In the essay How to Start a New Country, Balaji outlines seven ways to approach such a project. The idea by itself is, of course, the dream of every good libertarian, but there is a reason it has never worked out so far.
The first five options he mentions in the post—election, revolution, war, micronations, and seasteading—are either not feasible (trying to elect politicians who fire themselves and their friends is a libertarian fairy tale) or not desirable. I fully agree with Balaji’s decision not to discuss these options further.
Option number six—space—is interesting and, in my opinion, the most promising of all seven that are outlined in the essay. With Mars, you get a whole new territory far away from any politicians on Earth, so they cannot interfere. In theory, this is a viable option; the challenges are technological.
However, it is not enough to just live on Mars; you have to have a self-sustaining Mars colony. Otherwise, you are too dependent on Earth, and the people can control you. If you have to get anything delivered from Earth at regular intervals, people (politicians) on Earth can—and will—use that as leverage against your little Mars project. They will, for example, link these deliveries to political demands. You will end up being just another country dependent on the U.S.
We are, unfortunately, far away from making a self-sustaining Mars colony happen, but it is at least theoretically possible. There is not much else to debate here; we will just have to wait and see whether the one man who is still trying can make it happen.
The main reason I wanted to discuss the space option is that it can help us understand why cloud countries cannot work. Balaji himself hints at the problem when he writes:
Having outlined these seven methods, the careful reader will notice that we played a bit fast and loose with the definition of what a "new country" is.
Oh yes, we have. That’s why I focused on “self-sustainability” in the analysis of space countries. The problem we are getting at here is sovereignty. A country has to be sovereign; otherwise, it is just LAPRing. Most of the countries today are, in fact, LARPing. If you are not sovereign, you are dependent on some other country—most likely the U.S.. This is not necessarily a bad thing until you want to do something that the U.S. does not think is a great idea—like electing King Elon—then it will get ugly. Since the U.S. sees itself as the world police, it cannot let anything slide that in its eyes “violates human rights.”
Balaji describes this problem under the headline micronations:
Moreover, while an existing state may be content to let people harmlessly LARP a fake country in their backyard, an actual threat to sovereignty typically produces a response with real guns, whether that be the Falklands or Sakhalin.
Balaji’s plan for the physical part of the cloud countries is as follows:
Over time we eventually crowdfund territory in the real world, but not necessarily contiguous territory. Because an under-appreciated fact is that the internet allows us to network enclaves. Put another way, a cloud community need not acquire all its territory in one place at one time. It can connect a thousand apartments, a hundred houses, and a dozen cul-de-sacs in different cities into a new kind of fractal polity with its capital in the cloud. Over time, community members migrate between these enclaves and crowdfund territory nearby, with every individual dwelling and group house presenting an independent opportunity for expansion.
The problem with this plan is that you don’t own the territory because you cannot defend it—even if the territory is decentralized. You cannot buy a property and declare it part of your cloud city because when the tax collector comes knocking and you tell him that, you do not pay taxes in your cloud country, you will need some tanks.
Even if you could get a territory outside of formal government control—basically the idea of seasteading—you still need a military to defend it. Sure, you might be left alone for a while but only for as long as you do nothing to upset the U.S.—and if you do not want to do something that might upset the U.S., you do not need to start a new country in the first place.
Balaji's main insight is that if you get many people connected in the cloud, you could overcome the difficulties of getting your country “off the ground”—and that is correct. But even if that were to happen, and:
Eventually a cloud country of 5M people worldwide with thousands of square miles of (discontiguous) community-owned land and billions in annual income demands recognition.
You would still not be a sovereign country. Getting recognized by the united nations does not make you a sovereign country like China or Russia where you can actually do what you want. You are, again, just LARPing.
So cloud countries suffer from the same problem all other projects—seasteading and the new city Prospera—suffer from. They cannot work long term because they cannot defend themselves and are, therefore, not sovereign.
You could, of course, just hope that nobody will bother you, but again, if your way of living is not going to bother the U.S., or more precisely “the international community,” you do not need to start a new country.
My biggest disagreement with Balaji is probably that he sees the world as currently divided into many sovereign countries, whereas I think there are only two sovereign countries besides the United States: Russia and China. These are the villains of the international community and are portrayed as such—not always wrongfully, of course. The only reason they can exist and are allowed to have different governmental, societal, and economic structures (the things you want when starting a new country) than the rest of the world, is their military.
In short, there are only two ways of not being bothered as a country: either you don’t bother anyone, or you have big guns so people are scared of bothering you. If you have neither the international community nor big guns on your side, your project is doomed.
The above argument is, in a sense, just a summary of this essay. Although I am sure Balaji has read it, he does not seem to accept the conclusion. I would be genuinely interested to read his response to these arguments; especially since he seems to acknowledge the power of the international community in his paragraph on elections:
The most conventional way to start a new country involves winning sufficient power in an election to either (a) rewrite the laws of an existing state or (b) carve out a new one from scratch with the consent of the international community.
Why would the international community not care about the physical manifestations of the cloud country? And if anyone believes they will welcome all of these experiments, I have bad news for you: they are “criticizing” the Próspera project already—as Scott Alexander notes:
You can read what actual anti-Próspera people have to say here, here, and of course on Vice. But I can’t stress enough how misleading and awful most of it is. “Imagine…” starts the first: "…you live in the most dangerous country in the world that is not in a war zone. You fear your government, and the ZEDE syndicate taking over your homeland as much as you fear the narcotics gangs…these libertarian neocolonial conquistadors’ sole aim is to eventually force all of you out of their stolen paradise, and eventually expand, swallow and exploit the most precious parts of your country and its resources….In this new ZEDE experiment the indigenous people on Roatan how have to re-apply and pay to live on their own land."
As always, Scott Alexander does a great job of analyzing the project as well as pointing out why their “criticism” is stupid—as, of course, it is. But most people—and Balaji is definitely one of them—should have understood by now that it does not matter that their arguments are bad.
Balaji, in fact, knows that good arguments are not enough to win; otherwise, he would choose option number one for starting a new country: an election. If your ideas are better, just enlighten everyone, and we will have a libertarian government in no time. Alas, this will not happen—and it cannot happen.
Ironically, if you could convince the international community that Próspera is a great idea, you would not need Próspera because you could turn the U.S. into Próspera. Unfortunately, none of this is possible. Maybe someone should start thinking about how to make it possible...