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Jack comments on How likely is Peter Thiel's investment into seasteading to pay off? - Less Wrong Discussion
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Er, what profits are those exactly?
Government of decent quality is in severely short supply nowadays. If you manage to create a functional truly sovereign government and run it with a modicum of competence, even if it's just a tiny statelet, masses of people will be willing to pay handsomely for the privilege of taking their business there.
Even if you can't come up with a regime that would offer superior governance across the board (though there's no excuse not to), you can always target some particular industry that's been regulated into oblivion or where prohibitive barriers to entry have been imposed by the present governments. This doesn't necessarily mean creating a haven for shady and questionable practices -- perfectly normal and honest industries are regularly destroyed by the modern governments in bouts of bureaucratic craziness or in various shakedown schemes.
The possibilities are endless, if you can just maintain actual sovereignty.
Can you give some examples here? I am not clear what the industry is that a seastead can do, where it has enough comparative advantage to pay for all the obvious associated costs.
Clearly, that depends on various technical properties of the seastead. Also, I don't know enough about most industries to say what exactly would be necessary for them.
As for concrete examples of crackdowns on honest industries, it's hard to find any that wouldn't immediately open charged political topics. However, there are clear examples of industries massively changing jurisdictions in response to increased regulatory compliance costs. Another interesting data point is the success of well-governed small countries in attracting foreign business.
It's hard to know in advance how good a government is. Five years ago, people might have held up Ireland and Iceland as well-governed successful small countries. Those no longer look so persuasive. There's a danger of confirmation bias here -- we only know they're well governed because they're successful.
Singapore, Switzerland, and Hong Kong are the successful well-governed small countries I can think of offhand. But I'm not sure the one caused the other. New York, Silicon Valley, and London are doing comparably well in terms of GDP per capita and I think quality of life, despite a lack of obvious good government and without obviously greater natural advantages. (NY has a good natural port and a good location, as do HK and Singapore.)
That is all true, but the idea of seasteading is to explore the options for high-quality governance outside of those available to any presently existing countries, which are severely curtailed by their domestic historical and political constraints, as well as international entanglements. Of course, the proposition that there are such options is somewhat controversial, though I find it pretty evident that there should be. (I am however much more skeptical about the possibility of building them from scratch in a planned way, even if the problems of ensuring sovereignty are solved somehow.)
Also, you forgot Liechtenstein on your list. It is perhaps the best example of a highly successful small country that prospers by offering high-quality governance that attracts business. (Recently I was amazed to find out that rather than being just a finance hub and tax haven, more than 40% of their labor force is in manufacturing!)
Iceland and ireland, like a great many other countries, allowed their banks to behave irresponsibly. When the banks imploded, Ireland bailed them out, and made incompetent and criminal bankers entirely whole. Iceland took the other extreme, declared the bankers broke, and told the creditors to take a hike.
If one is doing something badly wrong, the other is probably doing something right. They are unlikely to both be badly run.
This, right here, is the evidence that their governments weren't quite as effective as we thought beforehand.
This doesn't follow. It might be that both, one, or neither have responded sensibly to the crisis. Different circumstances call for different measures, and all that. And "bail out" or "let fail" isn't the complete universe of policy measures.
As compared to all those countries where wise regulators ensured wise bankers.
There are countries that did much better -- Canada, for instance, avoided a banking crisis. There are also countries that seem to have handled it better, such as the Baltic states.
Just to be clear: I'm not saying necessarily that I know what the optimal thing to do was, in 2007-2009. What I'm arguing is that it's often unclear for a long time how well a given country's policies have worked, since negative consequences don't always become visible quickly.
England did well to put their political headquarters in their most important city and port city, creating a uniquely strong center of gravity that made it much larger than other English cities, which gave it advantages over anywhere else and momentum to this day.