The ABC drama is about a renegade crew of a nuclear submarine who go on the run after defying an order given under suspicious circumstances to deploy their weapons. They seek refuge at a NATO listening post and declare themselves the world’s smallest sovereign nation with nuclear capability. They then face the challenges of creating a new society while potentially fending off threats from other countries.

“The survey shows that 70 percent of respondents approve of Obama’s decision to keep open the prison at Guantanamo Bay. . . . The poll shows that 53 percent of self-identified liberal Democrats — and 67 percent of moderate or conservative Democrats — support keeping Guantanamo Bay open, even though it emerged as a symbol of the post-Sept. 11 national security policies of George W. Bush, which many liberals bitterly opposed.”

Repulsive liberal hypocrisy extends far beyond the issue of Guantanamo. A core plank in the Democratic critique of the Bush/Cheney civil liberties assault was the notion that the President could do whatever he wants, in secret and with no checks, to anyone he accuses without trial of being a Terrorist – even including eavesdropping on their communications or detaining them without due process. But President Obama has not only done the same thing, but has gone much farther thanmere eavesdropping or detention: he has asserted the power even to kill citizens without due process. As Bush’s own CIA and NSA chief Michael Hayden said this week about the Awlaki assassination: “We needed a court order to eavesdrop on him but we didn’t need a court order to kill him. Isn’t that something?” That is indeed “something,” as is the fact that Bush’s mere due-process-free eavesdropping on and detention of American citizens caused such liberal outrage, while Obama’s due-process-free execution of them has not.

Power creates its own legitimacy. To weaken corrupt governments, you can either focus on undermining legitimacy or power, hopefully both. Suckered into the voice gambit, the anti-war, pro civil rights movement is nothing more than the cat’s paw. They thought they could lay bare the illegitimacy of Bush era policies, but because they did nothing to check a raging hulk, they’re stunned, back peddling, mumbling. The protests of 2007 have faded into a faint whisper. It is the dawn of acquiescence and denial.

I like Kling’s appropriation of the term, but I also enjoy Stephenson’s more developed analysis in the middle section of his classic essay, In the Beginning Was the Command Line. The cultural trends he wrote about in 1999 have only grown starker:

Contemporary culture is a two-tiered system, like the Morlocks and the Eloi in H.G. Wells’s The Time Machine, except that it’s been turned upside down. In The Time Machine the Eloi were an effete upper class, supported by lots of subterranean Morlocks who kept the technological wheels turning. But in our world it’s the other way round. The Morlocks are in the minority, and they are running the show, because they understand how everything works. The much more numerous Eloi learn everything they know from being steeped from birth in electronic media directed and controlled by book-reading Morlocks. So many ignorant people could be dangerous if they got pointed in the wrong direction, and so we’ve evolved a popular culture that is (a) almost unbelievably infectious and (b) neuters every person who gets infected by it, by rendering them unwilling to make judgments and incapable of taking stands.

Morlocks, who have the energy and intelligence to comprehend details, go out and master complex subjects and produce Disney-like Sensorial Interfaces so that Eloi can get the gist without having to strain their minds or endure boredom. Those Morlocks will go to India and tediously explore a hundred ruins, then come home and built sanitary bug-free versions: highlight films, as it were. This costs a lot, because Morlocks insist on good coffee and first-class airline tickets, but that’s no problem because Eloi like to be dazzled and will gladly pay for it all.

Read the whole thing.

But why go to medieval Germany or post-communist Russia when here we have a great example from my home town, San Francisco:

The Ice Cream Bar opened Jan. 21 in the Cole Valley neighborhood — an homage to the classic parlors of the 1930s, complete with vintage soda fountain and lunch counter seating. It has become an immediate sensation, packed with both families and the foodie crowd, savoring upscale house-made ice creams and exotic sodas (flavorings include pink peppercorn and tobacco). The shop also employs 14 full- and part-time workers.

But getting it opened wasn’t easy.

“Many times it almost didn’t happen,” said Juliet Pries, the owner, with a cheerful laugh.

Ms. Pries said it took two years to open the restaurant, due largely to the city’s morass of permits, procedures and approvals required to start a small business. While waiting for permission to operate, she still had to pay rent and other costs, going deeper into debt each passing month without knowing for sure if she would ever be allowed to open.

“It’s just a huge risk,” she said, noting that the financing came from family and friends, not a bank. “At several points you wonder if you should just walk away and take the loss.”

Ms. Pries said she had to endure months of runaround and pay a lawyer to determine whether her location (a former grocery, vacant for years) was eligible to become a restaurant. There were permit fees of $20,000; a demand that she create a detailed map of all existing area businesses (the city didn’t have one); and an $11,000 charge just to turn on the water.

The article doesn’t investigate the origins and causes of this morass, but any plausible theory of urban development should figure out ways to dissolve the problem. I’d say it’s a reasonable assumption that we can thank baptists and bootleggers for each required permit. One by one the pebbles collect to thwart the flow of the stream. And the SF city planning commission seems to shrug its shoulders helplessly.

The whole episode in red tape asphyxiation inspired a humorous take on city planning in an Xtranormal skit. Enjoy [HT Boing Boing]:

Shang Yin, the eldest of a soldier’s eight children, opened a printing shop in the 1980s when she was in her twenties. As China moved to a market economy, demand swelled for printed products used by new industries. A short supply of paper bottlenecked Shang Yin’s business, until she made the discovery of her life: ships left Chinese harbors for the United States filled with cargo, and they returned almost empty…Shang Yin had discovered a new market, and she reorganized her business to exploit this opportunity. She started buying scrap paper in the United States and shipping it back to China. Business burgeoned at her company Nine Dragons Paper Industries, and some observers now count her as China’s richest woman.

When a developing country has many entrepreneurs like Shang Yin, a cascade of innovations in markets and organizations lifts productivity, wages and profits. Innovations in markets and organizations combine ideas and capital in bold ventures with big risk and opportunities. The central claim of this book is that sustained growth in developing countries occurs through innovations in markets and organizations by entrepreneurs; developing innovations poses a problem of trust between innovators with ideas and investors with capital (the “double trust dilemma”); and the best solutions require law. 

Emphasis mine. Though much of the book is about how bad laws inhibit prosperity in poor countries, much of its analysis applies equally well to richer European and North American economies.

We Americans tend to believe that democracy is an intrinsic part of good governance and that more democracy means better quality government…However, this postulated relationship remains just a theory that remains subject to more empirical testing. One can think of many ways in which greater democratic participation actually weakens the quality of governance. One case happened in the United States when Andrew Jackson was elected president in 1828, as a result of the broadening of the franchise in many states in that period. Jackson argued (1) that since his party won the election, he should get to appoint federal officials; and (2) that there was no job in the US government that was so difficult that any ordinary American couldn’t do it. This was the beginning of the patronage system in the US, in which the federal bureaucracy was controlled by the two political parties and in which jobs turned over with every election cycle.

Of all the problems democracy generates, this piece of history is small beer, but it’s a start for thinking through some of the obstacles to good governance.  It is true: relying on patronage systems instead of performance based metrics worsens rent seeking. Nevertheless, Fukyama is trapped in the academic political philosophy fly bottle–namely, his attention is drawn to the question of who should rule. He concludes we should trust the council of the Ivy League Jedi:

I would argue that the quality of governance in the US tends to be low precisely because of a continuing tradition of Jacksonian populism. Americans with their democratic roots generally do not trust elite bureaucrats to the extent that the French, Germans, British, or Japanese have in years past.

It’s baffling that he’d point to European countries that are one step from cascading into Michael Bay explosions detonated by a flurry of defaults.  And elderly Japan’s back may soon break under a debt to GDP ratio greater than 220 percent.  Any old how, the better question he should ask is: what system of governance discovers error quickly and roots it out effectively? The answer begins with the exit/voice paradigm, which implies a trial and error discovery process. Fukuyama is too focused on top down, hierarchical feedback loops. These are important–look at corporate governance–but alone, they are not optimal. Call them citizens, call them customers, they also can join the effort from the bottom up either by voting the bums out, yes, or by simply leaving for something better by their lights. Good governance is not an absolute institution independent of the wider ecosystem of competing governance structures. This is like asking “what is good corporate governance” independently of asking whether there’s a competitive market.

Quis custodiet ipsos custodes?

Economist Barry Weingast writes, “the fundamental political dilemma of an economic system is this: A government strong enough to protect property rights and enforce contracts is also strong enough to confiscate the wealth of its citizens.”

How then do we restrain the predatory powers of government to an appropriate scope? How do we keep powerful interests from capturing government institutions to use against others? In other words, “Who will guard the guardians?”

Weingast has an easy answer:

The answer concerns the design of political institutions that credibly commit the state to preserving markets, that is, to limits on the future political discretion with respect to the economy that are in the interests of political officials to observe.

The romance surrounding America’s founding and the drafting of the Constitution is the story of this struggle. Unfortunately, actually ‘designing’ these institutions is exceedingly hard. And even if we were able, people disagree over the ideal size of government.

Disagreement over the ideal size and scope of government means any given ‘transgression’ that expands State power by exploiting the populace is not necessarily opposed by enough people to stop the expansion.

Weingast shows rigorously, using history and game theory, that sovereigns can ‘divide and conquer’ their subjects using disagreement over government’s limits:

…if citizen beliefs about the appropriate limits on the state differ considerably, it is difficult for them to react in concert to state actions. Indeed, this diversity allows the sovereign to form a coalition with one group of citizens against another, allowing the sovereign to transgress boundaries considered fundamental by other citizens.

Obviously, most Nation-States, including the US, contain severe disagreement over government’s proper scope. Unfortunately for us, the sovereign can later transgress against the same group that they used earlier for the winning coalition to transgress against another groups. The sovereign wins regardless.

Without an “automatic mechanism” (Weingast’s term) to produce a consensus on the limits of State power, we face the worst possible outcome: where sovereign power steadily balloons using a divide-and-conquer strategy against all groups, in theory indefinitely.

So what can we do?

We need to find a way to unify preferences about government’s limits. With a unified ideology, a transgression is opposed by a broad base of people and becomes politically untenable. Divide and conquer fails.

But actually convincing 300,000,000 of your fellow citizens that your idea of government’s limits is the correct one is an almost impossible task. As anyone who has tried to rally people behind a cause will attest, political activism is difficult and the results are often disappointing.

Moreover, as I have argued here previously, the expansion of government itself changes people’s perception of acceptable government limits and sovereign power expansion may even create the psychological environment that reinforces the legitimacy of future transgressions.

So we must search for Weingast’s ‘automatic mechanism’ so that our convergent preferences for limits to government bring a resilient political order by stopping attempted transgressions in their tracks.

Imagine a world in which people are opting into a wide variety of different institutional structures. People personally contract into competitive legal systems and different mixtures of ‘public goods’ and social programs provided by sovereign, small jurisdictions or private developers.

This is a world of entrepreneurial communities and competitive governance. In the act of contracting and immigrating, we find people revealing their preferences for a rule set and, by extension, a pre-defined scope for government activity.

People vote with their feet and their pen for an explicitly stated limit on ‘government power’, as expressed by contracting into an entrepreneurial community. This means that competitive governance is an automatic mechanism for bringing together people with convergent ideologies and expectations about an authority’s limits.

If Weingast’s analysis is correct, this means that not only will people enjoy the benefits of living beneath institutions more closely tailored to their preferences, but the attractiveness of a competing polity to a citizen will work to restrain unjust expansion in an authority’s power.

This is because those attracted to a particular rule system will have similar ideas about the limits of that rule system, creating a robust check against the ‘divide and conquer’ strategy of a sovereign.

Those that hope for ‘limited government’ should reconsider their acceptance of the Nation-State system for achieving their goals. Nation-State machinery is too easily used by political elites and economic special-interests against the large, dispersed mass of people with heterogeneous ideas about government’s limit. Those frustrated with the political process in countries like America must realize that ‘divide and conquer’ is endemic to the system.

To limit government, we need to bring together people’s preferences for government’s limits. Since that’s nearly impossible, we need to bring the people with convergent preferences together. With competitive governance attracting citizens by innovating rules and political institutions, we build a robust check against predatory government expansion. In short, limiting government power needs entrepreneurial communities.

A key part of our approach (articulated well by the Free Cities Institute) is to work with the host country to carve out areas of law previously handled nationally, to instead be defined at the city level.  This gives citizens greater choice in jurisdictions without leaving their country, and enables competition between cities to attract residents and businesses.  So part of our core value offering is to develop a world-class legal system based on historical study and best practices around the world, which can operate inside the constitutional limits and existing legal environment of the host country.

We are working to develop this system, and so we’re beginning to form a board of advisors for it.  If you know someone with time & expertise in this area, please pass this along.  If you’re interested, you need to know:

1. We’re looking for people with relevant professional expertise or very strong, long-term interest in this area.
2. You will have to sign an NDA.
3. We are not currently compensating advisors, although it is a possibility for the future.
4. We aren’t expecting very many hours, and will be flexible.
5. The initial relationship will be informal; after a trial period with demonstrated contribution, we’re open to being listed on your resume or linkedin.
6. Most importantly: You’ll be contributing to fascinating work that is a key enabler of increasing competition in governance and radically improving one of the most foundational, yet non-innovative, areas of human life.

If you’re interested, please email patri@futurecitiesdev.com with:

1. CV, resume, LinkedIn, or short summary of qualifications.
2. The most relevant piece you’ve written (link or attachment to article, blog post, book, paper, etc.)
3. 100 words or less on what you see as the greatest challenge in practice to designing a legal system in this context.

More interesting news from Dubai about the opening up of their common-law courts in the Dubai International Financial Center free  zone to small businesses elsewhere.

The registrar sounds excited:

This is the first time these companies have had an English-language, dispute-resolution option available to them in Dubai.

And so do the small businesses (since disputes are usually settled in only three weeks, without any lawyers or legal fees):

Judging from the hundreds of inquiries received by the DIFC Courts since October, we are forecasting a … 100 per cent increase in the SCT’s caseload in the year ahead.

However the truly fascinating quote is an off-the-cuff remark early in the interview:

It was nice to finish the year having tested the new jurisdiction and so send a clear message to the business community that we are here and ready to resolve problems with a continued commitment to customer and community service.

When was the last time you thought of a court as having a ‘commitment to customer service’?

The founders of the Free Cities Institute, in association with Universidad Francisco Marroquín in Guatemala, will discuss recent efforts to establish Free Cities in Honduras and other countries. They will also present a specific course of action for creating the first Free City in Belize.

Date: Thursday, January 26, 2012
Time: 6:00 p.m.
Place: Radisson Fort George Hotel and Marina in Belize City, Belize
Cost: US$50 per person