Titus Gebel joins me to talk about Free Private Cities and how they relate to Bitcoin Citadels, a way for Bitcoin people to peacefully set up Bitcoin friendly cities.

We talk:

  • The problem with democracy and standard political activism
  • Legal system
  • Fee for service 
  • Benefits of lower cost and more certainty
  • Dealing with poverty and pandemics
  • How to get there

Titus links:

Sponsor links:

Stephan Livera links:

Podcast Transcript:

Stephan Livera:

Titus, welcome to the show.

Titus Gebel:

Hey, Stephan, it’s a pleasure to be here.

Stephan Livera:

Yeah, thank you for joining me. I had the pleasure of reading your book free private cities and I saw a lot of relevance for my Bitcoin audience. So did you want to just start with a little bit about yourself?

Titus Gebel:

Yeah, I’m originally from Germany, but I immigrated to Monaco five years ago. Monaco is a small principality in the South of Southern France, but it is it’s own independent country. And I originally I’m a lawyer by education, but many years ago I decided that this is not what I wanted to do until the rest of my life and I went into industry. So the first the biotech industry and venture capital and eventually landed in the resources industry. Right. So because I like that, right. It’s a digging out. It was easy for me as a lawyer to understand, right. Digging resources in the ground, you dig it up, end of business model. That was easy to understand. And now it was really a great time. And and after a couple of years, I think I started in 2004 in resources industry. And after a couple of years in 2006, I was in the position to start a company called Deutsche Rohstoff AG, which I founded together with a partner.

Titus Gebel:

And we were doing also in Australia gold mining, silver mining, later tungsten mining. So we really brought things into production and then expanded to the U.S. Did oil and gas production. So we are really, we’re primary producer, right? So we were starting from zero and managed to get 10,000 barrels a day. So with only a handful of people, this was really a success story. We went public in 2010 at Frankfurt stock exchange and I could eventually retire at the end of 2014 and focus myself on really what my, what I’m passionate about is creating alternatives for living together. I was always interested in politics, and freedom and self determination. And I found all that this is not, frankly, this is not sought after by the majority, right? So freedom has no majority in no country and no system.

Titus Gebel:

And so I thought, okay, you have to basically come up with a new product. And then people if they like it, they take it. If not, they just stay where they are. From my personal conclusion to say, okay, it doesn’t make sense to go into a country and try to convince people, Hey, this is good the way I think things should be. You should be more free to take care of yourself. No, I say no, that doesn’t work. I’ve tried it for 30 years and probably I could try it for another 30 years. Expecting a different result and that’s what brought me to the idea to create a totally new product and that’s why we are talking at the moment, I suppose.

Stephan Livera:

Yeah, that’s, that’s precisely right. And I had the opportunity to read your book. I thought it was fantastic. I think there’s probably a lot of, let’s say, ideological similarity between yourself and me and probably for many of my listeners as well. I am strongly influenced by Austrian economics and Austrian thinkers such as Hans-Hermann Hoppe and Mises and Rothbard and these individuals. And so I think this idea of trying to make the government smaller by using political activism is just not going to work. And so maybe we are better off trying to find ways of succeeding either digitally or physically, if possible into, you know, and so one of the, it’s kind of tongue in cheek. In fact, I joke about it on my podcast and my sign off is actually I’ll see you in the Citadels. Right? And so it’s this joke of how, you know eventually Bitcoin people will become rich and they’ll need somewhere to go away and all be away and kind of defend themselves in a sort of gated community.

Stephan Livera:

And I actually, as reading as I was reading your book, I saw a lot of similarities. So perhaps you could just tell us a little bit about what is the fundamental problem that you see with the democratic system and why do you think something like, you know, free private cities can be a solution there?

Titus Gebel:

Yeah, I think one of the main problems that we have is it’s called the minimal principle that is people want to have best they can get for the least they can, they have to give for it. And that’s normal. And but this principle makes sense evolutionary because we create all the machines and all of the things that are basically helping us to create more value, to be more productive with less input. Right? We’re just a prerequisite for progress. That makes sense. You don’t want to spend much but once want to get as much out of it as you can.

Titus Gebel:

So the problem with this minimum principle if it meets politics, right? Because in the political political system, the leaders can redistribute wealth because they have the monopoly or force. And now if you are in a democracy you still, you and I included, if somebody would offer us here, look, you get $100 for 10 hours hard work, right hand in my left hand, you get $100 for nothing. Just make a cross here. Well, most people would take the $100 for just make, giving the signature for whatever party. And this example I think illustrates the problem. So over time the politicians to be reelected have to promise more and more free lunch, more and more goodies, right? And there will always be crisis like now whatever league before a big crisis. And then the more reasonable people will be elected into power. And we have seen this in the mining industry as well, right?

Titus Gebel:

So it’s the first, for example, Australia, the mining industry is a pillar of wealth production, right? And it’s a really, it’s a big pile. And if the mining industry is going well and everybody’s happy, and then people say, Hey, let’s walk the good guys into power, right? And the good guys are redistributing the wealth others and say, Hey, we have to take care of this group and that group and this and this. And everybody say, Hey, these are good people, right? And, but then they say, Hey, and we have to protect environment and let’s put in very strict rules that leads to that the resources industry is not profitable any longer in some areas, right? So then the downturn begins and then people say, Hey, maybe if you have to vote the tough guys again in power, and then the tough guys repair, fix the thing and the circus starts again.

Titus Gebel:

And the problem is that, and that is all over democracy. The problem is it’s an eternal circle, right? But people do not learn from that. So if you’re on top of the circle, after a big crisis and reasonable guys are in government, and over time, then people find out, Hey I can vote money into my pockets because I’m just voting for this party that is that is promising more. And that means that over time the other parties be conservative or even libertarian parties have to adapt to that. They have to give out goodies. Otherwise they are just elected out of power. And I can give you many examples. I mean the whole of Europe, right? When they started with democracy at the end of the 19th century, these people were really classical liberals, right? And they started, even jump to 30% in Switzerland, I think it was 60 to 70% and over time they all disappeared because it cannot compete in a, not in a one man, one vote.

Titus Gebel:

Democracy against parties who for whatever reason, a promise you that they take care of, the rest of your life, they take care of, you get additional healthcare, you get additional education, you get additional, you name it, right? So we cannot, we as classical liberal or libertarians, we cannot compete against those offers, but that now this is the one thing, the other thing is that of course you can redistribute yourself into being wealthy, right? It’s not possible if somebody has to produce it. And like I said, with the mining cycle, if you are making production difficult because you have too high taxes and high social security because of your goodies promises, then production will go down and then less can be redistributed. And the other thing is many groups in society discover that they can basically they have to cry out and then they get some money from the government.

Titus Gebel:

So everybody’s doing that. And then over time, eventually this system is becoming insolvent. And what we are currently seeing is a final phase that we are basically printing money to avoid this problem that we have self created. And that is a problem that will be fixed only for 10, 20 years. And then we’ll start a new, so this is my findings. That’s okay. I have to go out of this circle right? Because if democracy, I have no chance. I have maybe a small chance to be stay in power for 10 years after crisis. But after that it’s gone. It will be redistribution again. That’s the problem. That’s my, what I call a democratic cycle. And there is no way out in traditional systems.

Stephan Livera:

Right. And so then in your book you present this idea of the free private city. So could you just give us a bit of an overview? What is that?

Titus Gebel:

Yeah, in a nutshell, it’s imagine a private company takes care for protection of life, Liberty and property. You pay a certain amount for that based on a contract in the contract. The amount is fixed. Maybe there’s an inflation clause and they say these are your rights, these are your obligations. And there are some rules, right? And there’s a legal system which is a fallback system or whatever. So, and you pay a fixed amount for that and then there is no forum that for people tend to change the law. Right? So you, everybody has a, has a contractually guaranteed position towards the operator. In this case, I would be the free private city operator. It’s a service provider, right? I say, okay, I provide a protection, some infrastructure dispute resolution if you want and you pay say $1,000 per year.That’s not much, but this is the basic minimal state, right? Like the classical liberal philosophers. That is what you need more, not more and the good thing is that everybody’s protected by this contract and if I have a problem with you, then you go to outside arbitration. We do not go to my court or to the courts I have established, they are all only for the disputes of people that they have amongst each other. This is basically not super new. It’s what we call service and it’s what, we know from international trade that if you can go to international arbitration, right, which is not part of the country that you’re working in, especially in the resources industry for big projects, you have something like that. Now and I’m now putting this down, to the small man. I say, okay, you can have to say you will be protected by a contract and you can go toward to arbitration if you dislike what I’m doing.

Titus Gebel:

If you think the contract is not fulfilled, you can say, I’m not going to pay my fees because you didn’t guarantee security or whatever. And so you’re, and this is something that I just transfer what we already knew from the free market into our living together, right? I make an offer, you don’t like the offer, go somewhere else. And there’s a lot of our variation possible, right? You can have very, I would say anarcho-capitalist environments. You can have like more classical liberal, minimal states provided by a private company. And then you can have things where they have all kinds of restrictions. Like we want to be totally CO2 free. We want to have a big social security or even there’s no, private property, right? Well, as long as it’s voluntary, but participation is voluntary. I have absolutely no problem with that, right?

Titus Gebel:

It can be a communist system, whatever. People have to take care of the consequences. So when that is I think if we really want to achieve what is achievable from people who are really can be free and are responsible and reasonable that as security, a safe space, dispute resolution, some infrastructure. For the rest I leave you alone because I know you can much too much better than I’m only basically creating a framework in which spontaneous order can then can then flourish and he has my protection against my cycle problem. Every single resident has a contract with city operator. And that means that even if 90% of the residents say, Hey, let’s create a swimming, let’s build a swimming pool, right? And they come to you Stephan, and say, Stephan, pay, we voted 90% in favor with the swimming pool.

Titus Gebel:

Everybody, we decided everybody should pay $100, or $1000. Wait a minute, I didn’t sign up for that. Right? And you can come to me and say, Titus protect me for those guys. And I said, Hey guys, you build your swimming pool with your money. Okay. And you can charge me and Stephan a higher entrance fee, that’s fine. But you cannot force Stephan into your ideas. Right? And that is the big difference, right? There’s no forum for people who are not successful in life who are bored and then they try to impose their will upon the majority, which is the reality what we have from today’s parliaments, from the smallest community to the biggest empire. Right? And the majority of a large portion of those people is really either couldn’t be as successful as they are in a free market environment, or they really are completely filled by the wish to dominate others and think they have, they know what’s best for the world. Right. And these people are, can become very dangerous and still there think they do good.

Stephan Livera:

Yeah, that’s right. A lot of do gooders out there who want to actually control a lot of people. I think one of the, well there’s a, there’s a range of benefits that I could see when I was reading the book. It’s, you know, we would have a much more efficient environment for operation. It would be lower regulation and it would be like market-driven regulation. I think, and I think the key one, and as you were pointing out, it’s clear rules that everybody ops in from the start. So there’s less of this kind of Star Wars, Darth Vader you know, pray I do not alter the deal any further style governance. And so it means that in order for things to, you know, there is competition, but it might be between different free private cities or Bitcoin, different Bitcoin citadels or whatever you want to call them. And the other thing that I found really striking was the extreme low costs. Right? So most of us right now, we’re used to paying very, very high tax rates. The amounts that you were discussing in the book, you mentioned $1,200 as the contribution amount for something like a Singapore or Hong Kong level per capita for a year. Could you just outline a little bit around that number and how such a big cost saving is able to be generated?

Titus Gebel:

Okay. If you think that that the tasks of the city provider should be protection of life, Liberty and property. What does this mean? It means you have to have a kind of a security force, a police force for internal and external security. Now, external is something we come back later. Well let’s start with internal security and then you have to provide some dispute resolution mechanisms, be courts, arbitration or whatever because there will be dispute, right? And there will be disputes where people cannot agree on certain rules or certain arbitration tribunal, right? So this is a fallback which is probably needed or it is needed. And so you have, and there are some administrative things and you have to at least the beginning, you have to create a kind of infrastructure. Otherwise nobody’s coming, right?

Titus Gebel:

You can later try to privatize all of this, but there will be some element of administration. But this is something which was basically the case in the 19th century, right? Which people say, this is the nightwatch state or minimal state. And if you just compare these, I just compare these figures with what are cities spending on that compared to what a state is spending on redistribution, on all kinds of programs. And I mean, health care and education is not included, right? So you still would have to pay for that, but on your own. So my idea is that this will be much better, can be provided by private initiatives and even you can say, okay, let’s say there’s minimum protection intuited in that amount so that you are not dying or starving on the street, then it would be not much higher that we have.

Titus Gebel:

I have elaborated in my book comparisons to Hong Kong, small States, and the Pacific. Then Sandy Springs example, the first world example from the U.S. They have basically privatized nearly everything in their community. And it’s a town of 100,000 people. It’s not a small community. So you can come to, and everybody can have a look at the book and see, okay, does this the, what do we need? So that will make us discover that today’s States are not only totally inefficient, they are also super expensive for what they offer, right? I mean, 90% if you say this is a market, right? And every state is a market participant, 90% are highly in debt of the market participants and 80% of the customers are dissatisfied what the government does, right? You know, all over the place and, and it’s highly concentrated. So if this was a normal market, you would say, Hey, definitely we can gain something in that market, right?

Titus Gebel:

Because obviously they are totally inefficient, right? And they account for 30% of all wealth that is created on the world. So the world GDP would be 30% right? Only state activity is 30% so this is the biggest market of all it’s even bigger than financial. Bigger than health care. Bigger than you name it. Right? And that is something well I said, Hey, let’s view this as a market. Here’s my offer. I provide a service for the people who want to live free and they, people know that they have to take care for themselves. We would offer all kinds of mutual health things for social problems and for if you have an accident and cannot work any longer, this all this can be covered, right? And it can be covered better. Than in a state, because the problem in the state is again, you start an institution like the national health service in the UK, right?

Titus Gebel:

And then over time what happens is just bureaucracy is getting bigger and bigger and more and more people are not really doctors or they are surveying doctors, then a lot of things that are spending are not really healthcare there. Something else. Right? But that over time that creeps into such society. So this is always a problem if you have no competition. Right? So that then, and in so far, I know this is the main one of the main concerns people have say, Hey, the privacy is only for the strong and the weak people would then suffer, which is not true, right? Because if you take Hong Kong as an example, Hong Kong has managed to integrate millions of people in relatively short period of time and bring them to a status where they can take care of themselves. And most people are refugees from communist China.

Titus Gebel:

They would just come in there with zero. They have no income, they have no work, they have no wealth they brought with them. And they managed, this with a system that was not a social welfare state to integrate millions of people and, and gather was a very low state rate expense rate about, I don’t know, 10% or something like that. They managed to get the higher level of wealth for everybody. But now here here comes the but. If Hong Kong would have been a democracy since the 50’s, this could not have happened, because then the redistribution would have started in the 50’s they would have followed the model of the UK, et cetera, et cetera. Right? So here comes to takeaway. It doesn’t work because people are, you cannot change people. If they offered a free lunch, they will vote for it.

Titus Gebel:

And that’s the point. So you have to go away, take yourself away and say, look, we are much better than a democracy because you can decide basically everything for yourself and you can associate with your fellow citizens and you can create self help groups for social calamities and there will be a fund there will be all kinds of things where we can, we can help people who really cannot help themselves. But it has, I think I’m going through this in my book to a certain extent. It has been shown that normally it’s not more than 5% in any society that are really incapable of, of helping themselves because either they, because they are ill or because there are, have some, some natural born, I would say incapacities or whatever. So they’re not really take, they can’t take care off themselves.

Titus Gebel:

So this 5% and I think every society since human kind the last 5,000 years has found a way to help those people. Right. And this is also here the case. So there will be nobody starving to death on the road. I’m absolutely sure that this is not going to happen. And again, we can say, Hey, here’s a proposal. Instead of $1200 a year, you pay $1,500 a year and you have a fund. It’s called the minimum help for people who really cannot help themselves so that they do not die. They can survive. So it is not the big thing. The big money is spent in the States for redistribution, for bureaucracy. And of course in some countries it’s for having a big army despite not needing it. And then the army needs to know something, right? And then the war started is we have to take care of this country and be it because of our responsibility.

Stephan Livera:

I always, I mean I heard hear this constantly from my former home and gentlemen. Yeah. And you have to, we have to be involved in Syria and all that and say, okay, you pay for it and you send your own children. Then suddenly suddenly people are not so interventionist in getting involved in foreign Wars, right? If they say you pay for it and I will say the same in a free private city. If you want to support a party in a civil war, you’re free to do that. But on your own expense, right? And you can even go around and former military Corps of people who are fighting on behalf of that party, that’s fine if you’re doing it voluntarily, but via going, not going to pay for it, right. We only be paying for self defense and that is the point. And the same with all kinds of how are we going to help this country and we go to have this region and say, okay, you can do that, but then make a collection and send your own money, right?

Titus Gebel:

That is the one of the big things people say, Hey, these libertarian guys, they’re so cold hearted and I’m so good because I’m taking other people money and do good with it. You”re betraying yourself, right? You’re betraying yourself if you help with your own money, I have respect for you. If you help with other people money, I have totally disrespect for you because it’s the exact opposite. You are egocentric because you feel better if people is helped with other people’s money, right? That is, that is egocentric and people do reflect on that. But this is the case here are you say, okay, you exactly know what you have to pay and what we do with the money and if you want to add on that you are free, right? And you have much more money for that purpose because we’re only taking away from yours $1,200 to $1,500. And of course you have to pay something for you or for your healthcare. You have to pay something trances and you have to take care of education of your kids. But still it’s probably much less than you have to spend. Than you spend today in any Western country.

Stephan Livera:

Oh, of course. And I think many Bitcoin people would be interested in this kind of idea as well because many, well, many of us live in a country with capital gains tax for example. Right? So if you wanted to spend your Bitcoin, you’re going to pay capital gains on it. Whereas if you were able to set up this kind of Bitcoin Citadel area, which is like a low tax, low regulation environment that has rules that you opted in to from the start, I think that would be a definitely a big improvement. Let’s talk a little bit about the legal system involved as well. So there are obviously different legal possible, there are different possible legal systems. What are some of the ideas around the frameworks that you could put in place? Would you say, okay, we’re going to adopt the English common law and that’s going to be our body of law or how would that work?

Titus Gebel:

Yeah, for example, right. I mean you have to differentiate there. So there’s very important, I mean, what we all do is making contracts with each other. If you go to the Baker and buy bread, this is a contract, right? And and if something goes wrong like the bread is not good, right? You go back and then you have a set of rights. So this is no need to, to reinvent this because people have found out over 5,000 years of this should work, right? And they say, okay, first, for most thing, that’s this simplest example. Most legal jurisdictions have come to two conclusions. One is you can give back the bad bread and get your money back, or you can say, I want the better bread, right? So the, baker can say, Hey, wait, I want to stick to the deal, but I see this as bad bread, i’ll give you a better bread.

Titus Gebel:

Right? So this is this is what we have found out. So there is no need to invent this anew. Right. And the other thing is you will not attract much investors if they say we have, we have a totally new legal system, that we have created on our own, right? That is a, tough, tough call, right? Because lawyer in the world would know about it. So the easiest thing to do is for the civil law, for the private law parties dealing with each other is just, Hey, let’s import something that is already working. And for example, the problem is the common law. The common law is very unfavorable. And there’s a kind of a trend saying, Hey, common law is the reason for success. I doubt that. And but common law is definitely an option. But it is, the problem is common law.

Titus Gebel:

It’s not common law any longer because it’s kind of diluted by all kinds of statutory law. Right. So you have the same problems as in civil law. You have all kinds of laws every year is coming in. So another option would be to take a very systematic, a civil law like the German BGB, which means it’s the law book of citizens and it was introduced on the first January of 1900 and it’s still there and a lot of countries have cut copied it, including Japan, even China has now after 1990 taken parts of it. Estonia carries a lot of countries. Why? Because it’s very systematic, right? So you have basically a set of rules which covers everything. And then you say it’s a general part. This is all the general rules. And then there are special rules for family law and all that.

Titus Gebel:

And if you do not find a rule in the special section, go back to the general section and try to solve the, does the general rules works for 99.9% of the cases? That should do. Okay. So I know. And the other thing is, which we, I mean there are our first projects. What did we do? We try to keep you what we want common law And as a project in Honduras, you won’t common law, but we don’t want to spoil common law, right? So what we did is we extracted the common law principles as they were teaching. The students in the US the law students. It’s called the restatement of law according to the American Lawyers Institute or so. And the, and we adapted, this was sort of our best practice, common law things and say this is our common law, right?

Titus Gebel:

It’s basically based on the U.S. Common law, but it’s frozen here. We are not accepting any new rules. That’swhat we offer. And from here on we can develop our own common law with our own courts. And basically this is already existing that is existing in the Dubai international financial center. It’s a assistant Abu dhabi Global Market. They have introduced on common law based regulation mostly for commercial issues, but now it’s growing, right? Because the law is linked to each other. So you cannot say it’s only commercial. Right. They now have to infuse family law and all that. And they have judges hired from London or other common law countries including Singapore and they are making their own decisions and thereby creating an own DIFC, a law. So this is already happening. So it’s not just a fantasy. This is how it would work and that that’s how it worked in the past.

Titus Gebel:

For example, you may have heard about the Hanseatic league of cities in mostly Germany, but Central Europe even extending to Kiev, to Russia and Scandinavia. And they basically adopted the law of cities of Lübeck or inaudible because why invent a new one. Right. And the interesting thing was that they had their own courts, but if there was a dispute and they wanted to appeal that, I say, Hey, let’s go to city of Lübeck or inaudible and appeal there because this is where the law originates. And I can’t imagine frankly that we will develop the same model. You say, Hey, we have our courts, but if there’s a appeal, then we go to Dubai because they have so many more judges and they know the system and we create an own whatever, free private city high court and we say, Hey, if you want, you can come, we can serve as a service as an appeal court because you cannot force people to do that.

Titus Gebel:

Right? So, but you can say this is a service and then, you can, relatively. Why is it so much better doing this way? Because you are avoiding the problems that every company has that the rules are constantly changed, right? If you make an investment and you cannot be sure that two or five years from now, the basis for investment is just legislated away, very difficult to make an investment. In our case this is the legal basis and you’re not going to change it. That is a strong offer, right? Not only to people but also through to companies. But again, you should have, I would say you must take something that’s already known, right? You do not come up with a completely new creation because look these systems and even though the German BGB was based on I would say 2000 years of Roman experience, right?

Titus Gebel:

And what they have learned over time of the court and all that. And the common law also has hundreds and hundreds of years of trying out and finding out. So you cannot do this within a year or two. Right. So it’s not necessary. As, in my example with the bad bread, that you bought from the Baker. I mean there are not so much options. What you can do if you have, you bought something, just something to eat and we’re just in a state and well there’s not much to do then give it back or get something or exchange it against a good one. So, and then so far my call would be, Hey, you just copy an existing system which is well known, which is working, you streamline it. Because for example, in Honduras, what we have done for property transactions, we have taken a land from New Zealand, but we could slim it down from, I think 150 pages to 40 pages.

Titus Gebel:

Right. So it was possible. I can always make it easier. And you should know, I mean the more extensive law is, the more it covers single cases, right? You must say, if you have a very general role, then there will be cases that are not covered. There will be gaps. But that’s, I mean, you have to live with that, right? The common law says, okay, then the judge should find a rule. That’s fine. That’s how you do it. And in, in most countries people say you have to make a new law and by doing a new law, you’re creating other gaps and creating other uncertainties because a law doesn’t exactly fit to the old laws. That is why it’s getting worse and worse in our societies. Too many laws.

Stephan Livera:

Yeah. And another area that I could see conflict is around cultural conflict. And you touch on this in the book as well because looking at our modern day world of, you know, big statism large States and they try to make everyone, they try to sort of mesh everything together, but there may be cases where certain cultural rules or certain religions are just not compatible with each other. So what’s the approach and how does a free private city approach change that or improve on that approach?

Titus Gebel:

Yeah, I think this is one of the big takeaways of the book and of my personal life, I’m now 52.Yes, it’s fine to have a certain diversity, but if it’s too much of a diversity, then it’s not going to work. Right. And that’s like probably why Bitcoin people should mostly live amongst themselves because they just have another idea of life. It’s like you say, Hey, I want to have the right without capital gains tax and I want to have the right to transfer wealth without asking for permission. Right. And other people say, wait a minute. No, no, this is all owned by the community and you are basically only entitled to use part of it. So what I want to say is, look, if you think that private property is really necessary for freedom and for wealth, then you shouldn’t live together with people who think that property is theft because it’s incompatible.

Titus Gebel:

Right? And if you say, Hey, we are humans. We try to find out what is the best rule? And then we changed the rule. They’ll come up with a new product. You shouldn’t live together with people who say, Hey, wait a minute. Everything is already here in our book, in our Holy book, the Quran, because God told us to. It’s all in there. We shouldn’t change anything that’s not comfortable. But here’s the good thing about the free private city approach. You say, okay, look, Hey, why don’t you make your own communities, right? And then it’s still possible. I think we will see a big segregation in the 21st century because people discover they are more connected. They discovered first they are different, but they are not alone. They discover we are very few that you can, you and I probably are, I don’t know, 0.1% of world population thinks similar to us, right?

Titus Gebel:

So that’s not a lot, but it’s millions of people, right? So, and you say, Hey, we can, we can associate together. And then what I think a lot of people, they discover, Hey these guys, it’s not bad what they’re doing. Right? And maybe I want, I go into my government and say, I want a contract too. So we can create new products which are maybe not for everyone. And the other thing you should keep in mind, I mean, if society, is going to develop further, then you have to create a cycle. And this will only be a small group that is pioneer as always, right? You start and 100 years from now, everybody say, Hey, of course, right? Everybody’s going into the system that fits best for him or her. And as I wrote in my book, it can change over time.

Titus Gebel:

Why don’t you say, Hey, I’m young,I’m full of energy. Again, go in free private city, which is a libertarian free private city, they leave me alone. There’s basically no taxes. I can come up with all kinds of business models and enterprises. And then when you are older, you’re saying, Hey, I want to start a family. And now I go into a system where whatever, right? There’s more children playing a bigger role or whatever it is. There’s more on offer for families its very quiet. And then if you’re all just say, Hey, basically, I want to live with the people who are like, right, who have the same religion or the same ethnicity, I feel better like that or where I was when I was young or whatever. And that can again change all the time.

Titus Gebel:

So we and if we had the choice everybody of us would be happier. And, and if people want to go into a Islamic state society, well, if it’s voluntary, why not right then do when we can even cooperate on the basis of exchange of goods or common defense or whatever with those people. But we don’t have to struggle each and every day. Right? And that is something which I think is keeping a lot of energy from us doing really productive things is these political struggles. I don’t want to have political struggles any longer. And I’m also tired of arguing with people about how society should be. I said, Hey, I cannot convince you. I know that, but let me just let me try it. And I show you and I have people like Stephan and others, they are coming and we will make the hell of a successful society. Right?

Titus Gebel:

And we know that we cannot just grab money out of other people’s pockets because that is our common value. I think it’s not. So my thesis is not so much ethnicity or religion, but religion to a certain degree of course, because it’s an ideology, but it’s more to common values, right? If you have common values, skin color doesn’t matter, right? It’s, it’s that you say, Hey, this is my conviction and I know that the people around me share this conviction and we can, we can make something together, which is working, right? And again, different your religion to a certain degree. But if the religious become original becomes too politician, then then it’s not working because then they say, Hey, you shouldn’t do that. You shouldn’t, you shouldn’t insult my profit. You shouldn’t insult my God, you shouldn’t eat this. You shouldn’t eat that.

Titus Gebel:

I say, Hey, wait a minute, fuck off. Right. Yeah, you go into your own society and we do it here as we like it. And that is, that is, I think that will will happen over time. And I would even make the prediction that is we will see much more segregation in the 21st century. It’s the opposite of one world will happen, which doesn’t mean that these people are hostile to each other, right? Not at all, they’re cooperating and exchanging goods and ideas, but they would not say, Hey, we have all to live together and they have to be a quota and you have to be a certain gender or ethnicity to have that’s a nightmare, right? And because in our society, it’s just, Hey, you, if you think you, there are not enough women in business start a business where you only have women. I have no problem with that. Right. And you’re free to, right?

Stephan Livera:

Yeah. So let me throw a couple of perhaps maybe some of the more difficult ideas around how these things could be resolved maybe in a more libertarian friendly way. So an example might be something like privacy right now that’s something that’s important to a lot of libertarians, maybe not all libertarians. But, and so from a taxation standpoint, I can see there’s a benefit here obviously, because if the typical government needs to know what your income is and what your, whatever, then obviously they’re going to start peering into your bank transactions and, and so on. So that’s one aspect where I think straight away, the free private city model or the Bitcoin Citadel model fee for service, you just pay upfront, this is how much you pay and that’s it. Then the government or the private corporation managing it doesn’t have to look into that. But another example might be say keeping out unwanted people or criminals, but at the same time having surveillance in this society to protect, you know, against, like violence internally or even something like yeah. Let’s start with that. Like do you have any ideas around how that could be sort of managed in a way that’s kind of respectful of people’s rights but also, you know, keeping the place safe.

Titus Gebel:

No, good point. Look, first and foremost, it’s you look which people are coming, right? So there will be no open borders. It’s absolutely for sure and no society can afford that because it’s attracting criminals. The moment you have a sudden wealth, it’s attracting bad apples. Right? So, and here’s the thing that is, in order to keep any surveillance and things like it’s as small as possible. You have to do it up front. We say, Hey, you are applying for the, for this for being a member. Who are you? Can you show us a police report? And if it says, Hey, you have been arrested because of tax evasion or something like that, shall say, okay, we can talk about that. Right? It’s, I want to know if you are a child molester or a drug lord or something, right?

Titus Gebel:

Or a political acts, extremists or religious extremists. I want to know and I will make, I’ve investigated and I say, look, Stephan, we found out that you are somebody who is putting bombs in churches or mosque, maybe that doesn’t fit into our society, but you say, okay, normally 90% of the people or 95%, hey, there’s no problem, right? Your average guy you have, you’re not a special criminal and you don’t have crazy ideas like overthrowing free private city. Let’s assume you are a leader of an overthrow the free privacy model because these are a greedy capitalist exploiters and you say, Hey, Stephan, do you really think I have take you as a citizen? I will be mad if I do that because you would, you would, I get hate from day one. Right? So there will be some controls. But then if we have checked the people and they’re just here in Monaco, I’ve been screened, they even asking for a CV and they were calling me and say, what, what was this kind of company you were working for?

Titus Gebel:

And they said, basically this is good because I know everybody else here has done the same screening and now that I’m in, they completely leave me alone. And that’s exactly good. So what is happening in Monaco? It’s cameras all over the place. Okay. That’s not what you like, but it’s not really a problem. Right? It’s not really a problem because they and have visited police, are they really serving 24 hours and you can send your children on the street at midnight. I mean in which city can you do? Right. And that is, that is also something, there’s a trade off always. But I would say here’s one thing. We are not going to to interfere into your internet online, into your phone calls. That is not our business, right? We guarantee privacy. That is a product I say because I can guarantee that easy because I’ve screened the people.

Titus Gebel:

And then we also, there will always be people who who making false claims in this case. But this will eventually be found out. And for example, I would have a clause in the resident said, if you are not telling me that you have been a sentenced criminal, then I can cancel the contract if I later find out something like that. And another thing, interestingly here in Monaco is if you commit a crime and maybe even a petty crime like a shoplifter, small things, they kick you out, they kick you out, they say goodbye if you’re not Monegasque. 80% of the people who have no Monaco citizenship so that these are the roots. So this would be the roots here. Maybe not as strict, but something in between. And then there’ll be other free private city being more, well we don’t care type of things and you can then decide what fits better.

Titus Gebel:

But I guarantee you people want security, right? This is really the basis of everything. If you can, you want to go out of the house and be sure nobody’s robbing. You want to come back to your flat and you shouldn’t, nobody has broken into that. Right? And if they, if this happened, which will happen from time to time and you come to me and say, Hey, wait a minute, Titus, I paid 1,200 bucks a year for security. Now they broke into my apartment, I want damages from you. And you are right because there wasn’t less service and I did, not good. Not good enough for you. I will have insurance on it, but you will be reimbursed. That is cool. That’s a difference to what we have now.

Stephan Livera:

Yeah. And I think it comes down to ultimately what is the power of the structure, right? So it’s a private city corporation. That’s different to a state, which kind of has these incentives to kind of keep ratcheting up the power, you know, in line with say, Robert Higgs thesis from Crisis and Leviathan or things like that. But one other hard hard case that I think might be interesting and very topical is how would a free private city corporation deal with something like a pandemic or coronavirus. Right. So, and I can, you know, and, this is a difficult question for libertarians to answer because it’s kind of like we haven’t had the time to build the private versions of the solutions that would work. So things like, okay, quarantining, testing, healthcare insurance requirements, I, these are all things that I guess some combination of those, a private libertarian society would use those. Do you have any thoughts on the kind of framework that a free private city could use against a hypothetical pandemic doesn’t have to be Corona, but.

Titus Gebel:

Maybe it’s an epidemic or war, right? Cities attack like in the middle ages, you hide behind city balls. There will be special rules for that cases and there will be a kind of a, more rules or stricter rules in that scenarios and that there’ll be in the contract, right? They say in case of calamities, catastrophes there will be a special law and this will be like this and this. So you know, in advance and then you can always go to court and say, Hey, this status is not there any longer. Right. For example, especially now on the Corona virus crisis, like let’s say, okay, we are all afraid and it seems to be a real problem because you’ve seen what’s happening in China and in Italy people are dying much larger numbers than in normal flu seasons. And so there’s obviously a real problem, but people say then for example, Germany, Hey, you don’t have so many deaths people.

Titus Gebel:

And after several weeks of lockdown, people would say, I disagree. And then they can go to court and say, I want right to move freely because there it’s not really a problem. So then it would be negotiated in front of the court that says, Stephan has made a claim that he wants to move freely again because what a second a contract that there’s a calamity justifying this an exception is not there any longer, there’s no basically emergency and you don’t work right. That would be a case which can be backed by code, but I think relying only on voluntary private things doesn’t work in that scenario. And the same is true if there’s a kind of a hostile take over by the host nation or so, I mean the problem of the inaudible it’s not possible to make them sovereign entities from day one that will maybe evolve over the decades.

Titus Gebel:

But in a moment we are kind of a special economic zone plus and that means there’s always the host nation, with a big military and then you have, I mean there are some ways to deal with that, but if there’s a coup detat in that particular country and some parties are trying to attack you. It’s not the government, it’s some civil civil war parties, then you have to defend yourself. And in that scenario you need also leadership. It’s like in the military you cannot say, Hey, there’s an army comprising of volunteers and they can leave any time that doesn’t work. And, that is what libertarians have to learn that it is not, everything can be solved. I mean, in the future it can be solved partly in private, right to send a private defense cooperation and with a hierarchy in such cases.

Titus Gebel:

Right? Like the a soldier of fortune who as their field marshall, right? He was a hired guy, hired gun. And that will probably happen in the future. But still you have to have a kind of a monopoly of power saying, Hey, this is, I declare this is war time, emergency time. And I declared it. Now this mechanism comes into place. I’m open to any additional ideas, but I also do not believe that not having a police or security that has the ultimate monopoly monopoly of force is working because it would lead to different securities. And the guy with the biggest securities would say, Hey, what do you want? Right. I am the biggest, I have the biggest guns. You can tell me nothing. So this is how mankind works.

Titus Gebel:

What I can offer the people and the libertarians is, look, you know the rules in advance. You can leave any time. I will be, my incentive is to make money. If I provide better services and misusing my power, you will leave like we would here in Monaco if the Prince is getting crazy, we’d just leave, right. So the, and that is, that is exactly the competition, the competition element and the profit incentive. Because I want to create more free private city. So I have to have good reputation. I have the reputation that I treat my customers well, that they’re not declaring emergency all the time and there is no emergency that I’m sticking to my own rules. And then people say, Hey, this is a good service provider. I want to go into this free private city. Not in that free private city because this free private city operator has a bad reputation, right?

Titus Gebel:

That’s the best I can offer, right? So that’s not a complete anarcho-capitalist world, but the thing is much, much better word than we have today. And we can find out, right? Because if a free private city is working, then other people will come into that business. They will say, Hey, you have to only to pay 500 here in our place. And we offer other services. There is, he has much more libertarian, right? It’s open borders. There’s no police, right? I’m okay, but I don’t think it will work, but that is my business call, right? It’s to say, I have a business idea and you ever know I’m not a business idea, that’s not a problem. It’s no need to fight, Stephan. You try your thing. I do try my thing. And then we find out what the market says. Right. And I think frankly there will be a lot of different cities possible because people have different, right? And some people, they need leadership. They want to have security, they don’t want to, they don’t want freedom. Right. And for them that will also be offers. But for the people like you and me, a free private city is probably the best we can get in our lifetime.

Stephan Livera:

Right. And so I think this brings me more now, which may be the hardest question. We’ve heard a lot about these different ideas around making, you know, special economic zones, special administrative regions. What is the best way to actually get that from one of the modern day nation States, which generally don’t want to give up power. They don’t want to give up, they don’t want to relinquish that control because they view us basically as the tax cattle. So what’s the, what’s the way to actually have a certain area of land free and clear to actually try out these kinds of Bitcoin Citadel free private city experiments?

Titus Gebel:

Well, as always, it’s a trade off, right for the host nation. It’s, if they can get something out of it and that’s my offer. I said, Hey, here’s the deal we bring good qualified, high performing people. We bring bitcoin technology or just mention a name, the word blockchain. They say, Oh, they don’t know what it is, but they have heard that it’s something new and, we can bring something new technology in your, in your backward country. So, and here’s the deal. You give us some internal autonomy and we bring investors and high potential people and new technologies. That’s a deal. Do you like it because there’s a belt of value around other cities states around Monaco there are very wealthy three French communities around Hong Kong there’s Shenzhen around Singapore. Even in both countries, in Malaysia and Indonesia, on the other side of the border, there is a big agglomeration that is profiting from Singapore, from the state.

Titus Gebel:

And this effect you will have and all these areas are in absolutely 100% taxable by your country, right? So this is one thing. The other thing is we already have a door, it’s called special economic zones and there are already 3000 working. And on paper there are four to 5,000 already existing. But I’m thinking about three thousand are really there and now it’s an evolutionary process and I can only encourage you people to support me with that. We say it’s nothing special. We don’t call it a free private city. It’s a special economic zone plus or a prosperity zone or a Bitcoin zone, right? You will get young people who are good entrepreneurs. You will get an interesting new technologies and crypto. And the moment, I think Bitcoin is also on the good path because it has some advantages so that it’s not completely banned as illegal by countries, but it’s, it’s tolerated right?

Stephan Livera:

So, and that is something which we can make use of because some countries, what I think what the last hype was, what was it, a crypto zone. Okay. Crypto was all that was chasing this Cyprus. Even Monaco wanted to have it’s own crypto. Gibraltar, they all wanted to make crypto stock exchange, right? So this is always. And then production before it was block chain and I don’t know what the next thing will be pragmatic and say, okay, whatever you call it, right? You name it and we fill it with content. So that is what we can do. And here’s a good thing. What we can see? I made example this, independent court in some areas. So that started in Dubai. Now we have seven in the whole world, right? Mostly in the region is Dubai, Abu Dhabi, Qatar, then Kazakhstan and inaudible.

Titus Gebel:

And even Georgia now is first Western country is coming up for such an idea to establish a common law system is on judges within their legal system. And then what happens next is that in Dubai they found out, Hey, commercial law not enough because family, yours according to Sharia law, nobody wants that. So you’re not getting marriages here. Okay we have to have come up with an old family law and so it will continue and people like me will continue to go to governments and I’m working together. For example with one of your organizations have special economic zones. I say, Hey, special economic zone every country has that. You have to provide something else which is attracting capital. Now this is a prosperity zone and now you have much more to me, they can make own rules and the first country that is basically trying this out as Honduras in central America, they have even changed the constitution to make it possible and I, they are two projects which are already prominent and I was involved in one for several years creating the legal framework and it is now a little bit delayed because of the Corona crisis.

Titus Gebel:

But the idea is to go public by mid this year. Then I’m happy to talk about this one or give you more information about that one and our hope that this extended first ignition and then others will copy that if it’s working and then you start something because it’s so decentralized, you have so many of them. It’s very difficult, for example, to send an army to kill this zone. Right. I mean that is probably not happening. So we creep slowly into that. And special economic zones for a moment are only for companies. But my idea is the next level is, Hey, no, they’re for residents and therefore both. And then new entities are created. So it’s not seen as so controversial. Secession is always difficult and comes with violence and maybe sometimes it’s necessary, but I think the evolutionary way, which we can go now, it’s creeping into that special economic zones or making it a special administrative zone and then the next level and then there’s more competition, then maybe a country falls apart and suddenly you have your sovereignty. So that is my plan if you want.

Stephan Livera:

Right. I see. Yeah. And when you, I guess the other thing is when you start something new, it’s like you’ve got no network effect, so you’re starting from zero and you’ve got to try and kind of get that you’ve got a zero start problem. Right. And I suppose the main incentive that you can offer people is let’s say, okay, if you’re a corporation you can come here and it’s very low tax and that’s the big incentive for you and you can have some workers here and you can pay way, way less, and so you know it’s cheap labor and maybe you can incorporate here or do things like that. Are those the kinds of reasons why say a corporation would go to a special economic zone or what are the typical reasons that draw them there?

Titus Gebel:

Yeah, no, it’s not a low tax alone because you have that in many places off the world. That’s not enough. I think for being myself a company founder can say what is even more important than though Texas is, is a legal security that you really can rely on the basic of the laws for the next 10 or 20 years. And if that is, I think our main advantage, we can say, Hey, we are not going to change the rule all only within this small framework this is already foreseen, but do you notice in advance? But we guarantee you for your business and what you pay as a fee and there will be no initial taxes, right? That is, that is I think the most important. The second most important then is that you have a working administration that is not corrupt, that you have really independent courts.

Titus Gebel:

And that is why we are in Honduras are bringing people who are pension judges from the U.S. who are pension judges from Australia. And they are really creating the trust that I need in the beginning for people to come. And the third thing, are low taxes, so, it’s really companies can deal with, with high taxes or with medium taxes but they cannot deal with constantly changing the rules and changing the playing field. That’s a nightmare. And that is the problem. And that is, I think what we can offer as a benefit. But you’re right. I mean the first one is the most difficult one, but I think we have really, I mean 50 years ago, whatever it was, a handful of special economic zones and now you have several thousand and I guarantee you this, this is the path that we are where we are coming into the play.

Titus Gebel:

It’s not just a crazy libertarian has an idea and now running around and say, Australia, give me an Island or something. Like now that’s not working, you cannot buy sovereignty. Even billionaires have tried it. It’s not going to work because every politician who would do that would be, he will voted out of power. Even Coup D’etat if he wants to do that. So you have to go say, Hey, you’re still the sovereign, it’s just a special economic zone with a new level, we call it a special economic zone plus it’s actually, especially special economic zone, you leave us alone. The constitution doesn’t apply or parts of the constitution, but everything else we do on our own. And then the country would say, Hey, wait a minute. We want to have this and this and this. Guaranteed. And then the negotiation starts to say, Hey look, if you want to have all your social security systems established here, it’s not going to work. Right. And then you have, normally in special economic zones you have lower taxes you have less restrictions and you have better labor laws for companies that is already there. So it’s not completely new. We are just asking for a little bit more. I have frankly, have a list, it’s called the prosperity zone wishlist. A Swiss consul told me Titus, the idea is great but I see a problem free private cities has three words and two of them, politicians doesn’t like, don’t like, it’s the word free and the word private.

Titus Gebel:

I said, okay, you’re right then let’s call them prosperity zone for them. It’s exactly the same model, but it, and some people want to, technology zone or whatever. Right? But I have a wishlist saying, okay, these are 10 points and what do you think? Which of those points are politically feasible in your country? Right. And then they say, Hey, maybe seven of them say seven is good. If you say three it’s probably not working, but seven is a start to negotiate. Look, we have to make compromises and concessions in the beginning, but as I said, it’s an evolutionary process.

Stephan Livera:

Yeah. And I think it’s probably a more feasible pathway than the traditional libertarian political activism pathway. So Titus if listeners want to find out more about you or find out more about this project, this concept, where should they go and what can they do about it?

Titus Gebel:

Yeah. First thing you do is go to the website. It’s freeprivatecities.com. One word. And there you have videos and explanation. There’s a newsletter which is coming about every quarter where I talk about the new projects that are coming, which are projects that are nearing those things. They’re not perfect free private cities, but a more autonomous, special economic zones, et cetera. And we’re also looking for ambassadors. If you already have kind of a senior person, have some network we are always looking for people who want to invest in potential projects. Then just you can, you can have a look at the website and say, Hey, maybe I want to become an ambassador. We have already 30 ambassadors all over the world and each continent we have one except Antarctica of course.

Titus Gebel:

And yeah, this is, and of course you can look at the book. I mean, if you really want to start something, the book is written for you, right? This book is written for people who want to start something on their own or support a project on their own. Say, Hey, maybe some of the ideas, I would do it differently. I said, perfect. Right? I mean, we need competition, we need diversity in products. But I think if you have gone through the book you better understand what will be the problems of these kinds of undertaking.

Stephan Livera:

Yeah. I think, yeah, that’s a great way to think of it. I really enjoyed reading the book, and my hope is that over time, some people out there will go out there and start their own Bitcoin Citadels and they’re using some of these ideas around how to make their own free private city. And we’ll have competition between different States. And we might, we’ll see that kind of, that vision of the thousands and thousands of city States around the world. And it might not be the ideal Anarcho-capitalism that I want, but it’s at least much closer. So I’ve really enjoyed chatting with you Titus. Thanks for joining me today.

Titus Gebel:

My pleasure. Thank you. Stephan.

Comments (1)
  1. We already have what he is talking about with the current Nation States. I notice he moved to Monaco where things are more aligned with his beliefs. Personally I moved to Switzerland where things are aligned with my view of things.

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