Gated Communities and Nation States: The Cartel Responsible for Global Poverty

This guest post comes from Michael Strong. He is the CEO of FLOW, Inc., and the author of Be The Solution: How Entrepreneurs and Conscious Capitalists Can Solve All The World’s Problems. Michael will be speaking at the Seasteading Conference in September–Editor

One of the deep inconsistencies in mainstream left-liberal moral thought is that gated communities are bad, because they are exclusive, whereas nation states are good, despite the fact that they are exclusive. If the exclusivity of small-scale gated communities is bad, why should the exclusivity of much larger scale gated communities somehow be good? This moral perversity shows just how deeply the nation state paradigm distorts our moral vision.

I may be one of the few libertarians who half likes the Scandinavian nations, if only they would get over their moral presumption and acknowledge that they are no more morally lofty than are gated communities. If we allowed the Mormons to put up borders around Utah and keep the riff-raff out, they might set up something that looks like Sweden – Mormons are committed to helping other Mormons when they are down on their luck. I see Swedes as a clan of people who want to help other Swedes and keep non-Swedes out as much as possible. That clan happens to own a nation state, the Mormons don’t. If we allowed for entrepreneurial government, through secession, free zones, charter cities, or seasteading, then I could imagine a lot of clans setting up their own nation states/gated communities, and many of them might have very generous “welfare” programs.

The fastest way at present to make the global poor better off is to give them access to a developed nation – allow them to immigrate. An unskilled Mexican can earn ten times as much per day in the U.S. as in Mexico, and although some costs of living are higher, some are actually lower here. There is no transfer program of any kind that can provide as great an improvement in standard of living, as quickly, as immigration can. Until we can create a world of entrepreneurial governments, open borders ought to be moral priority number one for all who are committed to the Rawlsian principle of making “the worst off, best off.”

(Of course, utilitarian moral philosophers can be just as clueless; in a dialogue between the famed moral philosopher Peter Singer and the economist Tyler Cowen, when Cowen brought up immigration as a moral issue and explained why, Singer was forced to acknowledge that it did sound like an important moral issue, but one that he had never thought about. Here is a guy who has written dozens of books on moral philosophy, one of the most famous moral philosophers of our age, the book being discussed was Singer’s most recent book on ending world poverty, and he had never even thought about the issue of immigration!)

But immigration is so effective at increasing wealth only because we have a legally binding cartel on the creation of new legal systems. Normally we are morally outraged by monopolies and cartels because they use their monopoly power to restrict output and raise price; it is a pure power play with no moral justification whatsoever – “We’re going to cheat you because we have the power to do so.”

But in the case of nation-states, there are 200 or so legally allowed sovereignties, a club the entry into which is tightly controlled by a small cabal of the most powerful nation-states, and new nation-states are rarely allowed to come into being. A private, for-profit nation state, no matter how effective at improving its citizen’s lives, would not stand a chance of receiving diplomatic recognition in today’s climate of opinion.

Global poverty is caused by restricted access to high quality legal systems. Insofar as there are obstacles to replicating high quality legal systems, the global governance system is acting like a cartel that restricts entry. Thus some four billion people are getting screwed because the people at the top like the system the way it is, and all academic Rawlsians (do let me know if you discover even one exception) blindly support this system of screwing the world’s poorest four billion. By their own moral standard, they are accomplices to the single greatest moral crime on earth.

Insofar as new Free Cities (Perhaps as Autonomous Free Zones) arise, they will increase the supply of high quality legal systems and reduce the power of the cartel slightly. If we had a global industry of Free City developers, that was allowed to create new sovereign entities, and those competitive corporations responded to market demand for high quality legal systems and infrastructure, then the power of the cartel would decrease. Not only would poverty be reduced dramatically, but higher quality versions of all of services currently provided by cartel members would become available, the qualify of life of the vast majority of humanity would improve. This is obviously the direction that all thoughtful Rawlsians should support.

This is why I refer to the movement for entrepreneurial government, without irony, as The Most Progressive Movement on the Planet. Or, to put it another way, Nozick was the ultimate Rawlsian.