When Governments Compete, You Win

People and groups are different. It’s not just that I like vanilla ice cream and you like chocolate; we also have different conceptions of value and different ideas about the good life.

As philosopher John Rawls wrote in Political Liberalism,

Whatever you think about Rawls’s work, it’s hard to disagree with the fact of pluralism and reasonable pluralism. In other words, a) we’re all different, and b) we can hold different comprehensive doctrines—and these can compete. Rawl’s mistake was to offer a universal theory of justice when what we need is a thousand experiments.

That means, if we could, we might live in different systems and play by different rules. In fact, we tend to cluster with people who share our values, whatever they might be. And aside from politeness through gritted teeth at family dinners, we don’t generally move in the same circles as those with whom we disagree. Though some might claim that people of other political persuasions are “mad and aggressive,” we should be as tolerant and charitable as possible within limits.

Rawls’s fact of pluralism has deep implications for vital governance questions. Whose concept of justice are we enforcing? What if our conceptions come into conflict? Are there any human universals at all? And if so, how are we to find them? If pluralism is a fact and we hold different values, maybe we can upgrade our social operating systems to accommodate these differences. Doing so will require a change of perspective on the question of central authority.

The ideas we are about to explore lie on a spectrum between ideology and evolution, which makes for a delicate dance. We’re used to thinking about ideal justice and comprehensive doctrines (ideology), but we’re pushing the slider toward how we think things can and will develop in the real world (evolution). Thus our thinking requires a mix of “is” and “ought” that some might not be comfortable with. For example, pluralism is a state—an outcome we must live with. Yet it is an outcome we might want to live with. So we’re arguing that political pluralism will likely result due to contemporary circumstances. And we want to build a superstructure around that, which facilitates experiments.

Such thinking requires both a philosopher’s reflection and an entrepreneur’s alertness.

It seems like decentralization is a good thing. But how do we know? And whose idea of good are we talking about? If we accept the fact of pluralism, the answer to the latter question is: “It depends.” Decentralizing authority in some territory, say, involves trade-offs to be sure. If we think of decentralization as implying exit options, there are more places to go if you don’t like where you are. So people have more choices to live in a system closer to their ideal. To unpack this idea a little more, let’s use our imaginations.

You are an American. (For this thought experiment, you don’t have to gain weight or carry a gun.) Let’s also imagine that you have the choice of living in two neighboring states: New Hampshire and Vermont. People in these two states tend to have very different governance philosophies. Now, the Amendment Fairy comes and changes the system overnight. With a wave of her wand, the fairy has done away with most of the federal government. Now, you’re basically living in one of two different smaller countries: New Hampshire or Vermont.

Which one do you choose?

If you choose New Hampshire, you’ll live in a condition of low taxes, low regulation, and robust entrepreneurship. You’ll obtain health insurance and purchase medical care privately in a price-competitive environment. In short, after shedding federal law, New Hampshire becomes a radically free market. If you choose Vermont, you’ll have higher taxes and more regulation, which might make starting a business more difficult. But you will have a bigger social safety net, and the Montpelier government will guarantee certain goods and services such as healthcare. After shedding federal law, Vermont turns more democratic socialist. New Hampshire turns to entrepreneurial markets.

Picked your state yet?

Seeing things through the lens of competitive governance, we’re not concerned with persuading you that one option is better. We’re concerned with the idea that these two different options exist at all. In fact, we can extend our thought experiment to 50 other jurisdictions, each of which can be subdivided into cities and counties. We might be able to convince you that all these choices are a good thing. After all, you have at least 50 more chances of living in a system more suited to your preferences. (Note: there are about 63 counties per state.)

Here’s the thing, though: a loose confederation of more diverse states doesn’t mean anything goes. Potent forces constrain each state’s system: competition and fiscal reality. In other words, your system has to be able to attract and retain real people without breaking the bank.

But local failure is better than national failure.

In this way, each state (or city-state) can determine its own governance and mix of public and private provision of goods. But it will have to do so more like a business—perhaps exactly like a business. If you don’t do things wisely, your best and brightest will leave for your neighboring jurisdiction, and there’s nothing you can do about it. Get your stuff together, or suffer an exodus. Such a polycentric order will continuously self-equilibrate within the parameters of utopian thinking set by reality. Competitors in the governance market can no longer treat people as mere subjects or citizens.

They have to treat them like customers.

In this way, polycentrism represents the death of political theory. Experimentation, competition, and evolutionary change have little to do with the fires of ideology. If you’re an ideologue in a polycentric order, you must test your theory in the petri dish of competition. Now, maybe you think polycentrism is itself an ideology. You might even argue that the very thought is beyond the pale. But if you’re open to the idea that systems can and should compete, we all might be able to get that much closer to our ideals.

According to Joe Quirk of the Seasteading Institute, the way to get good governance is to treat governance like startups. “Seasteading is less an ideology than a technology,” he says.

That’s because Seasteaders share a common perspective: we need “more experiments in governance” and “startups are the way to discover solutions.” You’ll often see Quirk and Company wearing a T-shirt that reads “Stop Arguing, Start Seasteading.

Whether on sea or land, people are enormously creative. Decentralization allows people to try new systems of governance and migrate among them. It is an industry—or it could be.

“An extremely useful way to think about the incentives that structure the political game is to consider the market for governance,” write seasteading scholars Brad Taylor and Patri Friedman.

Competition among governments functions rather like competition among operating systems. And though there will be network effects, making the switch could someday be as simple as migrating from iOS to Android.