The Network State: A Solution to Failing Governments
This is essay 5 of 6 essays for 1729 Writers Cohort #1. Apply to 1729 today at 1729.com
Introduction
This is about why governments in nation-states are failing and how to create a better system. A problem adapted from a 2002 blog post by Patri Friedman: Governments lack competitive feedback, causing poor performance. Towards the end, I proposed a solution by Balaji Srinivasan called The Network State.
I’m no expert in any of these topics, that’s why I’m writing it. I know there are many smarter folks out there, so feedbacks are welcome! All the truth here came from the Divine source and all the mistakes are mine. Enjoy.
(If you haven’t pre-order Balaji’s book on Network State, now is always best.)
Failing Governments
Patri Friedman twenty years ago: “Given how far all current governments stray from the libertarian vision, it is natural that some of us have considered designing or even founding a new nation.”
Three years before that article was published, In 1999, East Timor declared its independence from Indonesia and start as a new country. Since then eleven other provinces thought of doing the same, perhaps they have enough of our Gov.
Why do governments fail? Is it due to incapable individuals? Well, I’ve known a bunch of capable government officials with integrity and noble visions. Perhaps the problem, as Patri said, lies in the behaviour of systems-that to some degree independent of the humans involved. The USA started with liberty-minded founders and degenerated anyway.
What can we do to improve the future of governments and nations? Before jumping in, let’s discuss the problems.
The Problems
Here’s a map of Indonesia. We’re an archipelago with more than 17,000 islands, more than 800 spoken languages, and about 1,340 ethnic groups. In a nation-state like us and others, the government has a monopoly over a wide geographic area.
The Gov controls many services, such as courts, police, military protection, roads, and licensing. Let’s consider all of these as government services, and call the arrangement of these services as Patri called it: the governing industry.
Two aspects make this industry uncompetitive: a high cost of switching and a high barrier to entry.
High Cost of Switching
Let’s say I live in Kalimantan, an island on the left of the k-octopus-like-shape island (Sulawesi) above.
Pretend that I hate the Indonesian government and decided to switch to a Malaysian one, which geographically is located right above me. Although, it’s easy to cross the border and be in Malaysia. It will require a series of steps and money to be a Malaysian citizen. I have to consider leaving family and friends, having enough savings, quitting my job, dealing with immigration requirements, finding a new place, finding a new job, learning the language. It’s doable, but not so simple.
“Because it is so expensive to switch service providers, the industry has little market feedback.” Thus the majority of us stay in one government (or nation) and hope things improve.
Take a business example. Suppose there was only one food-delivery service in your country. All of your friends, family, and colleagues use it. One day they increase the price and nothing we can do. They won’t care about keeping us as customers because we won’t switch. When a competitor came and if it is easy to change providers, service is more efficient. With the governing industry, it’s difficult to switch, thus we bear higher costs maintaining it.
High Barrier to Entry
You can assemble a team and enter the computer applications market tomorrow. But entering the computer operating system (OS) market, competing with Windows or macOS is hard. “When the barrier is low, many innovative firms compete to provide the best product. When it is high, a small number of big firms fight to maintain their position.”
The barrier to creating a new government or a country is huge. Balaji Srinivasan shared seven ways to do it: election, revolution, war, micronations, seasteading, space, and cloud countries. Six of the mentioned require a large effort and sometimes blood. This high barrier causes the governing industry to be lacking in innovation, growth, small experiments, and ventures.
From the above reasons, we realized that the governing industry is a very uncompetitive one. Thus no surprise they do such a poor job. Without competition and market feedback, can we say the Gov is dead? Maybe.
The Solution: The Network State
Instead of using this remarkable instrument (the internet) as a means to get attention or to vent your rage and display your superiority, see the internet in this different light—an invitation to a fascinating journey inside a global brain and the surprises it can bring you by roaming freely in this vast space and making surprising connections. —Robert Greene
Our goal here is to make the governing industry more competitive by lowering the barrier to entry and the cost of switching. How?
Start a new country: proceed cloud first, land last.
Imagine if twenty years ago you read a blog post saying that the author would like to start a new global currency that is integrated with the current financial system, without people knowing her real identity, and to do it solely from her computer. What will be your reaction?
Well, Bitcoin is here.
The same concept applies to The Network State which aims to allow anyone in the world with an internet connection to become a founder of a new country or join one as a citizen.
Rather than starting with the physical territory that is impractical, start with a digital community.
I’d love to emphasize the importance of a digital community. It’s a modern version of a tribe. We love tribes because we know that other people in the tribe share the same goals and values. Having it aligned matters to the success of the tribe and eventually the country.
Geographical location does not ensure alignment with your fellow citizens. We share intimate moments with friends through social networks in other nation-states while not knowing the name of our neighbours four blocks away.
The network-state started with a shared belief while the nation-state started with shared geography. A close example can be Russia (a nation-state) vs Ethereum (prototype of a network-state).
Yes, to be recognised and be a competitor to the current nation-states, network-states will have to be part of the United Nations and be internationally recognized by others. If it feels far-reaching, Balaji has a roadmap to achieve it. And did you know that someone with a pseudonym successfully created a global digital currency?
Balaji describes The Network State as: “A social network with an agreed-upon leader, an integrated cryptocurrency, a definite purpose, a sense of national consciousness, and a plan to crowdfund territory.”
How the network state solves our problems?
Imagine the world if the cost of moving from one country to another was a click away. If one day, the president of Russia decided to declare war on a neighbouring country and plan to attack soon. He might find the next morning that everyone including his generals has been a citizen of another country.
The Network State concept makes it practical to start a country thus lowering the barrier to entering the industry. Creating one “just” requires stacking together existing technologies and doing so avoids the path of other high-barrier routes or ugly ones such as war.
With the low cost of switching and the low barrier to entry, network states shift the power to individuals. Governments would be forced to compete for citizens by providing more efficient, effective, and innovative services.
So what?
If you’re drawn to the vision of creating a network state, join us in 1729. Despite many sceptics of the world of crypto, the 1729 mission shows that embracing technological progress might bear fruit in many unthinkable innovations.
Our time is limited and what we leverage it with could be the best trajectory for success. And being part of 1729 where most people are smarter than I (see their writings here) might be the most valuable leverage of my time.
Let’s be part of this amazing community.
I hope to see you in the Discord group.
You have more than a billion choices online. With a few clicks, you could be about anywhere. Thanks for reading this today.