This article was published in the Autumn 1999 issue of Formulations
by the Free Nation Foundation

Bridge to a Free Nation

by Robert Klassen

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A free nation is an ideal that has been on my mind since 1965, when I attended meetings of a group who intended to create one. The results were disappointing. During the 1970s I studied under Andrew J. Galambos at his Free Enterprise Institute and there learned some of the mechanisms for providing security and justice without a coercive state, but the free nation in which these might be applied eluded all of us. Perhaps out of frustration with the improbability of this dream, I spent many years writing a novel about it. Today, thanks to the Internet, I believe we may be closer than ever before to creating a free nation and I believe it may be much closer to home than we imagine. Let me explain.

The model of government which I most admire was described by Spencer MacCallum in Formulations ("A Scenario for Founding a Free Nation on an Imaginary Island in the Caribbean Sea," Vol. VI, No. 3); it is a fine extrapolation of the multiple-tenant income property from shopping malls and cruise ships to a mercantile city in which native citizens are economic partners in the venture. This makes sense to me. His proposed method of supplying security and justice within the community via the initial lease contract, insurance, and private arbitration ("A Model Lease for Orbis," Formulations, Vol. III, No. 3) also makes sense to me. I wonder if these concepts might have a broader, more general application in our world today in existing cities and other political jurisdictions? I think it may be possible.

Based on what I learned from Galambos, I put together a simple model which I called economic government (Formulations, Vol. VI, No. 1), which consists of intermeshed businesses of insurance, banking, and innovation. Without going into the primary functions of these businesses, a coincidental function could be to provide security and justice within a population, similar to what Mr. MacCallum proposed. The question before us is, how do we get from here to there, how do we make the models work?

One elemental problem which faces every taxpayer on Earth is, how can I keep more of my own money? One answer is to turn it into gold and then hide it, but hidden gold cannot grow, so thatís a poor answer. Another answer is to hide it in a numbered account in an offshore investment bank where they know who you areóbut that takes a lot of money and a lot of faith in the political jurisdiction where the bank is located. What if we could hide our after-tax disposable income in small increments in an investment bank in cyberspace where all transactions are encrypted and anonymous and guaranteed? Over time there might be a vast repository of growing wealth owned by ordinary people and hidden from all political governments. Soon all of our financial business could be conducted in cyberspace using anonymous digital cash.

Another elemental problem which faces all of us is the protection of our property, I mean our lives, our physical property, and our intellectual property; it is abundantly clear that the state is intent on stealing our property, not protecting it. One method of protection is insurance, although insurance as we know it today is just another strong arm of the state. But what if we could go on-line and buy insurance cheaply for any risk we can imagine? What if that insurance company had a proprietary interest in reducing its losses by reducing our risk? Freed from the fetters of the state, insurance in cyberspace could become a friendly partner in planning the protection of our property.

What keeps banking and insurance honest? Competition, reputation, and a plain money-back-guarantee to do what they say they will do. How long would a business survive a bad reputation in cyberspace? Maybe one day, maybe two. A company that canít live up to its guarantees will also vanish in a short time. The free-market in cyberspace will ensure that we have dependable, trustworthy, guaranteed banking, investment, and insurance available to all of us.

I think the bridge to a free nation exists in cyberspace and I think we are already on it. Anonymous digital cash is urgently needed by the international business community and that demand will soon be filled. Investment banking in cyberspace is a reality and only a little nudging will convince them to sever their bonds with the state. Strong encryption exists, free to any person. If the state tries to throttle the Internet via the service providers, which is happening in Britain and Australia, they can move their servers outside of the throttling jurisdiction; an ISP can serve the world as well from a Pacific atoll as it can from London or Sydney. But if the bridge exists in cyberspace, where does it go?

I was discussing these prospects with a friend the other day and I happened to quip, "The next time San Francisco goes bankrupt, letís buy it." And the models began to fall into place.

The collapse of political governments is well documented in history, the uncertain questions for us are when and how fast. Being an optimist by nature, I will assume a best case situation where the failure begins on a municipal level and gradually spreads. Operating in the safety of cyberspace, a corporation might be formed along the lines envisioned by Mr. MacCallum to buy the land in the afflicted region in partnership with the citizens and restore the region to its former prosperity as a multiple-tenant income property. Taking into account the investment potential of unfettered wealth in cyberspace, we might discover that the free nation we seek may not be too far from home after all. D

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