Jason Hartman starts the show with Adam as they discuss home prices across the nation. He also talks about a 100 year bond. Later in the show he brings on guest Patri Friedman, Executive Director of The Seasteading Institute. They talk about setting up new nation and the seasteading technique. Patri goes into the concept of creating a country on the seas.
I started researching real estate investing about three or four years ago, two years ago, I was lucky enough to stumble upon the podcast when I was doing a search. I listened to you for probably three or four months, but I was hooked after the first episode, just everything from the real estate information, politics, the philosophy, the economics, and about three or four months, I decided, you know, I’m going to put my information in and see what Platinum comes back with. So I plugged my information in on the website contacted me a couple of days later. And by the way, he has been a tremendous resource for me, just pointing me in the right direction, especially as somebody with no prior experience real estate investing, but he definitely pointed me in the right direction, help to educate me and help to show me different sources of information where I can better myself as a real estate investor.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn and slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Welcome to the creating wealth Show Episode 1274 1274 and no need to adjust your volume or headphones. This is Adam today. Jason. Don’t worry he is not being bombarded Dorian, he’s not not out for that reason. He lost his voice, which, as you all know, is probably making him sit at home, banging his head against the wall saying I need to talk I need to talk. So we’re going to talk about a few things today before we get to his interview with Patrick Friedman. It’s based on seasteading and starting your own country, which I had never heard of before I heard his interview here. But before we get to that, let’s talk about some interesting news. In the homefront. There’s an article that Jason linked to on our Facebook group that’s talking about how in July, home prices in car dependent areas were rising faster than home prices in walkable neighborhoods, and they’re making it sound like some big deal. Well, let me tell you why it’s not. If you look at what’s going on in our economy and what we’ve talked about here. We’ve talked about how the cyclical markets we’re seeing prices on the higher end start to soften and whenever you hear people talking about walkable neighbors, hoods, most of the time, they’re talking about your downtown areas, you know, the areas where you have your, you know, high rises next to your restaurants next to your, you know, museums. And those areas are the areas that are currently being hit your suburban areas, your quote, unquote, drivable areas are the areas where you’re more affordable homes are now not in cyclical and hybrid markets. That doesn’t necessarily mean cheap. Don’t get me wrong, I’m not talking cheap. What I’m saying is they’re cheaper than the homes that are downtown, and are in the walkable neighborhoods. So it’s not surprising that as our housing market in general starts to cool off, that we’re seeing the walkable neighborhoods and having more trouble with sales, because they’re the higher priced homes. They’re the ones who are going to be hit first. And so, you know, just look at it. You got to look at these articles with the with the skeptical line and say, well, are they really telling me is it really that important? Is it really that surprising? They’re saying yeah, you know, it’s declining now, but for The last four years home prices were going faster and walkable neighborhoods and in car dependent ones. Well, yeah, of course, because people were thinking things were going to be great. You know, prices are just going to keep going up and up. And you got to get in now before prices start going down, and then they realize, Oh, wait a minute, it’s softening. I can’t my neighbor can’t sell their house. Do I really want to buy there my friends having trouble selling their house? Do I really want to buy there? So it’s really not that surprising. So don’t let that scare you off. The other thing I want to talk about is the fact that the United States government is considering selling a 100 year bond 100 years. Now, I don’t know if you’ve listened to Jason’s longevity and biohacking show, but I’m pretty sure that I’m not going to live to be 140. So if I’m buying this bond, and if you’re buying this bond, if we’re being honest with ourselves, all we’re doing is paying more in taxes. And guess what the coupon is on this. You ready for this? You put your money in for 100 years.
2% 2%. So in one year, essentially, maybe two, if you’re lucky, your breakeven, as it keeps going on, you know, 98 years later. 2%. Come on. I mean, this is essentially just people telling the government keep my money, I don’t need it. If you’re actually thinking about doing this, even if you are able to hand it off to your kids, you know, they’re going to have to wait another 30 years before they get it, if not longer, you know. So 100 year bond that’s coming from the federal government, just look at it and say, pass. Now there are some countries that for some reason have had a whole lot of success. Austria, did it. Two years ago, they raised $3.8 billion with 2.1% rate, which is just insane. And it did so well that it sold More just recently, they sold another 1.3 billion. And you really have to look at the confidence that people must be lacking in their country to be willing to invest in 100 year bond. I mean, I have a lot more confidence in our government in our country, that over the next hundred years, I can get better than 2%. And that our currency is still going to be around because think about it. If the bond doesn’t come to maturation, that means something horrible went wrong with our government, which means something horrible and wrong with the United States. So at that point in time, is it really your biggest concern? I don’t think so. Personally, who knows, maybe you don’t agree with me and you’re looking forward to it. They haven’t announced a date as best I can find out but they are considering it. So we’ll see if they actually decide to go through with that and then how much americans believe that locking their money away for 100 years is a good idea. To me if you’re thinking about doing it, just write the Treasury a check for extra taxes, let them burn that money and you’ll never see it. Again, before we get to Jason’s interview with Patrick Friedman, I just want to remind you, if you are wanting to go on the cruise with Jason and go see the fall foliage up in the northeast, you can go to Jason hartman.com slash cruise and get signed up for that. But we also have profits in paradise coming up in late October. Look on the website for that and profits in paradise will also include a market tour. We’re scheduling that right now and working with the local market specialist to get that nailed down. But it looks like we’re hopefully going to be able to see some of the new construction that’s going on in Florida, and a couple other finished products that are available for purchase as well. So go to Jason Hartman comm slash events, see all the good stuff going on. And enough of my voice. Let’s get to Jason’s interview with Patrick Friedman.
Jason Hartman 7:51
It’s my pleasure to welcome patrie Friedman to the show. He is executive director and chairman of the board of the seasteading Institute. He’s the grandson of The world renowned Milton Friedman and Son of David Friedman. Petrie, welcome. How are you? I’m doing great. Good to have you on the show I read about seasteading many years ago. And then I had the pleasure of actually meeting you in person at our mutual friend’s home in bel air, maybe, I don’t know, 10 years, maybe 12 years ago, where you talked about seasteading. And this is a pretty interesting concept. I almost want to say it’s the concept of startup countries. So yeah, what is seasteading and and what is a startup country?
Patri Friedman 8:36
So seasteading is the idea of building homes on the ocean, and not just homes but communities and eventually countries. And the reason is that well, I view government as an industry, just like any other and if you start thinking about as an industry, we just use our financial analyst or economics hat. You realize that it’s a really messed up industry, because new firms can’t enter. You can’t just make your own country There’s no startup sector. And so of course, there’s not much innovation. And the idea is that we could fix this if we open a new frontier. And people could go and start new countries, trying out new systems of government, just like America did a couple hundred years ago. And maybe we can find a new operating system for the 21st century.
Jason Hartman 9:20
Okay, well, you know, you start a new company with an idea and some capital and a certain jurisdiction in which you do it, and you’re subject to the laws of that jurisdiction, obviously, but I don’t know if what you said is exactly accurate. Just to be fair, you can start a new country. The problem is you need a military with which to do it. Right. A nuke new countries are always started by force, aren’t they?
Patri Friedman 9:44
That’s right. Yeah, you can start a new country if you’re willing to win a revolution. And some people say an election, but that’s not really true. We can see even when candidates who want to engage in great reforms, win an election. You know, they’re dealing with the entire mass of laws. The bureaucracies and the organizations that are in place and they can’t just change the direction of entire country. And that’s that’s probably good. They shouldn’t be able to. What we’re saying is that we also need places that have more experimental rules chosen by smaller teams of people, maybe even for profit companies. In some cases. We view these as sort of the next evolution of imagine like masterplan communities meet special economic zones, where the real estate developer is not only putting together the project, but also even looking around the world at the best legal codes and choosing what legal codes to use and operating the courts in the police and not just the development.
Jason Hartman 10:39
Interestingly, that’s exactly what at least smart entrepreneurs do. When they set up a business if it’s within the United States. They shop between 50 states and maybe Puerto Rico and Washington DC as well, and they decide where is it best to form my corporation or LLC? What place has the most favorable laws. And, you know, maybe they don’t physically need to be there. Maybe they do. And they shop, you know, it’s a marketplace. And it’s a wonderful thing people vote with their feet as it should be. But you know, it’s interesting. I love real estate. I’ve been in that business all my life. I especially love income property. And I remember years ago, hearing the preamble to the national National Association of Realtors induction, and it starts with under all his land, right? And, and even in our high tech world, where we have cyberspace and cryptocurrencies and virtual reality and augmented reality. If you want to start a country, you got to have a piece of land, right?
Patri Friedman 11:46
Well, Mark Twain said by you know, making it and we’re saying production resuming, I mean, absolutely. And part of the idea here and now, I want to admit that there’s downsides The ocean is expensive. It’s a tough environment. And that’s why we’re initially focused on building close to shore we have designed that will work eventually for large deep ocean sea stead. But it’s going to be a while. But the potential to be able to make new jurisdictions and make cities You know, one of the neat things about the ocean is that you can move things as largest skyscrapers. I mean, a cruise ship is as big as a skyscraper and it moves constantly. So cities on the ocean could actually be modular and rearrange, well, we can not only vote with your feet, but vote with your house or vote with your commercial real real estate property. And we have partners in the Netherlands who design floating homes there and they’re able to do really neat things like when a floating office building gets upgraded. Instead of having to demo it, tear it down. They instead sold the smaller building and towed it off to a new location and installed the bigger building. So there’s some really amazing things possible where cities are competing for people competing for capital and even competing for the very floating real estate that the city These are made up.
Jason Hartman 13:00
Okay. So, you know, you admit that the ocean is a tough environment? And I would agree with you certainly. I mean, some of these cruise ships could almost be a country, you know, they’re pretty large there, they’re getting pretty big. Why not just buy a piece of land from a country? You know, maybe there is some country that would sell you a piece of land and allow you to make it a sovereign country. Right. Is that is that occurred you? Or is it really you got to be on the ocean?
Patri Friedman 13:29
Well, I think that building on land in partnership with a country is viable, but the approach that I in my other nonprofit startup society foundation or, or advocating for that involves working with a country to govern a part of their territory that they designate. And with their oversight, the company or the developer, would get the set part of the laws and the reason for this, you know, first off, we’re not ready as as a movement or as a species, for small groups to buy sovereignty. But the other thing that I actually an international law, part of how sovereignty works is it’s being recognized by all of the other countries. And so if a developer makes an agreement with one country, to do what’s called a charter city, inside that country, and get to bring in best practice laws around the world, they’re essentially operating in international law under that country’s sovereignty. And so every country that recognizes that host country would recognize them. But if you got a country to sell, you land with sovereignty, then you go from being recognized by 150 countries to being recognized by one country. Because if even if they say, we This land is not ours, we recognize your sovereignty. No other countries recognizing you, and that means you only have one country recognize you.
Jason Hartman 14:46
Yeah, fair enough. That’s good point. So how do you get the other countries to recognize you? Do you go and petition the United Nations or something?
Patri Friedman 14:55
It’s a complex question because there’s no established procedure to become a new nation. There’s a lot of customs and guidelines. And I think, you know, what I’m saying is why we’re working with countries today and probably for the next 1020 years, in order to make these smaller developments on land and on the ocean, is that it’s going to take a while to solve those problems and the size of development that you need in order to credibly get recognized by countries. You know, it’s just a lot bigger than anyone can manage right now. Right? billion dollar development is not enough to go and get recognized by 50. countries.
Jason Hartman 15:30
Yeah. Got it. So there are new countries being formed. I mean, the map
Patri Friedman 15:35
does change occasionally, right? Yeah. They’re being formed regularly in a number of countries has been growing quite a bit in recent decades. As my patron Peter teal was wondering,
Jason Hartman 15:46
what do we have now? About 206 countries or 193? I don’t know. Depends who’s counting? Maybe?
Patri Friedman 15:52
Exactly. Yeah, it does depend who’s counting but what’s happening there. So what’s different is that those countries that their countries that are split Based on, say ethnic or religious grounds, and what we’re proposing is something that’s intentional. That’s not historical, that’s looking forward instead of looking backward, that says, hey, here’s a group of people with an idea about how to make a better city with better laws. You know, how about they try it out? We’ll see who moves there. Huh. It’s doing it as a business. Yeah, just excited. Plan Association.
Jason Hartman 16:24
That is super cool. I love the concept for sure. I’ve been saying for years, you know, like the, I mean, there’s a couple states within the US that would be likely secession candidates, right, Texas is obviously one of them. I think, Texas in Hawaii, and maybe even maybe Rhode Island, one of those is or Maine. I don’t know which one but, you know, up there, there’s kind of one that sort of really libertarian, I think is Rhode Island, right? Where’s your Hampshire or New Hampshire? New Hampshire? Thank you. Thank you. Sorry, sorry for me. But I just couldn’t remember. You know, like I always say if Texas was to secede from the Union. The first question is, would they let it happen? Right, what would the government roll tanks in there? Would there be fighter jets flying over bomb? Yeah, you know, who knows? Who knows? It’s never been tried, right? But if it did, I always said it would become the Hong Kong, the United States, because it would be this this Mecca where the all the capital would flee to the most friendly, you know, money goes where it’s treated best. And that’s what would happen. So there could be a secession concept, right.
Patri Friedman 17:27
There could be but I think it’s tough to do, because in the US secession is is associated with darker aspects of our past. And I definitely think that the union is, is starting to strain a bit, but it’s still the United States I think, is still a lot stronger than, say, the European Union. And I think it’ll be a while, right? You know, what, what you’re saying about about capital, so, you know, part of what I see is that capital is already flowing really effectively between jurisdictions based on where it gets the best treatment, you know, and that’s great, but will we want is for people to be able to flow more between jurisdictions. And we want governments to be competing for citizens by being great places to live and work the way that they compete for businesses today. So that’s part of the idea.
Jason Hartman 18:13
Let’s talk a little bit more practically for a moment. How, what is a C stand? I mean, what is it made out of? What makes it float? And how big would one need to be to kind of be a viable country? You know, and where would it be floating? You said that, right now you were looking at models that were like these close to shore models, but it has to be what, like four miles offshore to be in international waters or something. Tell us about all that kind of like really physical type of
Patri Friedman 18:40
stuff. So the ocean is divided into a number of zones. The first 12 nautical miles from shore is called territorial waters, and it’s exactly the same as being on land.
Jason Hartman 18:49
Once you’re out 12 miles not four. Okay, you got it, right.
Patri Friedman 18:53
There’s a common misconception that things are just a free for all outside of that, and they’re really not. So if you’re a ship Then once you’re outside 12 nautical miles, as long as you’re on a journey between two different countries, then you’re regulated by the state whose flag you fly. It’s like a corporate registration. So you register your ship, and they have sovereignty over you once you’re outside territorial waters. And that’s actually an incredible system from the competitive governance angle, because this is a virtual Association where you’re franchising their sovereignty. So I think there’s a lot that can be done with, you know, what I call ship SEDS. I think that medical treatments, for example, on a cruise ship, like medical tourism, but instead of having to fly someplace, you know, you get on a ship in LA that just goes to Mexico and back
Jason Hartman 19:38
to one of the concerns there is if he could have surgery, keeping the knife steady.
Patri Friedman 19:43
You know, that’s what I thought too, but it actually turned out from maybe experience but it’s because ships make these long, slow rolling motions, rather than any like sudden jerks that it’s not so much of a problem. So practically, that’s one design that we’ve covered is this ship now, then the Easiest design is if you’re in sheltered waters, then you can do it like a floating home, where you have platforms that are, say, hollow concrete boxes, or foam filled concrete boxes, and that you just put normal buildings on top of. And that’s one way you can go. And then there’s the oil rig, which we did a we commissioned to design. So we have a patented oil rig, residential system design. And those have these long pillars. So then the floatation is below the water. And then you have a pillar so that there’s not very much surface area at the water line. And then the pillars hold of a platform. And you build on top of that. And each of these kind of has different trade offs depending on where you are and how big you are. You know, and you asked how big these needs to be. So here, it really depends on on the economies of scale, if you’re close to land, and you could build on these developments for just hundreds of people, for example, but if you want to be your own country, I think that you need to have 10s or hundreds of thousands of people and you know we really need to scale up with smaller developers First.
Jason Hartman 21:00
Okay, so who would fund building these? I mean, these are giant projects. Right? And, you know, it begs the question, I mean, every sovereign country is susceptible to invasion, you know, if they have wealth, somebody’s going to want it and some burglar with a military, like Napoleon or saddam or whomever, they’re going to come and get it sometime. Right?
Patri Friedman 21:24
Well, I mean, that’s a concern. But that’s a way in which the world’s really changing is that we’re currently in a phase where countries aren’t doing hard imperialism, we’re forcing sort of soft imperialism from places like China. And maybe I would say that Russia would be the only a great power as doing something closer to actually taking territory. So I think that that if you’re following international law, and you know, initially you’re you’re plugged in through one or more agreements with existing countries until you’re large enough to sort of be bigger than many of the smaller countries and then claim independence that of course, have a military You know, I’ve always said that the the big worry is not pirates, its nation states. But, you know, nation states these days, they are not in the business of conquering places, fortunately. So especially in matters if you don’t threaten their economic interests. So one of our core principles is the idea that if these little polity, they’re going to want to have their sovereignty respected, then they better respect the sovereignty of all the much bigger, much older countries. And that means, for example, that seasteading can’t help citizens obey the laws of their country. So, you know, things like you certainly wouldn’t want to let any said export drugs that are illegal in other countries or help residents hide money and dodge taxes, like those things are disrespecting the sovereignty of other countries over their citizens. And that’s the last thing we want to do.
Jason Hartman 22:46
Okay, what else do we have to know? I mean, there’s so many issues. What about a passport? What about funding? You didn’t answer the question about funding these giant projects. I mean, it is a startup. So you Got to raise capital Now Peter teal, is he one of your backers?
Patri Friedman 23:03
Yeah, he was our first donor to the seasteading Institute. And he supported us for many years helped us get started, I see these projects as being very much for profit, right. So it’s, it’s like a real estate development, except you’re getting to bring the legal system and the courts and you ought to be able to make the land worth a lot more if you bring a good, honest legal system and honest judges to a place that doesn’t have them. So the money will be coming from investors seeking profit by funding your construction and return for the rents just like any real estate, other basics. Right now. We’re really it’s all about partnerships with countries and starting to do small developments. We’ve done a decade of research and we had one partnership with French Polynesia. We had a non binding agreement where we did an environmental impact study economic impact study and looked into legislation they could pass to enable a season Sort of a special economic zone for platforms floating alongside, but the the team that did that they tried to raise money with an Ico right after the Ico bubble burst, and they kind of ran out of steam. And so the partnership is not being advanced right now, but the country is still open to it.
Jason Hartman 24:19
Okay. I’m sure I haven’t asked you many questions that I should be asking what else do you want people to know? Just kind of tell us more?
Patri Friedman 24:27
Well, I mean, I think it’s interesting to think about how how this fits into a lot of the changes that we’re seeing in the 21st century. I mean, you know, with cryptocurrency, for example, there’s a lot of overlap in interest because, you know, what is cryptocurrency? It’s the idea of taking something money that has historically been done by the state in a centralized fashion. And, you know, they’ve sucked value out of it that way, and using technology to make a decentralized, more stable version. And, you know, really that’s what seasteading is it’s taking something traditionally done by the state namely, you know, being a State and making laws and saying, hey, maybe we can do it in a decentralized, bottom up way that uses new technology and that fits the 21st century. So I think a lot of these a lot of these trends are kind of on our side.
Jason Hartman 25:14
Okay. Yeah. Interesting. So, I mean, I guess the sea stead could use any currency, they could pick themselves to save the dollar. They could be a cryptocurrency country. So there’s that. Do you want to mention something about that?
Patri Friedman 25:28
One thing that people often mistake is thinking that seasteading is about one particular society that we want to make. And so they asked us, like, what will the money be in your sea stead? And the answer is that our goal is much bigger than that. We don’t want to create one society. We want to do the research and advocacy so that any group of entrepreneurs out there who has a vision for how to make a new society or a development with new legal systems can go out there and do it. And so our motto is let 1000 Nation bloom. We don’t want to take sides. And what the laws are, we want to just want to change the industry to create a startup sector.
Jason Hartman 26:07
Yeah, and I love the way you say the industry, which is an interesting way to look at a country. And also it’s, it just be this marketplace of ideas. And those ideas become, you know, laws and every set of laws is different. But, you know, you said that the sea stead should respect the laws of other countries so that other countries, for example, wouldn’t want to invade them more and steal their wealth and things like that. So they wouldn’t allow people to dodge taxes or do drugs or whatever, right. But ultimately, the startup country, the sea stead would probably out compete the other countries to attract capital, it would have better corporate laws, it would have a more business friendly environment, and so that there would be a capital flight and maybe a brain drain, following the capital. Of course, other countries would be upset by that. I mean, look at in business. Nobody loves their competitors, right?
Patri Friedman 27:08
Yeah, yeah. I mean, I, I, if it works out there would be a brain drain and capital flight. But of course, I think that the greatest impact that the startup sector could have would be spurring the big players in the industry, which is the large existing nation states to start innovating in order to be able to better compete. And so I think that with through syrup societies, we’re working on an open source legal system, for example, called UX. And so these laws and code, they’re going to be out there for other countries to use. So if they don’t want to lose in the competition for citizens and capital, hey, all they have to do is change the laws.
Jason Hartman 27:43
Very interesting. Very interesting. give out your website.
Patri Friedman 27:46
Sure. It’s seasteading. That org. And I also write on Twitter as Patrice Mo, Petrie were you located? I’m in the Los Gatos mountains at the very edge of the Bay Area.
Jason Hartman 27:56
Okay. And, you know, we’ve got to ask someone like you that because you might be out See, and you know,
Patri Friedman 28:02
we never know, you know, you’ll be out on a sea stead someday. When do you see this happening? When I saw your presentation about it at at our friend Chad’s house, you know, you talked about decades out, even, you know, 100 years away. What, like a timeline that you might see some of this start to take shape. We’re starting to see the the first seaside projects that are actually being built or have actual partnership with countries happening right now. So if you asked me a few years ago, I’d had to say, I don’t know 510 years, but these things are actually starting to starting to happen. So in the next few years, you’ll see things like this although of course, they may or may not be described as being like this. I mean, every every new product chooses a done branding and we could see product like this either trying to position themselves as very innovative and cutting edge in order to attract people or, you know, just as kind of Nothing to see here, move along. You know, they’re more worried about getting negative publicity, so Keep your eye out.
Jason Hartman 29:01
Yeah, good stuff. Thanks for joining us. And good luck. This is fascinating. And I really wish you the best it would be. It’d be great to see some competition in the country industry. Good stuff. Good stuff. Thanks again.
Patri Friedman 29:15
All right. Thanks for having me.
Jason Hartman 29:18
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