Titus Gebel is a German libertarian entrepreneur and activist living in Monaco. He proposes to create free cities to improve the governance of states and force them to become accountable to their citizens.
Government and self-determination
According to him, the only problem of humanity is that everyone wants to impose their will on others. States use 30% of world GDP. The absence of profit, considered by many as a moral seal, is usually offset by the ineffective use of resources.
The author presents examples of ineffective or counterproductive expenditure.
Germany and Sweden voluntarily attract unqualified people by offering high social minimums. Gebel quotes the stories in the german press of a Syrian refugee married to four women and with 25 children can receive 30,000 euros of monthly welfare payments if he lives in Germany. He gets nothing in Syria.
Iran and North Korea set up arbitrary rules and kill their citizens who violate those.
In general, states are ineffective and treat their citizens as captives rather than customers who have a choice.
The utopias described by philosophers of the past never speak of voluntary participation, but are almost always totalitarian states.
Governments behave like cartels, and only a revolution or secession allows someone to escape their dominion.
The solution advocated Gebel are:
Self-determination must be an alternative
Competition allows improvement
Institutions must be subject to a mutation, selection, reproduction process
He quotes Stefan Zweig in 1936: the majority do not choose the "patient and just", but seducers and other conjurers of great questions of destiny.
Patient people must establish their own community.
The political follies of post-war Germany
No man is good enough to govern another man without his consent
—Abraham Lincoln, who hastened to govern tens of millions without their consent nevertheless.
Gebel reviews the history of Germany after the war:
Adenauer implemented in 1956 a distribution pension system against the advice of experts. This was funding 60% of the last salary but was unsustainable and now finances 48% of the last salary.
Kohl adopted Euro in 1999 against the will of the majority
Schroder sends troops in 2001 to Afghanistan
Merkel decides to stop nuclear power plans in 2011
Merkel welcomes hundreds of thousands of migrants as asylum-seekers
Liberal principles of justice
In all these cases:
A small minority makes the decisions
It has nothing to fear from potential bad consequences of its policy
The burden falls on others.
This is a case or has decided what B and C must do, and what must be paid to D.
Democratic sovereignty is inherited from absolutist governments, the government has all rights and minority.
Co-determination and autocratic control are opposed to self-determination
A person who does not harm others has the right to the leave, even by the government or by large groups
Human interaction must take place on a voluntary basis and without coercion.
Current governments are still based on a violation of self-determination
The Exit Tax renews a practice that the abolition of serfdom in the 19th century had interrupted.
The golden rule in its weak form is negative: do not do to others what you don't want them to do to you.
Reciprocity in law is a fundamental element to justice. There is no legal framework for what A and C get along so that B gives them its goods without its agreement prior.
Gebel discussed with his Somalian taxi of Somaliland, a territory of Somalia that wants self-determination. The northern taxi was against independence. Why? The taxi simply says: because we in the North, we don't want it.
Self-determination is opposed to the government by a leader, who imposes rules of life and an objective for all. Collectivist and religious regimes are against self-determination, they say they know the common good best and hide the fact that the argument is to their advantage.
The UN Charter guarantees the populations the right to self-determination, but it is immediately withheld by giving the State’s right to territorial integrity
Welfare state
"Show me the incentives and I will predict the result" --Charlie Munger.
Political misincentives: purchase of votes, expansion of state powers
Bureaucratic misincentives: more budget when there are more societal problems.
Misincentives for beneficiaries: rewards spending and punishes thrift.
Growth is hampered by consumption debt
Paternalism
Corruption of human capital: dependence replaces the precaution.
The electorate follows the “minimum principle”, according to which everyone tries to obtain as much as possible for the minimum of effort. The State can promise social benefits that seem to come for free: UBI, welfare, labour regulations, replacement of nuclear energy with wind and solar.
Political history of free cities
Ancient Greece
The Greek government is organized around the unit of the "Polis", sovereign city of some tens of thousands of people
Each city has its government and its legal system, Aristotle (known as the Stagyrite) decides to migrate from the city of Stagyre to Athene.
There is competition between different forms of government. Sparta is undemocratic and imposes the non-specialization of its population
Democracy gives rise to an extension of the voting franchise, and according to Plato, naturally evolves towards demagoguery and then tyrany.
Unlike Greek cities, Macedonia is an "ethnos", a nation state, which will unify Greece and will launch it in an imperial project.
German Middle Ages: City of Hanse
In 1216, a municipal council was created in Cologne against the will of the archbishop. In 1288, the council won the battle against the archbishop and took power.
The Germanic emperor is sovereign but has no power, he accessed at the request of the creation of free cities to create a bourgeois power counteracting to the aristrocracy which controls military power.
The serfs are freed if they manage to stay for 1 year and 1 day in a free city.
Lubeck and Magdebourg are recognized by merchants as legacies for commercial contracts.
Some city buy their independence from their prince.
In the 15th century, franchise extension, the regulations become more and more complex, the rich become targets when they are unpopular.
Most free cities lose their status in 1803 during the Napoleonic conquest
Frankfort lost his status in 1866, Lubeck in 1871.
Venice and Ragusa
The Republic of Venice is founded by Romans who take refuge in the marshy zone to defend themselves against invasions.
Like Hanseatic cities, it uses protection rent arbitrage to draw significant commercial profits.
It becomes rich in the Middle Ages thanks to the Spice trade with the Levant, its fortune decline with the discovery of the Americas.
Venice maintained its independence for more than 1000 years, from 697 to 1797, and finally disappeared with Napoleon’s conquest.
The Republic of Ragusa, center on Dubrovnic, obtains its independence from Venice (with Suzerainty to Hungary which is not a maritime power). It quickly becomes free. It also fell to Napoleon’s armies in 1806.
Monaco
Monaco is founded as a Genoese colony. The Grimaldi, Genoese family, seized it and at the end of a war with Gene, become foreign vassals of the King of France.
Monaco lost his independence during the French Revolution, and was restored in 1814 as a protectorate of Sardinia after the defeat of Napoleon.
In 1860, Sardinia cede the county of Nice and Savoy to France, Monaco faces the revolt of the cities of Menton and Roquebrune because of excessive taxation. It gives up this cities to France, which are 95% of its territory.
A luxury hotel and the casino are built. The recipes are such that Monaco stops taxing its inhabitants in 1869.
The absolute monarchy was abolished in Monaco in 1911, with the promulgation of a constitution.
In 1963, the tax flight of rich French people and companies lead to a french blockade of Monaco under Charles de Gaulle. French citizens who settle after 1962 in Monaco will be taxed by France.
Monaco gives residency permits for 1 year and then 3 years. It does not renew them if there are any problems with the new resident. Any criminal act leads to the revocation of residence. The police follows the law and enforces public order.
The Government of Monaco scrupulously retains the minutes of its negotiations with the French authorities because, over long enough periods, the French authorities often contradict themselves. These archives allow Monaco to plead for a continuity of the relationships between the two countries.
Titus Gebel lives in Monaco
Liechtenstein
When it became clear after the battle of Königgrätz in 1866 that Prussia, which rejected the continued existence of the German Confederation, would be the center of this new State, the member States decided to abolish the confederation. A single member voted against at the time: Liechtenstein.
Liechtestein is a 38000 resident micro-country located between Austria and Switzerland
in 1717, a rich and politely influential aristocratic family bought the fief of Vaduz in order to be directly vassal of the emperor, who then erects the domain in the principality for services rendered.
In 1806, Francis II abdicated in favor of the Napoleon Rhine Confederation and ended 906 years of feudal history.
Liechtenstein was recreated in 1815 became a sovereign territory member of the German Confederation
In 1871 all the members of the Confederation decided to join the Kaiserreich (except Luxemburg, Lymburg who joined Holland, Austria and Liechtenstein).
The smallness of the principality means that its people were left aside from all the “great German projects”: the first world war, the hyperinflation of Weimar, Nazism and the Second World War.
Hong Kong, Singapore, Dubai
The expression "tax heavens" is a misspelling of "tax haven". The word "haven" port, and not paradise. The expression tax Haven therefore translates into "free port".
Hong Kong, Singapore, Dubai are free ports which are much less liberal than Western countries, criminality is lower. These cities were very poor but GDP per capita now exceeds that of Germany.
The Hong Kong model has been copied by Deng Xiaoping China since the 80s, with the foundation of Shenzen. This allowed Chinese development and its victory over poverty.
Singapore and Dubai have an intolerance to crime and drugs which corresponds to a less individualistic vision of society than the West.
Dubai implements many laws that correspond to the Sharia. This is incompatible with a liberal society according to Gebel.
Select Quotes
Charity is considered the first Christian virtue. However, as soon as it is considered as an instrument of equality and as a law and raised to the rank of principle of the State, it is an affliction of society. It is then a reversal of the principle according to which each person must put forward what they consume. Therefore, the consequence is always an unproductive consumption. Too much care for the poor increases poverty, discourage self-reliance and transfer responsibility to the State; It hinders work, diligence, austerity and encourages idleness.
-- Hermann Rentzsch, manual of Economy 1866
It [social security] was introduced by the top by the German Chancellor Bismarck at the end of the 19th century. The objective was to weaken the position of power of the unions and to strengthen workers' links with the State. Instead of social mutual aid in unions and professional associations, a paternalistic solution has been adopted. Bismarck saw a political danger in the self-employed and possessive.
Of course, someone has to pay for this at the end, but disguising the cost is one of the most important "services" provided by politics. In theory, this problem can be overcome using reason and persuasion; In practice, the minimum principle is stronger.
Politicians or managers who recommend the reduction in services will sooner or later be removed from their functions or replaced. Anyone expecting reasonable decisions of politics has not understood that the will to power are greater than any reason.
-- Roland Baader, economist and publicist
When looting becomes a way of life for a group in the company, it creates over time a legal system which legalizes it and a moral code which glorifies it.
-- Claude-Frédéric Bastiat, economist and politician
There is only one essential human right, namely the right to be left alone to be able to lead its self-determinated life. All other human rights are either legitimate derivatives of these, or illegitimate privileges at the expense of third parties.
But a liberal rule of law can also exist without democracy, for example in a constitutional monarchy. In a democracy, it can only deploy its beneficial effect as long as there is a fundamental desire to adhere to the rule of law. Since, as has been shown, the majority can deviate from it and even modify the whole constitution, no democracy can be constrained to in the long run.
The principles that the person who finances something also determines the use of funds and that everyone pays only what they have ordered are elementary and significant outings of the principle of reciprocity. Their almost institutionalized repeal in democratic systems prevents lasting stability. This is why democracies tend to go in one direction, namely to more centralization, more collectivism and more interference in more and more areas of life.
"More Democracy” means ultimately politicize all areas of life and all private decisions.
Unfortunately, opinions based on morality and indignation are much more easily accepted by all the groups of the population than the positions which arose following a reasonable examination of advantages and disadvantages. The majority of people do not want a rational solution to the problem with strict control of success. They want to feel good and be on the right side.
The reward criterion for democratically elected officials is therefore not the benefit of the community, but the maximum indignation of voters towards the democratic competitor who remains late in the fight against the elimination of injustices.
In a society of small states, neither war nor crime disappears; They are simply reduced to acceptable sizes. Instead of desperately trying to inflate the limited talents of man to deal with an immense size, the immense size must be cut down to a level that even the limited talents of man can manage. At a small scale, the problems lose their horror and their meaning; This is the most that a society can aim for.
-- Léopold Kohr,
If you do not want to understand that the best already choose their country as they do with good employers, life will punish you.
-- Gunnar Heinsohn,
Give a man the sure possession of a dark rock, and he will transform it into a garden; Give him a nine-year lease for a garden, and he will transform it into a desert. The magic of the property transforms sand into gold.
-- Arthur Young,
Conclusion
In its introduction, Titus Gebel presents free cities as a possibility of social experience, of a \ b testing policies. He explains that a communal city, a city of conservative Christians or Muslims, or a city of liberal capitalist will be made livable so long as people can choose where they live. After that, he explains in detail his project which is ideologically Liberatrien and individualistic.
The Prospera project in Honduras followed exactly its proposal. He is funded by libertarian billionaires: Peter Thiel and Marc Andreessen. A law allowing a special development zone was passed through the government of Honduras in 2012. Afterwards Constitutional questions, the construction began in 2020 in the area created on the island of Roatan. The socialist government that succeeded took has chosen to campaign on abolishing the zones, because they were created by the previous governement. The 2012 law was declared null in 2022 with immediate effect despite the fact that the zone rights could only be revoked with 10 years notice, which were extended to 50 years. Prospera tried to get into negotiation with the government, then uses international arbitration as international investment protection agreements were signed by Honduras.
A similar charter-city project had been proposed by Paul Romer in 2009 (where the sovereignty would have transferred to a developed country), the president of Madagascar had accepted this project before a developed country even agreed to control such a city. After that, the opposition launched a campaign for unity and sovereignty, and the city was cancelled before its foundation were layed.
The symbol of sovereignty and unity of the country is a powerful engine to obtain popular support. It is a major obstacle to private cities. These attract entrepreneurs who are confident in their capacity, but this is a rarefied support. Politicians, the "seducers and conjurers of major questions of destiny" of Stefan Zweig, know how to mobilize the envy of a population that does not want to see part of the territory having more success than the rest.
As explained by the representative of the lawyers association of Honduras: If they want to build a city, they must do it with the same administrative process and the same regulatory environment as the rest of the country. In Honduras as in Madagascar, this project has antagonized an elite that can articulate the frustration and the anxieties of the masses. In both cases, this liberal, cosmopolitan project became a campaign focal point that enabled the opposition to mobilise nationalism and socialism to gain power.
Democracy and universal suffrage does per se guarantee competitive improvement and A\B experiments which Gebel sees as key ingredients to good governance. Historically, Free cities have appeared for contingent reasons other than rational choice. At the dawn of a new millennium, the only state that recognizes the right to secession of a city is Liechtenstein, the others States remain anxious to keep power centralized ever since the advent of gunpowder displaced the feudal order in the 15th century.