“Government is an inefficient industry because it has an insane barrier to entry. To compete with governments on existing land you have to win a war, an election or a revolution”
Patri Friedman has resolved the problem of competing with governments on existing land with his idea of building a new country on the ocean. His is the Randian ideal of a libertarian state in which the government plays a minimal part. Paul Thiel, the billionaire co-founder of Paypal has agreed to back the scheme.
What they really want to achieve is a new Hong Kong, a country which, owing to a fit of absentmindedness, was allowed to develop on its own, with very little input from the government. In 1948 Hong Kong had a population of 600,000 and no natural resources. This was the year when the great socialist experiment began in the UK and the Governor of Hong Kong was instructed to apply the dead hand of the state there. For one reason or another, the Governor never got round to it and Hong Kong was allowed to develop as a free market economy with minimal taxation. Millions of Chinese fleeing from the mainland were able to enter illegally and take advantage of the opportunities there, raising the population to 6 million and turning it into one of the richest places in the world.
In 1948 Israel also had a population of 600,000 and at that time had an income per head twice that of Hong Kong. The population of Israel expanded as fast as that of Hong Kong, as Jews from all over the world came to settle there. They brought with them huge wealth, which continued to pour in from wealthy benefactors and US aid. Fifty years on, the population of Israel had grown to 6m, just like Hong Kong, but their income per head had fallen to half that of Hong Kong, a comparative decline of 400%. This relative decline was caused by the fact that their government was highly dirigiste; whereas the government in Hong Kong simply allowed their citizens to get on with their lives. That’s why Patri Friedman wants to create his new libertarian state.