More generally, Alberto suggested that, if states are unavoidable, having more of them is better than fewer. One reason is that individuals will have more choices as to which state to live under according to their preferences. A related reason is that competing states will have an incentive to satisfy the preferences of their clienteles. More numerous and homogeneous states will thus offer public services more in line with what citizens want. Alberto Alesina and Enrico Spolaore make related arguments in their book The Size of Nations.
However, there are also good arguments for larger, more cosmopolitan societies. What Friedrich Hayek, in his trilogy Law, Legislation and Liberty, calls the Great Society, i.e. the abstract classical-liberal order, is more likely to flourish in a large, cosmopolitan society than under small-group tyranny. In a large and diversified society, Leviathan may be less effective at oppression. At any rate, smaller, homogeneous nation-states will typically not allow individuals to move freely between themselves.
Alesina and Spolaore argue that, ceteris paribus, Leviathan prefers to rule over a large country because he can extract a larger rent. However, he may find it easier to take over a small country and will be able exploit the minorities there more harshly. There is no totally homogeneous country, and Leviathan will always find minorities to exploit in favor of its favored clientele, which is often the dominating cultural group. In this perspective, it is not surprising that most secessionist movements are run by socialists. (In Québec, it started with rightist, nativist organizations, but was taken over by socialists in the 1960s.)
Political scientist Karl Deutsch was on to something when, in Nationalism and its Alternatives (as quoted by Alesina and Spolaore), he defined a nation as "a group of people united by a common error about their ancestry and a common dislike of their neighbors."
The issue of whether large or small countries offer better chances for individual liberty is not simple, and the two opposite theories seem defendable. So let's have a look at the empirical evidence. Do available data show a correlation between individual liberty and the size of a country? A positive or a negative one?
The cloud of data points on my scatter diagram below suggests that there is no correlation between the size of a country, measured by its population, and its degree of liberty, as measured by the Fraser Institute's Economic Freedom of the World index. My data incorporates the 160 countries included in that index. The variation of the scores (where 10 represents the highest level of economic freedom and 0 the lowest) reminds us that some small countries are relatively free (Hong Kong and Switzerland are examples) and that in others, as Émile Faguet would have said, people "are more oppressed than in Turkey" (Venezuela or the Central African Republic, for example). Same for large countries: some (consider the United States) are relatively free, others much less free (India or China).
A simple regression analysis confirms the absence of statistical correlation between country size and economic freedom. The R-square--a measure of correlation that indicates the proportion of the variation in freedom explained by population size--is tiny: 0.004. The slope of the regression line, which suggests that the freedom index score decreases by 0.00038 for every increase in 1,000,000 inhabitants, is not statistically significant: the P value is 0.42. In other words, there is a 42% probability that the apparent negative effect (already tiny) of size on freedom is due to random factors.
The statistical conclusion does not change if we replace the countries' population by their size in square miles; or if we exclude China and India as outliers; or if we redo the analysis with both population and geographical size as variables (a multivariate regression).
In case the problem lies in the economic freedom index, I re-ran the simple regression using instead Freedom House's Freedom in the World index (for 194 countries). This index measures mostly political freedom, that is, such things as free elections, government openness, the rule of law, free speech, and other civil rights. The Freedom House index is slightly biased towards positive, as opposed to negative, freedoms. The results of the statistical analysis using this index are similar: the R-square is 0.005 while the P value goes down to 0.30.
It is true that correlation is not causation, but non-correlation is even less so. According to my simple statistical analysis, whatever the theoretical arguments are for the outlook of liberty in small versus large countries, there is no supporting evidence one way or another.
As my economist friend Sinclair Davidson pointed out to me, this does not prove that secession from a larger country (or for that matter, integration into a larger one) will have no effect on freedom. Statistical analysis is a tough master. We would need to compare freedom levels before and after secession (or before and after union) in a representative sample of countries having experienced such a move, but such a database is not available.
It does not follow that liberty never justifies secession. In particular cases, it may very well do so. Breaking a Leviathan's stranglehold on the seceding region would be a libertarian justification, assuming that a worse Leviathan is not likely to take over the "emancipated" region. The argument against a world government is closely related: under the reign of a single Leviathan without competition, there would be no way to escape into a separate space of liberty. So some government diversity is required as an insurance policy against monopolistic Leviathan.
In other words, it must be possible to break away from an existing state, even if the required majority is in many ways arbitrary. As Alberto argues, it should be more than 50% plus one, and there should be an accepted process, some agreed-upon rules, to realize the secession. Indeed, states that prohibit secession, like the Spanish state seems to be doing, thereby provide an argument to secede, as opposed to such states as the Canadian or the British states which would (from what we know) recognize secession under some democratic rules. Note that the European Union, a sort of state, also accepts secession.
What I think my reflection suggests is that, in regard to liberty, the size of a country does not matter per se.