WBD553 Audio Transcription
Free Private Cities with Peter Young
Release date: Monday 12th September
Note: the following is a transcription of my interview with Peter Young. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
Peter Young is the managing director of the Free Cities Foundation. In this interview, we discuss the development of autonomous administrative areas around the world called ‘free cities’, where new types of governance can be offered to citizens outside the control of existing states.
“A world where there’s a plethora of different kinds of society where people consent to the rules, and people have the ability to choose what kind of system they live under, is a better society for everyone.”
— Peter Young
Interview Transcription
Peter McCormack: Peter, how are you?
Peter Young: I'm good, Peter. How are you?
Peter McCormack: Good. So, a mutual friend of ours recommended that I should talk to you; Daniel Prince.
Peter Young: There we go, he's a good man.
Peter McCormack: He's a good man. He was here the other day; he came to watch my football team and we had a Sunday roast here in the village.
Peter Young: Yeah, he was here for the Wales Bitcoin Conf, wasn't he?
Peter McCormack: I don't know about that; I think he was just here for Real Bedford Football Club!
Peter Young: Oh, sorry, yeah, that was the main draw, why most people come to the UK.
Peter McCormack: Well, he said, "You've got to talk to Peter", he said, "You've got to get him on your podcast. If you do a sprint here in the UK, you've got to speak to him". So, I don't always do this but not everyone will know who you are so, for this one, we need to tee it up. Just tell people who you are, your background and why we're here today and what we're going to talk about; well, they'll know that from the title.
Peter Young: Sure, okay. So, my name's Peter Young and I'm the Managing Director of the Free Cities Foundation. The Free Cities Foundation is an organisation that works with smaller territories around the world that want to adopt innovative policies that are aligned to market principles. I've been doing this for about a year, but before that, I spent most of my career based in China doing UK trade and investment work, and I discovered Bitcoin through the Chinese community.
In about 2017, I started getting introduced to the ideas in Austrian Economics and libertarian ideas around that time, and that was part of the reason why, eventually, made a decision to move into the free cities and kind of market economic space.
Peter McCormack: You didn't think of establishing a free city in China?
Peter Young: Well, that's an interesting one. There are already quite a few special economic zones in China, so there's already a precedent there and some interesting case studies. But China's a difficult place to establish truly autonomous areas, for a number of historical reasons.
Peter McCormack: Yes, okay. So, this is a subject I'm interested in, I know a bit about it; my friend, Balaji, has just written an interesting book covering similar ideas. We used to have this other podcast called Defiance and we made a show about free cities for that and so I'm interested in it, but at the same time I'm sceptical and have a lot of challenges and questions which I think we'll work through today. But for you, I kind of want to understand what the steps were; was it you discovered Bitcoin and libertarian ideas and you felt like this is an area you want to work in, or was there just like a coincidence or a meeting of ideas; what happened?
Peter Young: So, when I was in China, I worked for the UK Government, for the UK Embassy in Beijing and the Consulate in Wuhan, so I was kind of working within the --
Peter McCormack: Wuhan?
Peter Young: In Wuhan, before it got big, Peter, yeah.
Peter McCormack: You were in Wuhan before it was cool.
Peter Young: I was in Wuhan before it was cool, in 2015 to 2016.
Peter McCormack: Did you go down to the local market and buy any bat soup?!
Peter Young: I may have done. Yeah, it's good bat soup down there; I may have done that!
Peter McCormack: Pangolin?!
Peter Young: Yeah!
Peter McCormack: God, I didn't know that. All right, anyway carry on, sorry.
Peter Young: Well, yeah, living in China, I was working on the inside of a major government, obviously, the UK Government, and I came through that to be exposed to a lot of ideas related to how spending decisions were made and how governments go about deciding what they're going to regulate, what they're going to try and influence overseas. I was fairly sceptical of some of the principles that were laid out, but didn't have enough of an understanding to really challenge them.
So, it was around 2017 that I fell in with a good Bitcoin crowd in China who were really into Austrian Economics and really into Bitcoin as well. So, in tandem, I started to learn about both of these things and I found that they are a much better explanation for what was happening in China, what was happening in the UK, what was happening around the world, in economic terms, than what I'd been presented with previously.
So, I had about three years where I went quite deep into some of the classics of the Austrian School, works by Murray Rothbard, Ludwig von Mises, Carl Menger. Through that process, I started to look at how different kinds of political systems could be established that would be more aligned to libertarian principles, and that's how I came to the Free Cities Foundation.
Peter McCormack: Was the Foundation already established or did you establish it?
Peter Young: No. So, the Foundation was established in 2017 in a different form. So, our founder is called Titus Gebel, he's written a book called Free Private Cities: Making Government Compete for You.
Peter McCormack: Did we not talk to him?
Danny Knowles: I don't think so.
Peter Young: I don't think you had a show with Titus, no.
Peter McCormack: No, I think we might have spoken to him when we looked at making that show for Defiance. Was he nomadic for a period; is he blond?
Peter Young: No, no.
Peter McCormack: Oh, I might be confusing him with somebody else. I just thought the name stands out.
Peter Young: Okay.
Peter McCormack: Can you find his Twitter?
Peter Young: He's not active on Twitter but you'll find stuff about him on YouTube, he's done lots of talks.
Peter McCormack: Okay, anyway…
Peter Young: So, he's the guy that's founded this foundation, and I've been Managing Director for about a year, and we've recently done a rebrand. We changed the name because it was previously the Free Private Cities Foundation, it's now the Free Cities Foundation; we have a slightly broader remit now. But yeah, Titus was the guy that founded it, I got introduced to it through Titus and Rahim Taghizadegan, who's an Austrian School Economist based in Vienna, so he previously worked for the Foundation, and I ended up finding them through work I was doing with some other Viennese people.
Peter McCormack: I'm sure Balaji introduced me to him; it really stands out. I'm going to have to check after this. Okay, so how big's the Foundation; how many people work at the Foundation?
Peter Young: We've got about ten people as the core team and then we've got a few contractors, and we've got four on our Board.
Peter McCormack: Is the idea to establish free cities or to support people who want to; how does it work?
Peter Young: So, the Foundation itself, we make the moral case that a world where there's a plethora of different kinds of society, where people consent to the rules and people have the ability to choose what kind of system they live under, is a better society for everyone.
Peter McCormack: Okay.
Peter Young: That's what we make the case for, and we run a conference, we put out social media posts that spread the message about this, we create resources for people that want to learn more, and then we also work closely with commercial partners. There's a commercial partner called Tipolis, which invests actively in projects like the Zone for Employment and Economic Development in Honduras; there are a couple of active projects there. We've got a new project in the pipeline in West Africa that we're hoping to be able to announce at our conference in October.
So, there is an element of working with investors that are actually actively building free-cities-aligned projects, but then we also just create general resources for people that want to take this forward themselves to go and do so.
Peter McCormack: There's a free city in India as well, isn't there; there's one I'm aware of?
Peter Young: There are various areas of India that have a high degree of autonomy.
Peter McCormack: There's a particular free city; Danny, can you try and look it up? I'll know it if you find it.
Danny Knowles: Well, there's one called Auroville.
Peter McCormack: That's it.
Peter Young: What was the name?
Danny Knowles: Auroville.
Peter Young: Auroville? Okay.
Peter McCormack: Do you know of Auroville?
Peter Young: It rings a bell, but we don't have any relationships over there with Auroville or with many in India to be honest; it's an area we'd like to work a bit more.
Peter McCormack: Yeah, because when I was in India, I met somebody, they were heading there and they were explaining to me. That was one of my first exposures to these cities, and I was reading about it all on Wikipedia. Anyone can go along and visit it and stay there apparently. Did you find it?
Danny Knowles: Yeah, I'll pull it up.
Peter McCormack: Yeah, they had a whole bunch of weird different rules around it, but it's like a village community that all work together. I don't know what they do for money, but here we go. "Auroville belongs to nobody in particular, it belongs to humanity as a whole, but to live in Auroville you must be a willing servitor of the Divine Consciousness", oh God! "Auroville will be the place of an unending education, of constant progress, and a youth that never ages"; okay, it sounds pretty hippy.
Peter Young: Yeah.
Peter McCormack: Yeah, that sounds like a commune.
Peter Young: Do we know the size of it?
Danny Knowles: 2,800 people.
Peter McCormack: That's small, yeah?
Peter Young: Yeah.
Peter McCormack: That's a community.
Peter Young: So, we work with various kinds of project ranging from fully autonomous zones within nation states to intentional communities. There are tens of thousands of intentional communities across the world, and this would be definitely on the larger side of the intentional communities end. But there are lots of different rationales for people coming together to establish a common set of rules, and they have lots of different political philosophies.
We tend to work more with those that have more libertarian focus, but yeah, there are quite a few projects out there that you could name that want to be established with their own unique set of rules.
Peter McCormack: Okay, give me an example of one of the projects you're working on at the moment, and then that probably will be easier for me to then start pinging the questions at you I have.
Peter Young: Yeah, so our founder, Titus, and the commercial organisation, Tipolis, have an active investment in a project in Honduras called Próspera, and this project has got about 150 acres of land.
Peter McCormack: Is it on an island?
Peter Young: It's on the island of Roatán, which is off to the north of Honduras.
Peter McCormack: We know of this, don't we?
Danny Knowles: Yeah.
Peter Young: What they're doing is exercising a degree of autonomy that they've been granted by the Honduran Government to do interesting things with property rights; so for example, establishing 3D property rights rather than 2D property rights.
Peter McCormack: What does that mean?
Peter Young: That means that, if you have a house, you can decide that you're going to buy some of the space in the air above someone else's house. What that means is that, if you're in a densely-populated area and someone comes and builds a very large skyscraper next to your house and blocks out all the light, then this is going to reduce your standard of living because you don't have access to natural light. So, the way they try and get round that is by establishing 3D property rights in the air. So, this is just one example of an innovative governance thing that they're introducing.
They're also introducing -- people are using Bitcoin within the companies over there. They have looser regulations around the business activity there, so it's quite a free business environment. They have lots of very innovative ways in which they're doing the building, so they're creating modular buildings in the area which, in normal planning permission circumstances, wouldn't be possible because you have to kind of create a finished product. So, they're experimenting with lots of different governance innovations when it comes to land regulation, business regulation, currency and then property rights regulation.
Peter McCormack: Okay, so how much autonomy are they given by Honduras? Do they have a local own government?
Peter Young: So, it's probably the highest degree of autonomy that any area within a nation state has been granted. So, they get autonomy over some of their commercial law but not the criminal law, and there is an entity, like a private operating company, that manages all of the services that would normally be provided by a local government, so there's a high degree of autonomy there. They can decide that their legal system is going to be arbitrated by a third-party court, so a court that's in another country, if they want to. They can have their own court independently that's set up for --
Peter McCormack: For civil crime, or for civil litigation, or for even criminal?
Peter Young: For civil litigation. So, criminal is still done through Honduras, but this is to do with mainly business regulations for companies that come and set up there. For example, if there were two Swiss companies that come and set up in this area, they can decide that they're going to sign a contract and have a Swiss judge to arbitrate any disputes between them.
Peter McCormack: Okay.
Peter Young: So, this kind of thing, there's a high degree of autonomy that's been granted to these areas within Honduras. Próspera's one, there is another one called --
Peter McCormack: Sorry, so let's just stick with that one, sorry, because it's interesting. So, who provides the policing?
Peter Young: So, that's provided by the operating company, they hire a private company, like a private security force, then they police the area.
Peter McCormack: Do they provide it for the whole of the area and people pay a tax, or is it opt in?
Peter Young: So, you pay a fee to be part of the community, and it's the same in Morazán, which is another area, so you pay a fee to be part of the community, it's quite a low fee; and then there are additional fees that are paid by the companies.
Peter McCormack: So, like a council tax basically, you pay a fee and you'll get your services?
Peter Young: Yeah, so similar to a council tax; it's written within a contract, what's it's going to be, so when you sign up you know what the fee is going to be for a period of time afterwards. Then there are also some other sources of revenue that are drawn from the companies, so there's also an income tax for the companies, for example.
Peter McCormack: This is it.
Peter Young: That's it, yeah.
Peter McCormack: It's beautiful; we should go.
Peter Young: It's a beautiful place; you should go.
Peter McCormack: You've been?
Peter Young: Yes, I have, went last November.
Danny Knowles: Is this real or is this like an artist's interpretation?
Peter Young: This is Pristine Bay I believe; I can't quite see with the light. This is the main area where they have the offices in Próspera.
Peter McCormack: Just for people listening, we're looking at photos of this; this is on www.bitcoinmagazine.com, so we'll put it in the show notes. It's a beautiful island.
Danny Knowles: It might be part of the Pristine Bay developments.
Peter McCormack: Is that a golf tee?
Peter Young: Yeah, they've recently purchased a golf course to incorporate into the area.
Peter McCormack: I bet they have! Okay, so you pay a fee; do you know what the fee is?
Peter Young: So, if you want to become an e-resident of Próspera I believe it's about $500 a year.
Peter McCormack: What's an e-resident?
Peter Young: Someone that's a remote resident, and it's about $500 a year, but you don't necessarily need to be based within the zone, you can have access to the services, you have access to the legal arbitration, but they have about 300 people, I think, that are currently e-residents.
Peter McCormack: So, I could just be e-registered and come and stay?
Peter Young: You could, yes.
Peter McCormack: Is there a hotel I can book there if I want to go and visit?
Peter Young: There are, yeah, so not actually within Próspera itself. So, Próspera itself is currently reasonably small, we're talking like a few dozen people living and working within the area, the same for the other projects that are over there.
Peter McCormack: But what could it grow to?
Peter Young: Tens of thousands of people.
Peter McCormack: In Próspera?
Peter Young: Well, the thing to bear in mind about it is that Próspera itself is not just a specific piece of land, it's kind of a platform through which any area of land can join and grow. It was initially a 58-acre development and then they incorporated this Pristine Bay development, which was about another 70 to 80 acres.
Peter McCormack: All on the island?
Peter Young: These are on the island, but Próspera as an entity is managing these individual areas through a common set of rules that they have, and you don't have to have contiguous land, the land can be based in any part of Honduras or even any other country.
Peter McCormack: Okay, we'll come back to that. So, as long as the government approves it?
Peter Young: So, what Próspera have done is they've created a governance platform, and if any area of any country decides they agree that part of the land can be part of Próspera, that can happen; that's their long-term ambition. So, what they've already done is increase the size to this 150-acre slot, but they could also do that if there were other areas of land that could be incorporated, they could also expand to incorporate that.
Peter McCormack: So, say I owned a bunch of land in Honduras and I wanted to become part of it, what is the incentive for me to do that; what do I get from being part of Próspera; what do I get new?
Peter Young: So, you get a different kind of regulatory environment.
Peter McCormack: Okay.
Peter Young: So, one of the challenges that Honduras faces is that a lot of businesses that would otherwise invest there won't invest there, because they're not confident in the legal system or they're not confident in the security situation; Honduras has got one of the highest crime rates in the world. So, if you have a situation where maybe there are issues with the local police and you're not happy with that, or there are issues with the courts and you have a business dispute and you're not happy with it going to a normal court, then this offers the ability to have disputes arbitrated by a different set of rules and different system.
Peter McCormack: Okay, so this makes sense, so you can bypass the less reliable, potentially, I don't want to make false accusations, but potentially corrupt security forces and legal system, and have a more private system or more independent system that people can trust in.
Peter Young: That's correct, yes.
Peter McCormack: And, the Honduran Government likes this because you're essentially privatising parts of the legal and security system because they can't handle it?
Peter Young: So, the current Honduran Government doesn't really like this.
Peter McCormack: Okay.
Peter Young: The previous Honduran Government did like this, and this law was established in 2013, so these zones have been in existence for about three or four years; they're a few years after the law was introduced. But earlier this year, a new government, led by Xiomara Castro, came into office and they have a very different political agenda from the previous one. So, at the moment, there is currently some uncertainty around what's going to happen with the future of the zones, because the current government is quite anti them.
Peter McCormack: So that kind of leads on to my next question because I was like, "This sounds great". What if the government just says, "Well, fuck this, we want all this land back and screw you and your laws"?
Peter Young: That's a great question. So, that's why one of the things that we focus on at the Foundation is to try and give new zones a really strong legal footing because we believe in strong property rights for people, we believe that that's the best way to encourage growth and to alleviate poverty. And, if you have a system legally whereby someone can't just come in and totally overturn an existing system, like for example, in the UK, a new government comes in, they can't overturn UK common law; common law is established over centuries through decisions made by judges.
There are certain things that we say, like there are limits to the power that we have to our elected governments, and I think you can make a case for that in other areas as well. One of the things that can be done with special zones is that you can have, for example, international treaties that are signed that protect the zones such that, if the government of a country decides they're going to expropriate property or land or resources from a particular zone, then overseas governments have a right to do the same with the Honduran assets or to that government's assets in another area. You can also do things like introduce constitutional protections.
So, both of these have been done in Honduras, so there was a constitutional amendment made, there were international treaties, and these mean that, actually, for the existing projects, even though the current government has said, "We're not a fan of these projects", it's quite hard for them to actually change the status quo, because there's very strong legal protections that were put in place.
Peter McCormack: But certain presidents sometimes ignore constitutions.
Peter Young: They do.
Peter McCormack: We saw that in Bolivia; was it Morales? And some people would argue, in El Salvador, that Bukele is ignoring the Constitution and will likely run again, and we don't have to debate why not. So, there are two ways to defend property rights, through the judicial system and through armed defence. Does Próspera need an army?
Peter Young: Well, so just to go to the way that you can defend it without having to resort to an army, if you have an international treaty which says that, "If you expropriate resources in this area that people from our country have invested in --" the Honduran Government has an investment protection treaty with Kuwait, because Kuwaiti nationals have invested in Próspera; if there is deemed to be expropriation of their resources in Próspera, then the Kuwaiti Government has the right to seize Honduran assets in Kuwait. So, this is a way that you can protect investment in areas, without having to resort to direct military defence of the area.
Peter McCormack: That's fair.
Peter Young: And that's something that's already been introduced.
Peter McCormack: Okay. I think governments will always struggle to be able to deliver everything that a government feels like it should, because they're incompetent and inefficient. Having travelled around South America, we know there are challenges with regard to security and trusting the local law enforcement, the judicial system and business. To be able to outsource that to more trustworthy private entities is a logical next step, because it takes the responsibility off the government, it takes the cost burden and it puts trust in the businesses that want to invest in that; it makes absolute total sense. I get it more now having heard that than I did, say, previously.
So, with regards to this situation in Honduras, unfortunately the new government, let's say they're not as interested, do you have a programme to try and educate them and spend time with them?
Peter Young: So --
Peter McCormack: Ideally?
Peter Young: No, we don't, and I think there are people that are involved in the projects, running the projects directly, that do have those dialogues with the Honduran Government. We don't seek that out ourselves, partly because they're very far away from our thinking on a number of different issues; it's a communist party, so their ideals are highly different.
Peter McCormack: Are they?
Peter Young: Yes.
Peter McCormack: I didn't know this. Are they a historical communist party?
Peter Young: They ran on certainly a very socialist platform and I think the word "communism" was used. I'd have to look the exact vocabulary that was used but it's certainly --
Peter McCormack: Are they not aware of the history of failed socialism in South America?
Peter Young: Well, this is one question we ask, yes. It's a little bit exasperating that people are still voting for these kinds of ideas, given the history in the region of them not succeeding.
Peter McCormack: How long have they been in?
Peter Young: Only about six months.
Peter McCormack: And how much damage have they done so far?
Peter Young: Well, there's been quite a bit of drama at the parliament, there's been a reasonable amount of policy change that they've been able to introduce; people can go and look that up if they want to see exactly what happened. There's been lots of political struggles at the beginning, but yeah, they're just trying to take the country in a direction which we don't personally think is going to be helpful for people.
Peter McCormack: I wasn't aware of any of this; wow, okay. So really, I understand why they don't like your ideas then if they're a socialist/communist-based party, because you're essentially advocating for the opposite.
Peter Young: We are.
Peter McCormack: Which is a private system. Okay, so within your system, there is a fee if you pay if you're an e-resident, so that's a visiting resident; what about a permanent resident?
Peter Young: So, you can't actually establish a permanent residency with a passport, in the sense that you can bypass the visa system of Honduras; that's one power that hasn't been granted to these zones. But the way that it works, just to expand it a bit more beyond this one project at Próspera, so the way that they do membership of the cities in another project, Morazán, which is by San Pedro Sula, which is the largest city in Honduras, that's done based on, you can either become a member or you can rent a property there. So, there are lots of people there that are renting properties that are very affordable and they provide basic security for people that are resident there through the private operating system through the security system that they have there.
Peter McCormack: What's it called?
Peter Young: The area?
Peter McCormack: Yeah.
Peter Young: So, it's San Pedro Sula, and then if you go up from San Pedro Sula to Choloma, which is an area with very high crime rates, then Morazán sits within that.
Peter McCormack: Is it like a compound?
Peter Young: It's like a walled area, yeah, you could call it a compound, it's a walled area with houses, with some industrial projects.
Peter McCormack: Can we find pictures of it?
Danny Knowles: What's that called, sorry?
Peter Young: Morazán. If you go to our website, you might be able to find some pictures; free-cities.org.
Danny Knowles: Just to clear up, they were a liberal party. I don't know what their policies are, but not actually called a communist party, they're a liberal party.
Peter Young: Click on "Blog" and then scroll down. Click on the Rosa Aguilar one. So, this is one of the residents of Morazán.
Peter McCormack: "One mother fighting for her dreams".
Peter Young: Yeah. If you scroll down a bit, you'll see a few more pictures. So, that’s Rosa who moved there, and this is constructing --
Peter McCormack: What are they constructing there?
Peter Young: This is constructing the main warehouse where they now have a medical supplies company.
Peter McCormack: Okay. Is that a private company that's come in and established there because they trust it?
Peter Young: It is, yes.
Peter McCormack: And they are able to distribute supplies throughout Honduras?
Peter Young: Throughout Latin America.
Peter McCormack: Throughout Latin America? But they feel safe having a property there, because they have legal protection and security and people won't come in and raid?
Peter Young: Yeah, that's one of the incentives, yeah.
Peter McCormack: Okay, and then these are the homes that have been established?
Peter Young: Yeah, these are some of the homes; so, this is a new set of construction there. The woman who's living in this area that this article is about is staying in this house at the end of it.
Peter McCormack: She's Honduran?
Peter Young: She is.
Peter McCormack: And this, for her, is good because she is able to live somewhere slightly safer, it's better for her and her daughter; is that what we're saying?
Peter Young: Yeah.
Peter McCormack: Okay, so this is a way of privately solving historic poverty and crime issues within developing countries?
Peter Young: Yeah, so the woman that is now living in Morazán was staying in an area called Choloma just nearby. She never had a business before, she was in quite a few personal problems with her family, had some young children, she's a single mother. This provided her an opportunity to become an entrepreneur for the first time, to have a place that she could know that she would be able to use for a stable period of time, where there was stable electricity, but also where she knew that there wasn't going to be any kind of local issues with crime. She's been very successful; she's now employing her own staff, she's got her own basic stuff for a restaurant, for a small shop.
Peter McCormack: Do her staff live in the same private area as her, or did they recruit in?
Peter Young: I think they commute in.
Peter McCormack: Commute in?
Peter Young: I'm not sure actually if they live there or not.
Peter McCormack: How did she afford to do this; did she have money or did she go and get a loan within there?
Peter Young: It's quite cheap to do it.
Peter McCormack: Yeah?
Peter Young: So, I think they charged her something like $20 a month to live there, to rent an apartment.
Peter McCormack: How; how can that work?
Peter Young: Partly because it's good to have her as part of the community, because she provides services to the workers, and so they wanted to just offer her a really good rate, but on the understanding that it was still like a paid service and that there would be conditions attached to staying. But they just try and establish the basic principles but make it as affordable as possible for local people, because they think it's a good thing to have them as part of the community alongside these larger businesses, like the medical supplies company.
Peter McCormack: Okay, so that's in Honduras; where else are you establishing or working with private cities?
Peter Young: Yeah, so outside of Honduras, what we've been able to do is more limited. I mean, we've got some partnerships with some intentional communities. So one that I'd name is called Liberstad in Norway, which is an intentional community that's being set up there. It doesn't have any kind of legal independence, but it's a place where people are coming together with a kind of libertarian mindset in order to establish a community. That's a small project with a few dozen people again, but that's an example of one nearer to Europe.
Peter McCormack: What can an intentional community do without having any control over setting laws? The majority of the framework for libertarian ideas comes from the idea with regard to the size of the state and legal framework, so if you're not able to effect or have your own set of laws, what can you actually do?
Peter Young: So, there's a bit you can do. You can trade internally in a way that's not utilising the banking system, and there are different rules around trade, around taxation, around what needs to be reported in terms of accounting and things like that.
Peter McCormack: Why though? If you're evading local tax laws, then you're --
Peter Young: You're not evading them. So, there are different rules in lots of places, but also in Norway regarding what you can do if you're just trading internally as a community.
Peter McCormack: Okay.
Peter Young: So, you're not using a fiat currency when you're trading, you're just using some other token; so this particular project has a stablecoin that they use in order to conduct local trade.
Peter McCormack: They need Fedimint.
Danny Knowles: Yeah.
Peter McCormack: Do you know about Fedimint?
Peter Young: A little bit, yeah. I was talking to Obi yesterday actually and it came up in the discussion I had with Matt Odell.
Peter McCormack: That sounds perfect for them.
Peter Young: Yeah. But yeah, this is the project. It's a way that, if you're someone that doesn't like to have to do a lot of reporting for all your activities to the government, then you can join a community like this and you can do it through their individual stablecoin. Then the way that it works internally is that only the company itself does the reporting and buying of things on behalf of the community, and then that streamlines and simplifies the whole process.
Peter McCormack: What you guys really want though, you really want a large successful private city, 10,000, or 100,000, even 1 million people; that must be the goal to prove this works at scale. I think, even somebody like myself who's interested and sceptical wants to see it work and wants to see how it works and wants to see that option. I love that thing where Balaji talks about vote with your feet rather than with your ballot, it's much more effective.
What are the biggest hurdles to getting to that point; is it that the state just has such a stranglehold and something like this such a threat to them and nobody ever wants to allow this?
Peter Young: Well, in part it's convincing people that this is a good thing to do, and in part it's finding the right areas where you can buy land and you can expand, and it takes time. I've mentioned projects in Honduras and I mentioned other projects, like Liberstad, we have partnerships with, but we're also working on a new project in West Africa, which hopefully we'll be able to announce in two to three months; this is somewhere where we are aiming for that 10,000 kind of figure eventually.
Peter McCormack: So how much can you tell us about that without announcing it?
Peter Young: Not a great deal other than, if all goes to plan, then that will allow an even higher degree of autonomy than what's been possible in Honduras.
Peter McCormack: Right.
Peter Young: So, if people want to learn about that, we'll be making some announcements about it at Liberty in Our Lifetime in October.
Peter McCormack: It's not the one with that rapper, is it?
Danny Knowles: Akon?
Peter McCormack: Yeah.
Peter Young: It's not, no.
Danny Knowles: Thank God it's not that one!
Peter McCormack: Jesus Christ!
Danny Knowles: Why would any of these countries allow you to do this; do they get paid from the city?
Peter Young: So, we ideally try and create a win/win situation for the government. So in Honduras, there is a percentage, there's a profit-sharing deal for the company that comes and sets the development up, so a percentage of the profits; it's about something like 12% from the Honduran projects go to the government. But also, the same reason that countries allow the establishment of special economic zones, because it brings in investment, it creates a preferable environment that's more competitive internationally. So, people come in, they invest, they build things, that creates jobs for people who are in the surrounding areas.
So, there are lots of reasons why people establish special zones, and these zones just go slightly further in terms of their autonomy, and that's the case we always try and make, that this is a genuinely beneficial thing for the government. We believe that it is a symbiotic kind of relationship, that if you establish a special zone then it does genuinely help the host government.
We were talking about China at the beginning of the show; if you look at what's happened to the area surrounding Hong Kong, like Shenzhen, Shenzhen is now the wealthiest per capita place in China, in part because of its relationship with Hong Kong and the fact that it sits just across the border; because, when you have these really wealthy and successful areas, then that creates more opportunities for people in the geographical proximity. So, we make that kind of case to governments when we're talking to them about establishing special zones.
Peter McCormack: I guess you're taking some of their responsibility away from managing areas and paying them for it; you're paying them to operate an area for them. There's like a strong long logic to it, but at the same time you're making an argument for government to not exist. You're basically having to tell them, "There's no reason for you to exist", without telling them that, but telling them enough to convince them to do it.
Peter Young: Well…
Peter McCormack: Yeah.
Peter Young: If you want to get into a really philosophical case for it --
Peter McCormack: I do.
Peter Young: -- yeah, you could make that argument. What we're saying really is that you don't have to go as far as we might do individually in terms of your view on politics and whether you think that you want to go into a full anarcho-capitalist kind of society, and whether you think something that's more libertarian but further away from that and more close to what today's society might be is the better option. You don't really have to take a position on that because in practical terms, what we're suggesting is that the zones are just granted a high degree of autonomy.
We make the case for having good legal frameworks, for having better incentives for the zones, that are established such that the people that are running the zones have a direct incentive to make them succeed; they're not rewarded for decisions that boost activity in the short term but might be bad for the long term. So, we make the case to governments that this is a good thing and we point to examples of city states like Monaco, Singapore, Hong Kong, Liechtenstein and the kind of wealth belts that have been generated around them.
Peter McCormack: Are those particular territories successful though because they were able to establish themselves as zero-tax or low-tax regions in areas where people want to avoid tax, and therefore it brings the wealthy into those regions and they become successful because of that?
Peter Young: I don’t think that's really the right way to look at it.
Peter McCormack: But I think it's an important lens to look; so, Monaco, zero tax.
Peter Young: Well, zero income tax.
Peter McCormack: Yes, okay, so it's great for Formula One drivers.
Peter Young: Yeah, Monaco, most of its tax is raised through VAT and it has a system whereby it -- strangely, people think about it as like an offshore financial place, but there's really not much of a finance industry there.
Peter McCormack: I think of it as a holiday zone and it's good for wealthy people. I'm not criticising it, I'm just -- Liechtenstein, what's the tax rate there?
Peter Young: I'm not entirely sure of the tax rate, but the examples I'm more familiar with would be like Hong Kong, Singapore. And, if you look at those examples, people turned up in their millions to Hong Kong during the Cultural Revolution with nothing; there were people fleeing the Vietnam War that were able to find refuge in Hong Kong. But the history of this region is that loads of people turned up, started from absolutely nothing, arrived with just the clothes that they had and a suitcase, and it's turned into a place that is wealthier, in per capita terms, than the UK is, and it took about four to five decades for that to happen.
Peter McCormack: Why is that as well?
Peter Young: Why is that?
Peter McCormack: Yeah, why was Hong Kong so successful?
Peter Young: I think it was because, in the post-war years, they established a very minimal government regime where there was between 9% and 12% government expenditure as a proportion of overall GDP, and that compared to, say, 40% plus in the UK. So, the government in Hong Kong was much, much leaner than the UK government, because it had some government officials; there was one who was the Chief Financial Officer called Sir John Cowperthwaite, who had some more libertarian ideas, and through that he kept the government really lean and small and just established clear property rights, which is what we advocate for at the Free Cities Foundation. Through that happening, Hong Kong's economy really succeeded in a short period of time.
I think the most impactful story for me is just the huge amount of people that I know were able to escape from what happened in mainland China and dramatically improve their lives as a result of it.
Peter McCormack: Until recently, sadly.
Peter Young: Until recently. I think the changes that have happened in Hong Kong relate to politics and media, and even now you can still do business there with a relative degree of freedom. I am definitely concerned with what's happened in Hong Kong, but I think there's a lot to be learnt from the overall story of how it's succeeded in terms of how they kept the government lean and how they kept private property rights strong.
Peter McCormack: It reminds me a little bit of that tweet we saw yesterday as well from the guy who was the President of Estonia in terms of fixing their country.
Peter Young: Oh, yes.
Peter McCormack: See if you can dig that out because I just think that's an interesting analogy. But I guess what you're saying is the more limited government is, the more opportunity there is for people to flourish. I'm not somebody who's ever been convinced by the idea of no government, but I think there needs to be some kind of government, but hopefully, limited and as small as possible. My worry about no government and purely private is what's now happening in Singapore, which has essentially gone very authoritarian, which is always the risk of having a fully private kind of jurisdictional area. What's your interpretation of what's happened there?
Peter Young: So, the difference between, say, Singapore and what we would advocate -- so there are various models, the core model that we advocate is the Free Private Cities model which is a conception of Titus Gebel. Within this model, the way that the relationship between citizens and the people that operate cities, we call them city operators, works is that there is a real contract that is signed between each citizen and each operator.
Within this contract, you specify all of the rules that the city has, and they mainly revolve around protecting the rights of other people and respecting the rights of other people, respecting their privacy, their ability to do business in a way that they deem suitable as long as they're not harming any people. Then within that, you also a set of obligations in terms of what fees need to be paid for the basic services.
So, that’s one model that hasn't been fully trialled yet, but we think that there's a strong case to be made for it. The difference between that and Singapore is that, in Singapore, you still have a government which is ultimately in charge of setting law and running the legislature, running the executive. So within our system, if it doesn't say, "In the case of X, Y and Z, you can lock down an entire population, keep them in their homes", then there's no legal basis for a free private city to be able to do that; whereas, in any other kind of society, the government just needs to get parliament to agree that this is the right course of action and it can be done.
Peter McCormack: If one of these projects was successful enough though, it could be one that eventually was completely autonomous from a state, which would be super-cool and interesting to see. I mean, it's almost like, "Why don't you just find an island and establish your own free country?"
Peter Young: The thing with doing that is that all of the land in the world is currently occupied by nation states, so there's no free land left. So, wherever you go, you're going to have to work with the government, unless you're part of the seasteading movement; that's the one exception.
Peter McCormack: Talk to me about that.
Peter Young: Yeah, so the seasteading movement is designed to try and establish new societies on sea.
Peter McCormack: Do you remember the Freedom Ship?
Peter Young: The Freedom Ship? I do, yeah.
Peter McCormack: Have you seen the Freedom Ship?
Danny Knowles: No.
Peter McCormack: I followed this for a while and the project ended up dying. I was like, "Is this real; are they really going to do this?" I don't know if it's still live, but it was a project, the idea was to build this entire city on a ship. So, if you go to the images, and I was like…
Peter Young: Yeah, some of the people involved with seasteading were involved in this ship.
Peter McCormack: I mean, look at that fourth picture, Danny, it's like an airport on top; can you get to it?
Danny Knowles: I want to read about it.
Peter McCormack: Right, so the Freedom Ship, I mean, probably before my kids were born when I first read about this, a long time ago. "Freedom Ship is a floating city project initially proposed in the late 1990s. It was so named because of the free international lifestyle facilitated by a mobile ocean colony. The project would not be a conventional ship, but a series of linked barges. So, this one was an integrated city 1,800 metres long, with housing for 80,000 people, a hospital, school system, hotel, casino, commercial, office occupancy, duty free shop".
You've got to go online and search for the Freedom Ship and see this, I mean it's huge. Think of a cruise ship and then like 20X it, that's what it is, and that’s because it's in international waters?
Peter Young: International waters, there's no government that has full jurisdiction.
Peter McCormack: Go back to the pictures though, Danny, I just want to see some of those pictures; I think there are also videos you can actually see them, but they actually did like the flybys and I was fascinated by this project just because of the idea. I mean, look at that airport, there's literally an airport on top of the ship; yeah, it's unbelievable. The one thing I thought about with this was, have you seen the film Snowpiercer?
Peter Young: I have not, no.
Peter McCormack: Is it Snowpiercer, with the train?
Danny Knowles: I don't know.
Peter McCormack: Like, I wonder how it creates the haves and the have nots within the city and the kind of weird zones of the rich and the poor. I think sometimes these things are kind of designed idealistically.
Peter Young: Well, if you want to see what the current seasteaders are mainly doing, there's a company called Ocean Builders based in Panama.
Peter McCormack: Let's have a look, Danny.
Peter Young: They are building individual pods for people to establish at sea.
Peter McCormack: Individual pods?
Peter Young: So, like family-sized homes basically on sticks, a bit like oil rigs.
Peter McCormack: Can you connect them so you can become a community?
Peter Young: That's what they aim to do, yeah.
Peter McCormack: Holy shit; this is cool!
Peter Young: So, two of these are going up this summer off Panama.
Peter McCormack: Wow, this is fucking cool!
Peter Young: Yeah.
Peter McCormack: Oh my God, that is so cool! It's like something from the future.
Peter Young: So, these are going from about $400,000 each.
Peter McCormack: How far out to sea do you have to be?
Peter Young: They're actually starting doing these within Panamanian territory, but then you have to go out I think it's a couple of dozen nautical miles until you're actually in international waters.
Peter McCormack: Okay, and then once you're out there and you're in your home, hold on, you're just kind of stuck in a little pod?
Peter Young: You would be.
Peter McCormack: What can you do?
Peter Young: You would be, but you could go out there, you could fish, you could enjoy your home. I mean, people can't see here but these are quite spacious pods.
Peter McCormack: Yeah, hold on, this like is WWF stuff; are we going to be eating bugs in these as well?
Danny Knowles: You should eat fish!
Peter McCormack: Okay, so why would you do this? Firstly, do you avoid any tax because you're in international waters?
Peter Young: Yeah.
Peter McCormack: Can anyone stop you? Can anyone anywhere go and build what they want out in the middle of the ocean?
Peter Young: Well, they could do technically; there's not any law. There's something called the law of the sea, which is an international set of rules that tend to be recognised by states. But if you were to go and conduct some economic activity out in the sea in international waters, then no individual state would have jurisdiction over you.
Peter McCormack: I see a lot of flaws in this one. Danny, can you get up the GreenPod? Oh, it's a land pod. I mean, they're kind of cool though, look at that; I want to live there, fuck it, that is so cool. What's the EcoPod; is it the budget one?
Danny Knowles: This one's the one in production by the look of it.
Peter McCormack: We're not to like pods, but these are very cool; I like these.
Danny Knowles: Yeah, but that's what it actually looks like!
Peter McCormack: What is that?! "Our first prototype"; that’s shit! Why have you put that there?
Peter Young: Well, just showing you how much it's improved since the original.
Peter McCormack: Okay, what we're saying here, there's lots of experimentation of ideas.
Peter Young: Yeah.
Peter McCormack: Interesting. So, if somebody had enough money, they could go to a poor country and say, "We want to buy some land from you", that would be a possibility; a country could sell its land.
Peter Young: They could, but that land would still be subject to all the normal laws of the country.
Peter McCormack: Why?
Peter Young: Because it's part of that country's sovereign territory.
Peter McCormack: What if that country sells its sovereign territory though; can it not do that?
Peter Young: Well, when people normally say, "Buy land", they're talking about buying it in the same way that you bought this home presumably.
Peter McCormack: No, I'm talking about someone rich enough to go to a country and say, "I just want to buy that one island; I just want that. I'll give you $20 billion, whatever the price is, but we're claiming sovereignty over it at that point. We're separating ourselves from you; we're going to establish our own country".
Peter Young: Well, typically, there's a parliament and a legal system and then you can't reverse sovereignty on any particular piece of land you've sold unless you go through the parliament.
Peter McCormack: But just imagine that scenario.
Peter Young: Okay, let's imagine it.
Peter McCormack: Yeah, could you establish your own country?
Peter Young: You could, yes. There wouldn't be any reason for you to not be able to establish a country; your obstacle would be whether this country is recognised by others. So, there are certain places that are seeking international recognition at the moment, one example is Liberland.
Peter McCormack: Yeah, I've heard about this.
Peter Young: Yeah, an area between Serbia and Croatia where the river has moved, which previously marked the border between the countries, and because the river has moved, there is an area in the U-bend of the river which is kind of ambiguous territory; people aren't sure whether it belongs to Serbia or Croatia. So, people have come together and tried to claim this land, their project is called Liberland, and they're seeking international recognition from other countries, and that has proved to be quite difficult because of the sensitivity around this particular piece of land.
There's a different view as to whether they're allowed to be there and allowed to establish the project depending on whether you consult the Serbian or the Croatian government, so there are some sensitivities there. But that's one of the key things that you need to have normally to trade with other people, to have a passport that's accepted at other countries where people want to visit other countries; it's international recognition.
Peter McCormack: Yeah look, okay, it's pretty clear that to establish these free independent private cities, whatever you want to call them, it needs to be within the structure of an open willing government that's allowing it to happen. What types of governments do you think are most likely; is it more developing countries because there's an economic incentive?
Peter Young: I would say that where we tend to focus our efforts is on developing countries, partly because they're a bit more openminded and they're looking for solutions. If you go to developed countries, it's typically harder because people tend to view politics through a slightly different lens, I would argue in part because maybe some bad political ideas have started to become more popular in recent decades.
Peter McCormack: Such as what?
Peter Young: So, let's take this country as an example, I would argue that the reason why this country has become so --
Peter McCormack: Fucked?!
Peter Young: Well, it's still one of the wealthiest countries in the world, it's because we have a long period, prior to the Second World War and the First World War, where we did have a very different system of government, where government, again, the proportion of government activity was less than 10% of GDP.
Peter McCormack: What are we at now; we're at like 40% now or something?
Peter Young: We're at about 50% now.
Peter McCormack: Are we 50% now?
Peter Young: Yeah.
Peter McCormack: It's ridiculous.
Peter Young: It's kind of gone up in the COVID response.
Peter McCormack: I've talked about this on the show recently. One of the things that was discussed recently with regards to inflation, the government was looking to remove 90,000 positions from within government. I was like, "That's a lot positions", and that was all new positions that were added within government in the last four years.
Danny Knowles: Since 2016 it was.
Peter McCormack: Was it 2016? So, they wanted to remove 90,000, but they'd added net 90,000 new people working for the government since 2016.
Peter Young: That's much be public servants in general, right, so that includes doctors, nurses, teachers?
Peter McCormack: I don't know.
Danny Knowles: Civil service jobs it says.
Peter Young: Civil service?
Peter McCormack: Yeah.
Danny Knowles: But imagine how many of those have come just in the last two years because of COVID, or two-and-a-half years or whatever it is.
Peter Young: Yeah, that seems like an incredibly high number to me because I think the total figure is about 420,000 civil servants in the UK.
Peter McCormack: Yeah, well, "90,000 civil servants are likely to lose their jobs in an attempt by Boris Johnson to find money to ease the cost of living crisis". I mean, I saw it here, even in the US, there was a report, like 60% of government spending is on government, or 60% of tax -- what was it? We saw it recently.
Danny Knowles: I can't remember.
Peter McCormack: But the point is, these successful western liberal democracies, the size of the state, it's just got out of hand, it's just got too big.
Peter Young: If you accumulate capital over a long period of time -- I don't know, when was this house built, just out of interest?
Peter McCormack: About a year ago.
Peter Young: About a year ago? Okay, so this is a new build house?
Peter McCormack: Yeah.
Peter Young: Well, the area that I grew up in, in Gillingham, the houses there are normally built in the 1890s, most of them, so that's kind of capital stock that you developed a long time ago, that you developed during the period of the gold standard, that you developed during a period when government spending was much lower. Lots of the things that we take for granted, like government funding of science, the NHS, all these things, none of them existed.
Peter McCormack: Houses built with solid walls!
Peter Young: This house is built with solid walls?
Peter McCormack: I'm talking about the houses in Gillingham that were built in the 1890s.
Peter Young: Yeah, they last.
Peter McCormack: All the walls will be solid.
Peter Young: Exactly, they are, they're good quality builds.
Peter McCormack: So, you might now have seen it, there's a whole estate that's just been built up round here. I got back from holiday two weeks ago, I went away for two weeks, the houses that are there now, you can see them, did not exist before I went; in four weeks, a whole row of houses just appeared. I don't know if they started the day after and they finished it the day before I got there but they're just cropped up.
Peter Young: Okay, well, there's nothing necessarily bad about that.
Peter McCormack: No, there is because they're soulless, badly designed, badly built shitty estates; they're terrible! One of my friends moved into one of these similar estates by the same company building them. Their house, like after they moved in, the amount of problems they had with it just moving, the walls cracking; these are shit houses built very badly.
Peter Young: It's interesting, because people often say that. Someone told me that, in western societies, roughly half the housing stock, or the building stock, was built before the Second World War, and roughly half afterwards. And, if you ask anyone, "Would you prefer to keep all of the structures that were built before the Second World War or after?" then they always say before, because these buildings in general tend to be more aesthetically pleasing, built to last; this is the opposite of what people that are supporters of the current urban planning system and land planning system would expect.
The whole argument for intervention in a housing market and for being very prescriptive about how houses should be built, what the size of the rooms need to be in order for it to be a suitable dwelling, and there are lots of those that exist, all of these are designed to improve quality. But the result is that, because you end up having to comply with all of these regulations to do with size and the shape of the housing and things like this, you add on extra costs. Then this means that in other areas you have to skimp in order to come down and be competitive with your pricing. So we find that actually, the result is the opposite of being very prescriptive in the housing regulation.
Peter McCormack: Do you want me to tell you a really dumb regulation for this house?
Peter Young: Tell me.
Peter McCormack: So, did you notice the wheelchair ramp on the way in?
Peter Young: Yeah, I did.
Peter McCormack: So, that's waiting to be removed. So, this house could only be signed off once it had a wheelchair ramp established, but the problem with that is it's a gravel path to the wheelchair ramp. Also, there's nobody in this house that needs a wheelchair, but it can't be signed off. But as soon as it's signed off, you can then remove it.
Peter Young: That's bizarre.
Peter McCormack: Yeah.
Peter Young: I came across some similar stuff in the US. So, I went to visit someone in Austin who was about to buy a house and having a house built, and they were just waiting for someone to come in and put in the flooring; they were going to put in their own flooring entirely from scratch. I said, "Why are doing this?" and they said, "Well, because the house has to be sold in a completed form before it can be signed off", before they can get a loan for it, all these things. So, they're just having to do all of this extra work and then the plan is to remove it entirely and then start it again.
So, there are lots of these regulations that do add of these costs and push house prices up, and it's quite bizarre. I'd be interested to know why this particular house has to have a wheelchair ramp.
Peter McCormack: No, I think they all do now.
Peter Young: Due to size; any new house?
Peter McCormack: I have no idea, all I know is, for this house, that it had to have a wheelchair access. I think it's because there's a step in front of the --
Peter Young: Yeah.
Peter McCormack: Most houses don’t have a step. Even if you get up that ramp, up that step, you've still got to go over the step into the house, but it might be because the house has a step in front of the front door so it has to exist, but that is a broad regulation, whatever the regulation is that exists. But like I say, you can remove it afterwards; there's no law that says I have to keep it.
Peter Young: Yeah.
Peter McCormack: The whole thing is absolutely ridiculous, and that's just one example; there are so many with this house, and it's just with new builds. I think that's the problem when you build a big government, you create a lot of jobs for people to have to create rules and enforce those rules. If you reduce the size of government, you're going to have to get rid of those fucking stupid rules.
Peter Young: Yeah, it's --
Peter McCormack: What you're advocating for.
Peter Young: All of these policies often have the opposite impact, and that's why we're advocating for what we're advocating. I mentioned Próspera at the beginning; this is an area, for example, where they don't have any of these prescriptions around what you can and can't build. They don't have prescriptions around things having to be in a certain pre-defined way in order to be sold and put on the market.
They're using modular housing, for example, so this means that you can just build one unit of a house and have parts of a house where extra areas can be added on at a later time if you want them to, and it looks nice and neat and it's also quite cheap to do and produces a really nice aesthetic. So, this is the kind of thing that's possible in free cities, but unfortunately we have a different system which adds to costs and creates problems in most parts of the world.
Peter McCormack: Do you think you could ever establish a free city here in the UK; is there even an attempt to do that; could we do it in Bedford?
Peter Young: Well, we'd have to convince people that this was something that would be beneficial and, if you look at where parties are at the moment, where people get the votes, there's not really much in the way of libertarianism in the UK at all.
Peter McCormack: No.
Peter Young: There is a very small libertarian party that doesn't get very many votes. But if you look at the policies of the Conservative Party and the Labour Party, Liberal Democrats, there's not a huge amount of difference between them I would argue.
Peter McCormack: No, I completely agree; I mean, the Conservative Party don't look like the Conservative Party anymore.
Peter Young: No, it's like they want slightly less spending than Labour, but they want to see more spending every year. By the way, I was listening to one of your podcasts earlier this week where you made reference to austerity in the UK and said that this was dealt with badly. But one of the things people often don't know about austerity is that, even in inflation-adjusted terms, there was no overall reduction in spending, even during this whole period when the whole country was talking about -- but even inflation-adjusted, there was no reduction in spend.
Peter McCormack: Yeah, I mean the austerity rules were just a very cruel set of rules that made very little difference in the grand scheme of things. If you want to make a significant difference to spending, you massively reduce the size of government.
Peter Young: Yeah, this is what I would say austerity means, reducing the size of government, and the only sense in which you reduce is in terms of the percentage of government's spending in terms of overall GDP; but the actual figures, the actual total amount of resource going to the government, continued to go up every year.
So, this what I think we need, and I think it's really troubling that there are still so many social problems, and there are new social problems that exist in this country which I don't think existed 100 years ago. There are certainly many ways in which society has improved immensely, but what you should be looking at is the rate of improvement.
If you look back to, say, someone in 1850 versus how well-off they were in comparison to someone in 1900, it's a really, really huge difference; the average house price, for example. People didn’t really own homes in 1850, everyday people; that started to become a thing in about 1880, 1890. The amount of time children were spending in schools was going up, the amount of good quality medical care was going up.
If you look at house prices, for example, in the UK, they went from like 13 times average incomes in 1850 to something like 4 just before the First World War. So, all of these improvements were happening, but since we've dramatically increased the size of government, some of those trends have started to go back in the wrong direction and we've started to have lots of new social problems in this country.
To go back to your question of whether we should establish a free city, or try to establish a free city in the UK, of course that would be a brilliant thing, but I personally feel that, because we've had such a long period of development and because lots of people are still living in houses that were built in the 1890s, or whatever it is, you can do quite a lot wrong and you can still have a relatively high standard of living; I would argue that that's what we've done. You're able to just kind of coast off the capital you've accumulated historically and do reasonably well, and just not have the pace of improvement that you used to have, and I'd argue that’s what's happened.
Peter McCormack: Unless you're particularly wealthy, everything's just getting shitter a little bit; it's like a death by a thousand cuts, everything's just getting a little bit shitter for most people, like they're getting squeezed, and squeezed, and squeezed. Like you say, it's increasing the size of government, it's also the money printing and the disproportional impact that has on people.
We had a guy on our show called Avik Roy, I'd recommend you listen to his show. You'd like him, he works for FREOPP in the US; it's a thinktank. They talk about the compounding impact of inflation on the poor, and he said even at low inflation rates, at 2%, has a compounding impact on the poor, you're just creating a widening and widening wealth gap; that's worth listening to. Also, have you been to Harlow recently?
Peter Young: No, I haven't actually.
Peter McCormack: So, I went down to Harlow recently because we're making a film about inflation and ended up finding this block, it's an old office block, a disused office block. To solve their housing problems, they've converted it into residential housing; I can't remember the name of the building, it begins with a T. If you search up "Harlow"…
Danny Knowles: The Lawn?
Peter McCormack: No, "Residential Office Block"; you've got to see this, let me show you this. This, to me, is a very strong signal of the country going in the wrong -- yeah, Terminus House, there we go, human warehouse housing. Okay, so it's an old disused office block, they have a housing issue in the country, so they handed this over to a private operator to convert it into social housing. It's a fucking ghetto! You get down there and, firstly, it's right near the town centre, but I would say the poor end of the town centre, the more kind of betting shops and charity shops; there's bingo it in. Around the edge, and it was so depressing to see, but outside slot machine bingo.
Then, you have to go up through a set of steps to get into the building and it's horrendous. How is our solution for poverty and homelessness and single parent families to put them all inside this kind of ghettoised office block rather than before where at least we used to be able to provide social housing? And, do you know what, it's because of the size of government. This is why we Bitcoin, because we're trying to advocate for smaller government, I mean some people are no government, but smaller government, more responsible economic policy.
Peter Young: Yeah, well, I think part of the solution is you just need to be able to build more houses. It really stepped up in about 1948 with the Town and Country Planning Act, but prior to the First World War, there was very little in way of planning restrictions, and you had, you know, a huge amount of new housing being built. I think part of the reason why these sorts of solutions seem to be necessary is that it's very hard and very expensive to build new places at the moment, and this is one of the things that Free Cities aims to solve and I'd like to see changed in this country as well.
Peter McCormack: I'm going to tell you something funny. When me and Danny popped out, we were talking about this one and I was like, "I'm so sceptical, I'm going to really push some tough questions on him". But I really had that moment where it clicked with me when you were talking about Honduras, in that the investment opportunity for some companies is limited because they fear the issues with the judicial system or security.
Most of us know that the government is pretty fucking useless at most things, apart from tax collection and maybe borders and a few other things, right. Again, I don't advocate for no government, but the fact that you can A/B test whether you can prove that we can do some things, running part of country, better than the government I think's brilliant; I like that idea and I'm convinced. Look, I'm on board now, I get it; yeah, I'm actually interested in knowing a lot more about this. I want to go and visit that place in Honduras and I want to know about this place in Africa when it's announced and I'd like to go.
Peter Young: I think we've covered some historical examples of places that have done quite well on this sort of model, and what we're basically advocating is that we try and examine what's worked well. The world is a very complicated place and there are so many different factors that you have you take into account when you're analysing what a society has been through and why it's been successful and why it hasn't been.
What we try and do at the Foundation is try and distil that down to the basic principles, the market ideas that have made society successful in the past, and we try and make that a kind of cleaner and simpler legal framework, and we adopt that in the places that we're working with or encourage that for other people that want to try out something new. So, yeah, we've covered quite a lot and I'm pleased to have had the conversation with you today, Peter.
Peter McCormack: Well, I'd like to do this again actually, and the reason being I think I want to do a lot more -- I haven't finished Balaji's book yet, and I'd like to read a lot more about what's been going on on this. Yeah, I'd like to do this again.
Peter Young: That would be great.
Peter McCormack: But if you've ever got something you want to talk about, you're welcome to come back on the show and just tell us if there's a particular project you want to tell us about. How can people support you or help you? You're obviously a foundation so what can people do if they're interested in this?
Peter Young: So, you can go to www.free-cities.org and there's a section on our website called "Get Involved". One of the things that people might want to do if they're interest in free communities is come to our conference in October; that takes place from 21 to 23 October in Prague. We're going to be showcasing projects like the Honduran projects there, like Liberstad in Norway. We should hopefully have something that we can say about the West African project there as well. So, if people want to come along to that, that would be a great way to support us. There are also ways that you can volunteer or donate and things, so visit our website, free-cities.org to find out about the options.
Peter McCormack: Amazing. Well, listen, all the best with this and, yeah, I really want to do this again, so thank you for coming in and, yeah, hopefully I'll talk to you again.
Peter Young: All right, thanks very much, Peter.
