It's not an accident that nice places to live have high tax rates

In a comment on Agorist Opportunity, Micha writes:

Meh, I wish the FreeStaters all the best, but it's not realy something I can personally get all that passionate about...Apart from the obvious costs of picking up and moving to a new state (which could be significantly, albeit not entirely, reduced by Patri's Dynamic Geography), it's also important to take into account the greater importance culture plays for most people than mere cost of living with gov't bureacracy.

He then quotes Nick Gillespie:

Fewer tax and regulatory hassles and, most important, a tremendously lower cost of living are, in the end, probably not that important to people.

Rather, I suspect the number of opportunities, for businesses and consumers alike, and something we might dub as "action"—a rough metric of buzz, restaurants, cool shops, weirdness, culture of all sorts—are far more important to most people in deciding where to live and work.

I think many people would agree that Manhattan is one of the best places to live in the country, although it's a bummer that it has such high tax rates. Many people would also agree that California is a lovely state, although it's too bad that it has such high tax rates.

This correspondence between tax rates and good places to live is no accident. It is exactly what the model of government as a stationary bandit[1], or my theory of Dynamic Geography, predict. Government works partly by exploiting fixed populations. The more the population likes its fixed location, the higher the rent that government can expropriate from them without driving them away.

For those of us who like culture and "action", this sort of sucks - it means that part of the value of anyplace cool will be taken away by the government. On the other hand, as a confirmation of my theories it is to some degree a confirmation of my solution - if we can somehow make a vibrant, productive economy on the ocean, we can, finally, have "action" without bandits exploiting it. That, in my very biased opinion, is what the let-down Ron Paul supporters should be devoting their energy to. And what, in at most a couple years, I will be focusing on.

[1] Apparently by someone named Mancur Olson who thought it was a good thing. Which it was, compared to what came before. But we can do better.

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Make it non-physical

The rise of the Internet has meant that people who live out in the middle of nowhere now have far better access to cultural products than they had before, so there is less of a difference now between living in Manhattan and living elsewhere than there was before - though still, undeniably, a major difference. As bandwidth goes up, the difference should drop further. As the location of the person matters less to the connections that he can make with others, then maybe - hopefully - government's grip will erode (is eroding?).

As a recent Wired piece by

As a recent Wired piece by Tim Harford, citing Ed Glaeser points out, what we've actually seen is internet technology *increasing* the value of physical colocation. Counter-intuitive, but that's what the empirical evidence says.

usual caveats

Usual caveats. Careful about inferring causality. Internet is not the only change in the world. For example a lot of the world is still presumably moving away from labor intensive agriculture and urbanizing for that reason. This involves the US via immigration. So, care is required when inferring from historical trends.Also, the urban/rural divide is not all that matters. Ease of moving from one city to another can also have the same effect I am talking about by pitting city governments against each other.

I couldn't agree more.

I couldn't agree more. Ceteris paribus people would rather not move and internet is decreasing the cost of not moving. These are very easy empirical observations one can make, and you merely inferred consequences. I put much more trust in that than in any econometric studies.

As for dynamic geography, mobility is not the only concern. The state does not predate on a limited geographic area per se, it predates on a set of people who happen to live within a limited area. Even if it is technologically very cheap to move, as long as the social network is more valuable than the disadvantage of paying taxes, people would have to move simultaneously. Even if that happened, the government could very well follow that group of people. The real breakthrough would come from a combination of physical mobility (you can move cheaply) but also from the end of geographical networks. Fortunately this is happening. By the way, I think Neal Stephenson has wrote on the subject of cultural evolution being freed from geographic ties.

Stupid but genuine question

How do you bootsrap it? It seems to me you rely on incrementalism, but doesn't incrementalism precisely fails when it comes to attracting networks ? What makes the value of Manhattan is precisely this network of jobs and entertainement, you couldn't move Manhattan incrementally. The first marginal settlers are probably not living in manhattan. They might be enjoying legal drugs in Amsterdam, crossing the ocean on a sale boat, doing tax free finance in Dubai or living off their fortune in England. How do you compete with the land based havens? It may also be that the propension to move to a seastead is bimodal, once you get a handful of early adopters, they might not make a network attractive enough to the other people. Of course there's only one way to know and I'd be thrilled to see the thing floating.

I think there is not really

I think there is not really any way around that. Settling a new area is going to require huge compromises. You have to let go of all the benefits of scale as well as existing networks that have settled into some sort of optimum. There is no way around it i think.

Moving to the ocean would require people who are motivated purely by putting their philosophy into practice, and do not expect any net material return within their lifetime. Hope, yes, but expect, no. Im one of them, but i guess it is not for everyone.

How to bootstrap it ?

I think of the PT movement as the bootstrap for the agorist society.

It is true that

It is true that incrementalism and network affects counter each other. Thus the plan is to start with industries that don't require network effects. The hope is to concentrate on making the new country attractive, at each stage, to those on the margin, who aren't quite ready to join. Once it gets big enough for network effects to kick in, then it becomes easy.

If incrementalism and network effects were truly contrary, there would be no networks that didn't start with a huge one-time infusion. Yet almost every network grew from a tiny seed, one piece at a time. The big, successful networks have both incremental and network properties: They are valuable at each step of the way, yet they are really really valuable once they are big. (The web, the telephone, cell phones...)

That is a good point: new

That is a good point: new networks spring up all the time. But still, you are going to need people who are willing to take (temporal) substantial reductions in quality of life. Ranging from no ER to no restaurants. There will ofcource be people willing to put up with that, but i wouldnt underestimate it, and i would emphasise this to anyone willing to join. Id say its better to have a smaller but motivated group of people than a bigger one that falls apart due to disillusion.

There's just one problem

There's just one problem with Nick Gillespie's reasoning: it's empirically junk. In terms of net internal migration, Manhattan, San Francisco, etc. are hemorrhaging residents. See, e.g., here (this is from last year, but it's still true). I don't have the figures with me, but the same holds true of states (I ran the numbers when the new census data came out last month). Americans (including former immigrants) are leaving California and New York at a very high clip and heading to Arizona and Nevada.

It's true their population isn't declining at all that rapid a clip because of international inflow, cities being preferred by immigrants for a variety of reasons. But in terms of where the people already in the United States (including people who've immigrated previously, so are now counted as "internal migration"), there's no question that the cool places are being slammed in revealed preference. And any economist worth talking to would tell you that revealed preference counts for more than costless verbiage.

Me, I think that's good news for seasteading, in that it shows a considerable willingness to migrate even within the United States looking for more freedom. (Admittedly, this tends to be economic freedom rather than social freedom, so I'm not sure how Patri would feel about this.)

revealed preference over verbiage

revealed preference counts for more than costless verbiage

Agreed (with the bit quoted). Hot on the heels of "people respond to incentives" comes another strong candidate for nutshell wisdom. Actions speak louder than words.

Wow, that's fascinating!

Wow, that's fascinating! Thanks for the info.

Real Estate

It's not clear that the migration away from hip cultures will continue, and is not just a symptom of the bursting housing bubble. Once we reach a new equilibrium, people might start moving back to the Bay Area and Manhattan.

A priori reasoning 1,

A priori reasoning 1, Econometrics 0

It might make more sense to

It might make more sense to look at net migration as a fraction of total population. New York city is so populous that a net migration even in the hundreds of thousands is still a single-digit percentage change.

Also New York city has large population fluctuations, yet it reached an all-time high in 2000. So it's coming down a bit in the aftermath of having reached its all-time high.

Finally, are the people leaving NYC doing so for more economic freedom, or because they've been priced out by foreigners enjoying the drop of the dollar's value? Such fluctuations don't really tell us anything about what the Americans living in NY think of the place -- just that a bunch of foreigners are showing up willing to pay more to rent or buy the same condos, coops, etc.

Cultureless rubes

Since I'm among the philistines that wouldn't mind living in Podunk, Wyoming (though I'll probably spend a few more years in the People's Gun-grabbing Republic of Illinois) the advantage goes to me!

Patri, if you read demographics-obsessed righties like Steve Sailer you wouldn't have been surprised by anonymous. It was also discussed here by Arnold Kling. With regards to California more specifically there's Movin’ Out Domestic Migration to and from California in the 1990s and Saying Goodbye California Sun, Hello Midwest. Even immigrants prefer other places, see 6 + 4 = 1 Tenuous Existence: An illegal immigrant couple with six children were already living in poverty. Then the quadruplets arrived. They're still in a daze and Are Immigrants Leaving California? Settlement Patterns of Immigrants in the Late 1990s..

Thanks TGGP for the links!

Thanks TGGP for the links!

Cogs Differ

A person who doesn't mind being a cog in a wheel in somebody else's company are more likely to ignore regulatory hassles. People who want to be independent simply must deal more with those hassles, so it stands to reason that people who are more happily dependent would value the Free State Project less.

The moment significant commerce hits the ocean, it's going to attract sharks. I think that's the real problem you've got to think through with seasteading. I don't see a solution and don't hold much hope for the status quo to simply continue, despite new incentives pushing government into the water.

Land of the childless

Manhattan and coastal California are great for young singles with money. You're in the transition state right now, married with a kid still small enough to put in a backpack carrier. When you've got more than one kid, or a kid old enough to want a bigger room, or you want to have a back yard to send the kid to so you can have a few minutes to get something done, then you start looking at the middle of the continent.

We moved from Los Angeles to Fort Worth when our third was on the way. We're much happier. Elbow room inside and out, an affordable cost of living, and a child-friendly culture. The last is the biggest part. Having kids is no longer the unusual thing in our circle of friends and people don't freak when you show up with some rug rats along. That makes a much bigger difference than tax rates.

Evolution is not a spectator sport, guys.