The cities of the future will be private: How Anarcho-capitalism incubates tech innovation

What do the cities of the future look like? I predict that the cities of the future will be privately run. Here’s why.

Sometime between when cities were located near arable land and fresh water, or just navigable water, and the present, where and when most cities arose was based chiefly on a meeting between an innovation (such as a new way to mine or use metal or a timber ) and a natural resource (such as ore or timber). This brought industry to the resource, which created jobs, which drew people.

The way things were

Traditionally, companies have chosen where to locate based on four main factors:

1. Resources

It’s hard to mine where there’s no ore.

2. People

It’s hard to mine if no one lives or will live near the mine.

3. Infrastructure

It’s hard to mine if people can’t get to the mine

4. The state

It’s hard to mine when the regulations and taxes make it difficult.

The way things were more recently

But today’s first-world economies are service and not manufacturing based. Google and Facebook don’t turn iron ore into steel and make automobiles. They take people and combine them with computers to create services.

The transition from a manufacturing to a service economy in the first world presents a massive opportunity to radically change the way cities rise, which will ironically occur first in the third world.

The shift from making things to doing things will render nearly inconsequential three of the four reasons companies choose to locate.

1. Resources

Innovation in the services sector requires few natural resources.

2. People

The third world is outpacing the first in math and science education. English is quickly becoming ubiquitous. Travel and telecommunication are becoming cheaper and easier.

3. Infrastructure

If a person from anywhere can be qualified to work, and can work anywhere, much less infrastructure is needed. What infrastructure is needed is incredibly cheap to implement and will soon be nearly ubiquitous.

4. The state

Regulations and taxes will continue to affect the feasibility and profitability of service-sector innovations.

NOT the way things will be

What I think it means for the state to be the primary factor in business location is that businesses will be asking themselves three main questions when deciding where to locate:

1. Where are the barriers to entry lowest?

Service-sector innovation happens quickly. Having to dick around with licenses and paperwork for months to enter the market with your product can be the difference between failure and success.

2. Where are the regulations most transparent, fair and consistent?

Byzantine, labrynthine, compliance-costly, incumbent-protecting, ever-changing regulations kill otherwise profitable ideas.

3. Where are the taxes lowest?

Self-explanatory.

In other words, cities will rise where companies find the best states.

In this case, best means all of the above — low taxes and barriers to entry with a clear, fair, stable regulatory environment — PLUS fair and effective contract enforcement and well-protected private property rights.

So how do you get the best state? The same way you get the best of everything else: innovation through market competition!

Competition and innovation in living arrangements has been tried to an extent, most recently via seasteading and charter cities.

Unfortunately thus far the attempted cities and seasteads haven’t been able to offer fair and effective contract enforcement and strong private property rights. And they’ve failed to protect the businesses that’ve tried to locate there from fuckery by other states.

But demand for better cities is rising. And when demand rises, the market provides.

Smart entrepreneurs may have to go inside, like the Honduras experiment, or under, over or beside (Waterworld holla!) existing coercive states. But they will be looking to build voluntary “states” that compete with coercive states and other voluntary states to offer other entrepreneurs an environment where innovation can flourish and wealth can be created.

If sold as such, with a valid business plan for creating that environment, I see no reason charter cities, seasteads or whatever else could have any trouble raising enough money to get started. It’s only a matter of time.

Photos by thelearnedfoot_smiling_da_vinci, and ILMO JOE.

One Comment

  1. But don’t you think Nations will implement retaliatory tax strategies to make sure that the money going to ancap businesses does not become a tax loophole? Sort of how states in the US are coming up with ways to include State Sales Tax on internet purchases from out-of-state businesses, since they see this as money leaving their local economy.

    I think Jeffery Tucker will discuss some of these ideas in his seminar on the technological end-run around the State, should be very interesting.

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