March 30, 2012 12:19 am

Seachange

Imagine a network of self-sufficient communities floating in oceans beyond the reach of international governments, capable of setting their own laws, norms and social rules. Led by pioneering individuals, these societies could become a blueprint for a new way of life – one that is more equitable, tolerant and entrepreneurial.

It sounds far-fetched but so-called “seasteading” communities could become a reality if a California-based group has its way. The Seasteading Institute, a collection of ideologically driven libertarians and entrepreneurs, wants to “further the establishment and growth of permanent, autonomous ocean communities”, according to its website.

With backing from Peter Thiel, the billionaire who co-founded PayPal, the online payments business, and who was an early investor in Facebook, the social networking website, the group has succeeded in turning a concept that sounds like the premise of a post-apocalyptic science fiction movie – Kevin Costner’s Waterworld springs to mind – into something more tangible. It has pushed seasteading into the mainstream at a time when confidence in government – in the US, in particular – is low, thanks to a prolonged economic slump and a decade of costly and bloody wars in Afghanistan and Iraq.

The Seasteading Institute was founded by Patri Friedman, the grandson of Milton Friedman, the economist

The Seasteading Institute was founded by Patri Friedman, the grandson of Milton Friedman, the economist. “I was getting frustrated with the way our society in the US was structured,” he says in an interview with the Financial Times. Building on some of his grandfather’s views about the limitations of government, Friedman has taken libertarian thinking into an altogether different realm. His market-based approach is quite simple: if you are unhappy with your government, then you should be free to use another one – or, better still, start one yourself.

Seasteading is a chance to try different governmental structures in an autonomous environment, he says. “If people are able to test different products, some of them will work better than others. This is about the evolution of governments, not about having one great idea for a better government.”

Friedman recently stepped down as chief executive of the institute, although he remains chairman. Having blogged about his decision to separate from his wife and tweeted about his sexual experimentation, he is an unconventional character who continues to be a passionate advocate for seasteading.

“I agree with a lot of what my grandfather says about freedom leading to economic growth,” he says. “But when it comes to the question of why we don’t have rules that work for us, I think it is because we have a dysfunctional government system and no start-up governments.”

Chartering a jungle city

In his quest to create an environment for new, experimental forms of government, Patri Friedman has looked to the sea.

But he has also looked on land, and is in negotiations with the government of Honduras about a radical project that could lead to the creation of a new “charter city”.

Future Cities Development is a start-up company that, in December, completed a seed round of funding. It aims to “advance humanity by building cities based on innovative forms of governance”. Under the proposal being discussed, FCD would pay a lease fee to the state and then invite national and international businesses to come to the city. Criminal law would apply, but the company that wins the right to operate it will be able to set its own fiscal and tax rules.

Friedman is not lacking in ambition, yet he faces competition in Honduras: a rival start-up – Grupo Ciudades Libres (Free Cities Group) – has also signed a memorandum of understanding with the government. It is unclear which, if any, of the schemes will proceed.

“We have a lot of work to do,” says Friedman. “But we’ll get there.”

Michael Keenan, president of the institute, tells me that national governments are inherently flawed and difficult to fix. “The main problem is the lack of competition for better services,” he says. “We impose the same system on hundreds of millions of people … but people are dissatisfied with how things are going.”

The institute does not intend to construct its own floating vessels – at least, not yet. “We see ourselves building a platform for other people to experiment on,” he says. “There should be a marketplace for government … people are largely forced to accept what 51 per cent of your fellow citizens want, or think they want. That’s not fair.”

. . .

The institute started its work in 2008 with a grant from Thiel, who has donated about $1.3m to the organisation. The first project to come out of the institute was the brainchild of Max Marty, its former director of business strategy, and Dario Mutabdzija, another former employee. They created Blueseed, a start-up venture that aims to solve a thorny problem affecting many Silicon Valley companies: how to attract engineers and entrepreneurs who have not been granted work permits or visas.

“Our team is creating a high-tech, visa-free entrepreneurship and technology incubator on an ocean vessel in international waters,” declares the group’s web site. Marty tells me that Blueseed is exploring retrofitting a cruise ship or barge, which would be moored 12 miles off the coast of San Francisco. It would be spacious and comfortable enough for people to live on for long periods, and close enough to Silicon Valley for them to travel there when required.

Blueseed is in the “seed funding” stage, he adds, and has raised $50,000, although the target is $500,000. If it reaches that amount, the company hopes to raise $15m in the next round. Much needs to be done: the group has to investigate the kind of vessel to use and explore supply-chain issues, such as how to get food on board and how the ship will be powered. “Right now, our favoured solution is an accommodation barge – a ship that has to be towed into place,” says Marty. The group would charter or lease the vessel and generate revenue by charging rent. “It’s also possible that we would purchase a cruise ship … it depends on market circumstances.”

The company is convinced that the proximity to the world’s technology capital will increase the project’s appeal. “We want to make it the Googleplex of the sea,” says Marty, referring to the headquarters of the technology company]. “This project will solve a very specific problem.” He insists that it is an achievable goal, unlike other ideas for seasteading communities, which may take decades to implement. “We’re not creating a new currency; we’re not talking about issuing new passports … this is for people who need to be close to Silicon Valley.”

I ask if Blueseed has had trouble convincing investors to take them seriously. “People are generally very receptive,” says Marty. “They say ‘wow’. We pitched at a venture capital event and an investor told us: ‘This is so crazy, it might just work.’” Not everyone believes in the vision, though. “Some people will label us crazy. But this can all be possible using today’s technology.”

The movement would have had trouble getting off the ground without the support of Thiel. The billionaire is the institute’s key financial backer, who invested in the project after being pitched by Friedman. With an eye for the potential of technology to change the world, he has not let practical concerns impede his enthusiasm for seasteading. “When you start a company, true freedom is at the beginning of things,” he told Details, a US magazine, recently. “The United States constitution had things you could do at the beginning that you couldn’t do later. So the question is, can you go back to the beginning of things? How do you start over?”

Thiel – who stands to make billions from the upcoming Facebook initial public offering – has the money to ponder such questions; others looking for investments that give them a return on their money may be more sceptical about putting their wealth into floating communities founded on libertarian idealism. While Thiel has a firm libertarian streak, Keenan tells me that the people working at the Seasteading Institute “come in from different angles … a lot of people are interested in creating diverse, autonomous societies. Some think government is a trillion-dollar industry and a lot of money can be made here, potentially. I don’t want to impose libertarianism on everyone. I want people to have the government that they want.”

Again, no one at the institute believes big change will happen overnight. Blueseed has the best chance and is the most advanced seasteading venture, partly because the projected cost of living on the vessel is fairly low, Keenan says. “The cost per square foot is the same as innercity apartment living in San Francisco or New York.” However, he admits costs “vary wildly” depending on the floating structure used.

Longer term, he sees a fixed platform in international waters as among the best seasteading options. The cost of construction would be significant.

“A platform is the most expensive [option], but benefits from economies of scale,” he explains. Expensive, certainly, but are these grand plans also unrealistic? “Seasteading needs to be sustainable to succeed,” argues Keenan. “We’re very focused on entrepreneurs and building sustainable businesses, and there are plenty of people interested in investing.” If a seasteading project launches successfully “then countries will rush out and experiment with these things. The world needs... new answers and seasteading is one of the best shots we have. We need a reboot, an alternative system.”

The biggest challenge is not cost, according to Friedman. A “ship stead” would probably run to tens of millions of dollars, he says, while a platform would cost “hundreds of millions” and a permanent village would run to “billions… [but] if you look at some of the big real estate projects, this is quite reasonable,” he says. “The challenge is getting people to see that this can be a route to political reform.”

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