Ok, fine. So you're a billionaire with an island nation state and (presumably) a private army to protect it. As a business owner, I then have the choice of doing my business in a major Western democracy with an elected government that is publically answerable to millions of people, or subjecting my business to the whims of an eccentric billionaire with his own private army who is answerable to no one.
If you want to do that with your own billions, have at it. But I wouldn't want to locate a business there, do business with you, or even go to work for you, an employer from whom I could have no possible legal recourse in the event of a dispute.
> an employer from whom I could have no possible legal recourse in the event of a dispute.
That part is easily solved: the dictator can put up a bond in some trusted country. The bond is forfeited if the dictator betrays you. The contract laws of the trusted country apply.
It could be that some enterprising dictator could gain a better reputation for respect of property than the US government[1]. A reputation for respecting property rights, combined with a country, is an extremely lucrative asset, and it would be costly to lose it.
> As a business owner, I then have the choice of doing my business in a major Western democracy with an elected government
If moonchrome can offer a better regulatory environment, you might prefer to do business with him. Maybe your business is melanoma detection. HN user danifong approached YCombinator with that idea, and Graham told her[2]: “The trouble with the melanoma detection idea is that you’d spend most of your time dealing with legal and regulatory crap. That sort of work doesn’t really take advantage of your skills.”
For all the issues that can crop up with property rights around the margins in the US, the EU, and any other established democracies, doing business in a country where decades or centuries of history has established a strong general belief in property rights and the rule of law gives you a very strong set of baseline protections. Abandoning that for a brand new country where what one guy says goes introduces a whole new kind of risk that most of us here at HN are not used to dealing with and factoring in.
For example, requiring a dictator to post bond is all well and good until he decides at some point while you're within his borders that he's going to (a) kill you, in which case collecting on the bond won't you much good, though it will soften the blow for your investors, or (b) start cutting off toes and fingers until you release the bond. (Obviously you could structure the bond in such a way that option (b) is unworkable, which means that it either becomes a straight up hostage ransom situation, or reduces to option (a).)
Even given all of that, you're right that it still might make sense to do business there for a particular kind of business given a particular risk tolerance. It might well be an experiment worth trying. By the same token, if you develop a new kind of versatile routing software that does an especially good job of finding the optimal approach to trying to route materials past someone who is actively trying to stop you, selling it to Mexican drug lords might be an experiment worth trying. Just make sure you have a really good idea what you're getting into and that the risks to your person as well as your business are worth it to you.
That's basically what happened in Sealand (discussed in the article). HavenCo moved there to be supposedly free of government intervention, but instead what they found was that they were subject to the whims of a very small, very eccentric government. In 2003, following a dispute between HavenCo and Prince Regent Michael (the acting Sealand head of state and head of government, standing in for his father), HavenCo was "effectively nationalized"; Sealand's government took operational control of its servers, and everyone else associated with the company had their visas revoked.
Exactly. The premise that you can allow businesses to operate outside the interference of government by setting up a new government is a category error.
>If you want to do that with your own billions, have at it. But I wouldn't want to locate a business there, do business with you, or even go to work for you, an employer from whom I could have no possible legal recourse in the event of a dispute.
It sounds like you are risk averse and probably don't share the goals, wouldn't be swayed by the value proposition - so you wouldn't move there. It's true that there would have to be trust in the person doing this, but I'm assuming the billions didn't drop from the sky and I have done something to earn them, the process of getting them should provide plenty of material to evaluate my trustworthiness. Trusted third party insurance is also an option.
If you want to do that with your own billions, have at it. But I wouldn't want to locate a business there, do business with you, or even go to work for you, an employer from whom I could have no possible legal recourse in the event of a dispute.