The Fintech revolution is upon us.
Fergus Hodgson on Gov 2.0
Writing for the Epoch Times (How the Fintech Revolution Could Liberate Us, March 22, 2019), Fergus Hodgson argues that decentralized GSPs (government-service-providers) will outcompete the old nations in the 21st century.
That’s modest compared with Liechtenstein’s Prince Hans-Adams II’s claim that we must completely re-envision the State in the Third Millennium.
Fergus says that Bitcoin and the sharing economy are only the beginning of the ascent of digital governance.
This is a bold claim, and it’s not likely to be welcomed by the guardians of the established order. However, if history is our guide, a major change in governance cannot be stopped once structural and technological changes make it a necessity.
Once known as “the Stateless Man”, Fergus draws on his own experience as a digital nomad to make the case that all jurisdictions must think ahead to the inevitable changes coming.
He quotes fellow futurist-libertarian Max Borders, “Cryptocurrency and income tax cannot coexist,” and draws out the dire implications for raising revenue in the increasingly burdened welfare states of the western world. This is not to say that governments will not be able to fund any activity, but that they will need to think carefully — both about how they tax their citizens and, more importantly, the value they provide in return.
Does the U.S. run the risk of becoming a Venezuela if we do not adapt to the changing tides of technology?
I’m delighted to welcome Fergus back to the show of ideas to discuss his recent articles on everything from Airbnb and Ethereum, to competitive currencies, and the democratization of finance through crowdfunding.
We explore the analogy between governments as service providers and citizens as customers, and see what’s happening countries that are failing their “customers.” Finally, we will look at what makes countries like Liechtenstein and Switzerland potential models for “The State in the Third Millennium” (to borrow the title of a book by Prince Hans-Adams II — reigning monarch of Liechtenstein).
When the revolution arrives, you won’t want to be left behind. Tune in or subscribe to hear my full conversation with Fergus, and follow him on Twitter: @FergHodgson.
Bob Zadek: Diogenes allegedly wandered the globe with a lantern in his hand searching around for an honest man. Well, of course there are many honest men and he shouldn’t have had to look that hard, but that’s Diogenes. This morning’s guests is another form of Diogenes. A more modern form perhaps. But he is real.
This morning’s guest has the theoretical lantern in his hand and has literally wandered the globe looking for freedom. That is a challenge perhaps. Has he found it? If he hasn’t found it yet, what is missing and what clues does he have for anybody who is searching for a more perfect life of liberty?
What tips does our modern Diogenes offer to us as he wanders the globe?
You probably have already guessed that this morning’s guest is Fergus Hodgson. Fergus has been on our show before. He shared his wisdom with us on Venezuela. That show is available in my podcast.
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It’s a wonderful listen, even today. So please enjoy that show. But this morning, Fergus will share with us his experiences traveling the globe, as a stateless man searching for freedom. Fergus helps us find the perfect country if our goal is freedom. So Fergus, welcome to the show this morning.
Fergus Hodgson: What a privilege and thanks so much for that introduction. It’s a bit emotional for me to speak on this topic because it’s been my life for at least a decade and I’m very pleased to share this with the audience.
The Beginning of a Pursuit for Freedom
Bob Zadek: The audience has probably already guessed that you didn’t grow up in Queens, New York. I did. You didn’t. So give us just a tiny insight into that part of your personal history that let you start on this search — this comparison shopping among countries for liberty.
Fergus Hodgson: At time growing up, I had no idea that the nature of my upbringing would really have this impact on me. I grew up in a very rural isolated part of New Zealand on an organic chicken and cattle farm. My parents had six children.
Maybe it was as close to the state of nature of possible because we just had open countryside. We used to go hunting, fishing, uh, build huts, whatever we wanted. It was an incredible way to grow up.
My father milked the cow by hand, so we had this fresh raw milk. And I remember one time a cousin from Canada came to visit and she was wondering how there was a speed limit of about 65 miles an hour on this tiny gravel road and how could this be? And we just said well you use your own brain to decide how fast you go. We don’t need speed limits here anyway. I guess that was the contrast. We had just grown up without dealing with control from government. It was just our nature to get on with the job and live with our own initiative.
Bob Zadek: So why are you not still living in New Zealand milking a cow and tending sheep and sitting on a hillside with a curved staff and watching sheep, which are very predominant in New Zealand? Why are you wherever you are — and you will tell us where you are perhaps — but you are not in New Zealand. So how come you left the state of nature? Were you drowning in freedom and couldn’t stand it?
Fergus Hodgson: Great question. I give a lot of respect to my younger brother who is now leading the farm with his wife and my father. My father was retired but still lives there. And in many ways because I was a child, I didn’t realize the different challenges going on. I didn’t understand taxes. I didn’t understand compliance. And now in New Zealand, of course we’ve got a carbon trading scheme. We have all sorts of publications. There’s tracking on every single cow which has to have a tracking device. I am in Texas in the United States and they have a similar chip device in drivers licenses.
As a child, I didn’t realize all that was going on behind the scenes in terms of compliance or the burdens and even since I was a child growing up in the late eighties, a lot has changed. The world has changed and particularly the bureaucracy in a place like New Zealand, which is a British colony and was really a Wild West for a long time.
It was an open country that was being colonized by white British settlers and it has become more of a bureaucratized country. And even though New Zealand scores high on indexes of economic freedom and it is not a bad place to be, it is difficult to make a start there as a young person. It’s very expensive. It is isolated. And you would earn roughly half in terms of salary what you might make in a place like the United States.
Bob Zadek: I would like to offer one quick aside observation. You mentioned fondly that New Zealand was like the Wild West. And the reason I am focusing on that phrase is because you said s o almost wistfully.
Elizabeth Warren, I believe, in the recent presidential battles, has in observing a part of our economy that was unregulated, she said with disparagement and with a lot of verbal exclamation points, that that segment of the economy is like the Wild West.
To me she meant it as it is, it is doomed. But to me that’s aspirational. I want the world to be like the “Wild West,” which means people are free to do what they want. So I was struck by the fact that the Wild West which equals a lot of freedom, has become something to fear and something that requires fixing with regulation rather than something to aspire to. You have experienced living and self-identified with being a stateless man. Tell us about that experience and why you chose that label and more importantly, choose that lifestyle.
Fergus Hodgson: There’s so much to say about that. Just a little bit about the nostalgia I have for the Wild West. It is true that isolated parts of the world still have that sense of being free that you can’t really get in the city. I see it as a positive thing because there is such peacefulness. Why did I feel this way? I guess as I was making the transition from being a student and athlete to being a worker and an entrepreneur, particularly because I was working as a writer, researcher editor, etc., that was when I started to realize the gravity of the problems. People who have followed my work might know that the first article I wrote for public consumption, the first non-academic article I wrote was on a superannuation retirement scheme that New Zealand imposed in 2007. Basically in the late 1990s there was a referendum asking whether people wanted a compulsory superannuation scheme like social security.
Fergus Hodgson: Over 90% of people voted against it. They didn’t want it. It was such a resounding statement. I was even surprised that people would be so clear about it. Obviously the social engineers would not let it go. They introduced what they called a “voluntary system” in 2007 called KiwiSaver, which was basically an appropriation of our proud bird, our national emblem for some government program. And they basically said that you have to opt out of this actively every time you get a job. Basically whenever you would take a job, you would be automatically opted into this and you would have to write a letter requesting to opt out. And if you didn’t write a letter quickly enough, you’d be stuck in it forever. Also, people who went into this government retirement scheme would get $1,000 bonus to start with, they would pay lower taxes. There would be all sorts of tax incentives which imposed burdens on employers.
I claimed this was a deceit, a lie. It wasn’t voluntary. It was harming people like me who wanted to be independent. And that was really the start of my writing career. That was the start of me identifying the problems that I didn’t want to have to deal with. And I felt like I had no real choice because of course I’m just one man and I can’t change an election. Even if I could get elected, I would just be one man in a Parliament. So I thought the fastest way for me to change the laws that applied to me was to leave and find alternatives. I also did not appreciate the treatment I had received growing up. I’m not sure about you, Bob, but I just had a very negative reaction to conventional education.
I did not like it at all. I had a hard time taking my teachers seriously and I just thought it was organized babysitting where I wasted 13 years of my life in government education and the idea that I should then have to pay them back because they had somehow gifted me something was just preposterous to me.
You just stole many years of my life. You want me to pay for it?
That is crazy. I just said, I have no loyalty to this government. And even if I have an affection for my homeland, those are two different things. The government and my home are two different things and I thought the fastest way yet to go and explore and let go of those loyalties.
I didn’t know what I was going to find. As I’ve mentioned in articles that people can see and in much of my work, it was harder at that time because when I left New Zealand in 2008 there really wasn’t the social media or peer-to-peer economy that there is now.
It was just a very hard time for me to get going. What happened is that in 2011 I began my own radio show and blog and I called it “The Stateless Man,” just to fit the life that I led at the time. It doesn’t mean that I don’t have any citizenship or anything like that, because there are people who actually don’t have citizenship, and that’s a very hard way to live. It fit because I didn’t want to give any loyalty to any government, and I just believed in being your own individual and living the life you want to live.
Bob Zadek: When you would describe being the way that New Zealand sold their version of social security, do you know what that sounds exactly like the beginning of the mortgage crisis in the U.S. In 2006, with teaser rates on mortgages: “Sign here, no money down, put 1% down, when you buy your house, you get a low interest rate for six months, the payments are so low, you won’t even notice them…”
That was an example of the government learning or adopting the worst qualities, indeed qualities that business sometimes adopts and it becomes illegal, or the source of great economic turmoil. And the government of New Zealand from your narrative appears to have adopted that very same approach in order to sell what is inherently a terrible product.
Fergus Hodgson: It is a terrible product. And at the time, economists just said that this is not going to increase savings. It is going to give low returns and will create cronyism. There will be mercantilists and phony financial organizations who get approval. It’s not going to permit people to invest as flexibly as they want to. I realized that no matter how beautiful or attractive or funny my articles my were, I wasn’t going to turn around the entire country. There were many other problems too. It might seem strange to many people, but even receiving government handouts was probably worse than paying the taxes, because I saw that as a tool to make me weak and dependent and I did not want that. I wanted to be a proud independent man who could speak with conviction and not let his principles be eroded away.
Bob Zadek: You were correct as I have observed many, many times on my show, almost irrespective of the topic, one of the primary tools that all governments use and indeed all institutions use as a substitute for loyalty is dependency. If governments or organized religions or perhaps even business can make you afraid of something in a way that it seems impossible for you to counter the fear by yourself, and these people who create the fear then say, but sign here and we will protect you. Once they make you afraid, then they have you where they want you. So your reference to dependency is right on.
Fergus Hodgson: There was one example which just opened my eyes to it, because a family friend of ours had run as a candidate for what would be equivalent to the Democratic party in New Zealand and a big plank which is now in place was universal child care — the government would pay a few hundred dollars weekly or monthly for childcare. That politician and her husband knew that this was a way to build a long term voting constituency. This group of mothers will become voters for us permanently. And I just thought, “man, this is exactly the problem with democracy. Politicians will literally take money from me or the people and just build a permanent loyal voting block.” It’s just painful.
Governments as Service Providers: The Liechtenstein Model
Bob Zadek: A lot of your writing as you study the governments of the world, good and bad — you have spent time in Central and South America and you have seen the worst of government and you have written about smaller governments as well. We’re going to talk for just a bit about Liechtenstein. Not that this is going to be a travel blog or a “sign here” or a link to a website where you can become an instant citizen of Liechtenstein.
I mention that only because there are lessons to be learned. So when we discuss Liechtenstein, which you have written quite a bit about, we are discussing it not to urge people to move there, but rather to show how different a citizen’s relationship to government could be where the government remains viable. So tell us about Liechtenstein, the Crown Prince and his writings, and what we as Americans or as New Zealanders or whatever state you self-identify with, what we can learn about how our government might have a different approach to its relationship to its citizens.…
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- How the Fintech Revolution Could Liberate Us, March 22, 2019, by Fergus Hodgson
- The Gateway to a Post-Political Age by Fergus Hodgson
- Crowdfunding Democratizes Finance, and That’s Okay | Frontier Centre For Public Policy, by Fergus Hodgson
- Competitive Currencies Can Check Fed Privilege, by Fergus Hodgson, January 2, 2019
- State-Backed Digital Currency Offers Nothing for Canadians | Frontier Centre For Public Policy, by Fergus Hodgson
- Hedge Funds Need Not Be Gated Communities, Epoch Times, by Fergus Hodgson