05/09/2012 12:08 pm ET Updated Jul 09, 2012

Innovation in the Government Industry, Vol. 1: Seasteading

There have been advancements in almost all aspects of how we live our lives. From the abacus to the calculator, the typewriter to the iPad, and the covered wagon to space travel. Almost everything around us has advanced... except for one very critical thing... government! We've been using the same political and legal systems for hundreds of years.

I don't have to tell you how many inefficiencies there are with our political and legal systems (have you been to the DMV lately?) or how many people are dissatisfied with our elected officials (have you talked to ANYONE lately?). To influence change, we can use near-useless mechanisms like protesting, writing our congressmen, voting using a flawed voting system, or just complaining. Monopoly by the government and high barriers to entry for competitors have made it easy for government to remain inefficient.

Seasteading aims to change that by creating a physical space to allow for innovation. Seasteading is founded by Patri Freedman, grandson of famous economist, Milton Freedman, and funded by Peter Thiel, co-founder of PayPal, first investor in Facebook and venture capitalist.

Patri views government as an industry (the world's largest), countries as firms and citizens as customers. "The leading firm had 2009 revenues of 2.5 trillion dollars and lost 1.4 trillion dollars... The worst companies kill many of their own customers!"

Innovation and progress requires experimentation -- trial and error. Unfortunately, for entrepreneurs with ideas for "startup countries," there's no way for them to experiment. It's not like the software industry where all you need is a laptop. "Seasteads" (floating cities) will give people the opportunity to peacefully test new ideas about how to live together.

Tony Wagner
gave a great talk at Skillshare's Penny Conference on this topic. He spoke about how innovation requires taking risks and learning and from trial and error. I think his talk is very relevant to a discussion about Seasteading.

To figure out what works in X (i.e., education, government) there needs to be a platform (i.e., school, city) for people to create. The best innovations on Seasteads are expected to be copied by countries onshore, benefiting all.

By essentially having a monopoly in the territory a government covers, there is no incentive for government to innovate or improve citizen satisfaction. Timothy Blee describes Seasteading in his blog titled "The Problem with Seasteading," saying:

Seasteading is based on a delightfully bottom-up argument: that the problem with government is the lack of choice. If I don't like my job, my apartment, or my grocery store, I can easily pick up and go somewhere else. The threat of exit induces employers, landlords, and store-owners, and the like to treat us well without a lot of top-down oversight. In contrast, switching governments is hard, so governments treat us poorly.

Political affiliation and feasibility aside, I think this is an incredibly awesome and ambitious undertaking that could have great benefits for society. Rather than just complaining (cough cough Occupy Wall Street cough) Seasteading is doing. For some extremely thought-provoking ideas, I highly recommend watching Patri's talk at TEDxSF, TEDxHongKong and Breakthrough Philanthropy.