Friday 20 April 2012

Competitive Governments on the Ocean

Patri Friedman and Brad Taylor make the case for Seasteading in the latest issue of Kyklos.
We argue that those advocating the reform of current political systems in order to promote jurisdictional competition are in a catch-22: jurisdictional competition has the potential to improve policy, but reforms to increase competition must be enacted by currently uncompetitive governments. If such governments could be relied upon to enact such reforms, they would likely not be necessary. Since existing governments are resistant to change, we argue that the only way to overcome the deep problem of reform is by focusing on the bare-metal layer of society – the technological environment in which governments are embedded. Developing the technology to create settlements in international waters, which we refer to as seasteading, changes the technological environment rather than attempting to push against the incentives of existing political systems. As such, it sidesteps the problem of reform and is more likely than more conventional approaches to significantly alter the policy equilibrium.
I love this line of work. Milton Friedman said that good government is best-case thinking; we need to constrain government. David Friedman said that constrained government is best-case thinking; we need market-based anarchy. Patri and Brad say that market-anarchy is best-case thinking; no government will cede territory to let it happen.

They aim a cannon at public choice theory:
Public choice theory tells us that we have bad rules because we have bad meta-rules. This merely shifts the question one level higher, however: why do we have bad meta-rules? This question has received much less attention from public choice theorists.2 Constitutionalists generally fail to extend their dispassionate critique of policy choice to the constitutional level (Farrant, 2004), arguing that current decision-making rules tend to produce bad policy outcomes yet expecting the same flawed institutions to produce good constitutional rules (Witt, 1992).
And, they give a solution to Caplan's Tiebout capitalization problem:
... dynamic geography addresses the concern of Caplan (2001b) that Tiebout competition is undermined by the fact that governance quality is capitalized into real estate values. When land is tied to a particular jurisdiction, reductions in the quality of governance will immediately lower land prices. This means that landowners have no incentive to exit bad jurisdictions, since they have the choice between putting up with low-quality governance and taking a capital loss when they try to sell. Fascinatingly, however, this is not the case on the ocean. Since floating real estate can be moved between jurisdictions, its value is not permanently reduced by a property tax increase, because there is the alternate use of moving the real estate to a new jurisdiction. This restores the property of a well-functioning market, where resources go to their highestvalued use. Floating real estate will move to the jurisdiction where it is the most valuable whenever the value difference is greater than the cost of moving it. This cost will be substantial, yet based on the cost of moving oil platforms, is likely to be a small fraction of the value of the real estate. Thus, exit remains a check on government power on the ocean.
Harford argues for experimentation and failure as a way of figuring out what's best. Friedman and Taylor argue Seasteading provides a mechanism for polities to fail gracefully:
Unfortunately, political instability tends to be accompanied by bloodshed, producing a tradeoff between peaceful stability with high levels of rent-seeking and violent instability with low levels of rent-seeking. Seasteading allows us to have political instability without bloodshed (Chamberlain, 2009). If rent-seeking becomes too harmful in an ocean polity, the population will gradually float away. This allows the polity to die without being overthrown violently. Dysfunctional governments would no longer take up valuable land, but would wither and die based on the preferences of citizen-consumers.
Where David Friedman looked to saga-era Iceland as example of anarchist order, Patri and Brad look to the Bajau Laut's pagmunda moorages.

The biggest challenge remains existing territorial governments; should Seasteads prove too successful as competition, we could easily imagine the French sending in dive teams with explosives or the Americans sending in a carrier group. Patri and Brad reckon business models focusing on relatively innocuous applications like innovative medical tourism will not only avoid annoying existing governments but could also build support for Seasteads from within those countries' existing voter bases: would you really support bombing the place that's working out nanobot alternatives to the hip replacement surgery you're going to need in a few years? I still worry this might be a bit of best-case thinking; the Americans can always fabricate an incident whipping up support for a bombing run if they want to.

But I still reckon Seasteading the best value play around. The odds on its all panning out still aren't great. But the upside gains are potentially very very large.

10 comments:

  1. I love the idea of seasteading. I wonder though, were they ever successful on a scale that impacted on nation states' revenue collection, whether those government's might simply insist that their citizen's paid tax on income earned on a seastead. And seasteads would scarcely be able to defend themselves should it come to that.

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    1. You can always repudiate citizenship. It's just expensive, at least in the States.

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  2. I can foresee seasteads being successful in attracting individuals who seek to escape the restrictions placed upon them by the legal framework in their home countries. For example a stead which had no restrictions on drug consumption would prove very attractive to a significant minority of the population and would do very well as a drug-tourist location, at least until the US decided it was a haven for terrorist fund-raising ;) But how far can this go? I'm pretty libertarian in my views, but I would have difficulties with a stead which was set up to cater for child sex tourists, or one created to allow people to hunt the homeless, etc.

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    1. There are existing territorial options for at least the former right now, and it wouldn't surprise me if the latter taste could also already be accommodated.

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    2. Could, yes. But should? This is one of those areas where morality gets in the way. Is it ok for some of us to decide what others can do in the privacy of their own homes? Generally I'd say no, but where personal freedoms impinge on the rights of others to lead lives unfettered by unwelcome intrusions and influences whose rights take precedence? E.g. I couldn't care less if my new neighbours turn out to be Satan worshippers, but if they sacrifice neighbourhood cats in satanic rituals then I'll have a problem with the way they practice their faith.

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    3. All I'm saying is that seasteads are exceedingly unlikely to make things worse on those margins, Lats.

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    4. Fair enough, you're probably correct. Certainly when it comes to ethically-challenging scientific experimentation seasteads could well be a good option, although I suspect that research in contentious fields could happily be performed in China and a number of other nations without too much risk. I'd certainly rather be doing stem-cell research in China than in the US, where some god-fearing nut-job is likely to try to kill you.

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  3. Right, the Americans. The Americans are the biggest difficulty with seasteading.

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  4. Have we learned nothing from Andrew Ryan's misadventurous Rapture?

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    1. No no no. That was UNDER the sea. Not floating on top of it. No way for residents of Rapture to decouple their pods from the complex and float off to less oppressive climes.

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