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Tom W. Bell joins us for a Live Free Thoughts to talk about the emerging trend of private start up governments.

Aaron Ross Powell
Director and Editor
Trevor Burrus
Research Fellow, Constitutional Studies

Prof. Tom W. Bell teaches at Chapman University School of Law, where he specializes in intellectual property and high‐​tech law. Prior to Chapman, Bell served as Director of Telecommunications and Technology Studies at the Cato Institute.

Tom W. Bell joins us for a Live Free Thoughts to talk about the emerging trend of bottom up governments. Private providers increasingly deliver services that political authorities formerly monopolized, inspiring greater competition and efficiency. We discuss this quiet revolution that is transforming governments with the potential to bring more freedom, peace and prosperity to people everywhere.

Further Readings/​References:


Aaron: So I’d like to welcome all of you to the Cato Institute for a special live episode of libertarianism.org’s Free Thoughts podcast. I’m Aaron Powell, I’m director of Cato’s lib​er​tar​i​an​ism​.org project.

Trevor: And I’m Trevor Burrus. I’m a research fellow at the Cato Institute Center for Constitutional Studies. This is the first time we’ve done it here live streaming. We’ve done a couple live episodes before and Free Thought was started about [00:00:30] fourth October of 2013, when Aaron and I decided that we needed to have a podcast that got more in depth into libertarian issues and actually ask the difficult questions that people want to ask libertarians. So rather than putting someone like Michael Cannon who’s the director of health policy at Cato into the chair and saying tell us about section 209 G of some law that’s coming out, we wanted to ask Michael what about people dying in the streets [00:01:00] because that’s the kinda questions that people want to ask libertarians and to get in depth to the ideas. So we’re excited you’re here today to see a live taping of a Free Thoughts podcast.

Aaron: And we’re pleased to have Tom Bell as our guest today. He is a professor at Chapman University’s Fowler School of Law and he’s here to discuss his new book ‘Your Next Government? From the Nation State to Stateless Nations’. Welcome Tom.

Tom: Thank you. Thank you for having me.

Aaron: So this is [00:01:30] a book about the evolving nature of government, about how governments need to evolve and to compete to better serve us. But that raises a question and it’s one that doesn’t actually get asked a lot when we’re talking about policy, when we’re talking about government systems, about how these things should be set up, how they should operate and that’s … What’s the purpose of these things in the first place? Like when we say they should better serve us, they should do a better job, what [00:02:00] is that job?

Tom: The job of governments?

Aaron: Yes.

Tom: Well let me first say, thank you all for coming and to hear about my new book, Your Next Government and I think friends of liberty would find it especially interesting because it describes this revolution currently sweeping through the world of government from the bottom up and inside up all over the world, and it shocked me when I did the research for the book. I didn’t know about this until I went and gathered the facts. And as far as special jurisdictions go, their job is to help governments do their job. Now what governments are [00:02:30] for, you’ll get different accounts, but I would say generally to refer to the constitution, it’s to promote the general welfare, secure the blessings of liberty. That’s the declaration of independence. I read them together, they taught me this at Cato where I used to work documents and special jurisdictions help governments do that by setting aside small areas where you can try out special rules.
When I was Cato, I discovered well that’s the way we did business. We were always aiming at reform sort of an inch deep nationwide, which is worthwhile [00:03:00] but when you do that it gets everybody in the country kind of alarmed, and the beauty of special jurisdictions is it allows you to go narrow and deep. So in a little area, you change the rules a lot. If that doesn’t work, it allows the government to try somewhere else. So it allows governments to give us more options in choosing the form of government we want. That’s good for us, in the long run it’s good for government. It makes them more adaptable, they can serve we the consumers of government services better.

Trevor: Do you make a distinction between government and governance? Some people do, I don’t [00:03:30] know if you do.

Tom: I don’t have a hard and fast rule, but I do prefer to talk about governance because really what we should be thinking of is the governing services industry. You think about the postal service, right? They deliver mail. Well so does FedEx, UPS. They deliver things too. We should look at government the same way. There’s the federal government, state and local governments, they provide governing services, but you can get the same services in a private community frequently. Not everything, you’re not gonna get an ICBM from your HOA, [00:04:00] but as far as like securing your property, allowing you to move freely in public areas, all the good things that we like from our local governments, you can get that from an HOA.

Aaron: At the start of the book you make a point that we think about the question of what makes a particular nation rich. A lot of point to natural resources, we point to maybe innovation or technology but you think that that’s wrong. That it’s in [00:04:30] fact the rule of law.

Tom: I would have said what you’re saying Aaron. Again, before I did the research for the book, if you were to ask me … You could ask yourself now. What’s the major source of wealth in the world? I think most of us probably think initially … kinda silly but we go, I don’t know, diamonds and gold. Not … Probably not real estate, maybe corporations … The shares in corporations, maybe. Nah, it was the World Bank. The World Bank that convinced me otherwise ’cause they did a big study, a whole book about the sources of wealth, very curious. [00:05:00] I put together a chart in the book. The book has several charts which I can’t share with everybody here now, buy the book. But the World Bank gives this information in their book and they never put it on one page, if scholars will note, I had to site two sources to put it together. Here’s the short of it, the biggest source of wealth in the world according to the World Bank is the rule of law. 44% of the wealth in the world, the single largest source of wealth in the world is the rule of law. And even I who worked in the law didn’t understand [00:05:30] that at first. So here’s a thought experiment to illustrate why that is very plausible.
You might’ve heard about the neutron bomb back in the days, Reagan administration. The idea is if the soviets invaded eastern Europe, we would explode these neutron bombs above them and it would kill the people with radiation, but they’re clean bombs, relatively speaking. It would leave the buildings and the roads and everything else. I mean it’s still killing people but it’s better than leaving a burning radio active wasteland. Well imagine we could create a law bomb and you explode this over [00:06:00] a city, it doesn’t kill anybody, it doesn’t destroy any property but all the laws are erased. So imagine you did this over New York City. New York City, a big source of wealth. Some terrorist explodes a law bomb and people wake up the next morning. What would that be like? It would be very bad. Most of the wealth in New York would be gone just like that. Oh, yes there’d be buildings and cars and diamonds, that’s not the real source of wealth in New York City. People would wake up and they’d go, “What am I gonna do today? I don’t have a binding contract [00:06:30] to go to the office. Maybe I’ll stay home. Although wait, I got all this stuff here and I don’t have any protection of my property rights. I better get out of here. Oh wait, I better stay here and lock the door.”
I mean it would be a mess. It would be utter chaos. People would flee New York City and if the effects of this law bomb continued, it would be a vacant wasteland. We can’t live without law. I have to stress this for my libertarian friends, actually humans love rules. We are rule following animals. What libertarians [00:07:00] should stress … And I think most of them are good at this especially Cato, is not let’s not have any rules but rather let’s choose our rules, and that’s really what this is all about. Making government a service industry so we have more freedom of choice so government can get better.

Trevor: Does this book represent … ‘Cause you’ve worked at Cato, you worked in the policy world and you’ve done things to try and make government better. But are you kind of giving up in terms of working through government, say do a better job [00:07:30] and trying to get out of the system and I guess the secondary question that is, if that’s so why aren’t governments getting better?

Tom: Oh, I think governments are getting better actually. I’m kind of … I have a … a congenital optimist maybe. So you can discount this and say, “Tom’s just a happy guy who lives in southern California, gets a lot of sunlight.” Whatever. But I really do think governments indeed … If I wanna push the point, the world generally is getting better, but I’ve not given up traditional approaches. In fact, I’m going to the Hill after this meeting to talk to some legislators I guess who are interested in some reforms. [00:08:00] That’s not really what I do though. We need a diversity of approaches to reforming government. Keep sending in your money to Cato, I just sent them my yearly donation end of December and it’s important to try to get reform an inch deep and a mile wide. Sometimes it works, sometimes it does. I helped get rid of the ICC back in ’96, it happens. But that’s not where I think my services are best applied. I think that we also need people like me trying to create these small areas with deep reforms [00:08:30] and I think governments are very receptive to this. Again it shocked me.
I started researching this book. There’s over 200 foreign trade zones in the United States, where the federal government has said, “Hey, in these little areas, no customs and duties.” And it’s not like people said to the federal government, “We have to have this.” They did this in the … it was after the Smoot‐​Hawley act ’cause they realized, “Oh no, we just choked ourself off from international commerce.”, said the federal government more or less. “We better actually institute some liberalization in small areas.” It’s the same [00:09:00] thing with other … Think about … I’ve been working in Honduras and French Polynesia, these are all places where the governments have said, “We want to bring in foreign investment. We wanna offer our population, better forms of government. We don’t wanna reform … We can’t reform the whole government, let’s try a small area at once.” So, yeah we need governments, governments are actually very receptive of this. In fact, I’ll say to my libertarian friends you should look at this area of reform. Sure keep trying that inch deep, mile wide stuff, it might work but check out this new strategy. It might get you places that the old [00:09:30] strategy won’t.

Aaron: So one of the things I found really interesting about this book was you start with examples of this in action, with special economic zones and these other real world, we’re doing these things, here’s competing governments or smaller governments with different rules. But then you take a step back and you show how these examples and the value that these efforts have is based on a really interesting [00:10:00] and I think powerful theoretical framework for understanding what they’re doing. It’s not that we’re doing something willy‐​nilly, but there’s some meaning and ideas behind that. And so I wanted to ask a bit about that and I wanted to start with the idea of … Tell us a bit about mono‐​centric versus polycentric law and how that plays into the examples given in the book?

Tom: Sure. So these are the kinds of things academics talk about. The question is sort of what’s the big theory behind [00:10:30] this. This is not the kinda thing law makers think about much and I think we should all be relieved about that. Well we academics and those of us here, we can think about this. Mono‐​centric law, it’s just a term used in the book, I didn’t make it up, but the idea is we have one source of government. This is traditional defense of … It goes back to Hobbes of the nation state, is we have to have one authority to iron out conflicts between people, otherwise everyone will be at [loggerheads 0:10:54], they’ll settle their disputes with feuds. So it’s nice to have a single sovereign over everyone [00:11:00] who specifies the law and says we’re gonna use a metric system and we’re gonna have property rights and you’re gonna bring all your complaints to our courts. That’s one approach to government and an extreme, just one sovereign and then at the other extreme, polycentric law, is basically many competing sources of authority, often overlapping. All of which together combine in any individual’s life to govern their behavior, and I would argue we live … We tend to think that we live in a mono‐​centric government. It’s very simple, that’s the [00:11:30] way the media presents the law to us, federal government … They talk about the President running the country. It’s absurd, but it’s simple.
That’s the way we often think about government, but if you really look at the way you live your life, especially in America, there’s many sources of law that govern your behavior. Of course, you have local state governments also regulating your behavior but that’s not the end of it. If you really take the law broadly as I do, you think about it as really … it’s the process of governing human behavior through rules, and that includes [00:12:00] things like churches. Do churches govern behavior? Are they a source of law? I would say yes in a very real way. They can control what you eat at lunch today in a few hours. That’s basically governing your behavior. So we have a … Or you’re in the Cato and they say there’s a sign here, ‘Don’t bring food into this auditorium.’ Kind of like a local law for Cato.
So there are many rules from many sources that every day really govern our behavior, and the idea with polycentric law is let’s notice that. Let’s celebrate that, find good things in it if there are, there’s some bad things to it. [00:12:30] Sometimes too many rules, they conflict, it creates chaos. We need to find a happy medium. So the idea is, let’s look at these extremes, mono‐​centric and polycentric law and in the book I advocated for a third category of what I call auto‐​centric law. I think really at the end of the day, that’s what we should want. Not … You shouldn’t say, “Well we gotta have one king or we should have lots and lots of different rulers.” I honestly don’t know. The reason there’s a question mark at the end of title is I’m not certain, ‘Your Next Government?’. I don’t know. It’s for you to choose. That’s what [00:13:00] I see happening, we’re getting more and more choice in government. It’s a beautiful wonderful thing, it’s gonna make us all better off. But it also means we can’t be certain what kinda government we’ll end up with.

Trevor: Is that the case though, that the kinda governing institutions like Cato or churches require that mono‐​centric like umbrella thing above it? ‘Cause you could … I mean I think most people would think that real polycentric law would be like … what sounds kinda like anarchy would be like Mad Max. You’d have the village with the bus that is the gate and you have the village with the driver copter and all that stuff and [00:13:30] those are governed by different things. But there’s no overarching thing that would actually rationalize disputes between them and that’s why we need the mono‐​centric model.

Tom: Again, that is kinda the story we’re often told in maybe elementary, high school, even college, probably graduate school actually, it’s a little sad. But that’s just not the way it works. I’ll give you an example from the open ocean. So like there’s no governing authority … regulates the high seas, and they are actually very rule bound areas. For example if you’re sailing a flagship and there’s a ship in distress [00:14:00] and it sends out a call for help, under international law you gotta go render aid. There’s no sovereign standing in the background tapping its baton on its palms saying, “You better do this.” So why do ships render aid to each other when they’re on the open seas. They’re bound by international law and international companies that provide shipping insurance and those international companies have said, “Hey, you want insurance from us, you’re gonna have to follow these rules.” “Oh, yeah. Who’s gonna force it, the UN?” “No. We will. You [00:14:30] wanna sale with insurance? These are our rules.”
Now it’s true, I mean if you look at their insurance clause, there’s probably a choice of law and a choice of foreign provision so that if there’s a conflict, maybe they end up in New York City and they apply maybe the rules of the ICID. But you could do that in private arbitration, you could do it in Venezuela … Look, not Venezuela actually. Sorry I was just … I’ve been thinking about Venezuela lately. Let’s choose a working country … Germany … you could … So, yeah it’s sort of arbitrary and not [00:15:00] necessary. There’s a lot of governance that happens without governments. That’s the one reason I prefer governance.

Aaron: Then how does the notion of consent fit into this, because consent plays a large role in your book in … To certain extent your book is just … is almost like a call for more consent in governance. How does this notion of having like one sovereign or lots of sovereigns relate to consent and why is consent so important when we’re thinking about [00:15:30] government in the first place?

Tom: You’re a daring man Aaron to ask me about consent, because I have a background in philosophy and I risk running on a bit. I try to keep it short in the book. I’ll just say I think consent is very important. In fact, I think after having debated this with many libertarians, you can make a pretty strong case that consent is and should be at the core of libertarian theory and more generally, the theory of government … generally. Because it’s sort of to me an ultimate moral value. It’s what you will agree [00:16:00] to freely, what you will consent to. So that is kind of a load star, a touchstone for governments … governance and I think we should … Yeah, we should emphasize consent and we should try to make governments more consent rich. One thing I take pains to emphasize in the book is that too many people think of consent as an on/​off switch. They think of it as a binary relation, you either consent, you say yes, or you don’t consent, you say no.
When you work in the law for years as I have, you realize [00:16:30] there’s lots of gradations of consent. For example, this is an actual case, doctors come across a man lying unconscious in the street. He fell off a street car in Cotnam versus Wisdom, they render aid. They go … He doesn’t survive, but they go to the estate afterwards and they say, “You should pay us ’cause we rendered aid.” Was there a contract? No, the guy was unconscious. Did they get paid? Yes, they did because there’s this intermediary form of consent. The guy did not wake up and say, “Render aid.”, but we say impliedly or hypothetically he did or would have consented. Probably [00:17:00] they would say he would have consented. The point I want to make is as I describe in the book, there’s a nice graphic for it, consent comes in different shades. So to some of my cranky libertarian friends I say you gotta loosen up a little. Too many of them say, “I never signed the constitution so it’s not binding at all.” Look I’m sympathetic to that line of argument, but I just don’t think it’s realistic and it locks you in this position where you have nothing to say about improving government. “I didn’t sign on the line, not consensual. Not for me.”
Governments come in different flavors [00:17:30] with different degrees of consent and the goal is to kinda climb this ladder of consent. Recognize the imperfections of our government, I’m the first guy to do that, but don’t give up on it. We can make government better if we keep trying to make it more consensual and special jurisdictions can do help us do that, because when you move to a special jurisdiction you’re choosing to move there. When you’re just born in the United States as I was, I didn’t really choose these laws, [00:18:00] it just kinda … I stepped into them. So consent is a matter of degree and more freedom and choice among governing systems can help us increase the amount of consent in our lives and that is a really good thing.

Aaron: Is there a relationship then between the size of government, maybe in terms of its scope and powers but also in terms of geography and consent? Because you said so … We have more consent if there’s a special economic zone and we can choose to move into it but for [00:18:30] a nation as large geographically as the United States … I mean you mentioned [inaudible 00:18:36] criticisms of the like love it or leave it notion of consent. That it’s awfully hard to move out of the United States, you’re giving up your career, you’re giving up your family, you’re giving up the culture that you know. So does there come a point where basically governments become too big for meaningful consent to really function within them?

Tom: That’s a good question. [00:19:00] I would say there is a correlation but it’s a loose one. If I had a blackboard, I would stand up and start charting this out. But I think there’s a trade off between size of government and how much government does. For example, I think most people could agree to a world government if it only did one thing and it prevented evil people from hurting innocent people and maybe we narrow that in a little bit more. You could say something like no shooting of children. How’s that? If that’s all the government did, we’d feel [00:19:30] okay about it. Whereas, if it’s a very small local government, suppose you live in a commune. They tell you what to wear, what to eat, when to pray. Not for me, could be for you. That’s okay. It could be oppressive to me but you chose that, you moved to that commune, that’s fine. So it seems to me each type of government could be equally valid but generally the larger governments, because governments tend to metastasize and grow too big, they tend towards doing too much. But it’s not a problem with bigness [00:20:00] per se. It’s a problem with bigness combined with how much they try to do.

Trevor: We did this though with the American experiment. I mean we could say that before that we had very non‐​consensual governments and … Since that we’ve had many non‐​consensual governments but what we did in America, we wrote a constitution and then sent it out to the people to be debated by popular ratifying conventions, some of which had larger rules of suffrage than even voting at the time and that was [00:20:30] about as good as you could ask for in a realistic procedure to get consent. So why would we use the American model as sort of a model of consent in that fashion?

Tom: I’m a big fan of the American model and I think as you said … You said it so well Trevor. That was state of the art in its day, I mean more than we realize. It’s just amazing, shocking. You go back and you realize what the founders had as their precedents and there was a little bit. They looked at the Swiss model of government, they actually looked at how the Iroquois and the Indian nations [00:21:00] governed themselves, they looked at how the covenanters, these religious groups would get together and agree to their particular religious communities rules. But really, our founders did some radical stuff. Yay. But we can do better now and to my libertarian friends who have this kind of hero worship of the founders, I get it.
But I feel like they’re kinda stuck in that era. You should take the spirit of the founders, really to me they said, “Let’s do as much as we can to make this government as consensual as possible.” And wow, they did a great job but we could do better. [00:21:30] We could learn from their precedent and we now have technologies that they didn’t have. I don’t know what they would do today, but I think if they were here they would be very proud, probably also appalled at what we’ve done with their experiment. But they I think would say, “Let’s keep pushing forward. Let’s make an even more consensual form of government.” I think that’s possible and it would be a good thing.

Aaron: When you’re talking about this spectrum of consent, you gave the example of you’re injured on the side of the road, you’re unconscious and [00:22:00] aid is rendered to you and so you didn’t in any explicit way consent to it because you couldn’t, but in that case we gave … say call like hypothetical consent. Like had you been able to, you would have and so we can assume you did. How does that … When we’re talking about consensual levels of government … So you’ve rejected the kind of hardcore libertarian view of, “I didn’t consent to this, therefore no.” It seems like hypothetical consent does a lot of work when we’re [00:22:30] justifying governments. But what role does explicit non‐​consent then play, because governments don’t say … So in the case of the rendered aid, had you been able to say, “No, I absolutely don’t want you to help me out.” The people would have to respect that, but if I say to the federal government, “No, I absolutely don’t want you to give me social security or no, I absolutely don’t want you to lock my neighbors up for smoking marijuana.” They still do it and so it’s hard to then hook that on to something like hypothetical [00:23:00] consent because I’ve been pretty clear.

Tom: Right, right. Wow, there’s a lot to say there. I will say in the book, I also talk about negative consent. The spectrum of consent goes to the positive, hypothetical consent’s very weak. We say, “Well you would’ve agreed to this.” “But I didn’t.” “But you would have.” But it … And it gets stronger to express consent, I agree to that. Negatively, you can say too, “You would never have agreed to that, would you?” And you might say, “Well, I did.” And you have … You can have non‐​consent expressed. So all this [00:23:30] is on the spectrum and I would with regard to the conflict between hypothetical consent, “You should like this government. You would’ve agreed to it.” And expressed non‐​consent, “I don’t like it.” I think the expressed non‐​consent generally should win out. I’m gonna say generally here because I’m a lawyer. I live caveats. If someone say, “You know the rule I don’t like with your government is I don’t get to steal stuff and hurt people.” I don’t agree to that. You’d say, “Well you better scram ’cause we don’t want your type around us civilized people.”
So there’s limits to this [00:24:00] but I would say what we should try to do since you’re right around that … Most of the time people use hypothetical consent to justify the jurisdiction of the United States. They just say, “Well you would’ve agreed.” Or maybe implied consent, love it or leave it. I think there should be room for people to say, “I wanna opt out of that social security thing. Not for me, I expressly don’t consent.” And our government would be more justified, this would make our government better philosophically not just practically. But we would feel prouder and better about our government. People could say, ” [00:24:30] That’s not for me. I wanna opt out.” And we should do that as much as possible. I don’t how far we can take this. I think social security, certainly that wouldn’t be that hard to have people opt out, in many other areas people should be allowed to opt out. So let’s keep pushing that so people can express non‐​consent and have that really be effective. If we did that, it would make the remaining government more justified. We’d be more comfortable in saying, “Yeah, social security is a good idea because the people that are in it are here by choice. [00:25:00] They didn’t opt out.” That’s not what we have now. I wish we did.

Trevor: You make an interesting claim when you discuss the constitution, which seems to apply to pretty much every government on the planet. That you can treat those constitutions like “A legal document that most resembles a standard form agreement offered by a large powerful unnatural person, to it’s many relatively powerless individual subjects.” Now having been to law school and Aaron also went to law school, this sort of contractual difference of a force and size of the parties, [00:25:30] which creates a problem in many contractual situations. It seems though when you’re talking about things like HOAs, which you bring up as a possibility of a form of government. So when you bring up Highlands Ranch, Colorado which is right next to where I grew in Parker, Colorado which is a … Highlands Ranch was just a massive growing blob of tract housing and you kinda cite that as a private community. But I can guarantee that if you went up against the Highlands Ranch HOA, they would beat you into a pulp like most HOAs would.

Tom: That’s not literal. [00:26:00] You don’t mean that literally.

Trevor: So to say … Not literally beat you into a pulp.

Tom: All right. Not literally.

Trevor: You would not have pink flamingos on your yard, you would not be able to paint your house the color you want.

Tom: Right.

Trevor: Isn’t the way to interpret a HOA contract very similar to what you say here? A very large group against an individual and we have this huge negotiating power … differential, so we should invalidate those contracts too?

Tom: You’re asking a contracts‐

Trevor: Yeah.

Tom: Again you too, Trevor, he likes to take risks. He’s asking a contracts professor about adhesive agreements. I’d say it’s a question of degree. It is [00:26:30] true, the HOA has more bargaining power I guess than a homeowner. Although apparently there’s a nice neighborhood right door to Highland, Colorado … You’re gonna like it‐
Yeah. You can just stay one mile away. So how much power do they have? But once you agree to those rules as I understand it, I’ve lived in HOAs, they’re pretty strict about it, you don’t have the same choice though with regard to the federal government. You can’t move one mile away and say, “No labor code for me thanks. I’m just gonna move over to Maryland where you don’t have it.” This just doesn’t work that way. So it’s a question of degree but [00:27:00] you’re certainly and I’m glad you told our listeners in our audience about my approach to constitution. Basically I think we should look at it in a way, very much akin to the way courts already look at standard form agreements. If you sign a rental car agreement for something and there’s some fine print in there or you have a dispute with them, courts look at it very skeptically. They have as much skepticism it seems with … That’s right, their employer the federal government. Federal courts don’t seem to be quite as skeptical about … [00:27:30] And by the way I bring that up because … Here’s the thing, let’s go back to the rental car agreement.
So this is a question of degree. Some of these standard form of agreements are more oppressive than others, it depends on a number of circumstances. Any court will tell you this.But I just gotta point this one thing out because it kinda makes me grind my teeth. Suppose you signed this rental car agreement with Hertz say, not to pick on Hertz but just Hertz Rent a Car. And they had a clause there that said, “If you have any disputes with us, it’s gonna go to private arbitration.” Okay, that’s pretty standard. “Oh, and the case will be decided by the CEO, CFO and COO of Hertz.” No government [00:28:00] court would uphold that provision. Any government court would say, “That is facially unfair. There is no way you have to go to that arbitration.” Case closed, bang. “Next case, first amendment case. You’re suing the government? Oh yeah, I’ll hear that.”
This is the same judge. When she looks at her W-2 it says U.S. Federal Government and she’s now going to hear the case against the federal government. I know what you’re thinking. You’re thinking probably the same thing Hobbes thought. We have to have an independent party to resolve [00:28:30] these disputes, someone who’s objective. Agreed, but it doesn’t have to be the government. So here’s my proposal made in the book, I call these ‘Citizen Courts’. Anytime you, me, anybody has a case against the federal government or state government, any government, it should go to arbitration, private arbitration. It shouldn’t be in government courts. No government court would let the private sector do that but they got a special rule themselves and if you’re wondering how you this, it’s actually pretty simple. Suppose I have a fight with Aaron, he chooses [00:29:00] an arbitrator, I choose an arbitrator, those two arbitrators choose a third arbitrator. That panel of three judges is pretty objective, it’s balanced. I don’t know why we don’t do this for cases against governments. I’d like to think it’s ’cause no one suggested it before, problem solved. All right.
So I hope you guys will hop on that. I’m an academic but some of you make things happen. Please fix that problem because that’s one reason the American experiment has kinda gone in the ditch. Courts have driven it there over many [00:29:30] years because time and again you’ve got government employees deciding cases against the government and what do they do time and again? Talk to some people here in the building who do con law, they’ll tell you. The trend is bad and it’s not getting better, and it won’t get better as long as you have that non disinterested judging.

Trevor: The judicial power of the United States shall extend to cases and controversies arising under the constitution of the United States and its treaties and statutes, so that’s why we do it.

Tom: Oh, that says the courts can decide the cases. There’s nothing in there, I looked at that, that says only those courts can decide those cases, and indeed federal [00:30:00] courts often use arbitration. It’s quite common in some civil disputes. In fact, many government systems say, “Please go take your … go try to mediate.” “Oh, you didn’t mediate? All right. Go arbitrate.” They keep pushing off much litigation. Oh, but if it’s a first amendment case, it comes straight to the government court. I don’t see why that’s necessary. It’s not in the constitution, it’s not good policy. It needs to be changed.

Aaron: So before we turn from theory to practice, I hope you can indulge me with one last theory question. Namely [00:30:30] you … So you’ve advanced this what you call your ‘Contractarian Theory of Constitutional Law’ and constitutional interpretation is an important thing at Cato. We talk about it a lot, it’s a big thing among libertarians. And so to get at what that Contractarian Theory looks like, I was hoping could you maybe tell us a bit about how it’s different from two of the other big schools that you discuss in the book with originalism and living constitution.

Tom: Oh, thank you Aaron. This is an issue in which I’m almost [00:31:00] all alone. Most libertarians in constitutional theory are originalists. They think the way we should interpret the constitution when the language isn’t plain and it isn’t always, is to go back and try to figure out what the people who ratified the constitution thought it meant at that time. That is originalism, very popular among libertarians. It’s a mistake my friends, I’m here to set you straight. Let’s set out the other school of thought. Libertarians have done this because they’ve only seen … [00:31:30] it’s either originalism or this other thing, the living constitution. Now agreed, living constitutionalism is a total train wreck, because what does that say? It says, “What does the constitution mean? Let’s hand that over to some experts who wear robes on the Supreme Court.” We’re gonna let these nine justices kind of look at their own institutional navel, their own precedents and we’re gonna trust them to figure out this language, and somehow their going to be in touch with what the people in the streets need and want and should have and we’re gonna [00:32:00] trust these justices to interpret the constitution.
That’s living constitutionalism that gets you things like Gonzales versus Raich, which said the federal government has the power to regulate you growing and smoking your own dope in the privacy of your own home, that’s interstate commerce. That is not consistent with the plain language of the constitution but there was Wickard, a Supreme Court precedent that led the court to say, “Well we have our precedent. We’re the experts. We’re gonna be bound by that.” So living constitutionalism, not so [00:32:30] good for liberty, great for statism. Originalism, now what’s my complaint there? I will admit originalism is probably better than living constitutionalism on many issues because the founders were much libertarian than the Supreme Court justices. However, it gets you in some very awkward positions. Justice Scalia, may he rest in peace, when he was still living he was a foremost originalist. He admitted in public … There’s a clause, the cruel unusual punishment clause. Fourth amendment, that no cruel unusual punishment shall be inflicted under [00:33:00] the federal governments in the Bill of Rights. And someone asked Scalia, “Hey Scalia, you’re an originalist. What does that mean?” “Well it means what the founders thought it meant.”
So back then they thought it was okay to lash people. That was a routine criminal punishment. You put them on a post and you whip them. Is that cruel and unusual? So Scalia had to come out … Honest man, bless his heart. He saw where his theory went, he said, “Yes, that would be constitutional under my theory.” We’re not sure what cruel and unusual means, so we’re gonna go back to see what the founders thought. They also thought branding [00:33:30] was okay. You could brand people. Now maybe some of you think that’s okay today. I think most people in America today would say, “That is sick. There’s no way we’re gonna do that.” Originalism, Scalia said, “Yeah, that’s constitutional. It’s stupid.”, he was quick to add. “I’m not advocating that as a matter of public policy, but it’s in the constitution.” So that’s a problem with originalism, the founders didn’t agree with us on many things.
Contractarianism is the third better way if you’re a friend of freedom and it says, “Let’s read the constitution as we would as close as we can to a standard form agreement [00:34:00] offered by an all powerful, immortal institution.” The most powerful institution arguably history has ever known and it’s gonna be you and me as individuals against the federal government. That is not a fair fight. We know how we would read that contract offer by Hertz Rent a Car, a court would read it very skeptically. We should do that with regard to the constitution and when we come across a phrase like cruel and unusual, we don’t go to the Supreme Court. They’re [00:34:30] well educated, they’re very rich and these days they’re held up like stars. They live in a different world from you and me. I don’t trust someone who lives in Georgetown to tell me what cruel and unusual means. I don’t think that’s gonna jibe with what common people think and we don’t go back to the founders. Great men in their day, long past, we gotta do things our way. We should ask what cruel and unusual means to people who have to live under that rule, and it’s better than originalism in this way too.
If you wanna figure out what the founders [00:35:00] thought, you gotta do historical research and guess what? Historians don’t agree. I’m sure there’s probably a historian there saying, “Well they didn’t brand much. It really wasn’t that common.” Are really gonna have to have that fight? Let’s not do that. We can do it very simply under contractarianism. You can do a poll. You say, hey all these people have to live under the constitution. What do they think it means? Here’s the test I like to play actually. Imagine you’re an immigrant moving to the United States. You’re not really totally immersed in this culture but you can read good english and you pick the constitution and read [00:35:30] it and you see cruel and unusual. You should be able to say, “I know what that means.” You shouldn’t have to go read a bunch of Supreme Court opinions. You shouldn’t have to do a bunch of historical research. You should be able to trust your gut. We should cut every … We should give you the benefit of the doubt, cut the slack in your direction. So that is the third approach to constitutional law. Again, haven’t heard people advocate it for a lot. It’s in the book, so libertarians get onboard. You’re gonna hack off a lot of my friends in the legal academy, but they’ll learn. Originalists use old school. This is a [00:36:00] new better way. We should adopt it.

Trevor: Originalist is definitionally old school. As an originalist, I feel that I have to defend it but I’m actually gonna move the conversation to more of the actual‐

Tom: Right.

Trevor: I just wanna say I’m not … If anyone’s mad that I’m like letting all that live, we’re gonna move to the special economic zones in Honduras and other things‐

Tom: Be a gracious host. He’s still an originalist. He’ll learn.

Trevor: So let’s talk about things that are happening. So we’ve talked about problems with government, about reading government agreements that [00:36:30] exist, about what happens in the government, about the lack of choice and consent. What sort of things are occurring … You mentioned fair trade … free trade zones‐

Tom: Uh‐​huh (affirmative). Free trade … Foreign trade zones.

Trevor: Foreign trade zones. So first of all, where is one? I mean would I just find myself in Salina, Kansas and just be like wow‐

Tom: Yeah.

Trevor: It’s a foreign trade zone.

Tom: All right. So this is another … those things I didn’t know about until I started researching the book. The United States has a number of what we could call special jurisdictions. There’s over 200 active ones [00:37:00] and they’re called foreign trade zones. These are very common at all major ports and also in very obscure places. Every state, including land lock ones and Puerto Rico has a foreign trade zone, because you can put them at airports too. What does a foreign trade zone do? Basically goods coming in to a foreign trade zone are not yet in the United States for purposes of customs and duties. These foreign trade zones are actually behind chain linked fences, locked doors. They’re kind of watched over by customs to make sure stuff doesn’t go [00:37:30] in and out without approval, but basically … I’ll take an example of what is … There’s probably one in D.C. but I live in southern California. There’s two of them in the LA area, the Port of San Pedro and the Port of Los Angeles.
You bring in a big shipment of bicycles from China on a big ship and those even though they are offloaded at the Port of San Pedro, are not in the United States for customs and duties. You don’t have to pay any customs and duties. So you might put them on smaller ships and send them down to Peru and send [00:38:00] another ship over to Canada and you don’t have to pay anything. You’re able to bring those bikes into the country and maybe process them, add brakes and things and ship them out again. That’s great for purposes of trade. There’s over 200 of these in the United States and that’s just … example. There’s other types of zones in other countries but that one’s close to home. So these zones are everywhere, you just don’t see them. They’re not talked about much and that’s what the book’s about.

Aaron: What’s the benefit to the United States [00:38:30] government for setting those up or allowing those?

Tom: Well I think you could argue on that and some scholars have that it’s … On that actually not good. But the argument made for foreign trade zones is … And again this was in the wake of the … the acts at the beginning of the 1900’s that clamped down on foreign trade is to allow foreign trade more freely. Basically it encourages trade, about 600 billion in exports goes through these FTZs [00:39:00] every year. About 6% of all exports in the United States go through FTZs and the argument is, “Oh look, we created this exemption for customs and duties and there’s all this …” Surprise, surprise lower price. “All this economic activity.” And the longshoreman who works at the Port of San Pedro goes to back to Corona where he lives and he takes his paycheck and he spends it and the whole economy is made better. That is the argument. Now the economists among you and policy wonks will see some holes in the argument but that is a facially good argument for foreign trade zones and they’re very popular. No one really [00:39:30] is criticizing them, nobody even talks about them.

Trevor: Now what in Honduras? You’ve done work in Honduras and there was one iteration of something even a little bit more “extreme” than a foreign trade zone to free up law and enterprise and just making better zones for humans in Honduras, which is not a terribly efficient country right now.

Tom: No, they have their problems. I’m glad you bring that up, Trevor. There’s a whole chapter in the book called ‘Stories [00:40:00] of the Sort Ordinarily Recounted Over Drinks’, because a cool thing about this area of law is it’s gotten me from behind my computer and out of my office and into the field. So I’ve been to Honduras, I’ve been to French Polynesia, I’ve worked with countries and parties all over the world interested in starting these zones and it’s a lot of fun, exciting and interesting. Honduras has written into law a provision for special jurisdictions that is among the most advanced … It’s probably the most advanced in the world. They’re just now starting to implement it. They were very close [00:40:30] to implementing it when they had the recent troubles in their most recent election, which is right now being resolved in the streets with riots. It’s Honduras, it’s a complicated place. But their [ZA 00:40:41] program on paper allows private parties to come into their country, subject to oversight and never escaping the requirements of the human rights protections Honduras on paper, allows its citizens in the Honduran constitution continues to apply in these zones.
However, [00:41:00] these private parties in the zones can have their own civil law system, their own educational system, social security system. Basically they can do their own government except for things like national defense, decide to fly the Honduran flag. The Honduran criminal code will continue to apply in these zones but it will be enforced locally with oversight. There can be a penitentiary system privately run and operated in these zones with oversight. The Hondurans are not gonna let you create a slave camp [00:41:30] but they’re gonna trust these foreigners with oversight to run these zones. Basically the governments will be built from the bottom up almost to the very top. They haven’t implemented it yet, but when and if that happens, that’s gonna allow a lot of experiments in government and it will hopefully reveal to the Hondurans in the world better ways of doing it.

Trevor: Why wouldn’t Honduras let you create a slave camp? Because I mean a lot of governments do let people create essentially slave camps. So why [00:42:00] are you so confident in a government that is currently in riots as you said, is going to be really good at making sure that no one creates a slave camp?

Tom: Well I’ve been to Honduras, I’ve met a lot of Hondurans and talked with them, and I’ll just say it’s not in their culture. I mean I just don’t see them creating slave camps. Now they can do a lot of bad things for sure. I’m not calling them angels but every different culture has its own kind of downsides, the way it can go wrong. They could do terrible things but the reason … Take in particular … First of all, I just don’t think culturally that’s gonna happen there but they can do things wrong and the reason it won’t happen [00:42:30] is for a number of reasons. One is the whole world is watching. Two, the Hondurans say on paper and I believe them, they say, “You’re gonna have to obey the Honduran constitution.” And they also say, “You’re gonna have to have a special court of human rights and if people in your they’re called, in these private communities are … they allege violations of human rights. You’re not gonna go to a Honduran court, you’re not gonna go to a local private court, you’re gonna go to an international court for human rights.
So they’ve … And there’s other mechanisms in place. This is a very well thought through system by … I [00:43:00] will credit Octavio Sánchez. He’s a Honduran, he grew up there. He’s got some … He’s just a brilliant man and I’ve met him and he won’t take credit. But I’m gonna give him credit for these really innovative reforms. There’s also … I’ll give you another … There’s a body called CAMP, the … That’s from the Spanish acronym, but it’s the Committee for Adoption of Best Practices. It’s a body of 21 mostly foreigners appointed by the President of Honduras to actually act like a Board of Trustees for these communities. So there’s many layers of oversight and double checking. Does it [00:43:30] mean it’ll work? I don’t know. They haven’t done it yet. It’s an experiment we’re trying. They in good faith have tried to set up a system where rights will be respected and people can live in peace and generate prosperity and I think it’s worth a try. I won’t pretend they have it all figured out but they’re way ahead of everybody else.

Aaron: So then let me ask I guess a variant of my prior question. These … So what you’re describing in Honduras, there are similar things in other parts of the world, where government has carved out spaces and said you can [00:44:00] use different economic rules here, different fiscal rules here. What’s the incentive for government to do this or allow this in the first place? Because say if this Honduras experiment works really well, if the enthusiasm that you have for these kinds of things ends up being warranted, then isn’t that just going to show the people of Honduras that their government wasn’t really that great? Like they’re just gonna wanna turn the whole country into one of these [00:44:30] things, which seems like that’s a loss for the government. So why would government‐

Trevor: Or in the government you mean. Yeah.

Aaron: For the people in the government. Right. So why would governments and especially governments that don’t run terribly well to begin with want to allow these kinds of things?

Tom: Good question. Well let’s use a couple of examples. Foreign trade zones, why did the United States decide … Initially they said, “We love customs and duties. We get money from that.” Why would the federal government back off of that? Because they see other gains. They see that, “Oh, well we’ll actually come [00:45:00] out ahead in tax revenues maybe because we’ll tax the income of that longshoreman when he goes back home in Corona.” Maybe they sat down and ran the numbers, that’s possible. In Honduras, there their problem is getting foreign investment and Honduras … You gotta be realistic. You work in the Honduran government and I imagine they had conversations a bit like this, “Boy, I wish we had more foreign investment.” “Me too.” “Why aren’t we getting it?” “Have you looked at our murder rate lately?” “Yeah, it’s pretty bad and nobody trusts our government. Why is that?” [00:45:30] I tell you everybody I talked to in Honduras, everyone. From the guy in the street to the government official said … This is what they told me … everybody, “You can’t trust the courts. They’ll throw the case to whoever pays them the most money. That’s why people won’t invest here.”
This is happening in the government office. They’re having the conversation of, “Well how do we get that foreign investment?” “We’re gonna have to let them do something different.” It’s not like governments are eager to give up power but it’s really … if you set it up right, a way that the governments themselves see they can come out ahead. We’ll have more tax [00:46:00] revenue, ultimately at the end of the day we’ll have more power by setting aside these small areas where we actually ease up a little bit. Now you might … And you should ask well what happens if that’s a big success and it takes over. Some people in governments say, “That’s actually what I wanna have happen. I’ve been trying to reform this government from the inside forever.” There’s lots of good people in government, wanna make it better and they can’t. It’s just hard to change government, an inch deep, a mile wide. But when you have an experiment that works … We’ll use the Chinese example, Shenzhen.
They’re [00:46:30] literally dying by the millions, tens of millions under Mao. People are eating grass, they’re eating each other. Communism doesn’t work. They look over the fence at Hong Kong they go, “They have among the highest per capita incomes in the world and they’re just as Chines as us.” Same language, same people, same climate. That is China with what? Better rules. So in Shenzhen right across the river, they implemented this zone and it worked and then it spread throughout the country. Now maybe someone in … who is a Mao‐​ist in China would regret that. [00:47:00] But I bet if you talk to people in government in China today they would say, “That was an awesome thing that happened. We actually now have more power. We have tax revenues, we can buy a big military.” They can do all kinds of stuff and the Chinese people came out ahead. They were lifted out of abject poverty, from famine to become basically a lower middle class country and they’re on the way up and I think we can credit special jurisdictions for that.
I’d like to see that happen in America. That’s a place where we could learn from the Chinese. If we could have special jurisdictions like the Chinese had them, ones that were big, had populations, [00:47:30] special rules. We could learn from that and people in governments should welcome that because it’ll bring them revenue, and we should welcome it because it’ll bring us freedom.

Trevor: You also discussed seasteading in your book, which is not even just using the land that already exists but making floating islands. Now I’ve seen Waterworld so I have an idea of what it’s like when people live‐

Tom: You don’t. No, you don’t. Waterworld is not the‐

Trevor: On … And I’ve seen Pirates of the Caribbean too, which is similar.

Tom: Pirates of the‐

Trevor: Why wouldn’t that be what [00:48:00] seasteading is? I mean so first of all, pirates are a problem in the world’s oceans and … I mean are we really gonna build islands and live on them? First of all, does anyone wanna live on an island that’s like a waterbed all the time? I don’t even like waterbeds, so maybe that’s the biggest problem. But tell us a little about seasteading and whether or not people will actually live there.

Tom: Oh man, Trevor. Okay. Pirates and Waterworld and a waterbed. Well, what do I wanna say about that? I wish I had … I wish the seasteaders had problems with pirates. Right now, we’re just trying to get one [00:48:30] or two platforms floating in a lagoon in French Polynesia and we don’t need to worry about pirates there and you also … I’m not gonna need to worry about the waterbed effect. We got our engineers working on these platforms. They’re big, they’re like the size of a football fields and it’s gonna be in a lagoon. A nice lagoon, I’ve actually gone scuba diving there. It’s got coral and everything. It’s really nice. Yeah, so I wouldn’t worry about that. Seasteading, I’d say right now we’re taking baby steps towards the ultimate goal, which is being on the open oceans, flying our own flags [00:49:00] and being really free. That’s not gonna happen tomorrow. Maybe then, there’ll be pirates but look, I mean what’s gonna happen if you’re on the open ocean and this is your home. You’re gonna have some pretty big caliber machine guns if you’re worried about pirates.

Aaron: Waterworld.

Trevor: Yeah.

Tom: They didn’t do it very effectively in Waterworld, did they? I’m guessing from what I saw at Universal Studios, they had like a Waterworld show there, it looked very violent and explosive, and that’s about as credible frankly as Waterworld as a source. Anyhow, I don’t worry much about that but if you worry about [00:49:30] that I’ll say let’s revisit this in 15 years. If you’re worried about pirates and Waterworld, we’re so far from that. Please let’s just try to have a few floating platforms in a lagoon in French Polynesia and a special jurisdiction and see if we can get the … some of the technology ironed out and a little bit of the governance in baby steps. We’ll get to that bigger … the bigger issues that come with more freedom later. I hope we do, but right now it’s nothing to worry about.

Aaron: So the examples that we’ve discussed so far of [00:50:00] smaller governments or competing governments or start up governments, have all been geographical in nature. We’re gonna build an island or we’re gonna carve out a port or some special zone, but is there space to realize the vision that you articulate in this book in non‐​geographical ways? Like I’m thinking ’cause technology enable us to maybe have competing governments or overlapping governments or pick and choose our governments [00:50:30] without having to be tied to a particular geographical area.

Tom: Oh, yes. Definitely. I think we can look at blockchain technology, bitcoin, ethereum, other cryptocurrencies as an example of people non‐​geographically of opting out of government monetary systems. That’s a very concrete example. There’s other examples. People are trying to make real … for example using blockchain technology to keep track of title to property. That hasn’t been implemented as full yet as cryptocurrencies [00:51:00] but it’s definitely foreseeable. So I’ll just say yes, I don’t talk much about that in the book. I’ve got my hands full with geographic jurisdictions but I think there’s a lot of room for growth and freedom in non‐​geographic special jurisdictions too.

Trevor: You discussed called ‘Ulex’ in the book, which I think you’ve drawn a very interesting parallel which in … open source coding and open source law. And you compare the U.S. code, which is about as impenetrable as maybe Apple’s [00:51:30] unattainable backend coding for IOS or something, but the U.S. Code, the Administrative Law Code, all those things, that’s proprietary law and what we need is open source law. What do you mean by that more specifically?

Tom: I guess the best way to explain this is use an analogy with computer science and its history, really quickly. So because coding is coding, right? Computer programmers write rules and it tells computers what to do and legislators write rules and it directs what people do. I know people aren’t digital chips but it’s an analogy. [00:52:00] If you look at the history of computing, they used to write an operating system uniquely for every mainframe they built because every computer was the first one of its type. So they would write an OS for it and they build another new computer and they write a new OS. These are very simple machines and then at Bell Labs in 1970, they came out with a very clever idea, “Why don’t we write an operating system that you can use across computers?” And governments are just now getting there. Governments are mostly back in the battle days of computing. We’ve got the United States, we write here an OS for the United [00:52:30] States. Well here, we’re in Canada and we write an OS for Canada and every nation state has its own OS. Most of them. Places like Dubai, Hong Kong kind of import them, software from somewhere else. In Dubai, they said the common law of England and Wales will dictate our financial transactions in the Dubai International Financial Center. And that’s why you’ve seen all those skyscrapers go in the middle east there.
So what Ulex does is it takes that evolution one more step. Computers went from that, from operating [00:53:00] systems that operate across computers to open source software. You got proprietary software, Microsoft Windows, Apple’s OS but open source software kinda lays open the code and says, “Here it is.” Anybody can read it, anyone can use it and download it, manipulate it and that’s what I’ve tried to do with Ulex. Collect a bunch of legal rules, lay them out … I’ll give you an example, you wanna have contract law in your special jurisdiction, you can use the Restatement (Second) of Contracts. This is put [00:53:30] out by the American Law Institute, a private body not a government body and it basically sums up the common law of contracts in this really neat little package. And I just took that off the shelf and plugged it into my legal code for contracts. When I needed torts, I used the Restatement of Torts. When I needed corporate law, I used the Model Commercial Business Association Act, which is the majority rule in the United States. So basically Ulex tries to do for governments what open source software like Linux, [00:54:00] which by the way is the most popular OS in the world because it’s on your android phones, Linux has done for computers and smartphones.

Aaron: Do you think that we should eventually take that analogy even further, because it’s not just that open source software projects are, “Here’s the source code. You can look at it and do with what you want.” But that the community can then contribute back into the source code. So do you think that we should have legal systems where there’s mechanisms for people to change them? Should we turn our constitution [00:54:30] into a Wiki?

Tom: Absolutely. Absolutely. We should have something … If you know about GitHub, people play around with software on GitHub and it allows you to have a piece of software and then people do little branching things and we’ll, “You know I don’t like this part I’m gonna change it.” And then people do variations on that and it’s all documented very carefully so you always know what version you’re using, and yeah, I would like to see that. So the idea is … I’ve already got up to version 1.1 of Ulex, so the modifications have already started happening, and I’d love to put it out there let maybe seasteaders say, “Well we’re gonna run Ulex here, but we need a little bit of maritime [00:55:00] laws.” So we’re gonna do version 1.2 for seasteads and someone over here will say, “Well we wanna set up in a civil law country of Ulex and we need to have special provisions ’cause we’re used to the civil law versus the common law.” We’re gonna do version 1.4, and they can do that on their own. And I’d love that and they could adapt it just like Linux has adapted for different platforms. Yes, that’s exactly how it should go.

Trevor: So we look … You want government to be updated, you want rules to get better. You want it to be evolutionary, you wanna open source law, [00:55:30] you want people to be able to try new things out, have right of exit. And I think a lot of skeptics would look at this and say, “Who’s gonna be doing this?” They’re gonna be corporations and powerful organizations are gonna be setting up special economic zones in Honduras or what you call united space special economic zones, possibly throughout the United States. Sort of a version of the Honduran one throughout the United States and a lot of people would say, “What’s gonna happen there is basically company towns of 1885.” We’re gonna have … That’s polycentric [00:56:00] law. We’re gonna have … We’re gonna go in and you’re gonna be ruled by company town or the company rules, only shop at the company store and it’ll be oppressive because the people will not be adequately represented, because they don’t know they have adequate options in the way … to exit and all those problems still exist. So what would you say to this idea that you’re advocating what would be a more oppressive system?

Tom: I’d say it’s a valid concern. I’m not one of these libertarians that say, “Well, it’s private. It’ll be fine.” No. I had examples in the book. I discussed Fordlandia, it was a project by the Ford [00:56:30] Motor Company to create this huge development in the Amazon Rainforest, a huge private city, utter disaster. Just ’cause probably people run in … They’re people. They’re the same as public servants, they can get things wrong. So valid concern, what should we do about it? First notice it and then read the book. The whole third section is about practice and I’ve worried about this myself and so I advocate a number of mechanisms to avoid those problems. For example, citizen courts. We gotta set these organizations [00:57:00] up so even if a corporation is running the town, when you have a fight against the corporation, you don’t got to their courts. You have an independent adjudicative body, freedom of exit. You need to have … Again, I’ll say these are situations … The governments have invited these projects. I’m not saying get rid of governments, I’m saying work with governments. So as in Honduras, they’re gonna be looking over the fence at your saying, “What’s going on here?” If there’s a human rights violation, you’re gonna go to this other court.
We’re gonna have this CAMP [00:57:30] acting as a board of trustees to oversee what you do. You can’t have your own criminal code, you can’t throw people in jail because they have the wrong religious. That’s not in the Honduran criminal code. It’s not a quick answer because it’s a hard complex problem but I think people of good will who are informed can foresee these problems and safeguard against them. And because there’ll be lots of experiments going on, if one of them blows up like Fordlandia we go, “Whoa, let’s not do that again. Let’s look at the successes and replicate those.”

Aaron: So we talked a lot of theory [00:58:00] today. We’ve talked a lot about examples of some of this theory in practice but maybe to close, could you tell us looking forward the next 10 or 20 years, what most excites you in this area? Are there other particular projects that you think will turn out really awesome or lead the way? Are there particular changes in what governments are doing? Like what just fires you up about the notion of [00:58:30] our next government?

Tom: Ooh, wow. I could go on and on about that. I will say keep your eyes open for the Institute for Competitive Governance. Institute for Competitive Governance. It’s a new organization I’ve started up with some fellow travelers, which aims from an academic point of view to studies, phenomena, encourage white papers, maybe we can work with Cato to do somethings. So that’s exciting to me as an academic. This is a whole new growth area. Like I said when I first started researching this it was new to me, it was very exciting. I want other academics, people who disagree with me. Please [00:59:00] to get into this and reveal things to me and debate. I think that would be great. More concretely what do I foresee happening, I hope the Honduran will happen. Right now we’re in a tough spot in Honduras. There’s a lot of turmoil there. It’s not unknown to Honduras, which is why they want these zones. People in Honduras can see the way the rest of the world is run and they are in anguish about the way their government is run and they wanna do it better.
They want a chance to do it better. So hopefully that will kick in and places like Honduras will be like China. The people in Honduras are really suffering under their government now, [00:59:30] like the people in China once did. If we can do for Honduras and other countries who follow their example, what happened in China, wow that would be great. That’s very exciting. Seasteading, very exciting. There’s a number of reasons I like seasteading. It’s kinda cool, kinda sci‐​fi, I like the ocean. People love it. They get so wrapped up in these images of floating cities and I would like for their dreams to be realized. I think sometimes they’re widely unrealistic but I’m sure you could say that about a lot of my works, so that’s fine. I’m also interested in [01:00:00] some interesting financing models that fellow travelers … I can’t say a lot about this yet ’cause we haven’t gone public but fellow travelers and I have been working on allowing for the use of … I guess say ICO type funding mechanisms for private governance projects.
So to give an example, the idea would be something like suppose you find Puerto Rico, that’s a place I’ve been looking at recently and you say, “Oh, they really need some help.” If they had something like a special economic zone in Puerto Rico, it could really help them [01:00:30] out a lot. It’s gonna take money to do that, maybe we could raise that money publicly through an ICO process and if we had a big pool of money. Guess what? Things happen when you have money that don’t happen when you don’t. If you could go to the governments of Puerto Rico and the federal government and say, “Look at all these people who have money they’re willing to put into a special jurisdiction of Puerto Rico. You’re interested now, that would make things happen.” That wasn’t available to us in the past. These new models of raising funds can let us tap a lot of people all over the [01:01:00] world who would like this for both financial and ideological reasons to happen and money makes things happen. So I wanna see that happen too.

Aaron: Free Thoughts is produced by Tess Terrible. If you enjoyed today’s show, please rate and review us on iTunes and if you’d like to learn more about libertarianism, find us on the web at www​.lib​er​tar​i​an​ism​.org.