People look very closely to what happens in their neighboring countries when deciding what to try and what to avoid. It is not true that one politician, who does not expect to get caught, is a sole responsible and everybody else is passive.
"Country Y had revolution and country X didn't. Turns out country Y never recovered economically and didn't make much progress. I will probably cut down on protests"
"Country C had ethnic cleansings and country B had reasonable ethnic policy. Country C did not suffer any punishment and is now successful. Country B suffers serious ethnic tensions and is an undesirable place. I would demand going harder on minorities"
You may be shielded from those narratives, living in a stable country. Guess what, not all of us do.
1) Human bonding (mother-child, family, and extended, symbolic tribes) is mediated in the brain by oxytocin. It turns out oxytocin also boosts xenophobia. Someone who claims to hail patriotism without being racist is therefore full of shit. They are two sides of the same coin, enlarging one enlarges the other.
2) Stigmatizing people for belonging to a group strengthens their tribal attachment to said group [a]. By punishing or threatening to punish a group of people, you enhance their tribal bonds and, per 1) their xenophobia, the very thing you're trying to rein in.
It's not about being moral, it's about effectiveness.
The only way to dispel tribal identity is to dilute it in a larger, weaker one, by being open to their members.
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a. Which is why laws against "the public display of religious signs" are counterproductive. Likewise, ostracizing people who vote for extreme, hateful politicians is counterproductive.
You are right about "punishing or threatening to punish".
However, the goal of genocide or ethnic cleansings were not to punish, it was to make said people go away from you. To make them physically disappear.
Turks has no problems with Armenian tribal attachment because there are no longer any Armenians in Turkey (They however still have the problem with Kurds). The same thing with Croatia and Serbs. We have to admit that the plan worked.
The problem here is that tribal attachment among Turks got haywire. I don't know enough about the tribalism tendencies of Armenians at the time. Victim groups can have developed a strong tribal identity, but that's not always the case (tribalism was strong among Jews and Gypsies, but AFAIK being gay was quite confidential during WW2).
Regardless, the story is the same all over the place. People's tribal instincts are amplified and manipulated by a few hateful/interested people, which turns peaceful crowds into genocidal herds.
The danger is the potential for excess that we have when thinking in terms of ingroup/outgroup, not a specific group (which is why it keeps happening all over the place, and sometimes victim tribes later become perpetrators of bigoted violence).
A desire for justice/vengance is understandable, BTW, but our intuitions are wrong when dealing with populations rather than individuals.
Edit: Whether strong tribal identity among small groups lead larger groups of otherwise neutral people to resent them is an interesting question as well, BTW. I don't know if it is the case. Gypsies and Jews are historical examples, I don't know if there are counterexamples.
Now that's interesting. I must admit that I know little about Jews and their history.
I know that Ashkenazim have a high prevalence of certain recessive diseases, which suggests that they tend, to this day, to be somewhat endogamous. I don't know how much of it is due to their own culture, and how much is due to the fact that they were up to WW2 stigmatized by the Catholic church for being, as a people, responsible for the death of Jesus (without which Christianity wouldn't exist, yet it was held against them, go figure...).
I also know that there's an derogatory Hebrew word, goy, for the out-group. But at the same time AFAIK before WW2 Jews were portrayed by racist nationalists as "filthy internationalists", i.e. an existential threat.
Regardless of the prior strength of the Jew identity prior, WW2 gave us a fiercely nationalist/tribal Israel (defined as constitutionally as a Jewish state, where interfaith or non-religious marriage are not possible, etc...), which in turn gave us the rise of the modern Jihad as a reaction to the oppression of Palestinians and the support of US/Europe to Israel (well, the Irak wars didn't help either).
I wish we could dispel that madness. At this point, territorial and tribal fights are a net loss, to every one but weapons merchants.
I'm not saying that they didn't define themselves as Jewish. I'm saying that that was one part of their identity and that the German part was also important. NB I'm speaking about averages and generalities. I'm sure that different individuals held a full range of opinions.
As you can see, in Turkey this vendetta was not unending - it ended when all the Armenians were dead or driven away. So I fail to understand what's the long-term downside for Turkey, given they were never punished.
Yes, the world became more violent and hateful (Armenian terrorists blew something turkish up in France AFAIR), but that's outside of their borders. Inside borders they were a pretty successful country to date.
I suppose that resentment among Armenians towards Turks is still high to this day, I'm not saying that there will be more violence, but the threat is still there.
Note that I come from Belgium, whose historians are so ashamed of the Congo Free State genocide that they consider it a controversial topic that should not be taught in school. Were it not for Internet conversations, I'd be blissfully unaware of it as most Belgians are. There were more Congolese people killed under Leopold II than there were Belgians living at the time. There's been little to no backlash. So, indeed, sometimes it pays.
I sometimes wish I could have a more cynical take on things, but I have a strong fairness drive, spontaneously.
Punishing Germany almost directly led to massive instability in Europe. Helping Germany recover led to extended peace for the first time (ever?) in western Europe. That narrative is the one the western Europeans thank for their stability.
I think what's missing in your assessment is time.
Yes, in the short term allowing X in country Y might make country Z feel like they can get away with X. But I think people generally have short memory, and anything beyond a generation (or two?) doesn't quite work that way.
To be clear, I'm not saying you're wrong or proposing an alternative theory. I just think there's lack of evidence that you're correct, and personally I'm deeply uncomfortable with any form of punishment that isn't well-supported by evidence.
More generally, the possibility of punishment does little to diminish violence, because people who perform it generally expect not to get caught.