Mike here. It’s been slow here at Let a Thousand Nations Bloom. But in case you haven’t seen this elsewhere, I wanted to post the Seasteading Institutute’s Indiegogo campaign to raise funds for designing the first floating city. They plan on working with Deltasync, a Dutch architecture firm with expertise in building floating structures. You don’t have to be Rockefella to help a fella (or to kickstart a new frontier). Please help put the campaign over the top!
The Floating City Project
The strategy behind this project is to accelerate the creation of an actual floating city while making seasteading – pioneering the oceans and creating new societies – accessible to the average person. Our years of engineering and legal research, combined with the input of our community, has culminated in our latest strategy to produce pragmatic plans for the first floating city. We realize that it will be more economically feasible to locate a seastead as close to an active port as possible, instead of international waters. Locating near shore will greatly reduce costs compared to mooring a platform in deeper waters. It will also reduce the cost of transporting people and goods to and from the seastead, making it easier for residents to take the plunge into ocean living.
Imagine that you were entertaining a business deal with a man with an supernatural ability to make two kinds of promises: 1) promises that are impossible for him to break and 2) ordinary, breakable promises. Why would you accept anything other than the unbreakable promises from him? If he offered to make breakable promises you might grow suspicious about his intent.
It’s easy to see how unbreakable promises would be a revolution for contracts and law. Enforcement costs for contracts would be drastically reduced. It would enable a new era of globalization, allowing people to participate in contracts with each other without regard to jurisdiction. The rights promised to a citizen of a country could be guaranteed instead of relying on the benevolence and caprice of their sovereign.
This is why I find Bitcoin so exciting. Sending someone a bitcoin is like making a promise that can’t be broken because the rules governing the transfer of bitcoins are secured by cryptographic algorithms which cannot be broken. Bitcoin is a system of rules for the accounting and transfer of property rights in a way that is completely verifiable and unforgeable. The regulation and enforcement of property rights is a big portion of what governments do so bitcoin opens the door to more efficient and trustable decentralized forms of governance.
In contrast, transactions in the traditional banking system rely on a fragile chain of trust and threats of force. If I try to send you money you must trust that your bank and my bank will not make a mistake or attempt to defraud us. You must trust that the government regulators which oversee banks are reliable, thorough, and honest. You must trust that banks fear the consequences of the law if they break a promise and that they haven’t captured their regulators. And with most methods of electronic bank transfer in the USA, the recipient will not be able to verify that the transaction went through for several days.
But in practice we know that people sometimes write checks that they can’t cover. We know that government banking regulators sometimes freeze accounts. And we know that banks and countries sometimes become insolvent. This year depositors in Cyprus and Argentina have seen their property rights in their bank accounts violated. Cypriots were promised the money in their bank accounts, but then their government together with the EU decided to change the rules. When rules change too often they cease to become rules at all.
Auditing and enforcing promises made in the traditional financial system requires tremendous resources, employing hundreds of thousands of people and costing billions of dollars a year. There are middlemen that guarantee transactions against fraud, regulators that ensure that those middlemen remain solvent and comply with banking regulations, police men and lawyers that prosecute fraudsters, intelligence agents that monitor transactions for illegal purchasers, banks to keep your money safe, and many other specialties. All of that overhead is obsoleted by bitcoin because promises cannot be forged or broken.
The importance of Bitcoin is bigger and broader than just a new kind of currency. It also represents a breakthrough technology in rule-making. The technology underlying bitcoin can be used to create systems for the maintenance and transfer of property rights in other goods, such as domain names (see the namecoin project). I hope that people continue to find astonishing new uses for this technology.
Property rights based on cryptography are a remarkable advance in governance technology for several reasons. First, they are unbreakable. Second, they are opt-in rulesets – nobody forces you to join the bitcoin ecosystem just because you are born in some jurisdiction. Third, it eliminates a mountain of compliance and auditing costs. Far fewer regulators, banks, courts, and cops are needed to maintain order when forgery is impossible. Fourth, it is universal – anybody can choose to opt-in to the system.
Cypherpunks and crypto-libertarians are way ahead of me. For decades they had the vision of property without government and of laws without force. Now that I see an example of it in the wild I finally understand what all the fuss is about.
Daniel Brook recently published excepts from his book on four designed or somewhat cultivated cities–St. Petersburg, Mumbai, Shanghai, and Dubai. Fascinating bit of history on Shanghai and how market reforms were introduced throughout China:
Two decades ago, when Shanghai’s leaders looked out over the new New China born of Deng Xiaoping’s economic reforms, it seemed history had gone off the rails. It wasn’t Shanghai, the city that invented Chinese capitalism, but Deng’s new experimental instant metropolis, Shenzhen, on the border with Hong Kong, that was brimming with factories and drawing thousands of ambitious young people from across the country. It was as if Deng had held a great national casting call for China’s next business hub and upstart Shenzhen had gotten the part Shanghai assumed she was destined to play. Hoping to set things right, Shanghai officials lobbied their superiors in Beijing, urging them to reopen to the world China’s historic global gateway city and financial center.
Back then even Deng’s pro-market political allies were wary of Shanghai. Some officials worried that unleashing China’s cradle of cosmopolitanism and revolution could upend their rule. Others fretted that the symbolism alone would aid their ideological enemies. Deng was already beset by anti-market factions within the Party who warned that his new Special Economic Zones for international investment would become “foreign concession zones” reborn. Though Deng had been able to overrule them in creating Shenzhen, the symbolism of their critique would be much more salient in Shanghai, a city that had actually been a grouping of foreign concessions during China’s “Century of Humiliation,” from the Opium War through World War II.
But the Shanghai city government kept pushing.
If you haven’t yet, do pick up a copy of Huemer’s latest book, The Problem of Political Authority: An Examination of the RIght to Coerce and the Duty to Obey. But for the short version, check out this month’s Cato Unbound. Here’s a typical Huemerian insight:
Imagine that someone proposed that the key to establishing social justice and restraining corporate greed was to establish a very large corporation, much larger than any corporation hitherto known—one with revenues in the trillions of dollars. A corporation that held a monopoly on some extremely important market within our society. And used its monopoly in that market to extend its control into other markets. And hired men with guns to force customers to buy its product at whatever price it chose. And periodically bombed the employees and customers of corporations in other countries. By what theory would we predict that this corporation, above all others, could be trusted to serve our interests and to protect us both from criminals and from all the other corporations? If someone proposed to establish a corporation like this, would your trepidation be assuaged the moment you learned that every adult would be issued one share of stock in this corporation, entitling them to vote for members of the board of directors? If it would not, is the governmental system really so different from that scenario as to explain why we may trust a national government to selflessly serve and protect the rest of society?
Welcome to the competitive government movement Michael Arrington. He writes at TechCrunch:
America is an unsolvable problem, a nation divided and deeply in hate with itself. If it was a startup we’d understand how unfixable the situation is, most of us would leave for a fresh start and the company would fall apart.
America is MySpace.
But leaving America means renouncing your citizenship, moving out of the country and leaving family and friends behind. You can retain your citizenship if you like, but you’ll still be away from loved ones and still be paying taxes. You lose all the good stuff about America and have to keep all the bad stuff.
I love this country but we have a management team that’s both evil and incompetent. And the way “stockholder rights” are implemented there’s absolutely no way to stop or even slow down the rush to misery. I wish people had the choice of voting with their feet. This tends to keep the individual states somewhat honest in their dealings with citizens because they have to compete against 49 other states. But there’s no escaping the fed. It’s like a startup where everyone is miserable but no one is allowed to quit.
I want to be as charitable as I can to Al Jazeera, and Belen Fernandez, who wrote an impetuous rant against the “charter city” movement in Honduras. If she wants to have a reasoned debate about the ideas animating these projects, I’m willing to hear her out. Please contact me and we can arrange a public discussion. Ms. Fernandez, if you are reading this, here are some points from your article that might make for a thoughtful kaffeeklatch:
- “Charter Cities: Neoliberal Viagra” Look, priapic snark may win solidarity from people who already agree with you, but let’s really deliberate and leave this claptrap to the next episode of Girls.
- “blantantly colonial charter city project in Honduras” Now this is a strong assertion. I can see how Paul Romer’s original version, which involved the participation of another sovereign and funding one of the top culinary schools in the world, may have led you to this judgment. You would not be the first to arrive at that conclusion. Still, if you had followed the developments closely, you would have known that the Hondurans rejected that model long ago in favor of something that would allay fears of giving up sovereignty.
- “The gist of the project is the creation of free-market enclaves on Honduran territory that are unaccountable to national laws…” This isn’t correct at all. For one, the model cities that the Honduras proposed would still be under Honduran criminal law. Where they would depart from the rest of Honduras would be in commercial and civil matters. But, and this is important, whatever commercial laws were established for a model city would have to be approved by the democratically elected legislature.
- “disingenuously suggests that Honduras is not already one big free-market enclave in the sweatshop tradition” What are you asserting here? That Honduras has a free market? The Index of Economic Freedom is a very reliable indicator for how much a of free market any country supports. You will see that Honduras currently qualifies as “mostly unfree” and is ranked 96th out of 177 countries. On top of that, and sadly, Honduras can be a very dangerous place. San Pedro Sula has one of the highest murder rates in the world. Oppression comes in many forms, sometimes from dictators, sometimes from violent criminals, and sometimes from disaggregated bands of drug lords masquerading as quasi sovereigns (a problem greatly exacerbated by the–ahem!–very unfree US drug war). Such conditions imply the opposite of freedom, and irrespective of what the Honduran state does, many human rights violations.
- “if Lobo really wanted to promote a democratic image of Honduras, he might refrain from presiding over an illegitimate regime” Given that the New York Times, the White House, and the United Nations also called Manuel Zelaya’s ouster a coup d’etat, I understand why you might leap to that claim as well. But it would help to examine the facts with greater care. In 1982, after years of military rule, Honduras established a constitution with certain sacred articles that would prevent the rise of a dictator. One of these articles imposes strict term limits on any presidency. According to Article 239 of the Honduran constitution: “No citizen who has already served as head of the Executive Branch can be President or Vice-President. Whoever violates this law or proposes its reform [emphasis added], as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.” When Zelaya called for a national assembly to eliminate this article, he violated the constitution in a way that the people of Honduras are very sensitive to and thereby stripped himself of power. They have a phrase for this temptation: continuisimo. The very same Supreme Court that overruled the legislature on the first model city proposal ordered Zelaya’s arrest for disobeying the court orders requiring him to obey the constitution. The democratically elected legislature voted 123 to 5 to remove him from office. Since this event in 2009, there have been open elections where the people of Honduras have spoken. It’s time the media elsewhere in the world see the coup narrative as misguided at best or simply way off track.
- “the splicing of national territory into enclaves governed by international investors – who by definition are concerned with maximising profit rather than human rights” Crony capitalism destroys freedom. We are in agreement on that. But the motivation behind the model city reforms are specifically meant to protect human rights and to provide the grounds for all Hondurans to flourish. Start from the assumption that the people involved share the same ends as you: they want to see a better future for Honduras. If the disagreement is about the means, about the way to ensure greater protection of human rights, then let’s have that debate. Since you only seem to tear down and criticize in your article, I know what you’re against, but not what you’re for. Please let’s discuss history and why some countries have developed and why others haven’t.
Ms. Fernandez makes many other bald and unsupported assertions in the article, which I am happy to take up with her if she so chooses.