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Next, we’ll turn to the second question:
We initially chose the ocean as the best place to experiment with new social systems because it is the only unclaimed area left on earth - and space is still a bit expensive. (You can read more about how the world is currently divvied up by the powers-that-be in the Politics section). After considering the matter, however, we were led to the unexpected conclusion that the ocean’s unique features will lead to a revolution in the quality of government. We’ll first analyze why terrestrial governments are so bad, and then show how things are different on the ocean. These ideas were first explored in Patri’s Dynamic Geography paper [PFriedman2004].
There are some important caveats we must make before presenting our theory on why terrestrial democratic governments perform so poorly.
The first is that this is by no means a complete taxonomy of the failings of democracy. There are other significant, endemic problems, such as those analyzed by the public choice school of economics, and discussed in the previous section . We have specifically chosen to explore the reasons below because they are the things that we can change, so they most directly illustrate the effect our changes will have. But since they represent only part of the problem, we admit that our changes will only alleviate some of the suffering caused by unresponsive, inefficient, and sometimes even murderous governments. We hope only to show that these reasons are significant enough that there is hope for seastead societies to work substantially better.
Second, it is truly said that democratic government is a terrible system, worse than any other except all those which have been tried. So before dissing democracy, we want to first acknowledge its rightful place as the reigning king of political systems. Our exploration of its flaws is not meant in any way to oppose its current widespread support and adoption, and we are delighted at its continued spread across the globe. Yet democracy is a relatively recent invention, and it was only a few centuries ago that it was a radical proposal, viewed by many as a hopeless utopian dream. It would be foolish to let our acknowledgment of its superiority over past methods blind us to the possibility of it being superseded by future forms of political organization.
Failed political experiments can have a terrible cost - just look at the mind-numbing body count of the 20th century’s failed experimentation with communism . So our trials with these forms must be done cautiously, incrementally, consensually, and with great care to allow for non-tragic failure modes. Yet to refuse such experimentation would be to resign ourselves to never improving one of the areas most central to human progress and happiness.
With those disclaimers, let us consider government as an industry like any other. Citizens pay taxes, and in return they get government services. While there are a variety of reasons why this industry does a terrible (and sometimes horrific) job at serving its customers, we will focus on two of them.
The second problem is that the cost of entering the governing industry is incredibly high. To create a new government you basically have to win a war, an election, or a revolution. These are rare and difficult things. Economists call this a “high barrier to entry”. While industries with low barriers to entry tend to be very competitive, with innovative firms competing to provide the best product, those with high barriers tend to consist of a few entrenched firms taking advantage of their position (an oligopoly). This is good for the firms (Warren Buffett, for example, specifically looks for such “trenches” when investing), but not so good for the customer. Currently, the difficulty of getting into the government industry dwarfs that of almost any commercial industry - if the barrier to entry in the automobile industry was this high, we’d all still be driving Fords. Even desktop computer operating systems, famous for its low level of competition, is not as bad.
Besides the general lack of efficiency and accountability which comes with an oligopoly, these barriers to entry are particularly hard on political minorities. After all, if the cost of getting into the governing business is very high, it will only be done for large groups of people. Contrast this with the ultimate New Economy business of creating websites, whose miniscule barrier to entry results in a vast array of options serving every conceivable niche (along with some unimaginable ones!)
First, the cost of switching service providers is very high, since it involves moving to another country. An expatriate must usually leave their job (and find a new one), sell their house (and find a new one), leave their friends (and find new ones), and deal with a new culture. Compared to the cost of switching cellphone providers, ISPs, cars, or insurance agents, this is gargantuan. So even if one feels poorly served, it’s a great temptation to stay and hope things get better, or perhaps try to change them despite slim odds. The expense of moving reduces the potential impact of jurisdictional arbitrage (a fancy name for changing the system by voting with your feet, taxes, and/or citizenship). The result is that governments don’t compete to do a good job, because they don’t need to. Their citizens are trapped, which means their actions result in little market feedback, so they focus on exploitation instead of innovation.
Besides making sense theoretically, we can find evidence for this hypothesis in the real world. For example, tax rates on capital are generally lower than those on labor, because capital is more mobile. Switching cellphone providers is more difficult in the US, where handsets are “locked” to one carrier, than in Europe, where unlocked phones are the norm. The result is that Europe generally gets better handsets, sooner (with rare exceptions like Apple’s iPhone), and its cellular providers are more innovative (cite needed). Gamers can switch console systems much more easily than companies can switch office software, and so Microsoft’s Xbox is considered much more innovative and user-friendly than its Office product suite.
One potential solution to the cost of moving is an information economy with digital cash, where people can work and maintain social networks from anywhere. This idea has been championed by hi-tech libertarians, and was described in the book The Sovereign Individual [DavidsonMogg]. While it has worked for a tiny number of individuals, most people’s jobs involve some hands-on component. And current economic research suggests that the importance of physical colocation is increasing, not decreasing (hence why the newfangled tech industry is concentrated in Silicon Valley). And even when the information economy frees us from job-based geography, the other problems with moving (family, house, face-to-face contact with friends) remain.
When it is hard for new companies to form (barrier to entry), and hard for customers to switch (lock-in), you have an industry segmented into a bunch of local monopolies. Sound familiar? Government in its current form is exactly that - a geographically segmented monopoly. The natural result is for firms to focus on exploiting existing customers rather than innovating and competing for new ones. Act like bandits, not like salesmen. This industry is so badly structured that firms constantly steal from and occasionally even murder their customers, and still stay in business.
Taken together, we can see that governments do a poor job of serving their citizens, especially minority groups. it’s an industry with little market feedback, little competition, little reason to perform well, and little opportunity for incremental improvement.
It is important to note that both of these are arguments about incentives based on systems-level thinking, and that they apply regardless of the political party in charge. One could argue instead that governments and websites are different industries because they attract different types of people, or have a different culture around them. While this viewpoint is natural, we think that in general such explanations are weak, and we instead take the attitude of the economics profession, which is that the first place to look for the causes of differences in people’s performance is in the systems that organize them and the incentives they provide. The people in Germany in the 1930s and 1950s were not particularly different, yet they operated under very different political systems.
The debate is important because the different explanations lead to different recommendations for change. If the problem with democratic governments is just that the wrong group is in charge, the solution is to kick out their bums and replace them with our bums. If the problem with governments is that they are run by politicians and bureaucrats, the solution is reform that encourages other types of people to enter public service. But if the problem, as we claim, is that democratic governments have a set of systemic incentives to perform poorly, neither of the above will make much difference. Instead, we need a new system with better incentives.
We think the empirical evidence is on our side. The reins of power have passed through the hands of many bums of many professions, personalities, and parties, but little has changed since Mark Twain wrote To improve democracy, we must improve these systemic incentives. Fortunately, we can.
When we build countries from modular collections of seasteads, we change both these characteristics.
Seasteading drastically cut the barrier to entry by opening a new frontier where small groups can form independent settlements. Instead of the trillion-plus dollars it’s taking the US to enact a new regime in Iraq, groups will be able to start a new country for tens or hundreds of millions - many orders of magnitude less. And the group doesn’t need to get it all at once either, they can add structures as resources and people become available. The result is to empower minority viewpoints of all types.
This is Royal Caribbean’s Freedom of The Seas Cruise Ship, and the Empire State Building. To the same scale. It is no exaggeration to say that the ocean lets things as big as skyscrapers move around on a regular basis.
This feature of the ocean has already had an enormous impact - it’s why we have global trade, but people don’t seem to have thought about what happens if you build a country on the water. On the ocean, we can create modular, geographically flexible countries. It’s a whole new paradigm compared to land - by detaching from one ocean city and floating over to another, you’ll be able to leave your country, without leaving your house.
If existing countries followed our model, then the country of Georgia could be 1000 miles away from Russia in a week (not a made up number). Israel and Palestine wouldn’t have to be neighbors - after fighting over how to divvy up the promised land, probably blowing some of it up, they could take their pieces and go their own way. New Hampshire might not have to be so close to Vermont! And any country whose laws were too oppressive would find its best and brightest melting away to grace some friendlier land - and taking their houses and offices with them.
To some degree, this already happens on land. Capital moves to where it can get the best terms - building new offices and factories instead of moving old ones, but it’s the same idea. The United States was founded with the idea of federalism, competition between the states. Well, think of this as Extreme Federalism.
This dramatically lower cost of switching providers promotes market feedback. If the government announces an unpopular policy on Monday, by Tuesday there may be nothing left of the city but the capital building, overlooking a serene seascape of empty waves. If residents care deeply about the change, they can do more than just voice their opposition - they can act. Whether it is libertarians and taxes, drug users and drug prohibition, pacifists and military expansion, environmentalists and sustainability, a modular city will give its residents an unprecedented degree of control over their political affiliation.
Instead of huge, monolithic, unresponsive governments, we’ll have many small, dynamic, innovative ones. Power will move downward towards the level of the smallest economically feasible platform (something like 10-100 people). We don’t claim this will result in utopia, but it should increase the efficiency of any type of government.
These differences are intimately related to the difference between static and dynamic geography. You can grab dirt and hold it. Try to grab water, and it will swirl away. What little you capture will slowly evaporate. There is some deep truth to this metaphor. We believe that terrestrial governments control people because they can control territory and the immobile structures on top of it. On the ocean, control of the foundation has little relevance - a seastead can float anywhere.
While these two industry characteristics are the biggest factors, there are a lot of other ways of looking at the advantages of seasteading.
Let’s consider several different levels on which we could discuss politics:
Policy. For example, a debate about whether to criminalize drug use, attempt to reduce the harm of use, or completely legalize it. What are the effects of each specific policy? Which does the most net good? Who is hurt, and who is helped?
System. What types of policies does a specific political system tend to generate? For example, in a democracy, a special interest group can easily coordinate to influence legislation which benefits them, but costs everyone a little bit. If every consumer loses a dollar a year from a policy, it just isn’t worth anyone’s time to fight it. Hence we expect democracies to frequently produce policies which steal small amounts from many and give them to a few. And indeed, tariffs, farm subsidies, and bailouts, just to name a few, fit this model quite well. This type of argument is at a level of generality above any specific policy, and it can offer enormous insight at consistent errors made by current governments. But to fix those problems, we need to rise further yet.
Meta-system. At the level we want, we think about the entire industry of government. What types of systems does it produce? How can it be changed to produce better systems (that is, systems which produce better policies)? What influences how well the governments of the world serve their citizens? How can we increase competition between governments? This level is the most abstract and the most complex, which can make it difficult to get a handle on, but if we can grasp that handle, it gives us the most leverage to change the world.
Now you can see why those who ask us which policies we want, or what type of political system we’d start, are missing the point. I mean, if you want to buy me a drink, I’ll be happy to spout off about my personal theories for an ideal government, but that’s not what this is about. We don’t want to start a government or change a policy - we want to create a world with a diverse ecosystem of governments of different sizes, values, and cultures, trying different methods of social organization. To use the metaphor of a business, these levels are products, firms, and industries. People are asking about what company we’ll start and what product we’ll offer, when we want to create an entire industry.
As philosopher Robert Nozick wrote in Anarchy, State, and Utopia
Utopia will consist of utopias, of many different and divergent communities in which people lead different kinds of lives under different institutions. Some kinds of communities will be more attractive to most than others; communities will wax and wane. People will leave some for others or spend their whole lives in one. Utopia is a framework for utopias, a place where people are at liberty to join voluntarily to pursue or attempt to realize their own vision of the good life in the ideal community but where no one can impose his own utopian vision on others.
That’s what we’re talking about.
This industry will have many different firms offering different services to different markets. In fact, it already does - they are the countries of the world - but the variety in systems, sizes, and methods is currently quite low, because of the barrier to entry mentioned earlier.
After all, there is no single answer to the question: “What is the best government?”, for many reasons:
Different people have different values, which mean they want to live in a society with different goals.
Making a good government is a very hard problem - even if a group agrees on goals, there is no sample way to construct a set of laws or institutions to meet those goals. Like any hard problem, it requires experimentation by many different groups trying many approaches.
There is no perfect form of social organization, which means the search for a better system will never end. There will always be something new to try. This is especially true because technological change will mean new tradeoffs and options for government. This is especially true if, as seems likely, technology starts to change human nature itself.
One of the problems of government is that it tends to slowly grow power structures which become entrenched and cannot be removed. When a government agency makes progress on its mandate, it asks for the same budget so it can continue. When it fails to make progress, obviously it needs more money. The result is what some economists have called a ratchet effect which results in government continually growing in size and scope. It is no accident that most political innovation has happened on the frontier, where brand-new societies were being formed.
The economist Mancur Olson argues that this is a big part of how democracies function, and points to evidence that older countries, which have had time to grow the most special interest sludge, have the slowest economic growth, while those whose powers were shattered, such as postwar Germany and Japan, have the most economic growth. Similarly, newer industries grow faster than older ones, because they haven’t accumulated these power structures which hamper change.
The modularity of seasteads provides a reset without a frontier (or, if you like, a permanent and omnipresent frontier). An entire government can be scrapped and started anew for any subgroup of its citizens, without them even needing to pack their bags - let alone shed blood. This will allow for much more frequent and less painful innovation, with new ideas constantly building on old ones, and the technology of social organization will advance much more rapidly.
While the disassembly that we discuss will be painful and expensive, it should not often be necessary. In chess there is a saying “The threat is greater than the execution”. The same applies to seasteads. The ability of a module to leave will enable it to win better terms for itself, even without exercising that right. It may be important for seasteads to actually leave on occasion, to prove that they can, but they should not have to bear the cost of leaving every time they want a political change.
One of the great things about this idea is that it’s a technological solution to a political problem. Humans are no good at changing human nature, and human nature, plus the nature of political systems, is why governments function poorly. Yet we are fabulous at solving engineering problems. Well, dynamic geography shows us that we can dramatically improve government merely by solving the engineering problems posed by seasteading. As cryptography makes it almost impossible to censor free speech and communication, seasteading will make it very difficult to exploit a trapped citizenry.
Let’s not forget that laws are information, just like code! The governing industry, like most modern industries, is built on ideas. Can you imagine if each of you had the same flexibility you do when programming to roll a new government out of pieces copied from old ones, plus a few new twists? Let’s just copy our corporate law from Delaware - or the Bahamas. If we want the right to revolution in our seastead Constitution, I hear we can copy Article 10 from the Constitution of this fine state.
And we’re going to do it without proselytizing, without having to argue people around to our way of thinking, without needing to win any elections. We’re going to do it by building an alternative and using it ourselves, and showing, through our lives, why everyone else should do the same. It’s a put up or shut up approach to philosophy - kind of like the Free State Project.
The ocean tax is the extra cost of living in the harsh, corrosive ocean. The government tax is extra cost of regulation and wasted taxes. At the beginning, our ocean tax will be pretty high, and only the sectors with the highest government tax will be worth moving offshore - like medicine. But if we can, through economies of scale, get the ocean tax to be lower than the government tax for most things that most people do, then we get a world where everyone lives on seasteads, and we use the continents as farms and nature preserves.
It’s worth noting here that the ocean tax is basically constant (decreasing), while the government tax is proportional to wealth, so over time, the balance tilts more and more in our favor. Maybe seasteads aren’t cost-effective now - by the time Obama leaves office…
As history shows us, revolutions are bloody. It is difficult for power to change hands without a period of uncertainty in who has the power, and such periods can be extremely violent. This is a big problem for those of us who want to radically change existing political systems. As Arthur B writes:
This is a pointless thought experiment, but I think it gives interesting results. Assume that you gain political power in a country, and - before you become absolutely corrupted - try to turn it into a happy anarcho-capitalistic society. How would you do it?
The first approach is to dissolve the State. Tear apart the whole structure, leave your office and throw the key. Unfortunately, should you do that, the State will be recreated instantly, election held etc. Society is sensitive to hysteresis, it’s not just the institutions that define how it works, it’s also where you come from. By shutting down the State, you will just have quit your job not destroyed it. The second approach is to gradually transform the State by reforming it until it completely disappears. Unfortunately, this second approach has drawbacks. First, it is unethical, it makes you a criminal. Second, you are very susceptible to become corrupted by the power on the way, to encounter obstacles etc.
Fortunately, there is a way to combine gradualism and radicalism all in an ethical way (hooray).
The way to do it is to grant secession rights to every landowner. Most likely, few people will use that right at first, because the services provided by the states are needed, therefore they will voluntarily chose to stay in the State. Once this right is granted, you are not a criminal anymore! You can then engage in extensive gradual reforms with the ultimate check and balance that people can secede.
At first, secession would probably be used to create free trade zones, that require little protection. Later on it could be used for gated communities. Meanwhile, you’d try to do the best job you can to provide something efficient people want to stay in, with very little budget due to easy tax avoidance.
The key idea here, is that market will provide the best balance between incremental changes and radical transformation of society by letting people chose. Pragmatism dictates that people won’t probably secede en masse, but their right to ensures efficient policies and satisfies any ethical concerns.
One of the downsides to seasteading is that it requires a relocation of civilization, building brand new countries on the currently empty oceans. While in many ways this is unfortunate, it also has its advantages - in a way, it implements Arthur’s solution. If you work with existing countries, not only do you have to somehow convince those currently entrenched in power to give it up, but you have a transition that is complicated and messy. People really don’t like power transitions, because of the potential for bloodshed.
But seasteading offers another way. There is no transition of power over any existing land or physical structure. Instead, we get an incremental movement as seastead cities grow and develop. People secede from traditional governments one at a time, and by physically moving to a new location.
If the above was too new or abstract or confusing to make sense, don’t worry about it. The key thing to take away is that we aren’t just heading for a new frontier with the vague hope of finding a better way to live. We actually have good reason to think that ocean societies will actually work better than terrestrial ones.
Which is not to say that life on the ocean will be perfect - far from it. Most of the problems of life on land will come right along with us - how to find love, making money without selling your soul, the tricky balance between security and freedom, and how best to raise your children. But the problem of being part of a system so huge that you don’t feel you can have any impact, with nowhere better to go, no way to get more autonomy for yourself or your community, no way to put into practice your ideas about better ways for people to live - that we can address.
Bad government is a big problem, it calls for a big solution. The bad news is, I’m proposing we rebuild our entire civilization someplace new! The good news is, if we do it right, in a modular way, we only have to do it once - dynamic geography will then ensure that it then stays a permanent frontier. We can have repeated bloodless revolutions where we reconfigure existing nations. And there’s plenty of room, since the theory suggests that 70% of the planet and most of the rest of the universe (space too) have the properties for better government.
It may be the last frontier, but it turns out that the ocean is not a booby prize.