Milton Friedman's grandson Patri has a vision that might have made the economist proud: to build a floating libertarian nation 12 miles off the coast of California.

Billed as "Burning Man meets Silicon Valley meets the water," the planned nation flotilla would be constructed on a variety of barges and water platforms within sight of San Francisco. It would include everything from homes, schools and hospitals to bikes for transportation and aqua farms for food.

Despite the widespread skepticism that the project is bound to invite, Friedman already has secured more than $2 million in venture capital for the development, which strives to create a free-market society in which members are free to form their own governing structures.

"We can't experiment here because all the land is claimed - the only place left is the ocean," says Friedman, 35, a former Google engineer now working for the "seasteading" movement full-time. Construction of floating offices will, according to Friedman, begin off the city in 2012. The project, which aims to have tens of millions of residents by the time it's completed in 2040, may ultimately be floated down the Pacific toward San Diego, but for the next decade, the focus will be here.

'Ridiculous' premises

Those in academic circles have balked. "The whole thing is so far from any kind of conventional urban planning," says UC Berkeley Professor of Architecture Margaret Crawford. "The physical premises are just ridiculous."

But that hasn't stopped Friedman and his think tank staff of 10 at the Seasteading Institute in Sunnyvale from going full steam ahead. Backed almost entirely by venture capitalist Peter Thiel, who co-founded PayPal, the team plans to seastead, colonize the sea beyond the reach of existing nations.

Friedman's mission is to open a political vacuum into which people can experiment with startup governments that are "consumer-oriented, constantly competing for citizens," he says.

"I envision tens of millions of people in an Apple or a Google country," where the high-tech giants would govern and residents would have no vote. "If people are allowed to opt in or out, you can have a successful dictatorship," the goateed Friedman says, wiggling his toes in pink Vibram slippers.

Wants his own rules

San Francisco needs seasteading, "because I can't come up with my own whole set of rules and implement it," Friedman says, shaking his head.

When asked what his team is working on right now, Friedman leaps up and writes "SEASTEADING" on the whiteboard, circling it and drawing four lines down, "RESEARCH, LAW, BUSINESS, MOVEMENT," underlining each before collapsing back into his chair and checking his phone.

As part of an effort to get the word out about the ambitious project, the third annual floating seasteading festival will be held in the Sacramento-San Joaquin River Delta June 10-12. Known as Not-Ephemerisle (punning on ephemeral), the event is expected to draw 300 people who will practice seasteading on houseboats and floating platforms.

"The first year, none of us knew how to tie a knot," says Matt Bell, a tech entrepreneur who is organizing the festival out of Mission District coffee shops.

Seasteading is necessary because in San Francisco, "the government isn't as efficient as it could be. Stuff just doesn't get done in a way that makes sense," says Bell. "Like Muni is so slow."

Bell and others are using Kickstartr, an online pledge service, to finance their festival art installations, which will include such floating attractions as AquaDome and Giant Floating Tilting Labyrinth Board Game.

"Seasteading is a stepping-stone to space colonization," says festival attendee Ratha Grimes.

It's in the genes

Although never close to his paternal grandfather, the late Nobel laureate Milton Friedman, the young Friedman believes he was destined to lead the seasteading movement.

"My grandfather's influence is genetic," says Friedman, who was raised by his mother in Philadelphia. "And there is an influence. We're both short, energetic libertarians."

Friedman grew up "dorky but happy," graduated in computer science from Harvey Mudd College in Claremont (Los Angeles County) and moved to Silicon Valley. He leads a studied life, keeping a detailed diet and exercise blog. He and his wife, Shannon, live with their two children, 8-month-old Izzy and 5-year-old Tovar, in Tortuga, a 20-person Mountain View commune that Friedman founded.

Working as an engineer at Google in 2008, Friedman met Silicon Valley philosopher and software engineer Wayne Gramlich, who introduced him to seasteading.

"I was enthralled," recalls Friedman. "I knew I'd dedicate my life to it." Together, they wrote an online book, "Seasteading: Homesteading the High Seas," and Friedman quit Google to build the movement full-time.

"Two hundred years ago, we could have gone out West," says Jon Cain, president of the PayPal founder's Thiel Foundation. "Now, we have to go further. The ocean is the next frontier."

In San Francisco, "taxes are so high, and there's no room for competition, and government uses the threat of violence to impose rules," he adds.

Life on the water

Although none of the Seasteading Institute or Thiel Foundation staff yet live on the water, many Bay Area residents do. They look on the movement with a quizzical eye.

On a creaky houseboat off Sausalito, Lewis Shireman, a stout man who's been on the water 15 years, tours Pier 8, pointing out where the Dixieland banjo player lives, the Zimbabwean watercolor artist, the air force colonel.

"We're an organic community. ... Life on the water brings us together. And it's not always easy." He points to the shopping carts along the dock that are used to ferry cargo from gate to boat.

"I wish those kids luck," Shireman smiles, bushy white mustache shaking.