«Private cities are in the
zeitgeist now. I don’t think they can be stopped»
The time for voluntary opt-in societies has come, believes libertarian activist and fund manager Patri Friedman. To get radical improvement, he says, one must create new structures rather than improve existing ones.
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You’ve been working on seasteading and free private cities for more than 20 years. Today, we still hear about prototypes and potential projects. Why is this taking so long?
What I’m trying to do is change the world so that we can start new countries like we start companies today. That’s a really, really hard thing to do in this world. I’ve been trying to turn private cities from theory into practice for a long time.
Where are the biggest challenges?
For a long time, the biggest challenge was that countries weren’t willing to work with us. My goal is to unbundle government and make it so that you can try out different legal systems in different places. This requires government support. Getting recognized as a country requires government support. Seasteading can be implemented under the existing laws. The disadvantage is that the ocean is very expensive and difficult to operate in. Another thing is that, because it’s such a big crazy idea, a lot of the people into it are dreamers rather than doers. The people who are very hands-on practical at building things tend not to get big, new ideas. I was able to get lots of dreamers excited for this. What we need now are builders.
Is that why you founded the venture capital firm Pronomos?
I started Pronomos because building was actually happening: Próspera was getting approved, other countries were interested, the opportunity to build real things was here. But we’re still very much limited by the supply of top tier proven founders, people who have had exits, who have had startup success. That’s now the greatest limitation.
What does Pronomos do in practice?
We’re in kind of a two-sided market. I go out to convince investors that private cities can really happen now, raise money, and then find companies that are working on private cities. We evaluate them, pick the ones that we think are most likely to succeed, and invest in them. Furthermore, we try to help our companies succeed. The founders are often outside of the startup culture. There’s a lot of things they don’t know about how to set up a company. We help them to get up to speed on the basics. The next step is to get into studio work, which means we work with governments directly, find founders, find the best opportunities, and start the company ourselves. Once it gets going, we hand it off to a founding team. So we’re serving as a matchmaker between founders and projects.
How many investors are behind Pronomos?
There are about 30 or 40 investors.
How much did you invest so far?
We have invested 13 million dollars in nine projects. And we’re always looking to expand our investment vehicles.
Wouldn’t it be more worthwhile for libertarians like you to try to make existing societies more free rather than found new ones?
No. Statistically, libertarians are a minority, and in democracies, minorities lose. Research suggests that libertarianism is largely a personality type. There are some people who can be convinced to it with arguments, but they constitute only about 10 percent of the population. Trying to convince a majority is just a recipe for failure. The other issue is that a lot of the problems with governments are system level problems. Public Choice Theory and economics have accumulated 70 years of Nobel Prize winning research showing that given the incentives that voters and lawmakers have, they tend to favor special interests and not those of the general population. As a result, democracies mostly don’t produce good laws.
What makes you think that a private city would produce better laws?
Well, if you use the methods of Public Choice Theory, there’s reason to think that other systems would tend to produce good laws. I also look at it from my background as a software engineer. When you have an old creaky software system that’s using lots of old packages and is written in an old programming language, making little patches to a giant codebase doesn’t get you very far. To get radical improvement, you have to rewrite it from scratch.
But isn’t there a difference between software systems and nation states? A nation is more than just a state. It has grown from below, it’s a community, a civil society, it has a common identity. Can a private entity replace that?
Nothing new, private or public, can replace that, and that’s a downside. However, if I look at the US, I don’t feel like the country is a gathering of people with a common identity who want to live together anymore. Maybe this was true 150 years ago, but today, Americans have very different beliefs and don’t share a common dream of America. And it’s similar in a lot of countries. I think that a private city can grow an identity, and it has the opportunity to rearrange people by shared values. Of course, you still start from scratch, and it’s going to take decades to nourish that common identity. So people for whom that’s important won’t move to a private city. And that’s ok, because existing societies can still learn from new projects.
You can think of private cities as the startup sector where really innovative things happen. Apple didn’t invent the MP3 player, other players already existed. What Apple did with the iPod was to produce MP3 players on a huge scale for lots of people. Similarly, China copied some of the policies from Hong Kong and liberalized its economy, first in Shenzhen and then in the rest of the country.
What innovative laws and institutions would private cities create? In a private city, there are also public goods that have to be provided and financed. So, there is an element of force there as well.
Not in a purely opt-in voluntary society, because people agree to it.
You can also agree or disagree to live in the US or Switzerland.
Yes. We have to distinguish between a preference for what kind of society to live in and what actually works in the real world. Many libertarians believe that there is a certain way to design a society. I disagree with this. There’s no formula for taking a set of rights and turning it into a set of laws, let alone institutions. Instead, I believe in what I call competitive governance. When we have different voluntary opt-in societies, it doesn’t matter so much which is the theoretically ideal way to organize society. There can be different models. You can have a universal basic income, you can have some degree of central government, and I would say it’s moral. I disagree with standard libertarianism in this regard.
As the grandson of Milton Friedman, you basically have libertarianism in your blood. Have you always seen yourself as a libertarian?
Yes. I have strong libertarian moral intuitions. I was arguing with people about free speech and things like that when I was in grade school, without even knowing in detail about the ideas of my grandfather. Libertarianism was just my intuitive morality.
Do you plan to move to a private city?
Yes, I’m really sick of living in the US and California. I’m only there because of my kids. Some time, roughly in two to five years, they’ll be old enough that I’ll be free to move overseas. At that point, it will depend on how developed the jurisdictions are. My hope right now is that one of the Pronomos studio projects, maybe in West Africa, is going well enough that I move there. Roatán, the island where Próspera is located, would be the other most likely candidate.
So you’re optimistic that one of the projects will be up and running.
I’m very optimistic. These projects are happening all over the world. There’s tons of countries that are interested. Private cities are in the zeitgeist now. I don’t think they can be stopped.