November 28, 2013
Proposed Largest Ship For Residents: 1 Mile Long, $10 Billion

Freedom Ship International proposes to build a mile long ship that will have housing for 50,000 permanent residents.

If built the claim is that it would circle the world once a year. What is unclear to me: why would 50,000 people want to circle the world once a year on a ship? What occupations would they have that would make such a lifestyle make economic sense?

If the residents did not need to work the question remains: Why circle the globe one a year in a ship, however large?

The idea of offshore communities has come to be known as seasteading. The allure for libertarians: avoid taxes, regulations, and visa restrictions. For example, a seasteading ship in the Pacific over 200 miles west of Silicon Valley could provide a way for software developers from all over the world to be brought in to work in the same time zone as Silicon Valley at short notice.

Among the problems with this approach: one would need to find people who do not mind living on a ship for months. That means having no way to go hiking, skiing, mountain biking or to lots of cultural events that require a dense population to support. It also means higher costs for electric power and some other basic utilities.

As an alternative approach: Do a leveraged buy-out of an existing sovereign state. A wealthy group could buy out the citizens of a small island nation by paying for their citizenship in another nation along with cash rewards for moving. An existing sovereign nation with the power to grant passports could then be in control of a group of very wealthy people and corporations. They could grant themselves citizenship and tax themselves very little. They could bring in highly skilled people to work on projects with high intellectual property rights value. Also, once robotic factories become fully automated they could set up robotic factories with little need for workers.

There is a roughly equivalent precedent for what I'm describing at the city-level. In Los Angeles County California the City of Industry (the real name of a city) has only 219 residents and over 10 times as many businesses. It exists so that the businesses in it do not have to pay high property taxes to a neighboring city.

I think robotic technology, cheap high bandwidth fiber, and the rising value of the most highly skilled workers will eventually make an island leveraged buyout an attractive proposition.

Share |      Randall Parker, 2013 November 28 11:45 AM 


Comments
Bob said at November 28, 2013 12:43 PM:

Who would protect them? They would eventually have to tax themselves a lot to protect themselves, no? Otherwise wouldn't they be an easy target for other states or organizations to take over or enslave?

Randall Parker said at November 28, 2013 5:35 PM:

Bob,

Lots of small countries have no military to speak of. Who is going to invade an island nation?

Wolf-Dog said at November 28, 2013 6:10 PM:

Randall Parker: "Lots of small countries have no military to speak of. Who is going to invade an island nation? "
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The decision to invade or not depends on how wealthy the tiny elite country is and where it is. Currently Switzerland is well protected because its proximity to civilized countries. But Switzerland were on a small island near Africa, various pirate countries would invade and loot it. Currently Switzerland is well armed and it can defend itself against a regular enemy for a short period of time, but if all the western civilization becomes chaotic, then it is conceivable that Switzerland would one day be looted by outsiders.

So the small futuristic super-rich elite country will always need powerful military allies willing to defend it, especially when the world is becoming more chaotic.

In the future, if the elite country's main capital is its scientists and engineers, then the reason to invade it would be to arrest and sent them to work in the invading countries. For example, the Soviet Union arrested many German scientists and engineers, and sent them to work in Russia. It is worth noting that some top scientists and mathematicians who were trained in the US actually accepted jobs in Switzerland, which is a very developed and elite country.

The top business elite of Silicon Valley will make a lot of money regardless of taxes, because they are smart enough to innovate all the time. Most rich people who are renouncing their US citizenship are capital-rich, but they are not great innovators.

In any case, in the long run, the cost of the robots will be much less than the cost of energy to operate them. Thus, if a new energy source is developed (e.g. the molten salt thorium reactors), then this would solve all the problems, and the rich will then afford to donate a few billion robots to the government to take care of the poor. Thus energy will be key in the future.

Bob said at November 28, 2013 6:18 PM:

Currently they depend mainly on the US for protection. The US has a 1,000 bases around the world and patrols the sea lanes.

Who would protect the offshore communities? Would they be protected by the US? If the offshore communities don't pay taxes to the US while receiving protection from the US, that would mean they'd get protection for free while other people are taxed to protect them. What if the US can't protect them, or won't without taxing the offshore communities? The offshore communities would have to tax themselves a lot to protect themselves, no? If they failed to protect themselves, then another state or organization could take them over and tax them, no?


Bob said at November 28, 2013 6:29 PM:

"For example, the Soviet Union arrested many German scientists and engineers, and sent them to work in Russia."

Good point. Throughout history, states and military men would routinely forcibly conscript foreign engineers to serve their armies.

If there's an unprotected island or ship with 50,000 productive engineers, why wouldn't a state or a military invade them and forcibly conscript them or tax them or charge them rent?

Nick G said at November 28, 2013 7:14 PM:

They couldn't really take their wealth with them to the island - it would be in the form of assets in other countries: Dollars, Euros, land, stocks and bonds, etc.

The whole idea of robot factories is that automation eliminates labor, and makes manufactured items very cheap. If they're so cheap, why manufacture themselves? Why not import? After all, they'd have to import most things: food, raw materials, specialty items, etc.

The City of Industry is relatively small, and still pays taxes to LA, California, and the US. An independent island is very different. Islands like the Caymans only exist because they provide services to the wealthy in....the US (and other countries). The moment the Caymans became a real liability - they'd be in serious trouble. Just like Switzerland and many other similar banking countries, which were recently forced to comply with US tax law.

Nick G said at November 28, 2013 7:21 PM:

Who is going to invade an island nation?

Well, the US has invaded Cuba and Grenada, for instance. And they were much, much poorer than the US.

And who's going to protect that ship from Somalian pirates, or their successors?

Abelard Lindsey said at November 28, 2013 7:28 PM:

To those who are concerned about how such an independent city-state can defend itself:

Would not the manufacturing revolution (robotics, automation, 3D-printing, son of 3D-printing) that will make such a city-state possible in the first place also make possible an entirely automated defense system as well? The era of million-man armies will go the way of the thousands of people factories of the mid-20th century.

Bob said at November 28, 2013 7:50 PM:

The issue here isn't whether or not offshore communities can defend themselves. Randall Parker is suggesting that they won't have to. Since they're for avoiding taxes, Parker seems to suggest that part of the whole point of having the communities in the first place is for the people in them being able to avoid having to defend themselves. In order to defend itself, a community would have to tax and conscript its members. But once it does that, that means it's no longer a tax-free haven.

To operate an entirely automated defense system, a community would have to tax and conscript itself to get the resources and manpower to develop and maintain the system. Also, there's no such thing as an entirely automated defense system, since in a war, after your opponent defeated or breached your automated defense system, you'd have to the physically defend yourself.

Randall Parker said at November 28, 2013 8:53 PM:

Bob,

Lots of cargo and cruise ships already sail the seas without US Navy escort. Off of Somalia they get hijacked. They face hijack risk in a few other areas. The owners of many of these ships choose to use Panamanian registry for tax reasons even though Panama doesn't have a powerful navy to protect them.

Tax-free haven: The goal isn't 0% taxes. The goal is lower cost of government. Surely a ship has security costs. A mile long ship will likely have a police force. Such a police force could take out pirates given some drones, 50 caliber machine guns, and sniper rifles. Some of the crew could be hired based on having right skills (e.g. former special forces).

Nick G,

The cargo ships could already be protected from pirates if their owners would just hire a crew with the right skills and weapons. It wouldn't cost that much.

This mile long ship does not introduce new security issues. I think the security issues for it are cheaper to handle because the costs of protection for such a ship can be spread out over a much larger set of residents.

Existence of Caymans and similar islands: well, they existed before they became tax havens.

Invasion of Grenada: If the United States decides to invade then whether the island is run by billionaires or elected reps of poor people it will have no chance of repelling the invasion. So there is no point of a small island spending money to create defensive measures against the US military.

Nick G said at November 28, 2013 9:21 PM:

Here's a basic question: will every island resident have citizenship?

After all, every millionaire requires 10-50 staff: nannies, gardeners, waiters, clerks, accountants, etc. Think of healthcare: for every doctor who makes 300k, there's about 20 nurses, clerks, radiologic technicians, lab techs, etc., etc.

So, only about 3% of the residents of this wealthy island will be wealthy - will they be the only ones with the vote, like plantation owners in ante-bellum S. Carolina, or modern Kuwaitis??

Bob said at November 28, 2013 9:32 PM:

Randall,

You're not seriously arguing that because the US Navy doesn't escort every single ship out at sea, that much of the world's sea lanes aren't protected by the US Navy, are you?

The US has a 1,000 bases around the world and patrols the sea lanes. It's US policy to maintain many of the world's sea lanes. This doesn't mean escorting every single ship around the world. It means having a credible response to threats to passage in the sea lanes. Ships using Panamanian registry aren't protected by the Panamanian navy. They sail sea lanes protected largely by the US. Panama is in Central America. Haven't you ever heard of the Monroe Doctrine?

So you do agree that the offshore community would have to tax itself in order to defend itself if it didn't free ride on the defense resources of another community or state? Also police with machine guns might be sufficient to ward of ragtag bands of pirates, but how would it defend against states or militias with subs, air forces, ICBMs, etc.? To do so without free riding on another community or state, it would have to have high taxes for defense. And if it didn't conscript itself for defense, but hired mercs for defense, the mercs could just take control of the community and tax it and charge it rent.

Bob said at November 28, 2013 9:42 PM:

The Cayman Islands were protected by the British Empire, the dominant naval power of its day. Today, it's implicitly protected by the US, the current dominant naval power, via the Monroe Doctrine. Or at least it was until 10 days ago, when Sec. of State Kerry declared that the ‘Era of Monroe Doctrine Is Over’: http://blogs.wsj.com/washwire/2013/11/18/kerry-makes-it-official-era-of-monroe-doctrine-is-over/

Randall Parker said at November 28, 2013 9:43 PM:

Bob,

I am seriously arguing that the US Navy doesn't do much to protect the sea lanes from pirates. Yes. Definitely.

Look at Somalia. If the US Navy wanted to stop Somali piracy it could do it. Station some ships with drones, choppers, and high speed boats in the area. When pirates come out near a cargo ship kill the pirates. The piracy wouldn't last long. The US Navy could do this. The fact that the piracy lasted for years demonstrates the US Navy isn't treating Somali piracy as a high priority even though Somali piracy is probably the biggest piracy problem in the world.

Monroe Doctrine is not about piracy. It is about telling major powers on other continents to stay out of the Western Hemisphere. However, there isn't big interest on the part of any major power to invade South America anyway.

Randall Parker said at November 28, 2013 9:52 PM:

Nick G,

Yes, lots of residents on this leveraged buy-out island won't have citizenship. They'll just have contracts and visas to work there for a while. Look at the crew of a cruise ship or oil rig or the large numbers of foreign workers in Dubai, Saudi Arabia, and other Gulf countries.

But I don't expect billionaires will even be on the island most of the time. They'll still have apartments in London, New York, SF, Paris, Stuttgart, Hong Kong, Singapore, and the like. They'll travel for work.

My guess is that by the time a wealthy group decides to do a leveraged buyout of an island robots will do much more of the servant work. Plus, some of the servant work could be done in another country and sent to the island. Or remote workers could control robots on the island and do security monitoring.

I've had dealing with engineers who remotely operated test equipment in many factories around the world from a single office. I expect we'll see this sort of remote work done for exclusive islands. Ditto remote-controlled surgery. Ditto remote medical diagnosis.

Bob said at November 28, 2013 9:55 PM:

I'm not just talking about pirates.

Somali piracy isn't a huge problem. It doesn't threaten the global commons.

Invading any part of the Americas would mean going against the US, the world's military superpower. Obviously there isn't big interest in doing such a thing.

Bob said at November 28, 2013 10:00 PM:

http://navylive.dodlive.mil/2012/11/14/keeping-the-sea-lanes-open-mine-countermeasures-2/

"At the most basic level, the mission of our Navy is to defend our homeland while keeping global sea lanes open and free. In fact, the latter actually helps us do the former, since so much of our nation’s prosperity and security comes for the free flow of maritime commerce."

Bob said at November 28, 2013 10:03 PM:

"But I don't expect billionaires will even be on the island most of the time. They'll still have apartments in London, New York, SF, Paris, Stuttgart, Hong Kong, Singapore, and the like. They'll travel for work."

With connections to major states, wouldn't they lobby the major states to protect their islands and offshore communities? Wouldn't they free ride on the defense resources of the major states they maintain connections with?

Bob said at November 28, 2013 10:10 PM:

http://www.realcleardefense.com/articles/2013/04/08/american_seapower_a_global_navy_for_a_global_mission_106530.html

"Why does the United States maintain such a robust Navy? It's a fundamental question we should be asking because the answer has both major economic and national security implications. Many assume we have a strong Navy simply because others states that may do us harm also have strong Navies or because the U.S. is flanked by the Atlantic and Pacific Oceans, waterways potential enemies may use to bring war to our shores. But if we maintained a Navy just to defend our coasts than our current battle force fleet of 285 ships would be more than sufficient for the task."

"Because the stability of America's economy is indelibly linked to the stability of the global economy, our Navy is sized to protect American shipping as well as the flow of global commerce. This occurs at the low end of the spectrum, where the U.S. Navy has worked with other partner nations to prevent scourges like piracy that can drive up maritime insurance costs. It is also the case at the high end, where states like Iran threaten to close the Straits of Hormuz and raise world oil prices or China seeks to alter the current rules-based order at sea by intimidating its neighbors over disputed territorial claims. Of course, America can work with its allies and partner nations to help support this monumental task, but it can never trust the health of its economy to any other Nation. A day when Iran determines which ships can transit the Strait of Hormuz or China dictates commercial passage through the South China Sea is simply unacceptable to American interests. The U.S. Navy exists to ensure that day never comes."

LdAnonis said at November 29, 2013 10:19 AM:

Fifty thousand heads is enough for their own wings of protection, plus, simply being something like international rescue services, isn't going to get to many pirates attacking now is it.. think of carrier vessel, with accompanying support vessels.

Nick G said at November 29, 2013 11:40 AM:

I think my basic objection is that such an island couldn't really be independent, and it couldn't be large enough to really matter to the world economy. If it did get large enough, major economies would take action against it.

It's basically anti-social and parasitic.

James Bowery said at November 29, 2013 11:47 AM:

The fundamental problem is that the real motivation for the wealthy to escape to their own jurisdictions is dominated by the infiltration, by Africans, of traditionally Jewish economic rent havens in the West, coupled with the rise of NE Asian (primarily Chinese) economic strength. Africans are just better at politics than Jews just as Jews are better at politics than southern Europeans and southern Europeans are better at politics than northern Europeans. The squeeze play between Africa on the political front and China on the economic front is going to result in some interesting times.

Ultimately I expect the Chinese to win due to the fact that they burned their merchant ships returning from Africa during the age of exploration. They violated that during the Sassoon steam-ship opium trade era and learned a very harsh lesson. As a result they have a deeply embedded history of very healthy xenophobia that may protect them from Africans as well as from the flight of Jews from the West.

See "Questions of Survival"

The fear expressed that "a real decline of the West, particularly the United States, would have dramatic consequences for the Jewish people," also led to controversy. Brandeis University president Jehuda Reinharz agreed that this type of decline can be expected "in the coming two decades" - but Stuart Eisenstadt was less emphatic about it. He believes the United States will remain the leading power. In all events, it was agreed the Jews "should strengthen cultural links with non-Western civilizations, particularly China and also India," powers that are on the ascent. This is not a question of preference or closeness; it is a question of survival, of readiness for the future. How should this be done? That will have to be the topic of discussion in the next gatherings already being planned.

Bob said at November 29, 2013 1:20 PM:

"I think my basic objection is that such an island couldn't really be independent, and it couldn't be large enough to really matter to the world economy. If it did get large enough, major economies would take action against it."

Right. But Randall doesn't seem to be proposing offshore communities or islands that even try to be independent. He says that the billionaires would not even live or spend much of their time there. They would live in New York, London, Paris, etc. In other words, it's not really any different from the current situation where the wealthy live in major cities and major states while storing their wealth in offshore tax havens.

Nick G said at November 29, 2013 1:41 PM:

Sure. But it seems to suggest a very significant escalation in scale of tax evasion/avoidance, where a large number of the very wealthy give up their citizenship in major countries in order to avoid income and other taxes.

That seems unlikely to me.

Bob said at November 29, 2013 1:50 PM:

Right, I agree. Randall agrees that the middle class is dying and the majority is increasingly impoverished. So if there were a very significant escalation in scale of tax evasion/avoidance, as he suggests, then there'd be no tax base or population base to defend and maintain the wealthy. He says that police forces armed with machine guns and rifles would be sufficient, but that wouldn't be sufficient to defend against larger states, militias, organizations, etc. Furthermore, since the wealthy would have to depend on mercenaries, they would be vulnerable to being dominated by the mercs, who would just turn around and tax them and charge them rent at high rates.

Randall Parker said at November 29, 2013 2:34 PM:

Bob,

Billionaires could hire more security in a hurry if their island was threatened. I do not think most nations need much in the way of a military. That is especially true for island nations.

Nick G,

Define independent. You mean self sufficient? Of course the island won't be self sufficient. They will sell goods and services.

Why do you see such an island as parasitic?

Escalation of the scale of tax avoidance? If companies move their economic activity outside the United States (whether to their own island or China or Ireland or Australia) then their economic activity really is not American economic activity. The Double Irish With A Dutch Sandwich scheme for tax avoidance is already used to avoid tens of billions of dollars in taxes per year. It moves the money around legal entities in different legal jurisdictions while not moving much productive activity around. But an island with lots of robot factories and imported engineers could produce wealth really inside its own territory. Such an island's corporation wouldn't need to use shell companies in Ireland, Netherlands, and Bermuda to avoid taxes.

Bob said at November 29, 2013 3:05 PM:

Randall, that doesn't address the fact that there aren't any mercenaries with the resources to defend against states and militaries, and that the mercenaries would be in a position to dominate the billionaires.

Bob said at November 29, 2013 3:10 PM:

"If companies move their economic activity outside the United States (whether to their own island or China or Ireland or Australia) then their economic activity really is not American economic activity."

But they still operate within a political and legal infrastructure and regime maintained by the US and other major states and international bodies. They still use global sea lanes maintained by the US navy and other major powers.

Bob said at November 29, 2013 3:13 PM:

"Why do you see such an island as parasitic?"

Obviously it's parasitic if it doesn't provision its own defense, doesn't police sea or air traffic it depends on, etc. and instead relies on other states or militaries that tax other people.

Bob said at November 29, 2013 3:24 PM:

"Ultimately I expect the Chinese to win due to the fact that they burned their merchant ships returning from Africa during the age of exploration. They violated that during the Sassoon steam-ship opium trade era and learned a very harsh lesson. As a result they have a deeply embedded history of very healthy xenophobia that may protect them from Africans as well as from the flight of Jews from the West."

From what I understand, it wasn't that they were unaware of this "lesson" during the opium trade era, but that they lost control of the trade between China and Western countries that they tried to limit, manage, and contain, resulting in invasion. Likewise today, they may be aware of this "lesson" but may be still lose control of the situation. It's clear today that there are forces quite intent on "liberalizing" China and essentially wresting control of it and invading it.

Nick G said at November 29, 2013 4:15 PM:

Billionaires could hire more security in a hurry if their island was threatened.

The primary threat isn't disorganized pirates from failed states. It's an attack by a medium sized nation-state that the major states decide to ignore, or an attack by a major state. Really, there would be no need for military action by a major state: the US (or it's successor(s)) would simply dictate terms, as it did recently to Switzerland and other homes of tax-evasion.

Define independent

Having a truly independent economy. Billionaires are completely dependent on a vast pyramid of people to do the real work, and a complex legal structure that protects property, especially intellectual property. Their assets exist in and by permission of the major states.

Why do you see such an island as parasitic?

Did Steve Jobs do a lot of assembly work, or programming? Does Bill Gates? Does Warren Buffet drive the trains he owns? No. They may have made good decisions that amplified the value of other's work, or they may have simply been lucky, and caught one or more waves that would have enriched whoever was lucky enough to be on the proper surfboard and the proper time. Either way, they're completely dependent on the people who do the day to day work.

an island with lots of robot factories and imported engineers could produce wealth really inside its own territory

Not really.

First, labor defines value. If manufacturing is completely automated (including the production of capital equipment needed), then manufacturing will become an extremely cheap, low value item. It will be like corn farming: the profits from an acre of corn have dropped dramatically over time, and corn farmers are a tiny percentage of the economy: there's very little profit produced there, even though the corn is still needed. That's why such an island wouldn't produce it's own food, or do much of it's own manufacturing (of if it did, it wouldn't matter, as there would be no profit from manufactured exports).

Seriously: people have this fixation on manufacturing, as if it produces value and services don't, but every year it gets smaller and smaller. In the kind of super-automated world you envision, it's products would be dirt cheap, and it's location would be essentially irrelevant.

2nd, intellectual services only exist in a framework of legal protections: copyright, patents, etc., etc. These knowledge workers, who are essentially middle class, would be completely at the mercy of their customers willingness to pay for their services. More importantly, their customers could easily choose to make them irrelevant: how hard is it to for a country to choose to exclude imports? The only barrier is international treaties. Would the major powers allow such an island to enter the WTO, if it were a real economic threat??

Randall Parker said at November 29, 2013 8:57 PM:

Nick G,

The United States is the only real state-level threat in the Western Hemisphere. How often do states attack each other? Attacks across borders are rare. When is the last time a country invaded another country in the Western Hemisphere? I'm thinking Grenada. In the Western Hemisphere the biggest security threat does not come from state actors. It comes from large drug smuggling organizations.

Suppose a Caribbean island was converted into s country only populated by corporate managers, engineers, technicians, a small staff of manual laborers, and security staff. That island would be at no greater security risk than it is now. Well, many Caribbean countries currently have little or no military. A leveraged buyout would not change that.

A truly independent economy does not offer any advantages. A truly independent economy would be extremely poor due to a large loss of specialization of labor.

Parasitic island: So your argument is that rich people are parasitic. If they are able to avoid more taxes they'll be even more parasitic. In some cases yes. But if they can generate their IP outside of the major powers then they won't parasites on the major powers.

Manufacturing: If it becomes extremely automated then the manufacturers won't need the manual laborers they hired in the past. This is already happening. My observation is that as a result of this automation the manufacturers are being freed up from dependence on most of the workers in large population nation-states. It seems logical for the manufacturers to shift their factories into lower population states that impose fewer costs on them.

An advantage of having your own factories is that you can generate IP and transfer it directly into the factory that you control. This enables greater protection of IP as well as greater ability to surprise the market with a new design that competitors did not expect.

Intellectual services:"

Randall Parker said at November 29, 2013 8:59 PM:

Intellectual services: can you clarify what you mean by that term? Is a software developer offering intellectual services? Or an accountant? How about a site that does your taxes for you?

Nick G said at November 30, 2013 12:40 PM:

The United States is the only real state-level threat in the Western Hemisphere.

Exactly, though it's conceivable that the US would simply quietly drop it's umbrella of protection, and allow/encourage a proxy (good PR). Really, there would be no need for military action: the US would simply dictate terms.

many Caribbean countries currently have little or no military

Well, they either have little of value, or the US government tolerates them, because they serve US citizens and corporations. If they become large-scale centers of tax evasion for ex-US citizens who nevertheless try to work in the US...

your argument is that rich people are parasitic

Not at all. It depends on their behavior. We agree that the Ibn Saud "royal" family is kleptopcratic, right? OTOH, Warren Buffet arguably has generated a great deal of value, lives modestly, and plans to use his wealth productively rather than leave it to indolent children.


Now, the problem with the island buyout is that it's intended to avoid paying the "overhead" costs of a complex economy. If the wealthy think the government is inefficient, it ought to help with pro bono management consulting and PR campaigns in favor of less corporate welfare. Instead, we tend to get campaigns against child welfare, and in favor of indirect corporate subsidies (e.g., the Koch brothers long-term campaign in favor of fossil fuel pollution).

This whole world of related political ideas has been clouded and distorted by the Koch's long-term campaign in favor of what one might call "corporate libertarianism", which seems to be aimed at crippling governments ability to regulate business and levy pigovian taxes.

if they can generate their IP outside of the major powers then they won't parasites on the major powers.

That's not possible.

1st, IP depends on legal protection within the consumers' economy. traditional economics dictates that competition will force prices down so that the benefits of the value produced go primarily to the consumer. Companies like Microsoft (and IBM before it) rely heavily on monopoly tactics to prevent that decline in prices. That requires legal restrictions and protections.

2nd, large-scale value generation requires larges-scale corporations and a web of 2nd-tier suppliers. Moving that to the island would multiply the size of the island population by 20x, and eliminate much of the value of the island idea.

3rd, the future world we're considering here is fairly static: if innovation is continuing, then new economic sectors are being created, and jobs as well. If everyone has all the goods and services they can desire, so that production has plateaued and rising labor productivity turns into job destruction, then there is no room for innovative new products to charge premiums, like Apple does today. Everything will be a dirt cheap commodity.

It seems logical for the manufacturers to shift their factories into lower population states that impose fewer costs on them.

Perhaps, though these dirt cheap products may not be worth shipping overseas.

More importantly, they're dirt cheap. Who cares where they are? They won't generate much export earnings, and if the manufacturers try to raise prices, competitors will arise elsewhere.

Intellectual services: can you clarify

I mean complex knowledge work - the kind that's protected by licenses, patents, copyrights, etc. MDs and JDs are legal protections against competition. So are patents and copyrights. Protection against copying of software requires the cooperation of the government in whose country the software is being used.

Randall Parker said at November 30, 2013 8:47 PM:

You get to the crux of the matter here:

Now, the problem with the island buyout is that it's intended to avoid paying the "overhead" costs of a complex economy.

Hey, businesses structure themselves to avoid costs. If they avoid costs that are not generated by them then I see nothing unfair about it. The lower classes, criminals, and other parasites create their costs that others pay for. If you can escape those forms of parasitism then why not?

large-scale value generation requires larges-scale corporations and a web of 2nd-tier suppliers.

Where do you think Apple's current web of suppliers are located? Or Intel's? Or Samsung's? Not much in the US of A. I think I haven't made a major point clear enough: When I say that robots are going to free manufacturers from dependence on large population countries I am not just talking about USA. I'm talking China, Germany, Japan, India. Currently many of the webs of suppliers are spread across many national boundaries. They won't be in the future. Where to put them? In a nation that does manufacturing with very few people in the factories.

Ford has a plant in Brazl where under the same (large) roof many suppliers to their component manufacturing. It all flows into the main Ford assembly line. Ford can't do this in the US because the UAW would insist all the suppliers be UAW members making the same wages and benefits. Cheaper to buy the components from suppliers off-site. But cheaper still to set up where these sorts of constraints don't exist. The ideal place to set up is one where there's so little manual labor that manual laborers are not a political force.

This point misses where the raw materials come from:

these dirt cheap products may not be worth shipping overseas.

If Ascension Island was built up with robot factories then raw materials coming from Africa and Brazil wouldn't have to travel as far before getting smelted, shaped, and cut into useful products. Lighter weight stuff would come out ready to go to markets, wherever they might be.

Another point: the demand will exist where smart people exist. What could radically change: where the smart people exist. Look at the smart people flowing into high tech Silicon Valley from around the world. What if the corps importing those people start offering them jobs at other offices? A corp that has offices in 10-20-30 countries could just add a new node in a newly created smart-only country.

The lower IQ folks won't be generating much demand. They'll only generate demand using money provided by government which will get it from taxing smarter people. Well, those smarter people and the corps who employ them can shift the work elsewhere. It can be done quite gradually. Not hard. To those of us who already collaborate with people in many countries (I've been doing this for many years) moving to another building that happens to be in another country isn't that big of a deal.

IP legal protection: the lack of it in China certainly hasn't prevented lots of corps from building up lots of Chinese engineering staffs.

The future I see coming isn't that big of a departure on current practices of the capitalists. They already hire operate across national boundaries, hiring globally, moving people around, moving plants around, and managing supply webs that cut across many borders.

dsgntd_plyr said at December 3, 2013 1:35 AM:

I just read on Megan McArdle's blog that Detroit's total property value is about $10B. There have to be smaller towns close to major metros/airports/seaports/raullines worth less right?

Nick G said at December 4, 2013 4:26 PM:

businesses structure themselves to avoid costs.

Ah. I thought you were talking about just the owners and highest paid employees moving to the island, for tax avoidance. That seemed possible, if the scale stayed small enough to not irritate large countries. Whole companies moving, and retaining anything like their current revenues? That's not realistic.

The lower classes, criminals, and other parasites create their costs that others pay for.

I assume you're thinking of the criminal justice system. It's worth keeping in mind that they are primarily designed these days to keep middle and upper-middle class workers employed (lawyers, police, guards, etc), at the expense of the poor who are entangled in the system.

robots are going to free manufacturers from dependence on large population countries

1st, even if automation dramatically reduces costs, those complex networks of suppliers will still exist, dependent on local expertise and comparative advantage.

2nd, if automation dramatically reduces costs, then manufacturing will become an unimportant part of the economy, like farming in the US. An affluent island won't grow it's own food, and it won't manufacture it's own goods. Brazil will continue to manufacture cars, and if they drop 90% in cost, then the cost of transportation from Ascension island will become much larger.

Competition will continue to exist. Anyone who wants to charge a premium for their product will have to have a way of preserving that premium, either through innovation or legal protections. In a world where the economy has stopped growing, innovation by definition will have pretty much ended.

the demand will exist where smart people exist

Only if they're paid very, very well. Why would investors pay these smart people, when innovation has ended? If innovation hasn't ended, then new economic sectors will continue to emerge, and overall employment will stay reasonably stable.

IP legal protection: the lack of it in China certainly hasn't prevented lots of corps from building up lots of Chinese engineering staffs.

Sure. They're willing to lose some of their IP in return for access to the Chinese market. That won't last forever - eventually China will transfer that IP to domestic companies. A counter-example is EVs - a large reason they're not doing well in China is that the big car companies decided they wouldn't go along with the Chinese demand that they just hand over their IP.

I don't know why knowledge workers, no matter how high IQ, think that somehow they're invulnerable to having their wages crushed, just like other workers. It's just a matter of workplace supply and demand. Musicians and journalists are smart, but they're very low paid. Programmers will suffer the same fate in a stagnant world, and probably well before that.

James Bowery said at December 8, 2013 2:36 PM:

I think people underestimate the slave mentality of Africans that is increasingly dominating the United States. What I mean is that as the US is Africanized, the social orders of Africa will increasingly dominate. Those social orders have always involved slavery. Indeed slavery in the United States could be seen as a con job run on the US by slave societies of Africa to get the US to buy into the game at which the excel. This would explain how the US Civil War replaced slavery of Africans to plantation owners with slavery of entire States to the Federal government -- a Federal government that is now obviously being taken over by Africans if you look at the full featured jobs of civil service that are increasingly going to folks of African descent -- full featured jobs that have all but gone the way of the dodo in the private sector.

Just as the people of a State cannot free themselves from slavery to the Africanized Federal government, so, too, will the Africanized Federal government go after any fugitive slaves that attempt to set up a free society anywhere. The Africanized US Federal government will simply claim any ocean-going societies as under US jurisdiction -- to Hell with the rule of law: "Those are OUR slaves!"

I'm not sure how this will play out with South African expats like Peter Thiel, Elon Musk, etc. There is a reason these guys have risen to prominence in the US and partly this has to do with superior adaptation to Africanization.

Pat said at December 8, 2013 4:18 PM:

James,

Peter Thiel is from Germany, not South Africa.

Elon Musk, however, is from South Africa, and I think you have a good point here. Musk is a self-described "introverted engineer" (see here: http://www.businessinsider.com/tesla-elon-musk-being-new-steve-jobs-2013-11) but if you've followed his career you can see that he hasn't acted like the typical "introverted engineer" in managing his enterprises. He's been quite savvy about working with the Obama admin and the government in general, and about casting himself and his disruptive enterprises as in line with the current elites and their values.

He seems to make a point of displaying enough fealty to the contemporary Powers That Be, even though I suspect he probably doesn't think much of them on the inside, so that his enterprises are allowed to go relatively undisturbed.

James Bowery said at December 8, 2013 10:40 PM:

Thanks for the correction on Thiel.

Thinking out loud a bit, Thiel may be a Jewish extended phenotype to an extent. Jews like their libertarian northern European males to be too old to sire children, gay or married outside their race (as is Charles Murray). Thiel's Seasteading Institute is run by Milton Friedman's grandson. So this could be one of the more reasonable attempts by Jews to get off the African plantation. Too bad Thiel's likely being taken out of the genepool. Its not something Jews do deliberately in my experience. Its just something they can't help because they refuse to think about it.

Ekdromos said at December 9, 2013 5:26 PM:

James,

People like Arthur Jensen and Friedman's grandson are advocates for our values, so what are you saying they're refusing to think about? They're surely highly aware of the birth dearth among Western intellectuals.

When you contrast them with, for example, non-Jews like Keith Olbermann and Al Gore, who want to accelerate the decline, it looks like you're relying on cognitive biases instead of thinking statistically.


Murray had re-married long before he and Herrnstein partnered. Likewise, Thiel and Max Levchin partnered for the very boring reason that they were both very smart.

MarkT said at December 9, 2013 6:57 PM:

Ekdromos,

You don't know James Bowery if you think he shares your or Arthur Jensen's or Friedman's grandon's values. Suffice to say he does not share your philosemitism nor your energetic excusing of Jewish behavior.

I say this as someone sympathetic to James's views and someone who has learned a lot from his comments and blogging over the years.

Also you really shouldn't accuse him of not "thinking statistically." He's been very statistical in thinking about these issues.

James Bowery said at December 10, 2013 9:55 AM:

Milton Friedman is actually respectable as post-Henry George economists go. He advocated the negative income tax and recognized at least one virtue of land value taxation over taxation of economic activity: That it is non-distorting. So I expect his grandson is similarly respectable. This isn't to say, however, that he's not attracted to men like Peter Thiel who do not represent reproductive competition for northern European females. That this is an essential aspect of Jewish virulence is made abundantly clear by the blond bad guy trope in Hollywood casting as contrasted with the blonde ingenue being rescued from the blond bad guy by the romantic lead.

Ekdromos said at December 10, 2013 9:00 PM:

James and Sockpuppet,

This is my view of my own Anglo-Saxon / Germanic ancestry: What makes those cultures unique is the high frequency of genes for an industrious, scientific, and meritocratic temperament. (See A Farewell to Alms, etc).

In contrast, you liked Jensen's work until you discovered he was part Jewish, and now you hate him. That kind of pettiness and disregard for science is the opposite of Western values.

If you search human biodiversity sites for references to Jensen or The Bell Curve, you'll find lots of respect for science and intelligence. That's actually the entire point of the HBD community.

People like Elon Musk, Aubrey De Grey, Charles Murray, JP Rushton, Peter Thiel, or Cecil Rhodes wouldn't want to have anything to do with anti-meritocratic or anti-science values.

MarkT said at December 10, 2013 9:32 PM:

Ekdromos,

I doubt you're of "Anglo-Saxon / Germanic ancestry." You're a concern troll who only pops up here to energetically defend and excuse Jews.

I never said anything about Arthur Jensen's work nor did I say that I "hate" him. I don't see how that's even relevant here. But if I did hate him because he was Jewish or for any other reason or no reason at all, so what?

BTW, your dogmatic policing of what qualifies as "Western values," the "HBD community," "anti-meritocratic or anti-science values" in an effort to get people to conform to opinions you favor is another telltale sign that you're not of "Anglo-Saxon / Germanic ancestry" and that you're likely some sort of Jewish concern troll.

MarkT said at December 10, 2013 9:34 PM:

Ekdromos,

LOL. You think I'm Bowery's sockpuppet?

Ekdromos said at December 11, 2013 1:57 AM:

James and Sockpuppet,

Feel free to search Futurepundit and Parapundit for my opinions on topics like gender, child-rearing, religion, morality in war, Theodore Roosevelt, and the history and future of conservativism. I'm not shy.

In contrast, you haven't even posted a single time other than this thread.


It'd be an injustice against the human biodiversity community to make us all look like bigoted, low-IQ barbarians. Rushton, Jensen, Lynn, etc. endured decades of sacrifice, and it was for a higher scientific purpose than that.

My musings on my Anglo-Saxon / Germanic ancestry stand. Those cultures have a high frequency of genes for science, industriousness, and meritocracy. But you've ended up with a self-limiting metanarrative that's against all those traits.

I live in Silicon Valley, so I have relationships that are important to me with smart people of many ancestries that you'd probably spit on. In contrast to your metanarrative, all that matters in Silicon Valley is what you can build... what you can give to others.

James Bowery said at December 11, 2013 9:30 AM:

Ekdromos is silly. I've never had a negative thing to say about Jensen's work.

Ekdromos's experience in Silicon Valley is in stark contrast to mine in which I was directly told by HP managers from India that I could not retain the one world-class specialist I needed but could "hire all the H-1bs you want".

HP is no minor player in Silicon Valley -- it being the largest of the founding firms still surviving.

The project on which I worked when told of this "meritocratic" culture, was the largest single investment of risk capital in the history of HP: $500M. Its primary product was a bunch of "meritorious" guys from India going to graduate school on HP's dime to get their MBA's, thence to spread their "meritorious hiring practices" throughout corporate America.

Some of the guys hired by HP from India had received the majority of the CS degree by never sullying fingers with keyboards, but by the good-old coding forms filled out in No. 2 lead pencils, and graded by inspection.

I'll never forget the words of one of the highest paid consultants, named "Krishna" when he told me that India was a waking giant destined to take over the US. Certainly, with such group solidarity as they show occupying critical centers, there is no reason to doubt they will succeed.

And we will all be the beneficiaries of their "merit".

James Bowery said at December 11, 2013 9:38 AM:

Oh, and as for my having a "sockpuppet":

I haven't posted pseudonymously any content since 1978 when I did, indeed, have two "sockpuppets" on the PLATO Notes group "ipr" that I used to argue with each other for comedic effect.

My purpose in quite possibly sacrificing my career by avoiding pseudonymity has been that since the 80s I foresaw a time when the archives of things like Usenet, and now archive.org, would form the big data inputs to advanced AIs and I wanted those AIs to have a consistent identity with which to model my cognition -- not so much as a matter of cyberimmortality as I believed, and still believe (See the Hutter Prize for Lossless Compression of Human Knowledge) that optimal modeling of human knowledge will yield ruthless -- utterly transcending the moral zeitgeist -- historic analyses that will, in turn, produce a "truth speaker" to appropriately classify the intellectual deficiencies, if not pathologies, of the current moral zeitgeist.

James Bowery said at December 11, 2013 11:19 AM:

Oh, and yes, being of Quaker heritage, the heritable tendency to "speak truth to power" is quite an evolutionary disadvantage nowadays. That's one reason I long for a "truth speaker" that will supplant Wikipedia with an intelligence capable of saying, if appropriate, "The Wikipedia articles on race are dominated by Jews with a hypocritical ethnocentric agenda." and not being subjected to human frailties such as the need for food, shelter and mates.

Ekdromos said at December 11, 2013 5:34 PM:

James,

The metanarrative you've ended up with substitutes "Jew" for "liberal."

This fails to capture liberals who are not Jewish, like Al Gore, and falsely captures Jews who are not liberal, like Jensen and Herrnstein.


Smart people are obsessive about the accuracy of the metrics they use.

The above large inaccuracies and unintended meanings make that usage appear to be lazy intellectualism at best, and barbarism at worst.

Ekdromos said at December 11, 2013 6:11 PM:

James,

Sorry that happened at HP. I don't see much of that in the circles I move in, so that probably colors my view.

But unintentionally insulting people like Jensen won't help put Humpty Dumpty back together again.


And it artificially removes you from the pool of people that people with genuinely meritocratic values would want to interact with... people like Elon Musk, Aubrey De Grey, Charles Murray, Peter Thiel, or Cecil Rhodes.

That's unfortunate, because there are a lot of good things to build in the world, and more smart people are needed.

Ekdromos said at December 11, 2013 10:00 PM:

I should have said:
"...fails to include liberals who are not Jewish, and falsely includes Jews who are not liberal."

The normal terms when discussing metrics and data could be misunderstood in that sentence.

MarkT said at December 12, 2013 1:12 AM:

Ekdromos,

According to Google searches, you've only posted in one thread at FuturePundit, this one. And you've only posted in about 4 threads at ParaPundit. In half of the threads i.e. 2 threads you've posted in at ParaPundit, you've criticized dueling and Bowery's advocacy of dueling and defended Jews.

James Bowery said at December 12, 2013 5:33 PM:

Ekdromos is spouting utter nonsense of the standard sort used to prevent the fundamental job of neurons:

Generalization.

I say "standard" because of the virulent conflation of "prejudice" with what anyone versed in learning theory would call prior probability.

Damaging brains, whether through AIDS dementia or through indoctrination is virulent.

As an example of exactly how virulent Ekdromos is, in an attempt to test ecological hypotheses about autism, I took data from the Department of Education on autism prevalence by State, and then gathered a vast number of other demographic variables at the level of State ecology. I then ran a complete cross correlation on them to see if any ecological correlations appeared to support any of the prior hypotheses. Incidentally to that I had gathered the Jewish population by State from a Jewish organization. My belief that Jews are virulent to "whites" led me to include the ratio of Jews to whites (Jews are counted as "white" in census statistics so this is actually the Jewish percent of Whites). My expectation was that this would end up being very important to "white" human ecologies -- particularly the US as it is a nation of settlers who were escaping from pathological centralization of wealth and power in Europe, making them a relatively vulnerable population.

Not really knowing where this ratio would end up in the overall coefficients of determination between the demographic variables, but expecting it to have a large average coefficient of determination, I calculated the average coefficients of determination for ALL demographic variables.

Guess which one came out on top?

Ekdromos said at December 12, 2013 7:36 PM:

James,

I'm out of time.

You're free to alienate yourself from all reasonable people like Elon Musk and Charles Murray if you wish.

You can check the executive bios of Tesla to see Musk's thoughts.

James Bowery said at December 12, 2013 7:49 PM:

Correcting Charles Murray’s Accomplishment Metric for Complicty

Charles Murray uses citation analysis to account for “human accomplishment” in his book by that name. However he failed to take into account the fundamentally important accomplishment: negative numbers. He therefore assigns a positive value for citations which might be best viewed as a negation of human accomplishment. Examples of such negative accomplishments might be such works as “Das Kapital” (which set political economy back a century), “Civilization and its Disconents” (which set psychology back a century), “Anthropology and Modern Life” (which set sociology back a century) and “The Genetic Basis for Evolution Change” (which set human ecology back at least a generation). He could have avoided this fatal error of epistemology by using a truly important human accomplishment that’s over a century old: Factor analysis.

Charles Spearman invented factor analysis to test for the existence of an hypothesized general factor underlying all of what we think of as intelligent behavior. Spearman used a variety of tests for intelligence and then looked for correlations between them. He invented factor analysis so he could find common factors between these correlations. Spearman was strongly influenced by Charles Darwin’s cousin, Francis Galton. Galton was one of the earliest proponents of eugenics, and invented the statistical definition of correlation to study the degree of heritability of various phenotypes, including intelligence. Eugenics is a highly controversial field so we should be unsurprised that the g factor, originating as it did with such a controversial area of research, has resulted in a long-standing dispute.

Something easily missed or ignored by the layman or amateur who is applying factor analysis to some area other than intelligence tests is that some of these correlations could be negative. For instance, if one is attempting to predict geographic rates of AIDS cases there is a strong positive correlation with the presence of blacks, hispanics and Jews in that geography but a strong negative correlation with the presence of self-identified “whites”.

Likewise in citation analysis it seems obvious that citation cabals which were accomplishing negative impacts on a field would present themselves as negatively correlated with the body of work that would ultimately prove to be correct. The correct way to proceed then with the sort of citation analysis claimed by Murray is to factor supposed “experts” to various schools of thought and figure out which of them were creating citation bias toward destructive channels by observing the degree to which they diverted attention from more productive lines of thought—lines of thought frequently preceeding the creation of destructive lines of thought. This diversion would present itself as the presence of a school of thought preceeding another, negatively correlated, school of thought, followed by the disappearance of the negatively correlated school of thought and reemergence of the original line of thought.

I have my opinions on why Murray failed to do this sort of negative accounting but the fact remains that he didn’t do it and it should be done.

http://majorityrights.com/weblog/comments/correcting_charles_murrays_accomplishment_metric_for_complicty

James Bowery said at December 12, 2013 8:09 PM:

In his introduction of me to his subcommittee for my Congressional testimony on July 31, 1991, Congressman Ron Packard (CA) credited my grassroots organization with spearheading the passage of PL101-611 codifying President Reagan's space launch privatization policy, the initial draft of which our members composed. This gave Lori Garver a swift kick in the rear and wakeup call since she had place Glenn Reynolds in the chair to my left during this committee hearing, and had hoped that, despite early opposition from her National Space Society, she could weigh in with Glenn Reynolds to have NSS take credit. She became Obama's NASA deputy director overseeing the the rise in support of SpaceX. Glenn Reynolds, as you most likely know, went on to become famous as the "creator of the political blog", *ahem*.

I am excruciatingly aware of what I am sacrificing. I am not alienating myself from the truth but from those who are shrewd enough to avoid associating with those speaking truth to power. Well, more power to them.

Neil Craig said at December 20, 2013 7:16 AM:

Giving the ship engines is a defence measure. Not being there is the best way to avoid Somali or other pirates. If this ship is going round the world once per year it can manage better than 3 mph.

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