EP 001 Free Cities Overview with Peter Young

Introduction

In this episode, Timothy Allen speaks with Peter Young, the managing director of the Free Cities Foundation. They discuss the foundation's work and its focus on promoting human freedom through special jurisdictions.

Defining Free Cities

• Free cities are autonomous territories that adopt policies to support human freedom.

• The foundation looks for small jurisdictions doing things outside of the box.

• Examples include El Salvador adopting Bitcoin as legal tender.

Persuading Governments to Allow Special Jurisdictions

• The goal is to devolve power from central governments to local jurisdictions.

• Decentralization can lead to better economies and lives for people living there.

• Requests can range from special economic zones to private cities governed by a single operator.

Titus Gebel's Free Private Cities Concept

This section discusses Titus Gebel's concept of free private cities, where a single operator governs a city.

Features of Free Private Cities

• A single operator governs a city, providing services in exchange for fees paid by residents.

• Residents sign contracts agreeing to abide by the city's rules and regulations.

• Disputes between residents are resolved through arbitration rather than traditional courts.

Advantages of Free Private Cities

• Competition between operators leads to better governance and service provision.

• Residents have more choice in terms of which city they want to live in based on their preferences and values.

• Operators have an incentive to attract residents by offering high-quality services at competitive prices.

Austrian Economics and Civilization

This section covers Austrian economics and its relationship with civilization.

Key Tenets of Austrian Economics

• Emphasis on individualism, free markets, and private property rights.

• Belief that government intervention in the economy leads to inefficiencies and unintended consequences.

• Focus on subjective value theory, which states that value is determined by individual preferences rather than objective measures.

Austrian Economics and Civilization

• Austrian economics provides a framework for understanding how civilizations develop over time.

• The division of labor and specialization are key drivers of economic growth and development.

• Free markets allow individuals to pursue their own interests while also benefiting society as a whole.

Education and Protest

This section covers education and protest.

Education

• Traditional education systems often fail to prepare students for the real world.

• Alternative education models, such as homeschooling or unschooling, can provide more personalized learning experiences.

• Education should focus on developing critical thinking skills rather than rote memorization.

Protest

• Protests can be an effective way to bring attention to important issues.

• However, protests can also be counterproductive if they turn violent or destructive.

• Nonviolent protests are generally more effective at achieving their goals.

Liberty In Our Lifetime Conference

This section discusses the Liberty In Our Lifetime conference hosted by the Free Cities Foundation in Prague.

Conference Highlights

• The conference brought together experts from various fields to discuss topics related to human freedom and special jurisdictions.

• Speakers included Titus Gebel, Tom Woods, Jeff Deist, and many others.

• Topics covered included free private cities, cryptocurrency adoption, seasteading, and more.

Finance and Money

This section covers finance and money.

Hard Money Bitcoin

• Bitcoin is a decentralized digital currency that operates outside of traditional banking systems.

• Its limited supply and decentralized nature make it a form of hard money, similar to gold.

• El Salvador's adoption of Bitcoin as legal tender represents a significant step towards mainstream acceptance.

Bond Issuance and Central Banks

• Most governments fund themselves through bond issuance, which are purchased by central banks.

• This creates a cycle of debt that can be difficult to break out of.

• Alternative forms of finance, such as cryptocurrency or private investment, could provide more sustainable funding models.

Offering More Choice in Governance Models

In this section, the speaker discusses the importance of offering people more choice in governance models. He highlights that historically, the world has converged on a small number of governance models and that people should be able to choose the kind of governance model they live under.

Democracy and Governance Models

• The current system of democracy is limiting because it does not allow people to choose between democracies or jurisdictions.

• The speaker's takeaway from a conference was that fair democracy is letting individuals choose the inverted commas democracy in which they want to live rather than being limited by one-person one-vote electoral systems.

• The prevailing view is that democracy equates to having a system whereby you have this kind of caretaker government that is in charge of a nation-state for typically around five years. However, this doesn't make sense because when we interact with people, we use our free choice rather than making single decisions where there's no skin in the game behind the vote that we place.

Decentralization vs Centralization

• Decentralizing power offers more democratic choices for everyday people. It gives them more options and increases their democratic choice.

• Decentralization can be achieved without destroying centralized powers. For example, the US has decentralized power in the form of states while still being one of the most powerful countries globally.

Convincing Centralized Authority to Allow Decentralization

In this section, the speaker discusses how decentralization can be achieved without destroying centralized powers and how convincing centralized authority to allow decentralization can be done.

Achieving Decentralization Without Destroying Centralized Powers

• Decentralization can be achieved without destroying centralized powers. For example, the US has decentralized power in the form of states while still being one of the most powerful countries globally.

Convincing Centralized Authority to Allow Decentralization

• Convincing centralized authority to allow decentralization is possible by showing them that it's not inherently destructive to their power.

Introduction to Austrian Economics

In this section, the speaker introduces the concept of free cities and explains how he became interested in Austrian economics. He also discusses the decentralization of states and compares it to the federal government.

Free Cities and Decentralization

• Free cities have wide-ranging powers that individual states can adopt without interference from the federal government.

• The decentralization of states is a good thing according to the speaker.

• The speaker discovered Austrian economics in 2017, which changed his perspective on political questions and governance.

Subjectivity Theory of Value

• The subjectivity theory of value is a crucial insight of Austrian economics.

• Value is subjective and cannot be quantified objectively.

• Mainstream economics assumes that market prices determine value objectively, while Austrian economics looks at value from a subjective perspective.

Differences Between Mainstream Economics and Austrian Economics

• Mainstream economic theory is an amalgamation of different schools, with Keynesian being predominant.

• Mainstream economists tend to use GDP as a metric for judging the health of an economy by looking at prices rather than subjective values.

• In contrast, Austrian economics focuses on subjective values rather than objective market prices.

Introduction to Economic Theory

In this section, the speaker discusses the difference between collectivist and individualist economic theories. He explains how modern economic theory deals with everyone in a basket together while Austrian economics deals with the individual more.

Collectivist vs Individualist Economic Theories

• Modern economic theory deals with everyone in a basket together.

• Austrian economics deals with the individual more.

Metrics Used to Reason About Economics

• Inflation is measured by taking the money prices of all goods and services sold in an economy and dividing that by a deflator which is the price of a given basket of goods and services.

• The basket of goods and services used to measure inflation is compiled based on what an average household typically buys, making it a collectivist concept.

• Austrians argue that the idea of a basket of goods and services is meaningless because it changes over time based on actual prices in the economy.

Free Cities Foundation & Austrian Economics

In this section, the speaker discusses how Austrian economics fits into the ethos behind the Free Cities Foundation. He explains that giving people more choice and greater variety of jurisdictions to choose from is the best way to improve society's well-being.

How Austrian Economics Fits into Free Cities Foundation Ethos

• Titus, founder of Free Cities Foundation, references many Austrian School economists in his book "Free Private Cities: Making Governments Compete for You."

• From speaker's perspective, Austrian School is not a particular policy prescription but rather a way of understanding how the world works logically.

• Speaker believes that giving people more choice and greater variety of jurisdictions to choose from is the best way to improve society's well-being.

Historical Context of Free Cities Model

In this section, the speaker discusses whether the free cities model is a new concept or something seen historically.

Historical Context of Free Cities Model

• No relevant content.

Governance Models for Increasing Human Freedom

In this section, the speaker discusses the concept of having a variety of governance models that aim at increasing human freedom. The speaker explains that this is a broad term that encompasses everything from special economic zones to free private cities.

Different Governance Models

• The speaker explains that the idea of having a single corporate owner of a piece of land with that owner determining what the policies are and having a clear contract with every single citizen has not been fully tried before in all its aspects historically.

• The speaker mentions examples of individual city-states such as the Hanseatic League in northern Germany and the Italian city-states, which have adopted some model similar to what they advocate for at Free Cities Foundation.

• The creation of prosperous Germanic areas in northern Europe is attributed to the tradition of having city-states operating with reasonable autonomy.

Vatican City and Free Cities

In this section, the speaker talks about Vatican City and whether it counts as one of the free cities.

Vatican City

• The speaker explains that Vatican City is technically a nation-state with full autonomy but does not count as one of their free private cities because it does not have a single corporate owner, and individual citizens do not have contracts with an entity governing the state.

Importance of Ownership and Contracts in Free Cities

In this section, the speaker discusses why ownership and contracts are essential in free cities.

Ownership

• Ownership is important because when there is no ownership, property tends not to get maintained well. By giving clear ownership to property, individuals or groups have an incentive to improve that property, which leads to societal progress.

Contracts

• Contracts are important because they give individuals a clear understanding of what is expected of them and what they can expect in return. In the case of free private cities, citizens have a contract with the city operator, which gives them more autonomy than traditional cities.

Property Ownership and Time Preference

In this section, the speaker discusses the relationship between property ownership and time preference. They explain how contracts are important in establishing rules that allow people to make long-term plans and lower their time preference.

High vs Low Time Preference

• High time preference means focusing on immediate consequences rather than long-term ones.

• Low time preference means thinking about the long term.

• Ownership of property allows for making long-term plans and lowering time preference.

Importance of Contracts

• Contracts give people a guarantee of what the rules will be regarding their property.

• Contracts establish basic rules such as service charges and taxes, allowing people to make long-term plans.

• Establishing what the rules are allows people to make long-term plans and build lives that are beneficial for the future.

Introduction to Contracts and Free Private Cities

In this section, the speakers discuss the concept of contracts in commercial life and how it can be applied to governance. They also introduce the idea of free private cities.

Contracts in Commercial Life

• Contracts have existed in commercial life for millennia.

• The innovation of free private cities is applying the idea of contracts between governing entities and citizens to create voluntary societies.

• The three cities model incorporates various bits that have been trialed in the past, such as small city-states incorporating freely.

Applying Contracts to Governance

• The speakers propose applying existing systems that have worked well in commercial and civil spheres to governance.

• One problem that could be solved by this system is determining whether people can build things on their land that obstruct views or impact others.

• In a free private city, part of the contract mitigates issues like these.

3D Property Rights and Zoning Systems

In this section, the speakers discuss 3D property rights and zoning systems as a way to address issues related to development.

3D Property Rights

• Prospera is experimenting with introducing 3D property rights where individuals can purchase space in the air above their land.

• This allows individuals who value their view to purchase surrounding space so no development can occur around them.

• Compared to current systems, this is more efficient because individuals know what they can and cannot do without having to appeal or go through lengthy processes.

Zoning Systems

• Prospera has a zoning system where taller buildings have to exist away from the beachfront area.

• This is because they've started building a 13-story tower block for accommodation, but it's tucked into the side of the hill.

• The governance model includes a zoning system that guarantees views and values them specifically by buying the air in front of it all the way down to the sea.

The Prosperous System

In this section, the speaker talks about the benefits of the prosperous system and how it is more efficient than other systems.

Benefits of the Prosperous System

• The rules regarding views, use of space, and obstruction are specified before moving in.

• There is a clear system for determining what development can happen around you based on local needs.

• The diverse group of people at the Free Cities Conference in Prague showed how encouraging the Prosper model is.

Parallel Structures for Progress

In this section, the speaker discusses parallel structures for progress and how they can lead to positive change.

Building Something New

• Building something new and starting off at a small scale is a better way to achieve positive change than protesting or engaging in political lobbying.

• Developing education structures that aren't forcing people currently involved in state schooling systems to join but offering an additional option could lead to different ideas becoming dominant or multiple systems operating harmoniously.

Education Systems

• We don't have a view on what outcome should be but we say that within the current system it's very hard to bring about change.

• Sweden does not allow homeschooling which has led some families living in Prague who just had to move because they wanted to homeschool their families.

Views on Education System

• Discipline in schools is getting worse partly due to teachers not having power to exclude students that are misbehaving.

• These costs aren't really imposed on parents so there's not really an incentive for the parents to say you really need to change your ideas.

Disruptive Kids in Schools

In this section, the speakers discuss why kids are more disruptive in schools now than they were in the past. They also explore how policies have changed the social system in Britain and how incentives impact the quality of education.

Reasons for Increased Disruptive Behavior

• Kids are more disruptive now than they were in the past.

• Decades of policies have fundamentally changed the social system in Britain.

• The standard of behavior is getting worse because of these policies.

Impact of Incentives on Education Quality

• The incentives that exist determine the quality of education children receive.

• Parents who pay for their children's education have a vested interest in making it valuable for their future.

• Children's bad behavior doesn't impose costs on parents, so they have less incentive to discipline them.

Free Cities Model of Education

In this section, the speakers discuss whether a free cities model of education would work and if it would be too expensive.

Private School Costs

• Private school in the UK is super expensive at around 20k per year on average.

• Sending three kids to private school would cost 60k per year before even getting out of bed every morning for eight years.

Viability of Free Cities Model

• It's unclear whether a free cities model would go down the same path as private schools and become too expensive.

Private Education Models

The speaker discusses private education models and how they can be affordable by having a relatively free market. They also mention the Chinese model of private education.

Private Education in the UK

• Private schools appear to be free market, but there are lots of regulations that increase prices.

• Prices would come down for just the experience that you're providing in a private school in the UK if it wasn't a purely free city environment.

• Private schools don't have to be what we think about in the UK when we say "private school". It could be another version of private education that is affordable by having a relatively free market.

Chinese Model of Private Education

• The private education sector in China is massive.

• Most students go to state school and then also go to training schools as well.

• These are like just after-school clubs where you go when you have a private tutor, and they're not that expensive.

• It doesn't have to be a boarding school or expensive hockey fields; this premium experience is an alternative model.

Financial Governance Models

The speaker talks about financial governance models and how changing things from within may not always be the correct way of doing it.

Protesting vs. Changing Things from Within

• Protests do nothing; changing things from within may not always be the correct way of doing it.

• Large protests happened in London, such as "reclaimed the streets", but they did nothing.

New Financial Governance Model

• We are sitting in the middle of a new financial governance model right now.

• Changing things from within may not always work, so creating new cities with their own governance models could work better.

Opting into a Parallel System as the Ultimate Protest

In this section, the speaker discusses how opting into a parallel system is the ultimate protest and how Bitcoin offers an opportunity to opt out of the current financial system.

Opting into a Parallel System

• Being a Bitcoiner means opting into a parallel financial system rather than protesting against the current one.

• The current financial system is unfair, and opting in or out of it is a real protest.

• The Free Cities Foundation does not take an official position on which monetary technology is right. Instead, they aim to create systems that offer people more choice so they can decide for themselves.

Bitcoin as a Protest

• Bitcoin was created as a vehicle to opt out of the current financial system.

• Bitcoin offers peer-to-peer trading and mathematically fixed monetary policy, making it an exciting innovation from an Austrian economics perspective.

Protesting Authority vs. Opting into a Parallel System

In this section, the speaker compares protesting authority with opting into a parallel system and discusses historical examples of both.

Protesting Authority

• Historically, protesting authority has not been very effective in bringing about change.

• Examples include protests against the Iraq War and fox hunting bans in the UK.

Opting into a Parallel System

• Opting into or out of something is another way of protesting.

• Opting into Bitcoin disempowers the current financial system by offering an alternative.

Bitcoin and Free Cities

In this section, the speakers discuss how Bitcoin aligns with the values of free cities and why it is important for long-term thinking.

Bitcoin as a Long-Term Thinking Currency

• Bitcoin's monetary structure allows for seamless transactions on-chain or via secondary layers such as the Lightning Network.

• The hard cap of 21 million in Bitcoin's monetary policy allows for planning for the future and makes it important for saving.

• Bitcoin incentivizes long-term thinking, which is an antidote to the current system that incentivizes short-term thinking.

• Inflationary systems incentivize spending money quickly, while hard money like Bitcoin takes people off this treadmill.

Importance of Hard Money for Free Cities

• Hard money without a monopoly issuer allows people to think further into the future and make longer-term plans.

• Free cities need a mechanism for trading with each other to be well-off. Trading freely with the rest of the world is essential because there are economies of scale, and we are all better off when we cooperate peacefully.

The Future of Global Currency

In this section, the speaker discusses the future of global currency and how it will be adopted across the world.

Adoption of Decentralized Monetary Network

• The question is how global currency will be adopted across the world.

• Bitcoin is a decentralized monetary network that no individual or free city would control.

• It's most likely that countries will opt for a decentralized network like Bitcoin.

El Salvador as a Node in the Network

• El Salvador adopted the US dollar about 20 years ago.

• They made Bitcoin legal tender, making them a new node in the network.

• The government made this choice to have more control over funds and exchanges.

Challenges with Bitcoin Adoption in El Salvador

In this section, the speaker discusses some challenges with adopting Bitcoin in El Salvador.

Mixed Feelings on Success of Experiment

• There are mixed feelings on whether El Salvador's bet on Bitcoin will pay off.

• While exciting to spend Bitcoin seamlessly and easily, there are issues with user experience.

Convenience vs Ideology for Mass Adoption

• People need an incentive to switch currencies or networks.

• Mass adoption probably won't happen on ideological reasons but rather convenience reasons.

Issues with Government-Issued Wallet

• The government issued wallet called Gevo Wallet has a terrible user experience and is very buggy.

• There are instances where people don't receive money or get incorrect amounts from ATMs.

Competition Among Currencies

In this section, the speaker talks about money as a competition and how one currency tends to become dominant over time.

Money as Zero-Sum Game

• Money is a competition where one currency tends to become dominant over time.

• Bitcoin is a convenient way of transacting, especially when traveling to foreign countries.

Hope for Improvement in El Salvador

• The speaker hopes that things are improving with the implementation of the Lightning Network.

• However, there are still issues with the government issued wallet and user experience.

Bitcoin as a Currency

In this section, the speaker discusses the sustainability of the current currency system and how Bitcoin is a better alternative. He shares his experience of using Bitcoin in El Salvador and how it can be used for payments.

Bitcoin as a Better Competitor

• The speaker believes that Bitcoin is a genuinely better competitor to traditional currencies.

• However, he acknowledges that it may not be the best option for everyone at present.

Using Bitcoin in El Salvador

• The speaker lived in El Salvador with his family for six weeks and used Bitcoin among their local community.

• They used Strike wallet, which uses the Lightning Network as payment rails.

• Both sender and receiver can choose which currency they want to send or receive, allowing instantaneous foreign exchange transactions.

• They spent Bitcoin while locals received dollars, which some people may disagree with but the speaker thinks is perfect because it allows them to tap into a huge market.

Using Bitcoin for Business Transactions

• The speaker shares an example of setting up a local farmer with a system where she receives Bitcoin and then instantly transfers it to pounds.

• This allowed her to tap into the beef market in the Bitcoin space.

• Within two weeks of doing this, she was interested in buying Bitcoins herself.

Importance of Spending Bitcoins

• The speaker urges people to spend their Bitcoins even if they don't want to because using the network is an important part of adoption.

• He suggests spending some Bitcoins and buying them back if you don't want your stack to go down.

Bitcoin's Convenience and Peer-to-Peer Network

In this section, the speaker discusses how Bitcoin allows people to take advantage of modern banking electronic payments without requiring a bank account. It also enables tourists to spend Bitcoin while in the country. The speaker emphasizes the importance of the Bitcoin community and its supportive, inspiring, and critical members.

Benefits of Using Bitcoin

• Bitcoin allows people to make electronic payments without needing a bank account.

• Tourists can spend Bitcoin while in the country.

• The Bitcoin community is supportive, inspiring, and critical.

Importance of the Bitcoin Community

• The speaker finds the Bitcoin community inspiring and critical.

• Members test their ideas every day to ensure that they are right.

• The community values openness, honesty, and critical thinking.

Supporting Local Businesses with Bitcoin

In this section, the speaker shares stories about how local businesses benefit from using Bitcoin. He talks about his neighbor who sells oranges for Bitcoins and a hard-working farmer who wants to connect directly with her customers. He also mentions that real adoption means using Bitcoins for everyday transactions like paying bills or buying food.

Stories of Local Businesses Benefiting from Using Bitcoins

• A neighbor sells oranges for Bitcoins.

• A hard-working farmer wants to connect directly with her customers.

• Real adoption means using Bitcoins for everyday transactions like paying bills or buying food.

Traveling with Bitcoins

In this section, the speaker talks about how he and his family traveled to El Salvador for six weeks because the country adopted Bitcoin. He also mentions that more and more Bitcoiners are traveling to places where they can work with other Bitcoiners.

Benefits of Traveling with Bitcoins

• The speaker and his family traveled to El Salvador because the country adopted Bitcoin.

• More and more Bitcoiners are traveling to places where they can work with other Bitcoiners.

Final Question: What Would You Do With a One-Year Sabbatical?

In this section, the host asks the guest what they would do with a one-year sabbatical.

Building a Settled Life

• The guest has traveled extensively and now wants to build a more settled life.

• They want to establish a permanent base somewhere and focus on building a family.

Good Luck

• The host wishes the guest good luck in achieving their goals.

• They express excitement for future conversations on the podcast.