Nevada’s Plan to let Tech Companies Become Governments

You’ve probably heard a friend, colleague, or relative repeat the cliche that the world would be a much better and more efficient place if governments were run like companies. American businessmen love this line, so do American politicians. Governor Steve Sisolak of Nevada apparently loves it so much that he’s proposed legislation letting companies become actual local governments–not the old-fashioned way, by sending lobbyists to wheedle their way to greater influence, but by giving select companies pieces of land over which they will have the right to exert the same power as any other Nevada county. That includes the authority to immediately or eventually:

  • Charge taxes (or not!).
  • Create school boards (or not!).
  • Run courts of justice (or not!).
  • Hire a police force (or not!).
  • Provide municipal services like trash pickup (or not!).

The thing to remember is that whatever gets built, it’ll still be in Nevada. And Nevada? Still in the U.S. Sorry to break it to you, but seasteading, this ain’t.

It’s more helpful to think of Nevada’s proposal as the logical progression of Donald Trump’s “Opportunity Zones“: geographic carve-outs with big incentives for developers, ostensibly to help poor communities. Opportunity Zones have been broadly panned as not very helpful for the people living in and around them. They were, however, good for Trump’s friends.

You can also think of Sisolak’s idea as a spin on an old American tradition: The company town, where a firm is service provider, employer, landlord, and schoolteacher rolled into one. I was surprised to learn that at one point, 3 in 100 American residents lived in a company town. That seems unlikely to happen again given that today’s most prominent firms–Uber, Lyft and Amazon–are going out of their way to avoid giving many of their employees benefits.

Nevada is a natural place for this kind of jurisdiction to emerge. Not only has it put itself on the map with various forms of regulatory arbitrage–adopting a more permissive approach to governing gambling, marriage, sex work, taxes, and so on–it’s also home to 32 tribal reservations and colonies, which enjoy tribal sovereignty. This is not to draw a direct line or ignore the vast historical, political, and cultural differences between a reservation and a drive-through chapel. All I mean to say is that Nevada is delightfully replete with weird jurisdictions, so it’s not that surprising that its Democratic governor would be amenable to such experiments.

Nevada also has quite a bit of space, which is important should this legislation come to pass. The way it would work is that businesses that hold deeds to more than 50,000 acres of land not inside an existing district would be allowed to essentially set their own rules, as long as they had $250 million in the bank and pledged to invest a billion dollars more in the next decade.

Oh, and there’s one more requirement: Nevadan local self-government is “limited to companies working in specific business areas including blockchain, autonomous technology, the Internet of Things, robotics, artificial intelligence, wireless, biometrics, and renewable resource technology.”

This all sounds highly specific, right? Like, how many huge, well-capitalized, land-holding blockchain companies are there?

At least one! It’s called Blockchains LLC, and it’s been totally open about its intentions to achieve exactly this level of autonomy for years. Its owner, Jeffrey Berns, donated $50,000 to Sisolak’s campaign, and has gone public with his stated goal of creating “a sort of experimental community spread over about a hundred square miles, where houses, schools, commercial districts and production studios will be built,” per The New York Times.

Or, as Berns puts it, a “sandbox” that will “impact humankind for the better” with “as many possibilities as there are grains of sand in all the sandboxes on Earth.”

Blockchains LLC is your average blockchain crypto-something-something, change-the-world-BUY-MY-COINS-revolution. Which is to say, it is both wildly ambitious and utterly incomprehensible to a normal person. If you have the patience, you can watch this video of Berns talking to a hologram of a 12-year-old girl about his vision.

If you cut through the crypto-bs (and I warn you, there is a lot of it), there’s the nucleus of a legitimately important mission: How to create a meaningful and secure link between our physical selves and our digital ones. That, I think, partly explains the seemingly paradoxical desire to have a blockchain-based county in the Nevada wilderness.

As far as I can tell, Berns’s company is in the business of self-sovereign identity: Creating tools to give you and me the power to show that we are in fact who we say we are. If you’ve ever had trouble getting a driver’s license, tried to fix a typo on your social security card, had your identity stolen, failed at un-muddling your tax returns, or attempted to restore a dormant eBay account, you will know that this is much, much harder than it sounds. Our digital trails and shadows simply do not correspond in a meaningful way to our arms, legs, and brains (and souls, if you believe in that sort of thing.)

Blockchains LLC is one of many tech firms trying to give individuals control over these scattered parts. The goal is to match each person with all their “bits” in a secure way without state intervention, and the blockchain is a medium through which to do it. Berns has apparently also bought vaults in the mountains of Sweden and Switzerland where people (well, his clients) can store “private keys” containing proof of their identity.

Notice that the key, the bunker, and the mountain are unique, physical things–portals to all the other stuff, which is digital and less tangible.

The longing to start a physical city, country, or community from scratch seems pretty fundamental to the way humans operate on a political and social level. Lately, I think the sheer force of this desire among tech people says a lot about how societies haven’t figured out how to simultaneously exist both on Earth and online in a reasonable way.

The same tension is lurking beneath debates over whether Trump should be banned from Twitter: We agree that what happens on a tech platform kind of corresponds to things that occur in the material world, but it’s not a one-to-one match, so we’re not sure what to make of this watery space in between, especially given the non-territoriality of where these contentious speech acts are happening.

In addition to fulfilling one rich guy’s massive ambitions, a blockchain city can also be understood as an effort at consolidation: An attempt to reconcile two parts of our lives that currently operate on different planes.

This almost goes without saying, but I also think we are living through a time of deep human frustration over a lack of new frontiers, and that people who pride themselves on disrupting things and thinking big are offended by the fact that they can’t just go and colonize a new place like their predecessors did. Not to make everything about asteroid mining, but this is definitely related to asteroid mining.

If I were a gambling woman, I’d wager that the Nevada legislation doesn’t pass: The proposed legislation requires public hearings, and I can imagine a big grassroots effort to prevent it from going through. Even the Charter Cities Institute, a think tank whose goal is to bring about exactly this kind of legislation, cautions that the public hearing “‍invites trouble in the same way that discretionary review, etc. invites trouble from Nimbys with respect to new housing development, but is probably an unavoidable inclusion.”

I can nevertheless see the state giving enough concessions to Berns and his firm for this legislation not to matter. Nevada wants Berns to stay, and with so many other states courting zillionaires like him, the zillionaire has all the leverage. His company will end up with a measure of political and administrative control over its land, and hand off the more annoying stuff to the state or another county. I think (hope?) serious people who get excited about tech stuff ultimately want to focus on the tech, and not spend their time figuring out how to put, I dunno, waste management on the blockchain.

Thinking about how best to build and organize a new city, country, or community is obviously a fun idea. It’s also a really important practice; ever since Plato’s Republic, it has defined political philosophy. But in practice it’s also a huge pain in the ass. Why? Because it’s not so easy to run a government like a company.

Excerpted from Terra Nullius, a newsletter about the places in the world where the rules don’t apply. Subscribe here.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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