Waves Washing Inland: Symbiosis Between Think Tanks and New Nations
As Peter Thiel said at TSI’s recent conference (talk video), the prospects for freedom over the coming decades depend enormously on whether we end up with more or fewer sovereign jurisdictions. Even governments respond to competition and the threat of exit. But that does not mean voice does not matter at all – far from it, the two are complementary.
Let’s consider the case of pirate radio in the UK, as covered in the old seasteading book, and featured in the movie “Pirate Radio” which recently came out in the US. From Erwin Strauss’ book:
In the 1960’s, a new form of offshore activity emerged. Commercial radio as known in the United States didn’t exist in Europe at the time. With few exceptions, all that was to be heard were staid government stations. Then a ship named Veronica dropped anchor just off the Dutch coast, with a transmitter beaming programing filled with the latest popular music. Advertisers eagerly bought up all the available time at premium rates, and imitators soon followed in the Scandinavian and British markets…
International agreements were entered into to ban broadcasting from ships, but the African country of Sierra Leone chose to offer its flag as a flag of convenience rather than subscribe to the treaties …
In addition to competition giving rise to friendly flags, another source reports that it ensured access to supplies:
…on January 22nd, the governments of Belgium, France, Greece, Sweden, Luxembourg, Denmark and Britain signed a Council of Europe Agreement that not only banned broadcasts ‘on board ships, aircraft or any other floating or airborne objects’ but also banned anyone from those countries from supplying the pirates with materials, supplies or equipment. The stations were forced to obtain new sources of supply from either Holland or Spain, neither of whom had been party to the agreement…Caroline’ was also in the happier position of being able to obtain supplies from Dublin or even the Isle of Man as the Manx government were reluctant to ratify legislation against the pirate ship due to the trade and tourism she brought to the island. “
Most importantly, pirate radio won, as Strauss reports:
The British finally knocked their offshore broadcasters off the air by banning advertising on them by firms doing business in the United Kingdom…then the coup de grace was delivered: the opening of popular music stations on land.
The waves from pirate radio washed inland, eventually forcing the UK government to give people what they wanted: rock-and-roll music on the radio. The pirates shut down, not because they were forced out of existence, but because the changes on land ended the arbitrage opportunity and eliminated their market. Which is the ultimate victory – helping those in current countries get more of what they want, through the existing systems they are comfortable with, and without the extra cost of ocean operations (what we call the “ocean tax”).
Jurisdictional competition movements can provide experiments, empirical evidence, and competition – which I believe are almost indispensible requirements for political change. But the greatest leverage will come from the effects on existing countries, which are far more populous than seasteads will be for many decades to come. Hammering home the lessons of failed policies and reminding people that there are better alternatives is exactly what domestic activist institutions such as policy think tanks specialize in. Thus, there is a symbiotic relationship between movements like seasteading, Free Zones, and Charter Cities, and domestic organizations such as Cato, The Independent Institute, Pacific Research Institute, etc.
Without A Thousand Nations to serve as examples and provide incentive for governments to improve, think tanks will only be an expression of dissatisfaction, not a force for change. But without think tanks to advocate for more effective government which incorporates the lessons learned in these experimental communities, the Thousand Nations will have no effect beyond those small communities. Think tanks need nation-startups to make waves, and the world needs think tanks to help those waves wash inland.
(this post is based on recent discussions with Michael Strong & Gayle Young, as well as Doug Bandow and David Boaz‘s comments on my Cato talk last spring).
Link Archipelago
The Law Versus Legislation
- For people who wish to see more than 250 nations on this earth, and the freedom to move among them, you might think we would be concerned about “the Paradox of Choice.” Tim Harford has a column exposing this claptrap: “The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way.”
- Harvard economist Ed Glaeser on why it’s difficult to measure the amount and degree of entrepreneurialism in a city. Big question: why is New York more dynamic than Pittsburgh?
- Jurisdictional arbitrage watch, NBA edition: since the NBA sports cartel prohibited 18 year-olds from playing for money, and since the NCAA indentured servant service prohibits anyone playing for money, Brandon Jennings skipped over to Italy to make some bucks. Now he’s back in the States and playing well–his example may inspire other indentured servants to claim their economic freedom.
- The law versus legislation: legislators build rectilinear walking paths in Brasilia and Detroit, but more desirable walking paths emerge on their own. Out of the pathways of desire, no straight urban planning was ever made.
David Friedman on Seasteading and Polycentric Law
Another great talk video from Seasteading 2009 is up, this one by my dad, discussing embedded legal systems and seasteading:
If you’d like a preview, Naomi summarizes the talk over on the seasteading blog.
The State of Love
The academic philosopher Crispin Sartwell has posted some thought-provoking quotes from the annals of american anarchism. They’re part of a talk he’ll be giving on how some cornerstones in that homespun philosophy emerged from radical protestantism. One quote Sartwell cites from Emerson’s Politics stands out for me:
The power of love, as the basis of a State, has never been tried.
I’m no Emerson scholar, so I’m not certain if he believed the U.S. satisfied that criteria in 1844, but I’m a hard skeptic and would assert that the truth of this proposition still stands. The State based on love has yet to be tried. And I’m also ambitious enough to say that competitive government is the best approximation to that worthy goal.
There’s a noble myth told by St. Augustine about God’s reasons for giving man free will. It is true, Augustine says, that by giving free will to man, God introduced evil into the world. Sure, if God fully determined our actions, then there wouldn’t be any evil (unless he himself were evil). But for not determining this, our good God had his reasons. Because if God fully determined our actions, there wouldn’t be any genuine good either. We would be puppets.
The story concludes: God gave man free will because it’s the only way he could know if man truly loved him. Love is an act of the will. Anything less is meaningless.
Replace God with the State in that story and you’re halfway to the land of a thousand nations. TRY to be a deterministic God in that story, and you’re a legislator in the modern State.
You cannot compel meaningful community. I invite you to imagine a meaningful life that requires someone with a gun telling you what to do, whom to love and whom to associate with. (It was a movie called Fatal Attraction.) I don’t think it can be done, but there are those who do. Most of us seem to vote them into office.
I think this is what Nozick meant when he vaguely said his notion of rights and “side-constraints” was based on meaningfulness. He didn’t elaborate the thought, but this is how I understand it: the community created by a closed State with no exit option is meaningless in the sense that the choice to live there is not our own; it is the legislators’. In the closed State, our relationships are compelled. And so like Augustine’s God, there’s no love in politics unless it’s by free consent. Or to come back to Emerson:
Whilst I do what is fit for me, and abstain from what is unfit, my neighbor and I shall often agree in our means, and work together for a time to one end. But whenever I find my dominion over myself not sufficient for me, and undertake the direction of him also, I overstep the truth, and come into false relations to him.
Law Markets: Leave the Gun Take the Cannoli
Chris Blattman reviews The Sicilian Mafia by Diego Gambetta, an Oxford Sociologist:
The book tells a fascinating tale of the mafia, traced mostly from court transcripts, investigator files, and some interviews. He essentially advances an economic theory of the mafia: they are entrepreneurs and firms who collude and compete; the good they sell is not violence, or stolen property, but protection. That is, they enforce contracts in places the government can’t or won’t, like illegal and illicit markets, or areas where the police and courts are weak. They actively compete with the police to provide protection, and this good is in high demand. Every transaction done under the table cannot seek protection from the courts, and the mafia step naturally into this gap. Their name is their trademark, and they prevent new entry by force but also by complex social rules and ethnic identity.
Naturally the mafia also help create demand for the product, through intimidation and threat, but the real demand for services comes from government regulation or government failure. Every tariff or ban or rule creates an incentive for a black market, and the market evolves contract enforcement mechanisms where the state does not.
Jonathan Rauch & Demosclerosis
As critics of the quality of governance democracy provides, sometimes it can be a bit lonely, intellectually speaking. Sure, there’s the work of Mancur Olson, but a dead economist can only provide so much company. Despite the huge relevance of diagnosing the defects of democracy to the current arc of history, in many ways it’s a dusty and neglected corner of economic theory.
Which makes it so delightful to come across a book like Jonathan Rauch‘s Government’s End: Why Washington Stopped Working, which is essentially an application of Olsonian theories of special interest capture to 20th century America. Just to get a quick idea of how much overlap this book has with our interests, chapter 2 is called “Mr. Olson’s Planet”, and the previous edition of the book was titled Demosclerosis. Here I thought we were the only ones talking about democratic sclerosis, and someone else coined a clever word and titled a book after it!
Technology is a Public Good and You Are a Free-Rider
I’ve heard a few speeches from Peter Thiel–at the Seasteading Conference and the Singularity Conference–and I’ve read his Hoover essay, his bit on the Contrarian Hero, and I’ve seen his interview with Peter Robinson. Many have linked to these, but few have discussed the central theses he raises in all of them, which I take to be the following:
- History shows overly optimistic beliefs about economic growth inflate financial bubbles (e.g. South Seas 1720s, Jazz Age America 1920s, Japan’s Rising Sun of the 1980s, Dot-Com, and finally 2007’s house of cards.)
- We can call the recent debacle a “credit crisis,” but that’s just another way of saying it’s a bet about the future of economic growth that didn’t pay out. Credit is optimism measured in money.
- So what we ought to focus on is why economic growth did not proceed apace. Since rapidly increasing growth = asset bubbles of little or no consequence.
- A la Endogenous Growth Theory, macroeconomic expansion requires the right mixture of technology-generating institutions and policies. At a deep, fundamental level, growth depends on invention.
- One big reason expansion hasn’t lifted us higher is because people are somewhat irrational–they build retirement nest-eggs, buy houses, bank on pension funds growing at 8 percent a year, but then in the voting booth they support policies inimical to growth. The tragic irony is that much of what people assume about their personal finance depends upon economic growth. And no growth, no pension. Or better: no innovation, no pension.
- Inventing new technologies is a public good, but one that can’t be financed by direct government intervention. Governments are good at providing subsidies for basic science research, but public choice and knowledge problems prevent governments from being active players in this game. Worse, they’re probably obstacles.
- Goverments fail, but so do people. Many are not investing enough in new technologies. (E.g. the 5 percent of your portfolio dedicated to VC investment is more important than the 95 percent dedicated to diversified lower risk investments, because, in the long run, for the 95 percent to pay out at 8 percent, you better hope something out of that VC goes orbital.) Instead, many free-ride, expecting others to do the dirty work of inventing profitable technologies.
- Last but not least, all of civilization as we know it may be one colossal bubble and it will burst unless we focus on inventing more and better productivity enhancing technologies.
Did I miss anything? Oh yeah–there’s an assumption in there reviving the Great Man Theory of History. Here are some quotes:
- “The agon between globalization and its alternative will be close — at least in the sense that individual choices will prove to be of decisive significance.”
- “Unlike the world of politics, in the world of technology the choices of individuals may still be paramount. The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.”
For all these reasons, Thiel has said that not only are Seasteading and other forms of competitive government probable, but more than that, they are necessary–necessary, that is, if we believe the global standard of living ought to improve.
It’s a lot to chew on and I’m not sure where to start. Any takers? As a bonus question, you can discuss this further absurd (or brilliant?) claim from Thiel: Rene Girard is the greatest philosopher since Kant.
Cool Heads And Blazing Hearts
The trailer is out for a new documentary on the 2008 Ron Paul campaign. It is called For Liberty: How the Ron Paul Revolution Watered the Withered Tree of Liberty. The trailer, featured below, is called “Let It Not Be Said We Did Nothing”, and I’d like to explore that idea, my reaction, and the branding of competitive government.
(Check out the teaser trailer also, it’s put together wonderfully)
I have two very different reactions to this: I feel simultaneously inspired at the nobility and enthusiasm of these people standing up for the vision they (and I) share about what makes a just society, while feeling depressed that they directed that energy through the democratic process, where I believe it will inevitably fail. I don’t know whether to feel hopeful that so many other Americans share my deep sense of wrongness about how things are now, or hopeless that they don’t share my analysis of how they can be changed.
I think it’s important not to deny either of these feelings, because both halves are true and important. To focus on our differences in strategy without acknowledging the shared sense of values and drive to bring forth a society which promotes those values is at best narrow-minded and at worst pointless condescension. Yet to be completely non-judgmental about strategy, to say that what matters is intentions and not the results they will create in the world, is to make the same mistake we so often criticize in others’ politics.
So in branding this nascent movement that is A Thousand Nations, we must weave a narrative combining both. Acknowledging the integrity of those whose passion for justice is such that they cannot stand by and do nothing, while reminding these passionate individuals that if they truly want results, not just symbolic defiance, they need to do more than Not Nothing: they need to do the Right Thing (or at least, A Right Thing).
Without careful analysis of why the current system is dysfunctional, new nations will be doomed to the same sclerosis as old ones. So I deeply believe that we cannot achieve substantial improvements in the performance of government unless we Let A Thousand Nations Bloom by opening new frontiers, autonomous free zones, and charter cities. Analysis matters: blazing hearts need cool heads. Yet without a community of people with blazing hearts, willing to make great initial sacrifices for their beliefs, there can be no new nations. However dispassionate the analysis, new nations are a form of revolution, and a revolution cannot be inspired without passion. Passion matters: cool heads need blazing hearts.
Considering the size of the challenge we’re confronting, we need the optimism that comes from seeing the synergies between these ideas, so that each gives the other greater hope for a better future. In the future, I’d like to inspire Ron Paul fans to find hope in our analysis of alternative strategies. For the present, I am happy to draw hope from their proven ability to inspire documented in For Liberty.
So let us take a break from planning our own revolution, and raise a glass to salute those noble souls who could not stand by and do nothing.
Organization, Olson and the Red Queen Effect
This is another post from our guest Max Borders. You can find his earlier posts here.–Editor
“It takes all the running you can do, to keep in the same place.” – The Red Queen, from Lewis Carroll’s Through the Looking Glass.
Remember Ronald Coase’s The Nature of the Firm? It’s pretty hard reading. But if I understand it right, Coase poses a really important question: why do folks organize into firms? Why isn’t there a totally “free” market in labor? Why do organizations take on scales that result in relatively costly forms of order? Coase’s answer is “transaction costs.” It actually costs more to coordinate actions among scattered people with disparate skill sets—all of whom would have to contract with one another and hammer out details of said contracts. And then they have to get themselves all together somehow to divide labor and accomplish something profitable. So, up to a certain point, organizations arranged like hierarchies have just been less costly to organize. Simply said: it’s cheaper for some people to give orders and some to take them (the former pay the latter for the privilege of being the boss). But that’s changing—and fast.
Enter technology. Lest this starts to sound like one of those Fast Company “new media are revolutionizing everything” columns, suffice it to say technology is lowering the costs of organizing without the need for firms (transaction costs). Clay Shirky does a great job describing the phenomenon in his book Here Comes Everybody. He offers a solid overview of this transformation in progress. So what does all this mean for slowing Leviathan and growing voluntary community?
The Special Interest State
Turn now to Public Choice 101. Mancur Olson nailed it. The idea is pretty simple: our Republic – most any republic – will turn into a corporate state due to the problem of special interests. If you can pass a regulation or subsidy, some small group is going to win. The small group that stands to benefit most from a reg or subsidy also has the greatest incentive to organize and has the lowest organizing costs. The benefits are concentrated (on the interest group), but the costs are diffuse (we all pay marginally higher taxes and marginally higher prices.) We the People have neither the incentive nor can we afford to organize against every group behind this little legislative tweak or that. But the tweaks add up. The costs mount, but go largely unseen. Special interest groups almost always win. The result is tremendous deadweight loss. Democracy ends up serving them, not “the public interest” (whatever the hell that means). Rational apathy, rational ignorance and/or rational irrationality rule.
Glass Half Full
But here’s the optimism: If people like Shirky are right, it’s getting cheaper both to monitor and to organize against special interest groups—at least select ones. I’m not saying we’re anywhere near being able to fight them at parity. Perhaps we’ll never be. Nor are we likely to see the immediate effects of our new distributed, organization tools. But we may soon be equipped at least to slow the process of “demosclerosis.” We may already be. And as long as our collective productivity gains outpace the growth of the deadweight state, we’ll be okay—at least in some less-than-savory utilitarian sense. We’re also going to be better equipped to drive creative destruction and out-compete the government in some of its historic monopoly areas, such as education. (We might even unleash the forces of social entrepreneurship if you believe folks like Michael Strong.)
The Red Queen Effect
Optimism over. Offer a glimmer of hope and just as quickly dampen it at its source? What can I say? You see, the enemies of voluntary association and advocates of expanded state power have all the nifty tools at their disposal, too. So the costs of organization are going down for them. And I’m not just talking about organizing for those titanic tug-o-wars we call elections. I’m talking about organizing more rapidly to form Bootleggers and Baptists coalitions, which obscure all the corporatism that’s really in the works. I’m talking about new instruments that make controlling and pilfering from us lower-cost propositions. Hence the Red Queen Effect. My guess is that until we find THE disruptive innovation to dismantle the state, we will be engaged in this strange, destructive form tit for tat for quite some time.
Michael Strong Talk: Free Zones And The Cambrian Explosion In Government
Michael Strong’s talk at Seasteading 2009 is now online:
He talks about his personal history, which should resonate with many of you:
“One of the things that bothered me as I became sold on more or less libertarian arguments is that the libertarians wanted to use the public choice mechanism to achieve libertarian ends. The problem with being converted to libertarianism in part through public choice theory is that if it’s impossible for left-liberals to get their way, why on earth should it be possible for libertarians to get their way by means of public choice?”
And then discusses free zones, as he’s written about earlier, as the best strategy he’s seen to get support for economic freedom and legal experimentation. He points out that free zones can operate according to different legal systems, including new legal systems (as is done in Dubai), which provides the competition in rules that we all want to see. In decades, this can lead to the atrophy of the nation state system and the achievement of our Nozickian Utopia of Utopias.
Let A Thousand Nations Bloom 