et al., were not France also suffering under the delusion of restoring its' past (Napoleanic?) glory*, to a nation, Germany, the de facto leader of the EU, that has twice within the last century initiated destructive wars of potential annihilation against Britain, in a futile pursuit of its own sovereign IMPERIAL ambitions. This German drive also is of long standing historical duration.

Just how many dead WOULD be required to counter the false assumption that the Brits are now forever subject to the diktats of a German lead EU?

Someone be so bloody kind to tell me - and the Brits!!!!!

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gabe
on December 03, 2018 at 21:08:10 pm

"Just how many dead WOULD be required to counter the false assumption that the Brits are now forever subject to the diktats of a German lead EU?"

If you put it to the Brits that way, they would pride themselves on saying, "Not one Brit for bloody German tribute."
But the WWII generation is near-dead and memory of WWII's sacrifice and cost among Brits is dull if not dead and, recall even, that 2 1/2 months after VE Day the Brits rewarded Churchill by tossing him out of office, so I doubt many Brits would see serving the EU as a matter of dying in the service of German diktats.

Rather, bureaucracy kills freedom like hot water boils frogs, incrementally by slowly increasing the heat. So I suspect that most Brits, were they to revisit Brexit today faced with their economic decline, would, like the Brits of July 1945, probably get back in the socialist water, as the Scots are preparing to do.

William Wallace died and Churchill lived for the freedom of the Scots and England to join the EU?

"That England, that was wont to conquer others,
Hath made a shameful conquest of itself."

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Pukka Luftmensch
on December 04, 2018 at 11:05:10 am

Gabe: I believe it was clear that I was talking about a natural right to secede from or rebel against any government that has lost the consent of the governed.

"The Constitution is not a suicide pact" aphorism cuts both ways; when a government has slipped its constitutional moorings and become merely a regime that no longer has the interests of a substantial portion of the governed as its chief concern it is suicide for the disaffected governed not to oppose the regime by any means necessary. If reform by normal politics is impossible then separation is the next step.

As for the Art. IV no new states from existing states stuff, that is the most profoundly anti-republican part of the Constitution. It seems to have been intended to preserve the dominance of a Federalist Senate by preventing western Massachusetts, Pennsylvania and Virginia from forming new states that would sent anti-Federalist senators to Congress.

Finally, your argument rests on the same kind of "original contract" argument that was always dredged up to support monarchies, slavery and unequal protection of the laws based on civil status. You are placing sovereignty in the institutions of government not in the governed.

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EK
on December 04, 2018 at 11:25:28 am

" You are placing sovereignty in the institutions of government not in the governed."

I admit that is a possibility. However, we must remember that the people themselves may not want to dissolve the Federal Union.

I suspect that what you are asserting is, as Jefferson conceded, is the people's right to Revolution - not secession.

And, indeed, in the case of Brexit, it IS the people who have elected to remove themselves from the supposed tutelary beneficence of a supranational imperial State. So no, Brexit is an attempt to reclaim sovereignty, while US secession is an attempt to overturn sovereignty (assuming that the majority of people are not anxious for a revolution).

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gabe
on December 05, 2018 at 09:59:42 am

Very much enjoyed this post. A couple of points:

Seems there is an analogy of sorts between contract and constitutional law. As I understand, in cases of business disputes the court doesn’t normally want to rule for specific performance, both because such is extremely cumbersome to oversee and also because of issues surrounding forcing compliance in a free market. The solution is traditionally to think though, calculate, and rule for the economic benefits of that which was bargained for. So, if the analogy holds, secession would be a matter of determining a full and proper payout. This route has the added benefit of not attempting to adjudicate moral matters. Just write the check.

On the other hand, from the perspective of history, as I understand, Lincoln did exactly that. He offered to write a check to recompense the slaveholders. If that is a proper reading of history and Lincoln’s offer was sincere and well-calculated from a valuation standpoint, still the South said “No, thank you.” Meaning, the issue was not finally about economics but about freedom to order the society the way the South wanted. And this reading is borne out by how our civil conflict unfolded. As it turned out, Davis was willing to give up even on the matter of slavery, but not the matter of being left alone, free.

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Eric Ressler
on December 05, 2018 at 15:56:30 pm

The assertion that "As it turned out, Davis was willing to give up even on the matter of slavery, but not the matter of being left alone, free." is incorrect and an emanation of the Confederacy's "Lost Cause" apologetics.

The Civil War was fought by the Union as a war to preserve the Union and by the Confederacy as a war to preserve the genetic power of slavery to metastasize into the territories and new states (else it would die.) "Freedom" as a motivating force for either side of the rebellion was an afterthought, arising initially for the North after January 1863 when Lincoln made emancipation of the slaves an official military policy for hastening Union victory so as to preserve the Union and for the South after its Appomattox surrender in April 1865 as a means of spreading false political propaganda that its secession and civil war (treason by any other name) had been undertaken to preserve their liberty not their slavery, and thereafter for both sides as the Lost Cause lie became for the South a century-long excuse for treason and Jim Crow and for the North liberating the slaves as casus belli became a century-long self-gratifying myth.

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Pukka Luftmensch
on December 05, 2018 at 18:47:13 pm

Now, now, Pukka! It cannot be that the CSA initiated the War becuase of Slavery.
To believe that one would have to believe that one of their elected leaders would publish a disquisition akin to the Cornerstone Address which advances the great cause of human bondage and it's necessity as a predicate for a successful political regime.

And we know that no one in the CSA would ever consider such a pedagogical tactic. Right??????

The South INITIATED the War to preserve and expand slavery and in so doing it recognized that this predicate, this human bondage upon which the cornerstone of the CSA was laid, would enable it to continue its oligarchic regime.

And, of course, there is always the works / theories of Calhoun to be considered. As of yet, I have been unable to find a successful apologia for Mr Calhoun or Mr Stephens theorizings.

Well phrased / stated, Pukka.

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gabe
on December 07, 2018 at 11:19:47 am

Thanks Pukka for the reply. However, I was not offering an apologetic. I was merely recollecting the historical fact that Davis was willing to give up on slavery before he was willing to give up on the war. I understand you interpret his position as contrived, but it seems to me only if you take less than a most generous interpretation. I was only making the point, in the context of the professor’s post and my first paragraph, that our civil issue was deeper than mere economics.

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Eric Ressler
on December 07, 2018 at 11:20:34 am

Thanks Gabe for the reference to the Cornerstone Address. I had not seen that. As far as an apologia, there can be none. I agree, the document exhibits racism, pure and simple. On the other hand, there does exist a modern apologia of sorts for Stephens’ defense of the right to secede. See K. Stamp, “The Concept of a Perpetual Union”, Journal of American History, 1978. Had Lincoln listened closely to that argument, he hopefully would have taken a more creative and less provocative approach to the seemingly largely symbolic issue of the forts. This is not to lessen the culpability of the South for firing the first shot. Rather, I am still only making the point that the conflict did not come down to and could not be solved by economics. See my follow-up note above to Pukka.

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Eric Ressler
on December 07, 2018 at 20:41:09 pm

Except for politicians, few of whom mean what they say, I am predisposed to accept what a man says he meant when he said what he said. So, since you say so, I say you are not an apologist for Lost Cause propaganda.

I will also agree with you that the Civil War "was deeper than mere economics." It was also and fundamentally in the North about preserving the "mystic chords of memory" of Union and in the Confederacy fundamentally if not wholly about a) preserving slavery as a social institution that economically and politically benefited the ruling class and b) preserving the iron-fisted oligarchy of that ruling class whose exercise of ruling power and whose war to preserve their rule could be said only in mythology to have been about "freedom," anybody's "freedom."

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Pukka Luftmensch

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