Our Superstate: Controlled by Party Headquarters, Bureaucracies—and Central Banks

Democratic nations have abdicated authority and been absorbed into superstates. The power is top-down from party headquarters; the funding in the hands of our state politicians has become enormous, and these funds are raised through debt and central bank money. And as if that were not enough, part of the power has been ceded to supranational bodies. The bureaucracies are also becoming increasingly influential politically at the national and supranational level. Nonetheless, there are still steps that can be taken to counteract these trends.

Beat Kappeler has written this article for the Austrian Institute about the topic of his new book Der Superstaat. Von Bürokratie und Parteizentralen und wie man den schlanken Staat zurückgewinnt (“The Superstate: From Bureaucracy to Party Headquarters, and How to Reclaim Small Government”) You can find a short excerpt of it on our website in German under the link below titled Die Notenbanken – das letzte Aufgebot des Superstaates.

We often hear about this happening: If a parliament votes against the government on an important issue, in a “vote of confidence,” it is dissolved by the government. Wait, what? Yes, you heard right: The legislative branch, which was supposed to determine the course of events, is dismissed by the executive branch, the executive government.

But not only that: In most European states, dissenters have a hard time getting renominated for the next elections, and some will be thrown out of the party right away—like the 21 Tory rebels thrown out by Prime Minister Boris Johnson a year ago. Everywhere, the heavy hand of the party headquarters controls the candidates’ lists, controlling the constituencies, even if there are officially appointed delegates there.

The voters have these constituencies, with these lists in front of them—nothing more. After the election, the party leader becomes prime minister or chancellor, and then he or she and the party leadership decide who becomes minister.

These ministers sit in the EU Council of Ministers, and its decisions come back to the national parliaments. They must give their assent under threat of dissolution. The circle closes, the party headquarters are always involved, even in the delegation of power to the EU Superstate.

This is because the European parliamentary democracies are built from the top down, or more precisely: suspended from above.

The Superstate Is a Self-Serving System in which Everyone Lives at the Expense of Everyone Else

These power structures have gained means of power that would have been considered impossible in the past. European states take 40-50 percent of the national income and distribute it as if society and the national economy could not hold on to it any other way. Since the Coronavirus crisis this has become the general conviction. To obtain a majority, the parties have always courted all those voters who bring them 51% of the votes, and this must be made palatable to them with benefits and payments to this majority. The state becomes a fiction, thanks to which everyone lives at the expense of everyone else. As the liberal French economist Frédéric Bastiat wrote as early as 1850, today the self-serving mechanism at the state’s expense works even across party lines, if those from one party do not have a majority then they make compromises across the aisle, even with the backers of other parties, and then whatever they are supporting passes.

Whatever the politicians and parties now decide is “financed”—that is, they have discovered direct access to the printing press.

But this all became very expensive in the meantime. To cover the deficits over and above tax revenues, even before the financial crisis of 2008, all western nations were reaching into the coffers of their citizens, not only with taxes but also through securities. Moreover, thanks to the money raised, the party system became independent of the electorate. The costs no longer had to be collected but were borrowed instead. The big breakthrough came in March 2020, when the American and European central banks declared that they would buy up all the national debt without restriction. Just days later, the politicians introduced unprecedented spending packages: 2 trillion dollars in the USA and 1.75 trillion euros in the EU. This means that whatever the politicians and parties now throw before the eyes of the voters as a justification, what they decide is “financed”—that is, they have discovered direct access to the printing press.

The Central Banks in the Superstate: Both Driver and Driven

The central banks have thus become part of the power cartel at the top of the superstate. On the one hand, they freed politicians from budget constraints, from being tied to the budget and to tax rates, and on the other hand, the central banks can no longer turn back. The states, but also private people and banks, are so indebted that any return to normal interest rates, to less liquidity, or to a slowing of the current pace, would lead to immediate bankruptcy for everyone. All of them, companies, banks, and states are caught in this debt trap and fall together (the “doom loop”). Moreover, the central banks have cut interest rates and thus income for savers, investors, pension funds, banks, and insurance companies, and have directed everyone instead to the constantly rising asset prices. However, interest rates of funds used on capital, increases these prices in the long run. Inflated asset prices, on the other hand, are reversible if the money supply declines; thus, general ruin can only be postponed with continually printed money.

The European Court of Justice carried out an actual coup d'état in 1963 when it placed the EEC Treaty above the constitutions of its member states.

Finally, the superstate has also amassed new and increased means of power at the international level. Beyond what follows from any original contract clause, mere committees of lawyers of the European Convention on Human Rights impose new regulations, and the OECD intervenes in tax rates and policies; the International Monetary Fund suggests selling gold reserves (1995) or turning away from cash. The EU Commission has repeatedly declared on matters that are not provided for in the EU treaties or would require unanimous approval as “relevant to the internal market,” and has forced them through with mere majorities of the member states. The British politicians surrounding David Cameron initiated the Brexit vote for this reason, and not because of immigration. The European Court of Justice carried out an actual coup d’état in 1963 when it placed the EEC Treaty above the constitutions of its member states.

In short, the international superstate is expanding beyond the nation states through its unelected officials.

There Is Another Way: A Bottom-Up Power Distribution

The one reversal of the national balance of power from bottom up is electoral lists made by the voters, not the party headquarters. In the Swiss parliamentary elections, voters can remove candidates from party lists, or add them, or even add candidates from other parties. Thus, important individuals of civil society get into the legislature: leaders of clubs and associations, artists, well-known media personalities. They are added intermittently to many lists, without the power of the party headquarters. The most important consequence—all parliamentarians can vote as they wish and tell the parties “I brought you this seat.” Not the other way around. The government suffers occasional defeats, in Switzerland as well as in the USA, but it does not dissolve the parliament, instead continuing with new proposals as a “learning institution.”

In direct democracies, “wrong” decisions can be quickly corrected, and the people become a learning institution.

Direct democracy offers another bottom-up reversal of this power differential. Often denigrated especially in France, Germany, and Britain, it can easily avoid the accusation of being a “winner takes all” approach. For if two majorities are needed, that of the voters and that of the regional units—i.e. the federal states (“Bundesländer”) or, in France, the régions—then the results are weighted: by Bremen and Bavaria, by Vienna and Vorarlberg. This is the case in Switzerland—the canton of Zurich has a population forty times larger than Uri. So, in addition to the popular majority, a majority of these various cantons is also necessary. Likewise, the accusation of producing monumentally wrong decisions can be avoided by direct democracy if the people make frequent use of it—often quarterly in Switzerland and in the US states. “Wrong” decisions can be quickly corrected, and the people become a learning institution.

The exorbitant, ruinous financial conduct of the superstates is more difficult to abolish: the situation is hopeless unless you break the rules. The central banks could cancel the purchased national debts or restructure them for 100 years. Or they could freeze the enormous sums in the bank and central bank accounts entirely as minimum reserves. Or, if inflation does occur, they could enforce low interest rates by law. With all these emergency measures, however, they would have to signal to the politicians that there will be no buying up a new round of debt. Monetary stability, the state’s creditworthiness, and its prosperity depend on a few central banks… So, this is the superstate!

No Super-Bureaucracy without Super-Financing

The rampant omnipotence of international officials can only be curbed by the withdrawal of many individual countries from these organizations. This is because they derive their funding, and above all their legitimacy, from their universality. Otherwise they wither away to annual hotel meetings of officials and the remaining ministers. But individual countries will only leave if the sacralization of the supranational ceases. These are not “communities of solidarity”; they offer no better solutions, and only rarely provide advantages of international cooperation. They are, rather. cartels of politicians, as in the EU or in the OECD, where they decide on rules and then put them before the national parliaments as a duty to fulfill, and without possible objections from their members. In reality, only the “technical” organizations are necessary: the Telecommunications Union, the Universal Postal Service, CEN/CENELEC, the WTO and a few other sober and level-headed institutions.

Real freedom, and even lasting prosperity and vibrant democracy, can only be achieved through a laborious return to small government.

Subsequently, the bureaucracy, the executive arm of the super-national states themselves, collapses whenever the states can no longer summon billions out of thin air. After that, the administration should not be allowed to charge fees for inspections or permits. After all, public interest is invoked. But without super-financing there can be no super-bureaucracy. The parliaments should not shirk their responsibility in this regard either, but rather should either approve or reject all regulations or the administration’s cash flow en masse. Moreover, and this is very important, the principle of presumption of innocence must again be applied in favor of citizens and companies. They do not have to prove that their tax behavior is flawless, or that their environmental or competitive attitudes are blameless: rather, the bureaucracy should have to prove them wrong. The courts must also be encouraged to do so. The law should again impose this liberal rule of presumption of innocence “beyond a reasonable doubt” on everyone.

Since 1945, the superstate has been building, bloating, and devouring itself. A return from this situation is arduous, and it violates vested interests, indeed the vested interests of everyone, because now everyone pays for everyone else, while at the same time depending in some way on the superstate. But real freedom, and even lasting prosperity and vibrant democracy, can only be achieved through such a laborious return to small government.

The new book by Beat Kappeler on the subject:

Von Bürokratie und Parteizentralen und wie man den schlanken Staat zurückgewinnt

(“The Superstate: From Bureaucracy to Party Headquarters, and How to Reclaim Small Government”)

Many citizens have had enough of the excessive state, its taxes, its rules, and its bureaucracy. Angry citizens show their faces. But the loci of this power are clearly identifiable: today in Western Europe, the party headquarters determine the governments, they dominate the parliaments, their ministers set the EU rules and, at the national level, they implement these rules as inevitable. The separation of powers has been lost. The central banks support the debt economy of the states by creating money, and they dispense politicians from fiscal responsibility. Step by step, regulations accumulate in everyday life that already remind us of the final years of failed empires.

Freedom has often been lost in history. This time, however, there are solutions for dismantling this structure, solutions that have already been tested in some nations. In this book, Beat Kappeler shows more concretely than ordinary regime critics, or populists of left and right, how we can win back freedom.

(Here you will find an exclusive excerpt from the book on our website (in German):  Die Notenbanken – das letzte Aufgebot des Superstaates)

151 pages, bound and e-book (EPUB) ISBN: 978-3-907291-10-8

NZZ Libro, Schwabe Publishing Group AG, Basel

Publication date 09.07.2020

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