Introduction
I don't know what convinced me to read the Sovereign Individual. It predicts the effects of the transition to the Information Age in 1997.
Some predictions didn't happen, some did, and some are yet to happen. Even 24 years after being published, the book is very readable. The authors draw lessons from history.
I think the book predicted a lot of things correctly. Some predictions, I didn't register. I hadn't on top of my mind the age of the book. The most miraculous is a prediction of bitcoin, the "internet currency" based on cryptography. I didn't appreciate that the authors talked lengthily about the year 2000. That was unnecessary. Their use of "Information superhighway" always made me smile.
Return on Violence
The authors use the term "return on violence" (ROV) to describe the changes in history.
If ROV is high, then it pays off to use violence aggressively. If ROV is low, then being an aggressor is not advantageous.
Hunter-gatherers enjoyed a low ROV. They carried everything on their backs, and they could leave. Shift to agriculture increased ROV. You can seize or pillage a farm.
In Roman times, the return on violence was high. You could raise an army and conquer and plunder easily. It resulted in a big centralized state.
At the end of the Roman period, people learned to build castles and make a suit of armor. The offensive war was more costly, with little to be gained. An area that would be swept by a Roman army was now defended by a castle. The army had to besiege the castle. It takes months before the defenders run out of food.
In the Middle ages, the return on violence was low. The power of the king was limited, and states were small.
Then the gunpowder came. It became easier to arm the population and to shoot castles to pieces. The return on violence got higher. At that time come colonization and unification.
What influences ROV
What decreases ROV: Good defense, mobility, expensive weapons, and well-spread technology.
What increases ROV: good offense, gunpowder, technology imbalances, and immobility.
Middle Ages were cool
The authors compare our times to the end of the Middle Ages, where the paradigm of religion and state shifted. Doing that, they explain a lot about the Middle Ages.
The Middle ages started with the collapse of the Roman empire. Generally, the return on violence decreased significantly. Militant groups (knights) terrorized the land. They were hard to pacify until the church managed to do it through religion.
Until we coalesced under one entity in the age of enlightenment, the Middle ages tried different styles of government, usually next to each other. There were traditional feudal lords. Cities ruled by an aristocracy. Hansa -- the league of merchants. Democratic cities. Church lands. Sovereign knightly orders.
You might have been ruled by a duke for half a year and by a bishop the other half. You could live in the land where you could cherry-pick from two legal systems. Or you could swear yourself to a knight order and follow a different sovereign.
Changes of morality
Style of government and morality change based on who has economic power. To cite one great Czech statesman: "I have to cite myself, I already said that here". The authors propose that one such change is here. We are working differently. Our morals will differ from the morals of those who farmed or labored in a factory.
The morality in the middle ages was chivalry. Knights swore oaths to their liege that they followed. The chivalry got way to citizenship. People were willing to die for the motherland. This morality will disappear too.
Now, a highly-skilled minority that can work from anywhere creates a lot of value. The formerly known middle class competes with cheap labor from abroad. The authors predict populist movements as a reaction to this shift.
Some change is bound to happen. The authors prophesize that the shift in institutions will happen suddenly, simultaneously, and everywhere. The world is connected more than ever.
Government monopolies
The only one who provides security (uses violence) is government. If someone does something violent, police (the government) stick him into jail. Now, it looks like we agree that this is the best, but we don't see any alternative.
Government is in charge of the money. Anytime, it might decide to print some, thus lowering their value.
The government also promises to care for us. In old age, for instance.
We don't have a choice. The state adds more and more to its "services". In the 20th century, it added about 0.5 to its total claims on annual income. It grows and grows.
Too costly
The monopolies tend to be inefficient and overpriced. And the government is a monopoly if you start to think about it like a company that provides some essential services. Don't think about the state (and government) as a family. It is not. (You know it, don't ask what you can do for your country, ask what a government might do for you.)
The government was the one who provided the security. Paying for the protection against outside enemies makes sense to do proportionally, everyone the same share of things he owns. But not everything is and should be shared this way.
Now, democratic societies spend at most 10% on protection. They provide other things that are not a good deal for many. It's not worth spending 7.65% on healthcare (Austria) if you earn a big salary.
Gas in your car costs the same regardless of whether you earn a lot or nothing. Highways should work the same. Regardless of whether you ship clothes or gold, you should pay the same. (Now you don't. Someone paid taxes to buy gold.)
Now, the wealthiest 1% (in the US) pay 40% income taxes and 24.1% taxes overall (and I found it on the left-leaning webpage that says the rich don't pay their fair share, wait for the prediction to fulfill, you'll see a fair share).
Finally the predictions
The current welfare state is going to die. Seeing communism collapse should not mean that our system is victorious. It is the same as seeing a fraternal twin die of old age.
There are two types of people: taxpayers and tax consumers. Taxpayers pay more on taxes than they benefit. Tax consumers receive more than they pay.
The more we redistribute, the sharpest the difference between taxpayers and tax customers. The more benefits we give, the harder it is to convince that children will die if you don't pay taxes.
At some point, under demographic pressure, everyone working will be a taxpayer.
So the nation-states will become obsolete. Taxpayers will move their work somewhere else. Maybe to a different country, maybe to cyberspace. Every taxpayer will be against a strong government.
The only people who have a political agenda (nationalist, environmentalist, or socialist) will defend the nation-state.
The process doesn't need to be peaceful. The state has a lot to lose. And it will be run by people with loud opinions.
Customerization
The taxpayers will try to find a jurisdiction that provides them with what they need. Instead of one country, they might choose between security firms, between insurances for many things, for pension savings, and so on.
We will be customers of things that the government used to provide. Some providers might be local (security), some might be international (healthcare), or even nonprofit (starting a software company).
Everyone will be choosing the suitable model, but there will be some super-rich people that will be influential almost as the government today (There will be 100 million of them). They will not need to obey any authorities (mostly). They will be called Sovereign Individuals.
Conclusion
Read the book. It is worth it! It is long but fun. It is the longest post (about reading), and I still skipped a lot.
Hilarious highlights
The Don Quixote of the twenty-first century will not be a knight-errand struggling to revive the glories of feudalism, but a bureaucrat in a brown suit, a tax collector yearning for a citizen to audit.
Whether a new plague will infect the world is unknowable. An eruption of microparasites, such as a viral pandemic, rather than drastic changes in climate or topology, would more likely disrupt the mega political predominance of technology.
Quote for Artur C. Clarke: "I also believe -and hope-that politics and economics will cease to be as important in the future as they have been in the past; the time will come when most of our present controversies on these matters will seem as trivial, or as meaningless as the theological debates in which the keenest minds of the Middle Ages dissipated their energies."
The word politics in English dates to 1529. It used to be pejorative to "opportunists and temporizers".
We are too keen to believe that all cultures are created equal, too slow to recognize the drawback of counterproductive cultures.
Why is the government big? "It is like asking why sumo wrestlers tend to be fat. The lean sumo wrestler cannot compete with a gigantic opponent, whatever his ratio of strength to weight."
I love the book also because of this quote: Most of the royalty money is paid to a small number of best-selling authors who can truly entertain their readers. Unhappily, we are not among them.
Any software company or even the Church of Scientology would be a more formidable antagonist in cyber warfare than the majority of the states in the UN.
Not funny, but to mention it: Labor unions are evil (of non-skilled workers). In us, they were successful, because they just seized the factory and demanded higher pay. There were a lot of unemployed people who wanted to work in relatively simple positions for market wages, but if the unions destroy a factory, you cannot produce anything. This is an example of a high return on violence.