Since When Is Competition Illiberal?
Mike has already responded to some of the points in Will Wilkinson’s Libertarian Democraphobia, and I’d like to join in as well. Will’s focus on philosophy and on the specific mechanism of democracy leads him to miss the broader, more important points about the benefits of competition in the market for government.
The libertarian non-coercion principle is a good abstract first approximation of the liberal presupposition that persons are free and equal. No one has a natural right to rule over another, and no one has a natural duty to obey. The liberal presupposition sets a high bar for the justification of coercion, and thus the justification of the state. Many libertarians think there is no justification. Therefore the only acceptable rule of collective choice is unanimity or full consensus. This is one focus of the debate between anarchist and limited-statist libertarians.
The choice between anarchism and minarchism is a false dichotomy, and here we champion a third way, the meta-way: Let A Thousand Nations Bloom And A Thousand Schools Of Thought Contend. Will seems trapped in the hopeless quest to philosophically define a single just society. I find the idea that one can determine, philosophically or practically, the best way to organize a society a priori to be laughable. And that’s even if we agree on a single set of goals for our society – which we don’t. Competition and consumer choice are the answers – why is this so hard for a libertarian to understand?
But I don’t think they take seriously enough the problem of governance in the DIY frontier.
Quite the opposite. We face a very hard problem – the problem of creating a good system of social organization, one with the power to enforce laws, yet which does not abuse this power. As liberals, we know how to solve hard problems – use markets. Which is why I advocate for a competitive market for government. Will, strangely, seems to like the current oligopoly with its high barrier to entry and high switching costs, and is skeptical that a more competitive market will provide a better solution.
Note that this argument has nothing to do with democracy, and doesn’t depend in the slightest on the morality or practicality of the system. Democracy is simply the current industry standard product that firms offer customers. If it truly is the ultimate form of social organization, then in a world of competitive government, democratic seasteads will outcompete all other seasteads, attract all the customers, and people will eventually give up trying other forms of government. Personally, I find the idea that this ancient Greek technology is the best we’ll ever do to be absurd, but even if I’m wrong, even if our Thousand Nations are all different variants of democracy, the system will still improve politics by allowing for competition between those variants so we can find those that work the best.
Thus even a democraphilic should want competitive government. It’s not democraphilia or democraphobia which is the key here, but agoraphilia or agoraphobia (meaning markets, not open spaces, of course). So my challenge to Will, and any other agoraphilic skeptic of competitive government is to resolve this contradiction. If you generally believes in the power of competition to offer better products to consumers, why is the market for government fundamentally different?
To engage on some more specific points:
I have questions about how well the Friedman plan can scale, as newcomers come to the settled frontier, and as pioneers raise children who do not share the consensus of the initial settlement. Sooner or later the problem of pluralism and moral disagreement will rear its head, and there are liberal and illiberal ways to respond. If the response is to maintain the consensus of self-segregation by evicting inevitable dissidents, one begins to wonder what to call those with the power to evict. At a certain point, the differences between a sovereign monarch and a monopoly landlord becomes semantic.
Huh? If we translate this claim to education, we have Will saying: the difference between a single monopoly school system which everyone is required to pay for and every child must attend, and a competitive system of private schools, is semantic just because the private schools are allowed to expel students. Say what? I thought we were libertarians here – do I really need to argue why a system of competing private entities which engage in consensual trade is superior to a monopoly? Yeah, the trade requires the consent of both the customer and the business, but I shouldn’t need to defend the benefit of consent by the business – all the libertarian arguments against anti-discrimination laws apply directly.
We can think of this in Social Contract terms. I’m suggesting a world where people and governments explicitly sign such a contract, on immigration or at the age of maturity. And Will seems to be worried about excluding those who won’t sign the Social Contract from society. Is it really illiberal to respond to someone who won’t sign the Social Contract by telling them to go find (or start) a society whose terms they do agree with? Color me confused, but I thought the liberal viewpoint on contracts was that they are entered into voluntarily by both parties.
…the point of the DIY frontier for its present advocates is precisely to demonstrate that society without politics is possible.
Not at all. The point is to create a competitive market for political systems. Like any market, this will provide better solutions than those that currently exist, including new innovations and twists on old innovations that we’d never have dreamed of in advance. We can’t get away from politics, politics is inevitable. But we can improve the ecosystem in which political systems compete by increasing the selection pressure for good government.
By bringing it up as a reason why democratic progress is hopeless, Thiel does make it sound like he thinks the problem’s not democratic politics per se, but democratic politics without good prospect of producing the right answer. But liberalism starts from the recognition that free and equal people don’t agree about the right answer but need to find a way to live together anyway. The secessionist instinct does seem illiberal insofar as it’s based in the frustration that reasonable pluralism fails to generate consensus on the right answer — even when the content of the right answer is a radical version of liberalism.
It sounds like Will is using liberal philosophy as the basis of his evaluation for institutions. He is saying that if democracy is philosophically justified, then whatever it results in is OK, that the liberal virtue of political equality outweighs any rights violations that may result. So I guess he is happy with the direction that the Bush administration took on civil liberties and national security and the Obama administration is taking on spending and regulation, because both administrations came to power via a happy fuzzy liberal system of equality where everyone got to vote.
Me, I look at things differently. I know what kind of society I want to live in, what rights I want it to protect, and what characteristics I want it to have (low crime, high growth, etc.), and I judge institutions by how well they do at achieving those goals. I’m happy to wrangle about the philosophical aspects of voting as coercion vs. a legitimate social choice function over a glass of cider, but at the end of the day, I judge democracy based on whether it results in the kind of country I want to live in. And it doesn’t – not by a long shot. I don’t want to “find a way to live together” under an institution whose results I find morally abhorrent – I want to create a better system.
Hell, let’s get personal. I don’t want to “find a way to live together” with people who think that Will & I should be locked in cages because we smoke pot. Fuck that! If being liberal means not calling out current society as tyrannical, well, I guess the phenomenon of the self-hating liberal has come to classical liberalism. As for me, I don’t care how “reasonable” pluralism supposedly is – it results in a society that steals from me, regulates me, and thinks I should be locked in a cage because of my harmless hobbies. And I think that’s the wrong answer.
Call me a pragmatist, but I think the cause of liberty is better served by finding institutions that will generate the right answer than analyzing the philosophical basis that produces the wrong one.
Diminishing Competitive Government
To riff off Tom Stoppard in The Coast of Utopia, freedom is what space we give each other, not what we take from each other like a fought-over loaf. But the U.S. government enjoys a good scrum. Two interesting posts to consider.
At the Oxford University Press blog, Cardozo law professor Edward Zelinsky says there are many benefits to telecommuting across state borders, particularly in NYC’s tristate area. But New York State’s onerous tax laws discourage this:
A major impediment to telecommuting is New York State’s extraterritorial taxation of nonresidents’ incomes. When a nonresident works at home for a New York employer, New York imposes income tax on the telecommuting nonresident for this out-of-state day even though the nonresident never sets foot in New York on that day and even though New York provides no public services to the nonresident telecommuter on his day working at his out-of-state home. The result of New York’s extraterritorial taxation is typically double income taxation of the nonresident for telecommuting from outside the Empire State, a classic confirmation that no good deed goes unpunished.
What’s good for New York State is good for the Feds. The Obama administration is announcing a plan to lasso in offshore tax avoiders. (WSJ story.) Greg Mankiw points us to some research on the topic from his colleague Mihir Desai at the Harvard Business School. From the abstract to Desai’s paper, Securing Jobs or the New Protectionism? Taxing the Overseas Activities of Multinational Firms:
This paper address these questions by analyzing the available evidence on two related claims – i) that the current U.S. policy of deferring taxation of foreign profits represents a subsidy to American firms and ii) that activity abroad by multinational firms represents the displacement of activity that would have otherwise been undertaken at home. These two tempting claims are found to have limited, if any, systematic support. Instead, modern welfare norms that capture the nature of multinational firm activity recommend a move toward not taxing the foreign activities of American firms, rather than taxing them more heavily. Similarly, the weight of the empirical evidence is that foreign activity is a complement, rather than a substitute, for domestic activity.
Evangelism Through Examples And Experience
I am generally skeptical of trying to improve government through evangelism for a number of reasons, but there is an excellent working paper from GMU’s Mercatus Center arguing for preference change as a viable option: If A Pure Market Economy Is So Good, Why Doesn’t It Exist? The Importance Of Changing Preferences Versus Incentives In Social Change, by Ed Stringham and Jeff Hummel:
Many economists argue that a pure market economy cannot come about because people will always have incentives to use coercion (Cowen and Sutter, 2005; Holcombe, 2004). We maintain that these economists leave out an important factor in social change. Change can come about by altering incentives or preferences, but since most economists ignore changing preferences, they too quickly conclude that change is impossible. History shows that social change based on changes in preferences is common. By recognizing that preferences need not be constant, political economists can say much more about changing the world.
They have a good argument. However even if one buys it, I think it would be wrong to neglect the importance of real-world examples in changing minds. Let us contrast two approaches:
- Figure out how to form libertarian societies with those who are already libertarians. Use those societies to convince others by example and experience that libertarianism works.
- Convince enough people to become libertarians to substantially change government in an existing country. Use that country to convince others…
While the latter seems hopeless to me given the basic facts about how few people are intuitively libertarian, I am open to the idea that it is possible. However, even if it is possible, surely it is far more difficult and cumbersome a method. How many decades or centuries of sweat and tears and rhetoric does it take to enact such a monumental shift in the culture of the world? To convince people that a system of government that they see nowhere in their world is superior? It is difficult enough to overcome prejudice with facts – overcoming it with mere abstract theory seems close to impossible.
I’m sure I’m not the only one whose had the experience of trying to argue for libertarianism with data, and seen it constantly argued away, doubted, minimized, or rejected because it doesn’t fit the listener’s prejudices. One can always find some flaw or incompleteness in a study in order to reject it (witness those who still claim intelligence is not hereditary despite the extremely robust evidence). A successful society is the ultimate argument, and the ultimate tool for evangelism. Showing is much more powerful than telling.
Thus the argument for political change through cultural change does not contradict the philosophy of secessionism or experimentalism. Forming an actual society based on any fringe ideology (such as libertarianism) is not only a way for ideologues to live their beliefs sooner, it also provides the best kind of ammunition for arguments. Out of the murky assumption-dependent world of theory, and into the concrete world of fact.
In advocating for laissez-faire economics, the two words “Hong Kong” have more power than thousands of academic papers put together. If we want to change global culture, the best route is to create more examples of success to power our evangelism. Few people will be convinced just by reading or debate.
How To Go Broke Fast
I tend to agree that for libertarians the “voice” option is looking bleak. I prefer exit options. But by the same token, I do not want to move to New Hampshire (see Jason Sorens) or to a seastead (see Patri Friedman). I think that perhaps the best positive approach for libertarians right now is to support institutions that compete with government.
Commenter fundamentalist suggests:
Congressman do not respond to voters; they respond to money. Politicians have an audio frequency range that responds only to cash. In addition to supporting civil society as Arnold suggests, libertarians need to finance libertarian candidates for office. We are great at financing think tanks, but we need to finance politicians. Educating the public is a fools errand; buying politicians is the key. And in order to buy politicians, we need to have more wealth, so use the Austrian Business Cycle Theory to invest wisely and avoid market crashes. The process of success is simple: become wealthier, buy politicians, support civil society. The implementation is a little more difficult.
Let’s briefly trace the logic of why this method is doomed, as it is a good example of the dominance of structural issues over policy tweaking. Suppose each day, a bill comes before the state legislature which costs $1 to each of the 15 million people in a state, and benefits an industry by $10M. (A transfer with 1/3 loss).
The industry will, of course, be willing to spend up to $10M to get the bill passed, because that’s how much they make. So you will have to spend close to $10M to outbid the industry to bribe the same legislators. If the legislators offer themselves for $9M, the industry can pay the price, and still book a million-dollar profit. Whereas every dollar you spend (except one) comes straight from your pocket.
In other words, it’s like you are bidding with a $1 subsidy while the industry is bidding with a $10,000,000 subsidy. It’s a rigged game that will soon leave you penniless, no matter how wealthy you start. That’s the merciless logic of concentrated vs. dispersed interests in democracy – in order to get even one tenth the subsidy in the auction as your opponents, you need to organize 1,000,000 people who stand to benefit by only 1$ each. To get a larger subsidy than the industry, you would need to coordinate with 10,000,000 – two thirds of the entire state.
Perhaps someday technology will lower coordination costs enough to make this feasible, but for now, it’s impossible. Bidding within the system, whether by getting politicians elected or bribing existing ones, is at a massive inherent disadvantage in fighting special interests. What we need is competitive government based on attracting citizens, rather than the current system where the few take turns robbing from the many.
More Follow Ups at Cato Unbound
Thiel responds to his agonists:
I had hoped my essay on the limits of politics would provoke reactions, and I was not disappointed. But the most intense response has been aimed not at cyberspace, seasteading, or libertarian politics, but at a commonplace statistical observation about voting patterns that is often called the gender gap.
It would be absurd to suggest that women’s votes will be taken away or that this would solve the political problems that vex us. While I don’t think any class of people should be disenfranchised, I have little hope that voting will make things better.
Voting is not under siege in America, but many other rights are.
Patri also:
The old view resigns itself to the status quo; the new one tries to create alternatives. The old view operates through individuals; the new one, through technology and systems of incentives. The old view may have helped slightly stem the tide of statism that swept the United States in the 20th century, but it is clearly inadequate to enact any substantial change. For those of who want true liberty in our lifetimes, is it any wonder that we are turning to a new view where direct political action within existing systems is no longer considered to be a credible option?
Amy Chua’s World on Fire and Free Economic Zones
But of course democracy lends some voice to those who have legitimate grievances. It is undeniable that, in a large number of obvious cases, democratic politics have provided a check for a nation’s citizens against the depredations of a small ruling elite. True—but it is also indisputable that in many poor nations democratic reforms have led, not to prosperity and stability, but to violence and plunder, particuarly when governments grafted these reforms on to an economy already dominated by plutocrats and their cronies. That is the compelling thesis of Chua’s 2003 book, World On Fire, a somewhat rambling academic investigation into the ethnonationalist movements that came into power across the developing world during the 1990s. The outcome of these movements is a grim nut: capital flight, increasing poverty, famine, rape, mutilation, pillage, murder, tyranny, a record that would even make Stalin blink. In this, Zimbabwe, Rwanda, Indonesia, and Serbia are in the vanguard—and all of their horrors, Chua emphasizes, were born from majority rule. I’m late coming to the book–I only read it last week–but it ought to give pause to those advocating for establishing free economic zones in the developing world. Here, as in the cases Chua mentions, the institutions of democracy may in the end threaten prosperity. Once established, any success in a free zone will remain vulnerable to the democratic means of plunder. Resentment, demagogues, economic success–my guess, with a lot of ins and outs and what-have-yous, is that democracy creates an unhealthy dose of regime uncertainty for a fledgling zone. Only Mohammed bin Rashid Al Maktoum could plant the seeds for Dubai. But we shall see.
Chua identifies three conditions that have catalyzed this democratically motivated plunder in the past: (i) crony-based markets controlled by a disproportionately prosperous ethnic minority, (ii) an impoverished, and therefore resentful indigenous majority, and lastly (iii) a political marketplace for demagogues to shill their vengeful policy.
Land-loving free economic zones, beware the demos.
Free Guptastan
Our next guest post comes from Vinay Gupta, the creator of, among other things, the Hexayurt, a shelter you can build for $200, and the Open Tool Box, an open source consulting group that aims to find better solutions to disaster relief.–Editor
For a long time, I’ve been joking with people about Guptastan – the state which is in the box. It only recently occurred to me that people don’t realize that I’m absolutely serious about starting a new nation state within three or four years if conditions are historically right.
This is not a joke. It’s very, very clear to everybody that we have serious and possibly insurmountable problems in American liberty. Hakim Bey discusses the “closure of the map” meaning that, for now at least, there is no more frontier for people who want a more rugged freedom to flee to. He omits in large degree that the map has been opened and reopened by genocide, but we will put the matter of the Americas to the side for now.
Barring the sudden opening of new land, and in abundance, we are out of frontier. There are microniches which could be opened – tiny atolls in the middle of the Pacific, disused oil tankers strapped together to form new “land” as the age of oil ends – but the fragility imposed by extremely low population and geographic isolation is unwelcoming to put it mildly. Unlike many pondering the evolution of the Nation State, I’m unwilling to consider the proposition without land to back up sovereignty.
Sovereignty is the point of this. Bluntly, I do not like your law. No, Sir, I do not. I do not like the incarceration rates in the USA. I do not like a policy which seems, on the whole, to be moronic and self serving. I do not like that the effective IQ of congress appears to be around 40, resulting in obscenities like subsidizing making fuel from food, resulting in taxing Americans to cause starvation in foreign lands. I do not like the fact that everybody agrees that military procurement is broken, and nobody is able to fix it, even though everybody involved is theoretically on the same side. I do not like the absence of preparedness for a nuclear event, a pandemic flu, or the inevitable economic crash caused by lying to people for generations about the fact that they will always be richer tomorrow than they were today, and that it is possible to live well forever on the hard labor of the Chinese factory worker. No, Sirs, I do not like what you have done with America, the most bountiful nation on earth in terms of natural resources, only just scattered with people, and with every historical potential for national success, and the international role of being the beacon of liberty.
In short, all y’all have screwed up America so badly that it might be time to consider Plan B.
(This is a decision I have made for me, which is a story for another day.)
So let us say that America dies. There are three or four options: another serious terrorist strike, perhaps even including WMDs, or a mishandled economic crash resulting in feudalism or socialism of an oppressive kind or chaotic revolution, or perhaps a continuing slide into fascism until there is nothing left of the Republic, or an evolution towards internal disunion so severe that it fragments the nation into little pieces, none of which can fully uphold the spirit of the Constitution. The meaning of the whole may not be accurately reflected in the part.
The dream is alive and lives on. We all know the Founding Fathers got really, really close to something. They built aright, level, square and plumb, and their work lasted quite some time. But their envisaged revolutions – the overthrow every generation or two of the corrupt government – never happened. The tree of liberty died from lack of nourishment as the fat and idle focussed on economy, not on education and political awareness. The tax slavery of the population fed a fat and ineffective State, which every passing day resembles the latter stage Soviet Union more simply by virtue of size and general character. It’s like the Bogons that had been bound up in the Soviet Union were released at its collapse and swarmed Washington…
So we are in the position of “skimming the algorithms off” – looking at America, copying what works, and finding a new place to try it again, updated and upgraded. Modern technologies like PKI and biometrics help. Other modern technologies, like ubiquitous surveillance, hinder. But between these two pillars, we can find a middle way which could allow a new style of State to exist, offering many of the same virtues that America by rights should have by virtue of its principles, and has lost by the nature of its practices. “We do not torture” – yes you bloody do.
So here is the framework of the Libertopian Community Template. The LCT is the idea of rolling up a basic prototype for Libertarian microstates. The expectation is that even a partial success on the first or second outing will result in a swarm of successor operations. In the really dire conditions which are likely to accompany an American collapse, many Americans would be willing to try such templates. Some would try them within America in a resurgence of local government via things like elected sheriffs denying jurisdiction to federal officials and local juries imposing nullification of laws they consider unjust. Others would expatriate or “vacation” in new Weakly State-Like Entities (WSLEs) which is, I think, the most that a microstate can hope for on the first outing.
A WSLE (yes, it’s pronounced Weasel) has four basic defining properties which are, I think, likely preconditions to success.
- WSLEs are parastate entities. They draw on loopholes and other fudges in international law for their legitimacy, rather than attempting to attain full-fledged sovereignty from the outset. Parastates are closer to free trade zones than autonomous regions, apart from in two critical matters: taxation, and criminal law. The parastate defines its jurisdiction in libertarian forms, but does not ask for recognition, only tacit acceptance. The reasons for this will become clear.
- WSLEs are inherently temporary. They based on a 20 year land lease, or a 50 year free trade agreement, or a 30 year “open city” experiment. WSLEs do not stand and fight, WSLEs basically stay put as long as they are broadly speaking welcome, and they refer anybody who is deeply unhappy with their presence to the simple, historical inevitability of their closure when the treaty expires. If it takes 10 or 20 years to really get a WSLE going, and the lease expires in 30 years, the window for really serious opposition to get irritated, angry, scheme, research, plan, prepare, organize and then finally execute serious action to crush the WSLE is short… by the time such opponents do the math, it may well turn out to be a lot easier to plan on coming in after the lease expires and taking whatever is left over.
A “flag held high unto the ages” is not for us: we must be so far inside the OODA loop of conventional nation states that they have very little chance of understanding what that was until it is gone again. WSLEs are small, fast, live in holes, do not attempt combat with big dogs, and run from hole to hole in the event of trouble. They do not die with their boots on. Remember this is the experimental phase. Full implementation may take generations or, at current rates of change, 30 years.
- WSLEs have police, not armies. Because they are not States, only weakly state-like entities, WSLEs do not have armies. They draw their state-type protection from the region which granted them their license to exist in the form of a free trade zone or similar agreement. However, the “police” in a WSLE might well constitute, in an emergency, the entire population armed with hunting rifles and so on. You can’t really do a WSLE without arms, which makes some jurisdictions a lot more welcoming than others. But those arms are personal possessions of the population. I’ve explored ideas like having a WSLE rent land to, say, a largish mercenary company as a training base and I think there is considerable merit to having a significant military understanding present within a WSLE just to make sure that things like regional conflicts do not turn into a problem more quickly than the residents of the WSLE can evacuate to, say, international waters and plead for protection with the governments that gave them their passports.
- WSLEs run on tourism. Not because libertarian tourism is a cheap and easy way to make money with more-or-less any WSLE, but because the more people have visited Tor-two-ga, the less easy it is to demonize it, wipe it off the map, or sabotage the idea of libertarianism as a reasonable way of life. One has to beware the temptation to cater to sex and drug tourism exclusively: if there is sex tourism, let it be tourists having sex with other tourists, rather than rented bedmates. If there is drug tourism, let it be covered by the general rule of not prosecuting events that occurred between consenting adults, rather than by (say) specific mandate. Everybody likes to think their WSLE will be kinda like Burning Man or kinda like the Virginia Colonies. Nobody really wants it to be like the red light districts of the third world. So let’s try and maintain a framework which implements that policy goal.
As for the rest? English common law with appropriate modifications, binding arbitration agreements to implement private courts, and something like geolibertarianism to raise whatever funds the government requires to operate, with the excess being divided equally among the population. A fall-back position for economic failures might rest on a self-preservation clause which is designed to allow people to escape serious punishment for non-violent property rights violations undertaken for their own survival, based on a restorative justice framework where the lack of damages from, say, farming unused land is basically zero. (and thanks to Arto for the long discussions which came to this equilibrium.)
My proposal for starting an African WSLE in the event of disastrous developments in America around the election or the financial crash is threefold.
- The WSLE produces anti-HIV medications legally. Without regard to patent laws of course, and delivers them at cost to the people of the State which encloses the WSLE. In exchange, it receives a land grant, the ability to nullify or ignore local laws, and an ironclad rationale for not having IP laws apply. Of course, on the other side, the WSLE does not export anything. Doctors or their agents come into the WSLE, fulfill prescriptions on behalf of patients, and then go through the “customs station” between the WSLE and the nation state it exists within. Other than that, there is no export: IP enters, but it does not leave. Electronically exporting IP which leads to diplomatic pressure being put on the WSLE is a strongly discouraged thing.
- The WSLE publishes careful notes about how life works there. This includes especially careful documentation of problems. It needs to be an open lab for new ways of life, and it needs to be transparently not a threat to anybody. One can also imagine a large non-resident “advisory board” consisting of interested Libertarians from all around the world who could be members of the project, and perhaps enjoy visiting rights and so on.
- The WSLE maintains an escape fleet. Simply, in the event of a diplomatic breakdown or a regional war, the WSLE maintains the ability to get the entire population into international waters, and to hold out there for a short period while help arrives. I’m going to stress this very strongly: WSLEs do not fight wars, they abandon their ground, evacuate the population, and reconstitute elsewhere if it can be arranged. Contingency planning beyond regular policing functions is oriented around flight, possibly with layered retreat defense, rather than fight.
WSLEs are guests of local governments, not nation states and it is on this distinction that their successes and failures will rest. But given that the planet has very little land free for the taking, the WSLE approach of “negotiate a corner to live in” has much to recommend it, and a foreign policy based on not being too annoying and not being at all threatening is a critical component of this approach.
Finally, we come down to population. I believe the appropriate number is a shade under 30,000 – the size of a small town. It is an M2 community (i.e. in Monkeysphere / Dunbar number terms, it’s a bit over 150 * 150 people, approximately two moneyspheres in radius.) I believe you need a population of about this size to support things like first world style medical care and regular flights to the nearest airport. It also creates some resilience in local infrastructure. It also gives some guide as to the amount of territory required: at 1 acre per person, it’s about 50 square miles or 130 square kilometers. Not a small patch of land.
If you take a look this Google Map, a suitable territory would be about two pixels.
Do you think a few tons of good quality anti-HIV medications could get ground rent and a no-questions-asked policy for two pixels of this map?
I think so. The hard part is finding 30,000 people who’ll invest $30,000 – $50,000 each in moving to Africa to live in what amounts to the world’s most interesting tourist town. That’s not going to happen without massive social dislocations in the first world so, until the time is ripe, this is where the plan sits. A small crew could do a lot of planning and research, but the money won’t flow until there’s no place else for it to go.
Local Public Goods & Dynamic Geography
Public goods are in part defined by their non-excludability. Once provided, they are provided to all. To take one canonical example, if the government provides a national defense, everyone under its shield benefits, even those who do not pay for it. That’s the nature of the thing.
Another element is that it is notoriously difficult to determine how badly the public wants these goods. With national defense, hawks want more, doves want less, but that’s not even the half of it. We also have the free-riding knave, the narrowly self-interested man who expects others to pay for a public good like national defense. Since he can’t be excluded from the benefits–that is the nature of this pure public good, after all–why not let others foot the bill? So we have a complex problem. Without any sense of loyalty or trust, all have an incentive to act like knaves, since they stand to benefit even if they do not share the burden. There are hawks, there are doves, and we can’t even identify them. Instead, everyone acts like a knave and the public good never materializes. It is, as they say, a market failure. Of course we’d like to exclude the knaves, and provide what the public truly wants–neither too much, nor too little–but given the nature of the good, and our inability to discover the public’s true preferences, we can’t. So the government coerces everyone and eye-balls it.
But Charles Tiebout, in a classic 1956 paper, noted that some public goods allow for a modicum of excludability. There is a subset of public goods such that only those who are nearby receive the benefit. Yes, within that neighborhood, the good is non-excludable. But since the positive externalities are local, we can exclude by geography. National defense is one thing, municipal golf courses are another. (The culture of the 1950s hangs like a grey-flannel specter over Tiebout’s discussion.)
From this perspective, Tiebout discovered a solution to the problem of determining the demand for local public goods: we can think of local town governments as competitive suppliers. People are free to live in the town that suits them. Since each town offers its own package of public goods and matching tax burdens, citizens shop among them by deciding which town to live in. Each public good consumer can ask, Is this package worth it? Politicians can create ad campaigns. Those towns that provide what people want, to the extent that they want it, will thrive, while those that don’t will wither. And so though we are dealing with public goods, we have at last the approximation of a competitive market.
And what about the incentive to act like free-riding knaves? Mobility eliminates it. The towns that fail to produce the local public goods people truly want will empty. Those that do will fill.
Now let’s indulge in a little fantasy. Tiebout’s assumption was that people can move anywhere within a nation. But that assumption is stated too precisely. (For this blog!) What really matters is mobility, period. If people can move the land they own and live on, then the upshot of Tiebout’s competitive market for public goods still holds. (Instead of voting with your feet, you vote with your dirt.) In a world of dynamic geography, a world of viable seasteads, we should expect a competitive market in public goods. Right? Individual seasteads will detach and attach and reattach to other seasteads according to how well that association fulfills their needs. Various associations of seasteads (perhaps with democratic governments) will act as efficient suppliers of local public goods (despite their democratic governments). Or so Tiebout might say.
But Bryan Caplan offers a few objections to Tiebout’s model. Competition between non-profits is not the same as that between for-profit ventures, he says. First, the incentives are different: a politician doesn’t get paid more when the local economy flourishes. And second, politicians may have an easier time when things go poorly. For all you seasteaders out there, what is to be done? What would a seasteading Tiebout say to Caplan?
Let A Thousand Nations Bloom 