YOUR N EXT GOVERNMENT ?

Governments across the globe have begun evolving from lumbering bureaucracies intosmaller, more agile special jurisdictions – common-interest developments, specialeconomiczones,andproprietarycites.Privateprovidersincreasinglydeliverservicesthatpoliticalauthoritiesformerlymonopolized,inspiringgreatercompetitionandefficiency,tothe satisfaction of citizens-qua-consumers. These trends suggest that new networks ofspecial jurisdictions will soon surpass nation states in the same way that networkedcomputersreplacedmainframes.Inthisgroundbreakingwork,TomW.Belldescribesthequiet revolution transforming governments from the bottom up, from the inside out,worldwide, and how it will bring more freedom, peace, and prosperity to peopleeverywhere.

ProfessorTOM W. B E L LearnedhisJ.D. fromtheUniversityofChicago in1993, thenpracticedlawinSiliconValleyandWashington,DCbeforeservingasapolicydirectorattheCatoInstitute.In1998,hejoinedthefacultyofChapmanUniversity,FowlerSchoolofLaw,whereheteachesallofthefirst-yearcommonlawcoursesandelectivesinhigh-techand intellectual property law. Bell’s prior publications include Intellectual Privilege:Copyright, Common Law, and theCommonGood (2014). ThroughArchimediate LLC,Belladvisescompaniesdevelopingspecialeconomiczonesonthedesign,installation,andsupportoflegalsystems.Helivessurroundedwithbooks,guitars,surfboards,andsmilingfriendsinthesunnybeachtownofSanClemente,California.

YOURNEXTGOVERNMENT?

FromtheNationStatetoStatelessNationsTomW.Bell

ChapmanUniversity

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Tomyfather,DavidGlennBell,acivilservantwhotaughtmehowgovernmentswork–andtoooften,donotwork–fromtheinsideout,bottomup,worldwide

ContentsListofFigures

Preface

Acknowledgments

Introduction:FromDinosaurstoChickens

PartI Facts1.1 TheMostValuableThingintheWorld?

1.2 Revolution,InsideOut,BottomUp,Worldwide

1.3 SpecialJurisdictionsintheUnitedStates

1.4 CaseStudy1:Fordlandia

1.5 CaseStudy2:HonduranREDsandZEDEs

1.6 CaseStudy3:Seasteads

PartII Theory2.1 TheCenteroftheLaw

2.2WhyConsenttoConsent?

2.3 UptheLadderofConsent

2.4 ForgetItIsaConstitution

PartIII Practice3.1 BestPracticesinGoverningServices

3.2 AbolishGovernmentalImmunity

3.3 CitizenCourts

3.4 FromOrphanedCitiestoSharedCommunities

3.5 DoubleDemocracy

3.6 UnitedStatesSpecialEconomicZones(USSEZs)

3.7 Ulex:AnOpen-SourceLegalSystem

3.8 StoriesoftheSortOrdinarilyRecountedoverDrinks

Conclusion:FromSmartGovernments,GoldSwans

AppendixA EconomicsofMonopoliesinGoverningServices

AppendixB UlexOpen-SourceLegalOperatingSystemVersion1.1(2017)

AfurtherOnlineAppendixcanbeaccessedathttp://cambridge.org/9781107161467

Index

Figures1.1-1 SourcesofWealth,Worldwide,2006

1.2-1 PercentageofResidentsinCommon-InterestCommunitiesintheUnitedStates

1.2-2 PercentageofCountriesWorldwidewithSEZsorSimilarZonessince1958

1.2-3 NumberofSEZsandSimilarZonesWorldwidesince1958

1.3-1 U.S.Foreign-TradeZones,Subzones,orAlternativeSitesApproved,NetofTerminations,1934–2015

1.3-2 U.S.Foreign-TradeZones,ApprovedandActive,NetofTerminations,1990–2015

2.3-1 ConsentasaBinaryFunction

2.3-2 TypesofConsent

2.3-3 TypesandSubtypesofConsent

2.3-4 TypesofConsentandTheirRelationtoJustification

A1.1 GovernmentQuaNaturalMonopolyAssumingOnlyExpresslyConsensualTransactions

A1.2 GovernmentQuaNaturalMonopolywithExpressandNon-ExpresslyConsensualTransactions

A1.3 NegativeDemandforOversupplyofGoverningServices

Preface

WhatWillYouChooseforYourNextGovernment?

Supposeyouwant tomove toanotherpartof thecountry.Willyouchoosea traditionalmunicipality, where political institutions provide governing services, or a privatecommunity, like a homeowners association? Or suppose you want to move to anothercountry entirely. Now you might face a choice between a constitutional republic,parliamentarydemocracy,orwhateverformofgovernmentseemsbetterthanthecorruptmessyouwanttoflee.

People choose between governments every time they choose to live in a new city,state,orcountry.Youmightalreadyhavemadesuchachoiceyourself.Evenifnot,youstillprobablyenjoyfreedomtomovebutchoosetostayput.

Sowhileitmaynotfeelmuchlikeshoppingforgroceries,youalreadyenjoyalargedegreeofchoicebetweengoverningservices.Andasthecomparisonsuggests,thelargeryourdegreeofchoice,thebetterchoicesyouget.Competitivemarketsdeliverthegoodsreliablyandcheaply;politicalinstitutions–notsomuch.Differentoutcomes,samerule:Whensupplierscompete,consumerswin.

Themarketforgoverningservices,neververyefficientorflexible,hasbeguntoenteraperiodofrapidchange.Nationstates,legacymonopoliststhatlongdominatedthefield,now face competition from private cities, self-legislating special economic zones, andotheragilenewinstitutions.Thisquietrevolution,workingfromtheinsideout,standstotransformgovernmentfromtheprovinceoflumberingbehemothstoanetworkofconsent-richcommunities.Notanothernationstate;astatelessassociation.

So,whatkindofgovernmentwillyouchoose?

Youwillprobablychooseagoodone.Peoplelikeyou–thoughtfulpeople;civilizedpeople – reject governments that pursue war, oppression, or pillage. Like other decentfolk,youwantbetterthanthat.Youwantyournextgovernmenttonurturepeace,cultivateprosperity, and protect freedom, right?Beyond that, though, the specifications probablystartgettingfuzzy.

Consider this book your friendly guide to the changes ahead. It will help youunderstandthetransformationalreadysweepingthroughnationstatesacrosstheglobeandprepareyoutoexerciseyourgrowingpowerofchoicewisely.Takeitinhand,dearreader,and…

makeyournextgovernmentyourbestgovernment.

Acknowledgments

ChapmanUniversity,FowlerSchoolofLawpatientlysupportedtheyearsofresearching,thinking,andwritingthatwentintothisbook,andforthatithasmyprofoundgratitude.Students and audiences atmany various events have inspired the development of theseideasandgivencountless smallencouragementsandsuggestions.Thanksalsogo to themanyvariouspartieswhohaveofferedupirresistiblelegalpuzzlesandadventuresabroad.

For providing critical commentary on drafts of the book, thanks go to: CarlosAlejandroPinedaPínel,EgorRyjikov,VítJedlička,MarkFrazier,PatriFriedman,OctavioRubén Sánchez Barrientos, Leif Smith, Jorge Schmidt, Christine Peterson, Randy E.Barnett, Annie Eby, Fred C.Moulton, Steven J.Ware,Max Borders, MattMiller, JonPeters, JoeQuirk,KellyRyan, JohannGevers,AlexTabarrok,DerrikSweeney,DonaldKochan, Antony Davies, Bart Wilson, Tom Campbell, Lotta Moberg, Michael CastleMiller,DylanEvans,DonnaG.Matias,DanielGriswold, JinWang,FredFoldvary, andAnonymous (but not that Anonymous). For research assistance, to: Sherry Leysen andthose under her direction in the Hugh & Hazel Darling Law Library at ChapmanUniversity, Fowler School of Law. For financial support: TheCharlesKochCharitableFoundation.Manyvariouspeopleandinstitutionscontributed to thecomponentwritingsthatthisbooksometimesdrawson;pleaseseethoseworks,citedasappropriate,forotherattributions,credits,andthanks.

Thanks for helping with this book should doubtless go to more people andinstitutionsthanthiscomparativelybriefandimperfectaccountingsuggests.Pleaseacceptthisapologyinlieuofanysuchoversight.Theauthorofthisbookbearssoleresponsibilityfor its contents, which do not represent the views of any principal, agent, or businessassociate.

Introduction◈

FromDinosaurstoChickens*

Look at a globe ormapof theworld.What do you see?More likely thannot, you seemanyvariouscountries,eachfilledinwithanevenpatchofcolor–blue,pink,orperhapslight green. Cartographers typically portray nation states that way. As a likelyconsequence,wetypicallythinkofthemthatway,too.

In truth, though, we do not live in a coloring-book world. Nation states1 are notuniformswathesofpoliticalauthority.Instead,almosteverycountryintheworldincludesoneormore special jurisdictions–placeswhere thecountry’susual rulesdonot apply.Thisoccursinprivatecommunities,manythesizeofcities,thatprovidetheirownroads,parks, security, and other community needs, effectively opting out of the local politicalalternative. Sometimes special jurisdictions arise not in spite of the government butbecauseofit,aswhenanationstatecreatesazonewithlowertaxes,streamlinedservices,lighter regulations, andother benefits. Some countries go further, allowing their specialjurisdictions considerable autonomy in regulatory, economic, administrative, and legalmatters.

Rather than showing India as a smooth swath of orange, therefore, cartographersmight do better to show the country sprinkled with 204 operational special economiczones(SEZs),2coloringthemgoldtoindicatewherethegovernmenthaseaseduponitsusual,somewhatmoreburdensomecontrol.TheUnitedStateswouldnotappearuniformbrown, but mottled with over a thousand Foreign-Trade Zones (FTZs).3 The variousspecial jurisdictions covering China would leave only a small portion of its territorymarkedindeepesthues,betheyyellow,blue,orpink.4

Ifconventionalglobesandmapsshowtheworldinthestyleofacoloringbook,thisbook shows it in the style of a shimmering video, revealing the subtle degrees andvariability,overtimeandoverspace,ofpoliticalpower.FromthisOlympianvista,weseespecialjurisdictionsadaptingtotheirenvironmentlikethegenusofsomehardyanimal,itspopulationanddistributionconstantlyinflux.

Recent centuries have seen zones flourish, die back, and then resurge. Privatecommunities have exploded in popularity. Special economic zones have grown morevariegatedandcomplex,too.Theybeganassimplefreeports.Nowzonesrangeinsizesand complexity from a single factory exploiting a customs loophole to entire cities,housingmillionsandlargelyself-governed.

The facts about special jurisdictions disclosed in these pages provide a fresh andaccurateperspectiveonthemomentouschangescurrentlysweepingthroughthe,forlackof a better term, governing services industry. For many centuries, nation states havemonopolized the market, such as it was, for governing services. At their best theyprotectedhumanrights,providedsuccortothoseinneed,andmaintainedtheruleoflaw.

Attheirworst,theymurderedmillions.5

Could nation states have done better? Certainly. The lulling effects of monopolypower do not encourage close attention to the demands of citizens qua customers of agoverning service. It does not even encourage close attention to human rights.Increasingly, nation stateshavebegun to allow– and even invite – other institutions toshare the heavy burdens of government. This book discusses the ramifications of thatinside-outrevolution.

The book unfolds in three parts. Part 1 documents the transformation currentlysweepingthroughthegoverningservicesindustry,givingrisetoprivatecommunitiesthesizeofcitiesandspecialeconomiczoneswithautonomyrivalingthatofcity-states.Part2describes a theoretic framework for evaluating governing services, one founded in theuniversalandmutualvalueofconsent.Part3appliestheorytofactstogenerateavarietyof practical observations (and a few stories from the field) about how to improvegoverningservices.

Facts, theory, and practice. Nothing fancy; just good science. Because the worldneedsgoodscienceaboutgovernmentsjustnow.Wefacesomebigchangesahead– thesortsofchangesscientistscall,withraisedeyebrows,“interesting.”

Recent decades resemble the late Cretaceous period in terms of the evolution ofgoverning institutions. Like newly evolved mammals scurrying among the legs ofdinosaurs, special jurisdictions have spread across the globe, gradually increasing in

number,territory,andtypes.6Noteverysuchexperimenthasworked,butmanyhave,andthesuccesseshavebegunrevealingimprovedformsofgovernment.7

All who value human flourishing should celebrate these trends. After all, theCretaceousperiodledtothetriumphofmammals,andthetriumphofmammalsledto…us.

Anddinosaurs?TheCretaceousperioddidnotendsobadlyforthem,really.Contrarytopopularopinion,thedreadmeteoricimpactatChicxulubs–anexplosionsearedinthefossil record across the planet – did not render dinosaurs extinct. Not all of them.Notcompletely.

Insteadofdyingoff in thefaceofachangingenvironment,dinosaursevolved.ThesuborderofSaurianReptilesformerlyknownasdinosaursgraduallyadoptedformsmoresuitable for their post-Cretaceous, early Paleogene Period world. Today we know theirdescendantsasmajesticandwildcreaturessuchasfalconsandeagles.Oramusingpets,likeparakeets.Orchickens:slightlyridiculousbuteminentlyuseful.8

Childrenoftengothroughastagewheretheyfinddinosaursutterlyfascinating.Theyrevel in the strange and ancient forms, wondering at their size and thrilling in theirviolence.Someday,childrenmaygothroughasimilarstagewithnationstates.Theywillsettleontheirfavoritesandreenactencounters–wars,mostly,andwithlotsofexplosions– between the noble and awful giants of old. Adults will smile on, happy to see theiroffspringencounteringnationstatesonlyasencasedintheamberofhistory.Theywillliveinaworld free from thosedragons.Aworldwherenationstateshaveevolved intosafeandevencharmingcompanions,asanotherkindofgoverninginstitutionassumesthetopofthefoodchain.

*ThischapterderivesinpartfromSpecialEconomicZonesintheUnitedStates:FromColonialCharters,toForeign-TradeZones,towardUSSEZs,64BUF FALO L . R EV. 9 5 9

(2016).

1Nationstate,hereandthroughout,meansanadministrativebodythatcrediblyclaimsanexclusiverightontheinitiationofcoercionwithinaparticulargeographicarea,adefinitionthatcloselyfollowsMaxWeber’sclassicone.SeeMAX WEBER ,THE THEORY

OF S O C I A L A ND E CONOM I C O RGAN I Z AT I ON154(TalcottParsonsed.,A.M.Henderson&TalcottParsonstrans.,OxfordUniv.Press1947)(1922).

2SeeI N D I A M I N I S TRY O F COMMERCE & I NDU S . , D E P’ T O F COMMERCE , L I S T O F

OPERAT IONAL S E Z O F I N D I A(2016),www.sezindia.nic.in/writereaddata/pdf/ListofoperationalSEZs.pdf(listing204operationalSEZsasofSept.2,2016).

3SeeChapter1.3,Section3.

4SeeChapter1.2.

5S T EVEN P I NKER ,THE B E T T ER A NGE L S O F OUR N ATURE : WHY V I O L ENCE H A S D E C L I N ED

320–43(PenguinBooks2012).

6ElisNewham,FossilTeethRevealtheSecretRiseofMammals–MillionsofYearsBeforeDinosaursBecameExtinct,CONVER SAT ION (June8,2016,11:58AM),http://theconversation.com/fossil-teeth-reveal-the-secret-rise-of-mammals-millions-of-years-before-dinosaurs-became-extinct-60711.

7SeeChapter3.1.

8KevinPadian&LuisM.Chiappe,TheOriginofBirdsandTheirFlight,S C I . AM.,Feb.1998,at38,47,www.nature.com/scientificamerican/journal/v278/n2/pdf/scientificamerican0298-38

PartI◈

Facts

1.1

TheMostValuableThingintheWorld?

◈

1Introduction:Awake?Whocaresaboutgovernment?

Ido.Youdo.Prettymucheverybodydoes.

Whydoweallcareaboutgovernment?Becauseweare,mostofus,conscious.Andyouwould have tonot be conscious to not notice that governments have the power tomakeourlivesalittlebitbetteroralot,lotworse.Fromsmoothroads,toabigtaxrefund,totheprospectsofnuclearholocaustandnuclearwinter–governmentoffersitall.

So everybody can agree that governmentmatters. But would you agree that goodgovernment–morespecifically,theruleoflaw–ranksasthemostvaluablethingintheworld?Ifnot,thischaptermightchangeyourmind.

Section1highlightsafactabouttheruleoflawthatitalmostseemstheWorldBankwouldratheryouoverlook.Section2reviewshowtheWorldBankdefinesandmeasurestheruleoflaw,resultinginafewquibblesbutnomajorobjections.Whetheritmeanttoornot, theWorldBankmakesastrongcase forbelieving that the ruleof lawaccounts formoreoftheworld’swealththannaturalresources,materialgoods,orhumanknowledge.Section 3 explains why that constitutes good news: Reforms like those discussedelsewhereinthisBookstandtogreatlyimprovetheruleoflaw,generatingnotjustbettergovernmentbutmorewealthand,withit,livessaved.

2TheRuleofLaw…RulesIn2006, theWorldBankset forthonagargantuanundertaking: tocatalogandmeasureevery kind of human wealth.1 What it discovered might shock you. Perhaps it evenshocked the World Bank. Because while you might think that discovering the mostvaluablethingintheworldwouldmeritsomehighlighting,ifnotfanfare,thebank’sfinalreportmerelyhintsattheleadingcandidate:theruleoflaw.

True,thereport’sforewordcomesclosewhenitadmitsthat“humancapitalandthevalueofinstitutions(asmeasuredbyruleoflaw)constitutethelargestshareofwealthinvirtuallyallcountries.”2Butnotehow theWorldBanksqueezeshumancapitalonto thefirst-placepodium,hides“ruleof law” inparentheticals,andstopsshortofassessingallcountries.Nowheredoesitsimplytrumpetthefact,plaininthedataofitsownreport,thattheruleof lawconstitutesthesinglelargestsourceofwealthintheworld.Figure1.1-1,createdfromdatascatteredthroughouttheWorldBank’sreport,correctsthatoversightbygivingthebigpictureinoneshot.

Figure1.1-1.SourcesofWealth,Worldwide,20063

The pie chart in Figure 1.1-1 holds a number of surprises for those unused tostudyingwealth.First:Relatively little economicvalue lies in natural resources such asfertilefields,richmines,oroilreserves.“Raw”doesnotpay.Second:Allthemanythingsmadebyhumans–theirbuildings,cars,jewelry,andmore–amounttoonly18percentoftheirwealth.Ourstuffevidentlyisnotworthmucheither.Third:Theeconomicvalueof

theruleof lawoverwhelmsnotonly thenextsingle largestsourceofwealth,schooling,buteveryothersourceofwealth,tangibleorintangible.Sofaraseconomicvaluegoes,theruleoflaw…rules.

Does that surprise you? It is easy to perceive the tangible sources ofwealth – thebounty of nature; all the thingswemake and own. The rule of law, in contrast, is notsomething you can touch or see. It is not a something at all, really. The rule of lawdescribesacondition–youmightthinkofitasthehealthofasystemofgovernment.Fewpeopleincludetheirowngoodhealthwhentheytallyuptheirassets,yetwhenitfails,theyvalueitbeyondmeasure.So,too,withtheruleoflaw.

Tobetterappreciatehowruleoflawaffectswealth,considerahypotheticalweapon:the law bomb. This sinister device wreaks havoc not by destroying its victims, but bydestroying the binding force of all ruleswithin its blast area.Whereas a neutron bombkillshumansbutnotthings,thelawbombkillsrulesbutnothumans.Whatdoyouthinkwould happen if an evil villain exploded a law bomb high aboveNewYorkCity?Thepeoplewould remain, untouched. The buildings, cars, jewels, bank accounts, and othertangible sources of wealth would remain, too. But what would any of those things beworth in a world without law? And how or why would anyone bother to go to work,knowingtheycouldnotdemandpay?Butthenagain,howcouldtheystayhome,knowingthattheirpersonsandpropertynowlayinperiloftheftanddestruction,utterlybereftoflegalprotection?Onecouldonlyflee,leavingNewYorkCityavacantwaste.

Onceyouimagineaworldwithouttheruleoflaw,youcanbetterappreciatehowitquietly makes our world so wealthy. Like health in bodies, the rule of law measureswhether a government functions well. As with bodies, there remain crucial questionsaboutwhattodowithafunctioninggovernment.Butwithouthealth,andwithouttheruleoflaw,noneofthosequestionsmatter.

3WhichRuleofLaw?Youmight and indeed shouldwonder what theWorld Bankmeans byRule of Law. Itexplains,“Thismeasurestheextenttowhichagentshaveconfidenceinandabidebytherules of society. It encompasses the respect of citizens and the state for the institutionswhichgoverntheirinteractions.”4Thoughnottheonlymeasureofgoodgovernment,“itcaptures particularly well some of the features of a country’s social capital,” alsoassociatedwith“generalizedtrust.”5

Does theWorldBank’s definition of the rule of lawmatch that of history’s greatjurisprudents? Lon L. Fuller defined the idea in the negative, describing eight ways inwhichalegalsystemcouldfailtoestablishtheruleoflaw:

1.Resolveeverythingonanadhocbasis,thusfailingtomakerulesatall;

2.Failuretopublicizethelaw;

3.Retroactivelaws;

4.Incomprehensiblelaws;

5.Contradictoryrules;

6.Rulesthatareimpossibletocomplywith;

7.Toofrequentchangesoftherules;and

8.Incongruencebetweenstatedrulesandactualadministration.6

Inhishistoricallyinfluentialaccount,A.V.Diceydescribedtheruleoflawashavingthreemajorfeatures:

1.Thesupremacyofregularlawasopposedtoarbitrarypower;

2.Equalitybeforethelawofallpersonsandclasses,includinggovernmentofficials;and

3.Theincorporationofconstitutionallawasabindingpartoftheordinarylawoftheland.7

FriedrichA.Hayekgroundedtheruleoflawinasinglefundamentalidea:predictability.“Strippedofallitstechnicalities,”hesaid,it“meansthatgovernmentinallitsactionsisboundbyrulesfixedandannouncedbeforehand–ruleswhichmakeitpossibletoforeseewithfaircertaintyhowtheauthoritywilluseitscoercivepowersingivencircumstancesand to plan one’s individual affairs on the basis of this knowledge.”8 In his idealizedformulationoftheconcept,forceflowsthroughagovernmentsubjecttotheruleoflawasregularly as force flows through a system, such as a computer chip or comet’s orbit,subjecttothelawsofnature.

Thoseaccountsoftheruleoflaw,whilemorephilosophical thantheWorldBank’sblunt generalized trust, reflect the same basic understanding. An arbitrary governmentbreakspromises,violatespropertyrights,andimperilshumanity.Initsviolentthrashing,itwounds social bonds throughout a community, giving rise to a general atmosphere ofmistrust.Amongthecasualties:wealth.So,atleast,theWorldBank’sstudyindicates.

Andexactlyhowdoes theWorldBankmeasure theRuleofLaw?BycopyingdatafromanotherWorldBankstudy,whichinturngeneratesanaggregatemeasureoftheruleof lawbycompilingdata fromvariousotherstudies.9And those studies?Theymeasurethe rule of law using survey evidence from a diversified portfolio of individuals andorganizations,includingcommercialriskratingagencies,nongovernmentalorganizations,andmultilateral aid agencies.10 The evidence includes not only direct assessments of acountry’sachievementoftheruleoflaw,suchasbyscoringitsperformanceona1-to-10scale,butalsoquestionsaboutcloselyrelatedeffects,suchasrespectforpropertyrights,levels of crime, independenceof the judiciary, enforceabilityof contracts, corruptionofofficials,andqualityofpolice.11

It bears noting that, while perhaps the best available means for systematicallymeasuringtheruleoflaw,thesurveysusedbytheWorldBankremainmere“informationon perceptions of governance.”12 Researchers have evidently not yet found a way tomeasureoftheruleoflawmoredirectly.Perhapsthiswouldprovideaquick,simple,andobjective test: Drop a wallet with identification and cash on the sidewalk outside acapital’sseatofgovernmentandmeasurehowquickly,ifatall,itfindsitwaybacktoitsputativeowner.Thatdevice,however,willhavetowaitforanotherdayandanotherstudy.

4FromLaw,toWealth,toLifeTosaythattheruleoflawhasaverypowerfuleffectonwealth,andthusonhumanwell-beinggenerally,isnottosaythatitmeritsmuchattention.Suppose,forinstance,thatthesuninsteadoftheruleoflawqualifiedasthesinglegreatestsourceofearthlywealth.Sowhat?Allthetalkintheworldcannotchangetheday’slengthorglory.Inthatevent,wewoulddulynote the sun’s importance and then turnour attention tomatterswe candosomethingabout.

The rule of law is not, however, like the sun. It falls prey all too easily to humaninfluence–especiallyintheformofpoliticianswillingtosacrificethelong-termsystemicbenefitsoftheruleoflawforshort-termpersonalgains.Butitworksontheupside,too.

Researchers have discovered that small improvements in government services, ofwhich the ruleof law figuresparamount,have large impactsonhumanwell-being.TheWorldBank found that a1-point increase in a country’s“rule of law” score in its 100-pointindexboostedpercapitawealthbymorethan$100inlow-incomecountries,morethan$400inmiddle-incomeones,andnearly$3,000inhigh-incomecountries.13

Other research indicates that improving the quality of a jurisdiction’s governingservicesbyastandarddeviationincreasesresidents’personalincomebyaboutthreefoldinthe longrun.14Notably, that isnotcall forunthinkable reforms.Astandarddeviation ingoverningservicesamountstothedifferencebetweenplaceswithverylowratings,suchas Afghanistan or Zimbabwe, and those with still-low ratings, such as Nigeria orParaguay;orthemoderatelyratedTurkeyandGhanafromthenext-bestgovernmentsofChile or Portugal; or what separates those from top performers like Norway or NewZealand.Movingjustonerungupthatladderincreasesmeansnotjusttreblethemoneyinpeople’spockets;itmeanslessthanhalftheinfantmortality.15Itmeansbettereducation,too; a standard deviation’s worth of government improvement nets a 15–25 percentincreaseinliteracy.16

5Conclusion:ChooseYourRulesThischapterhasarguedfor the importanceof theruleof law.Admittedly, itwasnotanespecially difficult challenge.As any devoted student of law can attest, humans deeplyvalue – crave, even – the comforting guidance of rules. Not rules imposed withoutjustification,ofcourse; thatmarksoppression.But the ruleof law?That,werelish,andrightlyso.

Humanswantbothfreedomandconstraint,andtheywanttheminthatorder.Theydonotwanttheiroptionstocomealreadypredeterminedbyanother’swill.Theyinsteadwanttherighttochooseup-fronttherulesthatwillbindthemprospectively.InsteadofHomoSapiens,Latinfor“wiseman,”perhapsourspeciesshouldgobyHomoEligens,inhonorofthechoice(morethanwisdom,alas)socharacteristicofhumanaction.17

Thevalueof theruleof lawis thusnotonlyorevenprimarilyeconomic.Itaffectswealthsopowerfullybecauseitaffectshumanwell-beingsopowerfully.Weneedsociallifetothrive,andsociallifeneedssocialrules.Whatcouldbetterpromoteourhappiness,therefore,thantoliveunderruleseachofourownchoosing,amongthosewhoshareourjudgmentsofrightandwrong,undertheadministrationofajustandefficientgovernment?

This chapter gives good reason to believe that the rule of law really is the mostvaluablethingintheworld.Evenifnot,though,itstillhasaworldofvalue.Andunliketheothercontendersforthetitleof“mostvaluablethingintheworld”–alovingfamily,avirtuouslife,ordivinehappiness,forexample–bettergovernment fallswellwithinourreach.Howcanwegetmoreofit?Readon.

1THE WORLD BANK , WHERE I S THE WEALTH O F NAT ION S ?(2006)http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf.

2Id.atVII(“humancapitalandthevalueofinstitutions(asmeasuredbyruleoflaw)constitutethelargestshareofwealthinvirtuallyallcountries.”).

3DatafromTHE WORLD BANK ,supranote1,at26tbl.2.3(relativepercentagesofnatural,produced,andintangiblewealth);96fig.7.2(relativepercentagesofintangiblesourcesofwealth).

4Id.at92.

5Id.

6LON L .FULLER ,THE MORAL I TY O F L AW39(rev.ed.1969).

7A . V. D I CEY ,THE L AW O F THE C ON S T I T U T I ON97–102(J.W.F.Allisoned.,OxfordUniv.Press2013)(1885).

8FR I EDR I CH H .HAYEK ,THE ROAD TO S ER FDOM72(1944).

9DanielKaufmannetal.,GovernanceMattersIV:GovernanceIndicatorsfor1 9 9 6 – 2 0 0 4 ,at108–09,tbl.B-5(WorldBankPolicyResearch,WorkingPaperNo.3630,2005),https://papers.ssrn.com/sol3/papers.cfm?abstract_id=718081.

10Id.at5–6.

11Id.at108–09,tbl.B-5.

12Id.at5.

13THE WORLD BANK ,supranote1,at14.

14DanielKaufmann,GovernanceMatters2010:WorldwideGovernanceIndicatorsHighlightGovernanceSuccesses,Reversals,andFailures,BROOK ING S (Sept.24,2010),www.brookings.edu/opinions/governance-matters-2010-worldwide-governance-indicators-highlight-governance-successes-reversals-and-failures/.

15DanielKaufmanetal.,GovernanceMatters3(WorldBankPolicyResearch,WorkingPaperNo.2196,1999),https://papers.ssrn.com/sol3/papers.cfm?abstract_id=188568.

16Id.

17LUDW IG VON M I S E S , H UMAN ACT ION : A T REAT I S E ON E CONOM IC S11–26(LudwigvonMisesInst.1996)(1949).

1.2

Revolution,InsideOut,BottomUp,Worldwide*

◈

1Introduction:Revolution,withaTwistThewordrevolutionevokesconflict,violence,andupheaval.Itdoesnothaveto,though.Outsideofpoliticalcontexts,thewordsimplyreferstomotionaroundafixedpoint.Thatkindofrevolutioncanoccurdeliberatelyandslowly,liketherollingwheelsofacoveredwagon.Andyet,astherolethatcoveredwagonsplayedinsettlingtheAmericanfrontiersuggests,thismoreprosaicsortofrevolutioncantransformtheworldjustascompletelyasthekindfavoredbybomb-throwingfanatics.

Theastonishinggrowthinspecialjurisdictionsqualifiesasarevolutionofsorts,butnottheusual,politicalkind.Insteadofbeingimposedbydomesticorforeignenemies,thespecial jurisdiction revolution has come from within, allowed or even encouraged byexistingauthorities.Insteadofdescendingfromtherarefiedtheoriesofarmchairradicalssuch as KarlMarx, it rises from the bottom up, expressed in the everyday choices ofeverydaypeople.Andinsteadofmerelypluggingafewnewpoliticiansintothesameoldoffices, a cycle that ultimately goes nowhere, special jurisdictions have the power toquietly and gently transform government across the globe. Read on to learn about thishithertohiddenrevolution.

2RevolutionfromtheInsideOutRevolutionstypicallyresultinrevolutionarywars.TheoriginsoftheUnitedStatesofferaclassic example of the phenomenon. The exemptions prove rare enough to get specialnames like the “Velvet Revolution” or “Singing Revolution.”1 The cause of thiscorrelation is not hard to discern: those who hold political power seldom give it upwillingly. And yet the revolution in special jurisdictions now sweeping the planet hascomefromtheinsideout,alwayswiththeacquiescenceofgoverningofficialsandoftenwiththeiractiveencouragement.

Mere acquiescence happens only with regard to the most local kind of specialjurisdiction–thecommoninterestdevelopment.Thesearenotverygrandiose;thinkofasubdivisiongovernedbyahomeownerassociationorofaco-op’sboard.Yetthesemodestinstitutions take over functions ordinarily provided by localmunicipalities, such as theupkeepofroadsandothercommonareas.Insomecases,thedevelopersandresidentsofsuchprojectsmaynothavetoaskpermissionfrompoliticalauthorities,sincebydefinitionthecommunityarisesentirelyonprivateland,betweenprivateparties.Inotherandmoretypical cases, where applicable regulations require the issuance of a building permit,government permission usually follows as amatter of course.Why? Because commoninterest communities typically bear the full brunt of applicable taxes while providingprivatelyforthesortsofservicesthehostingmunicipalitywouldotherwisehavetofund.Politiciansliketheeffectthathasondiscretionaryfunds.2

It is lesseasytoexplainwhygovernmentshaveactivelyencouragedotherkindsofspecial jurisdictions, especially those that offer lower taxes and lighter regulations thanusual.Whatcouldmotivatepoliticianstowillinglycedepower?Well-reasonedargumentsbyproponentsofliberalizationandconcernforresidents’welfareperhapsdrivesomesuchreforms.Onehopesso.Butitseemsmorelikely–indeed,itapproachesatautology–thatpoliticianswillinglyrelaxtheirpowerwithinspecialjurisdictionsasameansforwinningstillgreaterpower.

Politiciansmight,forinstance,seethejurisdictionasawaytoencourageeconomicgrowth and, thus, potential rents. These prospective gains might come from taxes, aswouldfollowifaSpecialEconomicZone(SEZ)helpedacountrybackdowntheLaffer

curve, moving it toward lower net taxes but higher net government revenue.3 Or thepoliticalrentsofzone-inducedgrowthmightcomethroughlessformalizedchannels,such

as inbriberyorgraft.4AsuccessfulSEZmightgenerate jobsand increase localwealth,too, creating happy – or at least not riotously malcontent – residents, citizens, and(crucially,indemocracies)voters.

In addition to easing tax and regulatory burdens within special jurisdictions,politicianshavealsoincreasinglyseenfit todelegatetheirdevelopmentandoperationtoprivateparties.5Again,thislikelyreflectsnotsimpleideologicalpreferences,butahard-nosedrecognitionofwhatworks.TheWorldBankGroup’sreviewofthedata“suggeststhatprivatezonesarelessexpensivetodevelopandoperatethantheirpubliccounterparts(fromtheperspectiveofthehostcountry),andyieldbettereconomicresults.”6

Theseemingparadoxofpoliticalactorschoosingtodecreasestatepowerdissipatesunder the unstinting glare of public choice theory. The state can act only throughindividuals,betheypoliticians,bureaucrats,orothergovernmentofficials.Hereasintheemployer–employee relationship, the interests of principal and agent diverge. Theemployeeshirkstothedisadvantageoftheemployer;thepoliticianstealsthespotlightbysellingoffsovereignty.

It thus arises that, under certain conditions, self-interested individuals serving anationstate can rationally pursue policies that redound to their benefitwhile ultimatelydecreasing the size and power of the state itself. Thus, for instance,might a politicianlaunch an SEZ program that gives her good press while ultimately eroding the state’scontrolovertheeconomy.7Therestofusshouldnotnecessarilycondemnthateffect.Thestateitselfwinssuchjustificationasitcan(whichonclosescrutiny,isnotalot)onlybydintofhowwellitservesthoseunderitssway–itscitizensandresidents,attheveryleast,but also, arguably, the world at large. If special jurisdictions can do a better job ofpromotingeconomicgrowth,humanwelfare,andpersonalfreedomthanthenationstatedoes,weshouldpromoteandindeedcelebratethateffect.

3RevolutionfromBottomUpSpecialjurisdictionsareveryfarindeedfromthesortsoftop-down,theoreticallydriven,coercivelyimposedgovernmentplans,sorightlyexcoriatedbycommentators.8Thesortsofspecialjurisdictionsclosesttoeverydaypeople–common-interestdevelopments–havebecomeincreasinglypopularbothintheUnitedStatesandworldwide(Figure1.2-1).9 IntheUnitedStates,thesetaketheformofhomeownersassociations,cooperativeresidentialcommunities,andcondominiumassociations.Figure1.2-1 illustrateshowresidentshaveflockedtocommon-interestcommunitiesinrecentyears.

Figure1.2-1.PercentageofResidentsinCommon-InterestCommunitiesintheUnitedStates10

Thepopularityofcommon-interestcommunitiesappearsnotonly in thenumberofpeople living in them, as graphed in Figure 1.2-1, but also in their growing size andsophistication. Many common interest developments have grown to the size of smallcities.Their residents entrust theseprivate communities to provide nearly every serviceotherwise available from a traditional political municipality. The largest cooperativeresidential corporation in theUnited States, Brooklyn’s Co-Op City, houses more than50,000 shareholder-tenants.11 Their mutually owned private corporation provides themwithutilities,roads,stores,offices,schools,parks,security,andmore.12HighlandRanch,Colorado,evidentlythelargesthomeownerassociation(HOA)intheUnitedStates,boastsof almost 100,000 residents and 31,000 households on 22,000 acres.13HighlandRanch

alsohostsnearly1,000businesses,whichemploymorethan6,800people;19elementaryschools, 4 middle schools, 5 high schools, and numerous daycare facilities; severalmedicalfacilities;placesofworshipservingavarietyoffaiths;and70milesofpavedandnaturaltrails,20parks,two18-holegolfcourses,anda8,200-acrebackcountrywildernessarea. Other contenders for the title of largest HOA in the United States include the

ColumbiaAssociation,withmorethan90,000residentsand35,000households14onlessthan 20,000 acres,15 and theAssociation of PoincianaVillages,withmore than 80,000residents and 23,000 households on 47,000 acres.16 In everything but origin and legalstatus,theseresembleconventionalmid-sizedcities.

The success of private communities shows the popular support enjoyed by a verylocal kind of special jurisdiction. Further up, so to speak, at the level of SEZs, officialsupport and encouragement becomes more common. Even here, though, the roots ofspecialjurisdictionscontinuetoreachbackdowntotherealworld.

Devotion to theory has not characterized the development of special jurisdictions,whichgovernmentshaveinsteadadoptedinalargelyadhocmanner.Extemporizingandlearningfromexperiencehasdriventhelargestandarguablymostsuccessfulfieldtestofspecialjurisdictions:China,inthelastseveraldecades.LearningfromthesuccessoftheCrownColonyofHongKong,itselfahistoricalaccident,theChinesegovernmentbeganin the 1980s to try (or at least allow) a wild profusion of special economic zones.17

Officials did so not pursuant to theory but (silently) in spite of it, and described theirpolicyas“crossing the riverbygroping for stones.”18This intenselypragmatic, theory-free approach seems to have worked in China, hundreds of millions of people haveescapedpovertyinSEZs.19

It also bears noting that, thanks to the spread of privately developed andmanagedspecialjurisdictions,SEZsincreasinglyescapethechargethattheycanthriveonlythankstotop-downsubsidies.Thesedays,specialjurisdictionshappenonlyifandwhenprivateinvestors fund them. That sort of objective oversight helps ensure that specialjurisdictions, far from floating on clouds of theory, have a solid grounding in the realworld.

4RevolutionWorldwideThe prior sections of this chapter have established how special jurisdictions arise withgovernmenthelp,fromtheinsideout,andhowtheirsuccesshascomefromthebottomup.Thissectionhighlightsanotheraspectofthegreat,glacialrevolutionslowlytransforminggovernment:Itreachesworldwide.Thissectiondemonstratesthepointbyfocusingonthegrowthandspreadofspecialeconomiczones(SEZs).

SEZs, usually the creatures of national policy, attract the most attention at theworldwide level. It bears noting, though, that they are not the only species of specialjurisdiction to thrive in recent decades. Their somewhat less exalted cousins –homeowners’ associations, cooperative residential communities, and other commoninterest developments – have also evidently grown and spread in recent years.20 It isdifficulttofindgoodworldwidedataforthatinherentlylocalkindofspecialjurisdiction,however.Forhardnumbers,welooktoSEZs.

WhatareSEZs?TheWorldBankcallsthem“demarcatedgeographicareascontainedwithinacountry’snationalboundarieswheretherulesofbusinessaredifferentfromthosethatprevailinthenationalterritory.”21TheWorldBank’sdefinitionofSEZscontinuesbyclarifyingthatthedifferentrulesofbusiness“principallydealwithinvestmentconditions,international trade and customs, taxation, and the regulatory environment; whereby thezone is given a business environment that is intended to bemore liberal from a policyperspectiveandmoreeffectivefromanadministrativeperspectivethanthatofthenationalterritory.”22 ThroughSEZs, in otherwords, a government creates exceptions to its ownrules–selecthavensfromthestatusquothatprevailselsewhereinthenationalterritory.

SEZscome inmany types.Again, theWorldBankprovidesguidance, listing thesespeciesofSEZinroughorderofincreasingsizeandscopeofoperations:

1.Freetradezones,ranginginsizefromsinglefactoriestolargerareas;

2.Exportprocessingzones(EPZs),againrangingfromsinglefactoriestolargerareas;and

3.HybridEPZfreeportsorwide-areaSEZs,typicallylarge;sometimescity-sized.23

Afreetradezonemightoffernothingmorethanduty-freewarehousingofgoodsintransit,for instance,whileawide-areaSEZmightprovideanalternativegovernanceregimeforan entire metropolitan area. In this taxonomy, the Foreign Trade Zones popular in theUnitedStatesmostresemblesomethingbetweenfreetradezonesandEPZs.24

ThoughnotSEZsinthemodernsense,zonesgovernedbyspecialruleshaveexistedalmostaslongasgovernmentitself.Thesespecialjurisdictionshaveco-evolvedwiththenation state, usually cooperating but sometimes competingwith it.At least in terms ofmilitary power, the nation state today has become the dominant form of internationalinstitution. Special jurisdictions never died out, though, and in recent decades haveenjoyedrenewedvigor.

TheantecedentsofmodernSEZsdatefrom166BCE,whenRomanauthoritiesmadeDelios a free port, exempting traders from the usual taxes in order to stimulate localcommerce.25 The Hanseatic League, a confederation of trading cities chartered andloosely governed by the Holy Roman Empire, effectively ruled northern Europe fromaround1200to1600CE,huntingdownpiratesanddefeatingkingsinbattle.26

Early typesofspecialeconomiczonesnextappearedamongmanyvariousandfar-flung European colonial outposts, formed as quasi-sovereign sub-governments andtypicallygranteduniquetradingprivileges.ExamplesincludeMacau(foundedin1557),27

Hong Kong (1842),28 and more than eighty treaty ports, established throughout Chinafrom themid-1800s, throughwhich it leased territory andgrantedbroad concessions toBritain, France, Germany, Russia, and other countries.29 (Through that era, ChinaprovidedsomethinglikeahothouseenvironmentforSEZs,aroleittookupagaininthelate twentieth century.) As detailed in the next chapter, which focuses on the UnitedStates,antecedentsofmodernSEZsalsoarosefromthechartersthatroyalauthoritiesinEuropegranted toentrepreneurialsettlementssuchasJamestown,NewAmsterdam,andtheMassachusettsBayColony.

AftertheEnlightenment-eraexplosionofspecialjurisdictions,thenationstatebeganits rise. From the Napoleonic Empire, through two world wars, to the collapse of thecommunistregimes,itruledtheglobe.Pushedtothemargins,specialjurisdictionsreachedtheirnadirsomewherearound1900,when theworldhadonlyaboutelevenfreeports.30

Functionally, these differed little from the free port of ancient Delios. SEZs seemedheadedforextinction.

WhatbroughtSEZsbackfromthebrink?TheUnitedStatesshouldgetsomeofthecredit. Its Foreign Trade Zone (FTZ) program, launched in 1934, offered specialexemptions from federal excise taxes and duties. This proved convenient for trans-shippers and others who, legally speaking, wanted to be within the jurisdiction of theUnitedStateswhile remainingoutside itscustoms territory.31Asdocumented laterhere,FTZs have thrived and spread.32 TheUnited States boosted SEZs again in 1948,whenOperationBootstrapmadePuertoRicoafreetradezoneforU.S.companiesengagednotjustintrade–thetraditionalfocusofFTZs–butalsoproduction.33

Despitethoseprecedents,mostcommentatorsdatethemodernSEZmovementfromthe industrial free zone established in Shannon, Ireland, in 1959.34 That early examplecertainlydidseemtosetoffawaveofsimilarinnovations.35Sinceaboutthemid-1980s,“the number of newly established zones has grown rapidly in almost all regions, withdramaticgrowth indevelopingcountries.”36Today’smostpopulousnation state,China,hasprovedespeciallyprolific,goingfromzerospecialjurisdictionsin1980toatleast295today.37Asthefollowingchartsattest,about75percentoftheworld’scountriesnowhostSEZs,whicheasilynumbermorethanfour thousandandwhicharguablynumbernearlytenthousand.

Figure1.2-2needslittleexplaining,thoughitperhapsbearsobservingthatthecurvefollowsthesamesortofS-shapethattracksthepopulationofanewspeciesasitexpandsinto new environments. Here as there, the curve naturally flattens out as it nears 100percent.SomenationstatesmayneverhostSEZs;fewspeciescaninhabiteverypossibleniche.

Figure1.2-2.PercentageofCountriesWorldwidewithSEZsorSimilarZonesSince195840

Figure1.2-3showstwocurves,onetrackingaRawCountofSEZsandtheotheranAdjusted Count. The Raw Count covers all the zones enumerated by the InternationalLabourOrganization (ILO) in its2007censusofexportprocessingandsimilarzones,astandard database in the field.38 Though the ILO census included Bangladeshi single-factoryzones,itevidentlyexcludedthemfromitstotalcountofSEZs.39Thereasonsforthat special treatment and the exact calculations used remain unclear.41 Perhaps themultitudeofBangladeshisingle-factoryzonesthreatenedtoswampotherobservationsofmore interest to the ILO, or perhaps the zones simply seemed too inconsequential tomatter.Abiologisttakingacensusofanimalswouldnotwanttoneglectthesmallestandsimplest,however; indeed, thoseoftenprovide themost interestingcases.Orperhapsasmere bonded warehouses, the Bangladeshi single-factory zones did not seem specialenough to qualify as SEZs. A bonded warehouse represents a genuine exception to acountry’s generally prevailing customs laws, however: a zone (albeit small) wheremerchandisecanbestored,manipulated,ortransformedthroughmanufacturingoperationswithout payment of otherwise applicable duties.43 Figure 1.2.3 thus offers both a RawCountofallzones, fromsmallestandsimplest to largestandmostcomplex,and,outofrespect for the ILO’s approach, an Adjusted Count, which represents the Raw Countminusbondedwarehousezones.

Figure1.2-3.NumberofSEZsandSimilarZonesWorldwideSince195842

Assuchquibblesindicate,academicsmightandindeedprobablyshouldquestiontheexact numbers tracked in these charts. Nonetheless, the general public can confidentlyregard them as fair summaries of the large-scale and long-term structural changessweeping through nation states across the globe. Those trends look likely to continue,moreover.ThepercentageofcountrieshostingSEZsandnumberofSEZsworldwidewillalmost certainly increase in coming years. Afghanistan recently announced plans toconverteightairbasesformerlyusedbytheUnitedStates’militaryforcesintoSEZs,forexample.44Botswana,too,hastakenstepstohostitsfirstSEZs.45StillothercountriesthatmaysoonhaveSEZsincludeEthiopia,46Libya,47andPapuaNewGuinea.48

AtrendtowardincreasinglylargerandmoresophisticatedSEZs,thoughlessreadilyquantified, also bears noting. Zones have in recent years begun shifting away fromencouraging international tradewith relatively simple financial incentives –exemptionsfrom customs obligations, typically – toward “multiuse developments encompassingindustrial, commercial, residential, and even tourism activities.”49 Consider KingAbdullah Economic City (KAEC), a development being built and operated by privateparties under a charter from Saudi Arabia that allows themetropolitan area to operateundera formofgovernmentespeciallydesigned toencouragegrowth.50When finished,KAECwillconstituteanentirelynewcitythesizeofWashington,DC,withapopulationoftwomillion.51

Developersplan tobuild severalcity-sizedspecial jurisdictionsacross theworld incomingyears,including:

If all goes to plan, those cities will, by the year 2035, cover more than 2,612 squarekilometers, have cost more than $300 billion to build, and have close to 6 millionresidents.53

At the same time that theyhavebegun to resemble conventional cities in termsofscale,population,andservices,SEZshavetendedtobecomeprivatelyowned,developed,andoperated.54Markingthefarthestlimitofthattrend,HondurashassetupalegalregimeforZEDEsthatdelegatesmanyofitsfunctionstoqualifyingzones,whichprivatepartieswilldevelopandmanageundergovernmentsupervision.55ThemorethatSEZslookliketraditionalpoliticalinstitutions,inotherwords,themoretheyrelyonprivaterights.

Does thatposeaparadox?Notat all; the trendswork inconcert.56Extant polities,sheltered from competition and saddled with histories of financial mismanagement,evidently lack the incentives and capital required to create large, new, world-classcommunitiesentirelyfromscratch.Forthat,publicinstitutionshavesoughthelpfromtheprivatesector,givingbirthtoanentireindustrydevotedtomakingmoney-makingcities.

Cyberjaya,Malaysia;

IskandarMalaysia,Malaysia;

JazanEconomicCity,SaudiArabia;

KingAbdullahEconomicCity,SaudiArabia;

KonzaTechnologyCity(KTC),Kenya;

MasdarCity,AbuDhabi;

SongdoIBD,SouthKorea;and

YachayKnowledgeCity,Ecuador.52

5Conclusion:WhiteWaterAheadTheorists say that biological evolution proceeds not at a steady pace, but instead as aseries of punctuated equilibriums, like a mountain stream flowing from pool to poolthrough a series of cascades.57Applying the samemodel to governments,which surelyadapt to their environment (or not) no less than species do, suggests that history hasentered thehistoricalequivalentofa turbulentstretchofwater.Tosafelynavigate theserapidscallsforcarefulstudyoftheircurrentsandhazards.

For the last several centuries, political institutions have dominated the governingservices industry. But the environment that led to their rise has changed – it is not asuniform and unchanging as it once was. Private communities increasingly take overfunctions that traditional municipalities cannot or will not provide. Special economiczonesmelt more and larger holes in the uniform legal and regulatory power of nationstates.Yet these revolutionary changes are not imposed fromwithout.They come fromwithin,sometimesthroughwillingacquiescencebutmoreoftenthroughactivepromotion.

Specialjurisdictions,longrelegatedtothemarginsofhistory,haveinrecentdecadesgrowninnumber,diversity,andinfluence.Thischapterhasrevealedtheirrevolutionary–onemightsayjustaswellsayevolutionary–impactonthegoverningservicesindustry,aprocesstransformingthemfromtheinsideoutandthebottomupallacrosstheworld.Farfrom sitting out these trends, the United States exemplifies them. It was born from acluster of proto-SEZs, has the special jurisdictions of various states and Indianreservations built into its very foundations, and in recent years has created hundreds offlourishingForeignTradeZones.Thenextchapterexplains.

*ThisChapterderivesinpartfromTomW.Bell,SpecialEconomicZonesintheUnitedStates:FromColonialCharters,toForeign-TradeZones,towardUSSEZs,64BUFFA LO

L . R E V.959(2016).

1See,e.g.,SHARON ER I CK SON N E P S TAD , NONV IOLENT R EVOLUT ION S : C I V I L

RE S I S TANCE I N THE L ATE 2 0 TH C ENTURY(2012);GUNT I S ŠM I DCHEN S , T HE POWER O F

SONG : NONV IOLENT NAT IONAL CULTURE I N THE B ALT I C S I NG I NG R EVOLUT ION(2014);MIROSLAV VANĔK & PAVEL MÜCKE , V E LVET R EVOLUT ION S : A N ORAL H I S TORY O F

CZECH SOC I E TY(2016).

2EVAN MCKENZ I E , B EYOND P R I VATOP I A6(2011).

3TheLafferCurve,THE LA F F ER C TR . AT THE PAC . R E S EARCH I N S T. ,

www.laffercenter.com/the-laffer-center-2/the-laffer-curve(lastvisitedOct.1,2016).

4SeeLottaMoberg,ThePoliticalEconomyofSpecialEconomicZones,11J . I N S T.

E CON . 167,176–77(2015).

5ThomasFarole,IntroductiontoS P EC I AL E CONOM IC ZONE S I N A FR I CA : COMPAR I NG

PERFORMANCE AND L EARN I NG F ROM GLOBAL E X PER I ENCE18(ThomasFaroleed.,2011),http://documents.worldbank.org/curated/en/2011/01/13887813/special-economic-zones-africa-comparing-performance-learning-global-experience.SeealsoClaudeBaissac,BriefHistoryofSEZsandOverviewofPolicyDebates,inS P EC I AL

ECONOM IC ZONE S I N A FR I CA : COMPAR I NG P ER FORMANCE AND L EARN I NG F ROM

GLOBAL E X PER I ENCE,supra,at37–39.

6GOKHAN AK I NC I & J AME S CR I T TLE , F ORE IGN I NV. A DV I SORY S ERV. , WORLD BANK

GRP. , S P EC I AL E CONOM IC ZONE S : P ER FORMANCE , L E S SON S L EARNED , A ND

IMPL I CAT ION S FOR ZONE D EVELOPMENT4(2008),http://documents.worldbank.org/curated/en/2008/04/9915888/special-economic-zone-performance-lessons-learned-implication-zone-development.

7SeeMoberg,supranote5,at176–77.

8See,e.g.,J AME S C . S COTT, S E E I NG L I KE A S TATE : HOW CERTA I N S CHEMES TO

IMPROVE THE HUMAN COND I T I ON HAVE FA I L ED(1998).

9MCKENZ I E , supranote3,atx.

10Datasource:CMTY. A S S’ N I N S T. ( C A I ) , N AT IONALAND S TATE S TAT I S T I CAL R EV I EW

FOR 2 0 1 5 ,at1 ( 2 0 1 5 ) ,www.cairf.org/research/factbook/2015_statistical_review.pdf.

11ElsaBrenner,EverythingYouNeed,inOneGiantPackage,N . Y. T IME S,Apr.6,2008,www.nytimes.com/2008/04/06/realestate/06live.html.

12Id.

13Facts,H IGHLAND S RANCH CMTY. A S S’ N ,https://hrcaonline.org/area-resources/highlands-ranch/facts(lastvisitedDec.12,2016).

14COLUMB IA A S S’ N CHARACTER I S T I C S O F COLUMB IA , MARYLAND : A D EMOGRAPH I C

AND SOC IOECONOM IC P ROF I L E8tbl.3(2013),www.columbiaassociation.org/about-us/planning-development/characteristics-columbia-report/.

15Id.at1.

16ABriefHistoryofAPV,A S S ’ N O F PO I NC I ANAV I L LAGE S,http://apvcommunity.com/apv-history/(lastvisitedDec.14,2016);Villages,http://apvcommunity.com/villages/(lastvisitedDec.14,2016).

17SeeRONALD COA SE & N I NG WANG , HOW CH I NA B ECAME CA P I TAL I S T 5 9– 6 4 (2012).

18Id.at175.

19SeeJinWang,TheEconomicImpactofSpecialEconomicZones:EvidencefromChineseMunicipalities,101J . D E V. E CON .133,136fig.2(2013)(showing10autonomousprefectures,5prefectures,and10prefecture-levelcitiesnotconstitutingorwithinaChineseSEZ).Combined,bytheauthor’scalculation,thosenon-SEZsareasholdalittleover43million,orabout3.2percent,ofChina’smorethan1.3billionresidents.

20DominikaV.Polanska,TheEmergenceofGatedCommunitiesinPost-CommunistUrbanContext:AndtheReasonsforTheirIncreasingPopularity,25J . H OU S I NG &

BU I LT E NV’ T 295(2010);ChrisWebster,GeorgGlasze&KlausFrantz,TheGlobalSpreadofGatedCommunities,29ENV ’ T & P L AN . B315(2002).

21ThomasFarole&GokhanAkinci,IntroductiontoS P EC I AL E CONOM IC ZONE S :

P ROGRE S S , EMERG ING CHALLENGE S , A ND F UTURE D I R ECT ION S3(ThomasFarole&GokhanAkinci,eds.2011),http://documents.worldbank.org/curated/en/2011/01/14813550/special-economic-zones-progress-emerging-challenges-future-directions(quotingBaissac,supranote6,at23).

22Baissac,supranote6,at23.

23Farole&Akinci,supranote22,at2,table1.1.TheterminologyusedherealsoborrowsfromBaissac,supranote6,at27–30.

24SeeinfraChapter1.3.

25Baissac,supranote6,at31.

26HELEN Z IMMERN ,THE H AN S A TOWNS(KrausReprintCo.,1969)(1889).

27ERNE S T S .DODGE ,I S LAND S AND EMP I RE S : WE S TERN IMPACT ON THE PAC I F I C AND

EA ST A S I A226(1976).

28FRANK WEL SH , A BORROWED P LACE : THE H I S TORY O F HONG KONG 1(1993).

29J OHN K I NG FA I R BANK & MERLE GOLDMAN , CH I NA : A N EW H I S TORY201–03(2ded.2006)(discussingthemanyvarioustreatyports,firstfiveandlaterovereighty,thatChinaestablishedforcountriesfromacrosstheglobe).Thelargelystandardizedtermsofthesetreatiesincludedlowtariffs.Id.at203.SeegenerallyEN - S A I TA I , T R EATY

PORT S I N CH I NA : A S TUDY I N D I P LOMACY(1918).

30Baissac,supranote6,at32(citingsevenfreetradezonesinEuropeandfourinAsia).

31Id.at32–33.

32SeeinfraSectionII.C.

33Baissac,supranote6,at32–33.

34See,e.g.,Farole&Akinci,supranote22,at3.Theauthorsadmit,“[h]owever,aformofindustrialfreezonewasestablishedinPuertoRicoasearlyas1948.”Id.at19n.1(internalcitationomitted).Forreasonsdifficulttodiscern,FaroleandAkincidonotevidentlyconsiderFTZs,whichdatefromevenearlier,intheirsurveyofspecialeconomiczones.

35Ironicallyornot,theEuropeanUnion’songoingcampaigntoquashjurisdictionalcompetitionamongitsmembercountrieswillsooncurtailthebenefitsofferedbytheShannonFreeZone.WILLEM I J N DE J ONG,L I BRARY O F THE E UROPEAN PARL I AMENT,

E S TABL I SH I NG F REE ZONE S FOR R EG IONAL D EVELOPMENT3(2013),www.europarl.europa.eu/RegData/bibliotheque/briefing/2013/130481/LDM_BRI(2013)130481_REV1_EN.pdf.

36Farole&Akinci,supranote22,at5.

37Wang,supranote19,at136,138(counting295prefecture/municipallevelChineseSEZs).Thatfigurealonearguablyunderrepresentsthetotal,giventhenestedstructureofChineseSEZs;Wangalsocounts222state-leveland1,346province-levelzones

embeddedwithinthose295prefecture/municipalzones.Id.at136.The1980countexceptsHongKong,asthe“Handover”(“Return”inChina)didnothappenuntilJuly1,1997.

38Boyenge,supranote39.

39TheILOevidentlyexcludesthesemicro-SEZsfromitssummaryestimateof3,500“EPZsorsimilartypesofzones,”id.at1,becauseitseparatelynumberstheBangladeshizonesat5,341.Id.at8.

40SourceofdatafornumberofSEZsorsimilarzones:Jean-PierreSingaBoyenge,ILODatabaseonExportProcessingZones(Revised)2 (Int’lLabourOrg.SectoralActivitiesProgramme,WorkingPaperNo.251,2007)www.ilo.org/public/libdoc/ilo/2007/107B09_80_engl.pdf,asupdatedperinfraAppendix1:WorldwideCensusofSEZsandSimilarZones.Sourceofdatafornumberofcountries:VariousWikipediapages,asappropriate;forexample,EstimatefromListofSovereignStatesinthe1950s,WIK I P ED I A ,http://en.wikipedia.org/wiki/List_of_sovereign_states_in_the_1950s(lastvisitedDec.12,2016).

41TheILOoffersanasideabout“bondedwarehousesinBangladeshthroughoutthecountryunderEPZ-likeconditionswithoutbeinginazone,”id.at1,butdoesnotclarifywhythatdisqualifiesthemfromtheoverallzonecensuscount.Afurtherclueperhapsliesinthedatabase’sreferencetounnumberedmaquilasinHondurasandmaquiladorainMexico,id.at13,bothflaggedaszones“consideredasexportprocessingzonesorbondedwarehouses.”Id.at24nn.26–27(containingsametextinboth).PerhapstheILOcensusundercountsthosezonestoo.

42DataSources:Id.

43See,e.g.,U . S . C U S TOMS AND BORDER P ROTECT ION , BONDED WAREHOUSE ( 2 0 1 0 ) ,

www.cbp.gov/sites/default/files/documents/bonded_20wh2_2.pdf(describingbondedwarehouses).

44LynneO’Donnell,AfghanAirfieldsBuiltforWarSeenasEconomicHubs,AP : THE

B IG S TORY(Aug.31,2015,6:03AM),http://bigstory.ap.org/article/edb04e066868499da6f91ccf7ba67799/afghan-airfields-built-war-seen-economic-hubs.

45CalviniahKgautlhe,Botswana:SpecialEconomicZonestoStrengthenExportEarnings,BOT S . D A I LY N EWS(Aug.2,2015),http://allafrica.com/stories/201508030140.html(reportingonbilltointroduceSEZstoBotswana).

46ExtensiveDevelopmentofIndustrialParks,ETH IO P I AN I NV. COMM’N ,www.investethiopia.gov.et/investment-opportunities/strategic-sectors/industry-zone-development(lastvisitedSep.13,2016).

47SpecialEconomicZonesNorthWestSuezCanal,COMESA R EG’ L I N V. AGENCY,www.comesaria.org/opportunities/special-economic-zones-north-west-suez-canal.155.250.html(lastvisitedSep.13,2016).

48PapuaNewGuineaSpecialEconomicZone,I N T ’ L F I N . CORP.,WORLD BANK GRP.,www.ifc.org/wps/wcm/connect/region__ext_content/regions/east+asia+and+the+pacific/countries/png+special+economic+zone(lastvisitedSep.13,2016).

49Farole&Akinci,supranote22,at6.

50About,K ING A BDULLAH ECON . C I T Y,www.kaec.net/about/(lastvisitedSep.13,2016).

51StanfordGraduateSchoolofBusiness,FahdAl-Rasheed:BuildingaNewCityfromtheGroundUp,YOUTUBE (May12,2015),www.youtube.com/watch?v=epZ37AdRnsE#t=2260.

52ADAM CUTT S , N EW C I T I E S F OUND . , N EW C I T I E S A ND CONCEPT S O F VALUE :

P LANN I NG , B U I LD I NG , A ND R E S POND I NG TO N EW URBAN R EAL I T I E S – R E F LECT ION AND

ANALY S I S O F THEMES EMERG ING F ROM C I TYQUE S T – KAEC FORUM 2 0 1 5 ,at2 5 , 2 8 ,3 1 – 3 2 , 3 4 , 3 8 , 4 1(2016),http://bit.ly/Cityquest2015.

53Id.

54Farole&Akinci,supranote22,at7.

55SeeChapter1.5.

56SeeAK INC I & CR I T TLE ,supranote7,at3.

57Seegenerally,S T E PHEN J AY GOULD , P UNCTUATED EQU I L I BR I UM(2007).

1.3

SpecialJurisdictionsintheUnitedStates*

◈

1IntroductionThe prior chapter offered a worldwide tour of special jurisdictions, revealing a gentlerevolution transforming nation states from the inside out and from the bottom up. TheUnitedStateshasnotescapedthattrend.Tothecontrary,itarguablysetitinmotion.Attheveryleast,theUnitedStateshasalong,complicated,andrichrelationshipwithspecialjurisdictions.Thischaptertellsthetale.

TheUnitedStateshasspunoffanastonishingnumberandvarietyofoverlappingandsometimes conflicting jurisdictions. The very name United States reveals a stubbornrefusal to vest all power in a single entity, as does the respect for state and tribalsovereigntybuiltintotheConstitution.1TheCivilWargavebrutalwitnesstohowfarthenativeresistancetomonolithicauthoritycango;thesuccessfulfoundingofWestVirginiaand theunsuccessful foundingof theFreeStateofWinston,bothofwhicharoseoutofthat conflict, offer less cataclysmic examples of the same fractious tendencies.2

Americans’enthusiasmforpunchingholes inpoliticalconformityhasevendriven themabroad;considerHenryFord’sill-fatedattempttoexportaMidwesterncity,governmentandall,totheBrazilianAmazon.3

Even today, theUnitedStates includesmanyareas that,whilenominallywithin itsjurisdiction,constitutespecialzonesbeyondthefullforceofitslaws.Generallyspeaking,residentsandlocalcorporationsintheterritoriesofAmericanSamoa,Guam,theNorthernMariana Islands, Puerto Rico, and the U.S. Virgin Islands have no obligation to payfederal incomeorexcise taxes,for instance.4Also,Indianreservationsoperate in theoryundertheirownsovereignpowersand,assuch,escapethereachofmanystateandfederallaws.5NothingcouldbemoreAmerican thanspecialzonesofrelativefreedom–placeswheretaxestakelessmoney,regulationswastelesstime,andlocalscanliveundertheirownrulesratherthanthoseimposedbyadistantcapital.

TheUnitedStatesowesitsveryexistencetospecialjurisdictions,suchasJamestownand New Amsterdam, created under charters sold by Old World kings to NewWorldentrepreneurs.Section2 reviews that colorful era ofAmericanhistory. Inmoremoderntimes,domesticpoliticianshaveproposedvariousschemestoencourageeconomicgrowthindepressedareasbyfavoringthemwithtaxincentivesandgrants.AsSection3relates,

these Enterprise Zones and their ilk have not proven great successes. In contrast, theUnited States’ Foreign-Trade Zone (FTZ) program has a long record of helping localcompaniesmanagetheimpactofcustomsdutiesandexcisetaxes,andwhollyescapestateandlocaladvalorem taxes,therebyreducingthecostsofdoingbusinessandstimulatingregionalcommerce.Section3explainshowFTZsworkanddocumentstheirgrowth.TheyproveespeciallyaptmodelstoconsiderindesigningthenextgenerationofspecialzonesfortheUnitedStates:theUSSEZsproposedinChapter3.7.

2PrecursorstoSEZsintheUnitedStatesThe roots of the United States run back through the centuries to private, for-profitsettlements that operated under the authority of European royal charters.6 In this way,through communities such as Jamestown (founded in 1607),7 Plymouth (1619),8 NewAmsterdam(1626)(nowNewYork),9andtheMassachusettsBayCompany(1629),10theOldWorldseededtheoneithadjustdiscovered.Wemightfairlycallthese,thefewcellsfromwhichtheUnitedStatesgrew,proto-SEZs.

It bears noting that even the most successful of those early entrepreneurialcommunities, in terms of present-day wealth and population, was not a success for itsinvestors.TheDutchWestIndiesCompanylostmoneyonitsNewAmsterdamsettlement,andeventuallyhandeditovertotheEnglishwithsomethingclosetorelief.11Thatroughstart hardly prevented New York from eventual glory, though. Its neighbor, theMassachusetts Bay Company, generated similar results in Boston and wider NewEngland.12

TheVirginiaCompanyofLondon,whichgovernedlandsthatlaterbecamethestatesof Virginia and North Carolina, likewise went bankrupt, the land formerly under itscontrol becoming the first royal colony in theNewWorld.13 TheVirginiaCompany ofPlymouth, which held a charter to colonize modern-day New England, went out ofbusinessevenfaster.14Thiswasnotforwantofmercenaryinstincts;bothoftheVirginiacompanies, having found that they lacked the resources to settle the New Worldthemselves, sought gain in subdividing their royal patents and reselling them to otherparties,suchas thePilgrims.15TheNewWorldwasnotaneasyplace to survive,muchlessmakemoneyin.Roanokefailedutterlyandmysteriously,allofitssettlerseitherdyingordisappearing.16

As Roanoke exemplified, and as all the entrepreneurial settlements demonstrated,tryingtolaunchaNewWorldsettlemententailednotjustfinancialrisks,buttheperilsofshipwreck, disease, and war. Yet as with start-up millionaires in contemporary SiliconValley,someofthosewhohelpedbuildtheseU.S.proto-SEZsmadeoutveryhandsomely.UntoldthousandsofEuropeansettlersfoundfreedomandprosperityinthelandsopenedup by the Dutch West Indies Company, the Virginia Company of London, and the

MassachusettsBayCompany.Eventoday,religiousinstitutionsstillcoastontherevenuegeneratedbyproperties–nowsittinginthethickofNewYorkCity–thattheyholdunder

titlestraceablebacktothedaysofDutchadministration.17

With start-up communities aswith start-ups generally, entrepreneurs do us a favorwhen they throwseriousmoneyathardproblems.Call themheroesorgamblersasyousee fit; justmake sure to give entrepreneurs credit for generating public benefitswhilebearingprivatelosses.Mostsucheconomicrisk-takersfail.Theirfailureshelptherestofus,though,becausetheydemonstratewhatnot todo.Andsomefailedstart-ups,suchasthe DutchWest Indies Company, generate positive externalities the size of New York,Boston,andtheirenvirons.18

Themanifold failuresof theproto-SEZs thatgrew into theUnitedStates– failuresfinancial,material,andmoral–reflectanerawhenformsofgovernmentwerebeginningtomutate rapidly.As in nature,many such innovations died away.A few – theUnitedStates, for instance–survived.Like thereptiles thatpredated thedinosaurs,proto-SEZsruledtheirworld,intheirday.Asinthenatureofsuchthings,however,itcouldnotlast.These proto-SEZs had to pass into history in order to advance a greater good: theevolutionofgoverninginstitutionsgenerally.

3EmpowermentZonesandSimilarRegulatoryZones

Beginning in 1993, the federal government experimented with various programs thattargeted select areas of the country for special regulatory treatment. For themost part,these federal programs aimed merely to redouble the efforts of local, tribal, and stategovernments to assist their most distressed communities – often urban, but sometimesrural–withintheirjurisdictions.19Inadditiontogrants,thesefederalprogramsreliedontax credits, deductions, and accounting devices to encourage economic development inqualifying areas.20 Called Empowerment Zones, Enterprise Communities, EnterpriseZones,orRenewalCommunities, thesefederalprogramsdifferedindetailwhilesharinggeneralaimsandmeans.21

Allsuchspecial regulatoryzones (aswemightcall them) terminatedonDecember31,2014.22Theirpassingwasnotevidentlycauseformuchgrief.Ideally,theywouldhaveliftedcommunitiesoutofbadtimes,leavingthemstrongenoughtofacethesametaxcodethat applies everywhere else. It seems more likely, though, that the press and policymakersnoticed that thezonesdid littlemore thanencouragea fewbusinesses tomove,generatealotofredtape,andprovideopportunitiesforgraft.23Asurveyoftheliteraturesuggests that Empowerment and other special regulatory zones had no noticeableeconomicimpactsornetnegativeones.24

Whydidthesezonesfail?Mostlikelybecausetheyofferedrelativelylittlerelieffromfederalauthority–onlysomeratherconvolutedtaxbreaks,forthemostpart,andthoseatthecostofconsiderableredtape.25Itevidentlytakessturdiershelterfromthefullforceoffederal power to create the conditions for a special jurisdiction to flourish. FTZs,discussednext,providemorecompleteprotectionagainstfederalpower,andthusakindofspecialjurisdictionbetteradaptedtotheenvironmentalconditionsthatcurrentlyprevailintheUnitedStates.

4ForeignTradeZonesFirstcreatedin1934,U.S.Foreign-TradeZones(FTZs)exempttheiroccupantsfromthepayment of federal customs duties and excise taxes.26 Practically speaking, FTZs aresecure areas under the supervision of U.S. Customs and Border Protection officials.27

Legallyspeaking,thezoneslieoutsidethecustomsterritoryoftheUnitedStatesformanypurposes.28Thiscanmakethemattractivevenuesforcertainservicesandindustries.29

Inadditiontoofferingshelterfromfederalcustomsdutiesandexcisetaxes,anFTZaffordsotherbenefits.Ifazoneprocessorworksimportedmaterialsintogoodsdestinedtoenter the rest of the United States, thus triggering an obligation to pay customs, theprocessor can choose to have the duties assessed on either the value of the importedmaterialsor thevalueof thefinishedgoods–anoptionusefulforaccountingreasons.30

Another device businesses find useful: Merchandise moved into the zone for eventualshipmentabroadcanforfederalexcisetaxanddrawbackpurposesbecountedasexportedimmediately,beforeitphysicallyleavestheUnitedStates.31Also,personalpropertystoredinthezoneescapesstateandlocaladvaloremtaxes.32

The Foreign-Trade Zone Board, the federal body that administers FTZs, hasapproved zone status for a great many locations scattered all across the country. Thelocation types include zones, which tend to cover large areas of ports or internationalairports; subzones, a now-disfavored classification for isolated and relatively smallextensionsofexistingzones, likeoff-sitefactories;andalternativesites, relativelysmallandmutableareascreatedunderanewandstreamlinedregulatoryframeworkthatoffersthebenefits of subzone classificationwith lesspaperwork.33AsFigure1.3-1 illustrates,the Board has approved slightly over a thousand such special jurisdictions over theyears.34Ineffect,eachoftheseareaslieswithintheUnitedStatesbutoutsideofmanyofitslaws.

Figure1.3-1.U.S.Foreign-TradeZones,Subzones,orAlternativeSitesApproved,NetofTerminations,1934–201535

Figure 1.3-1 tells a story, but not the whole story. It traces something like mereenthusiasm for FTZs. The Board cannot approve an application on its own, after all.Applications come from applicants – in the case of FTZs, from public or privatecorporations(typically,tax-exemptones).36

Acorporationgrantedtheprivilegeofoperatingazonemustmakeitavailableasapublicutility.37 Far from free ridingon existinggovernment services, a zone’s operatormust pay the costs of any customs services required in the zone.38 The zonemust alsoprovidequarters and facilities for any federal, state, ormunicipal officers or employeeswhosedutiesrequiretheirpresenceinthezone.39Thefederalgovernmentdoesnotbuildor manage FTZs, nor provide their utilities; in these matters as more generally, zoneoperatorsmusttakecareofthemselves.

It is thus perhaps not surprising that approvedFTZsoutnumber active ones. Somezonesnevergetstarted.Otherslaunch,falter,andfail.Thatshowsacullingeffectatwork,helpingensurethatonlystrongFTZssurvive.ItalsoindicatesthattheFTZBoardhasnotmadeapplyingforanFTZsocostlyastoscareawayallapplicantsexceptthoseabsolutelycertain of success. It makes for a relatively fluid and adaptable system. Perhaps thatexplainstheoverallspreadandgrowthoftheFTZsystem.

WhatpercentageofapprovedFTZsbecomeandremainactive?Figure1.3-2 chartstherelativenumbersofapprovedandactivezonesfrom1990, theearliestyearinwhich

the Board began reporting the number of active zones. It shows a persistent and widemarginbetweenapprovedFTZsandactiveones.Aboutathirdfail.

Figure1.3-2.U.S.Foreign-TradeZones,ApprovedandActive,NetofTerminations,1990–201541

Notwithstandingthegapbetweenapprovedandactivezones,andasFigure1.3-2alsoillustrates,theUnitedStateshascometohostasurprisinglylargepopulationofFTZs,aswell asverymanysubzonesoralternative sites. In theaggregate, thesehave significanteconomiceffects.In2015,theapproximately2,900firmsusingFTZsemployedmorethan420,000people.40Thosefirmsshipped$84.6billioningoodsabroad–nearly6percentofall goods exported from theUnitedStates that year.42 Shipments into zones, from bothdomesticandforeignsources,totaled$659.4billion.43

Everystate,aswellasPuertoRico,hasatleastoneFTZ.44Theyappearnotonlyattraditionalportsofentry,suchasLosAngelesorNewYorkCity,butalsoatlocationsfarfrom the coast and connected to international trade only by river or air.45 Examplesinclude: FTZ number 161 in Sedgwick County, Kansas; FTZ No. 240 inMartinsburg,WestVirginia;andFTZNo.280inAdaandCanyonCounties,Idaho.46

FTZsneedonlybesitedataU.S.CustomsandBorderProtection(CBP)portofentry–locationsofwhichtherewere,atlastcount,328,scatteredfaracrosstheUnitedStates.47

Actually, a site canqualify for zone status if it iswithin sixtymilesor aninety-minutedriveofaCBPportofentry.48Actually,azone’sinfluencecanreachevenfartheraway,iftheapplicantcan“ensurethatproperoversightmeasuresareinplace”tothesatisfactionof

thelocalCBPPortDirector.49FTZscouldintheoryliesprinkledacrossvastswathsoftheUnitedStates.

Constitutionalscholarsmightwonderhowtheexemptionfromfederalcustomsdutiesand excise taxes afforded by FTZs could possibly satisfy the plain language of theUniformityClause: “The Congress shall have Power To lay and collect Taxes, Duties,ImpostsandExcises…butallDuties, ImpostsandExcisesshallbeuniformthroughoutthe United States.”50 On the face of it, after all, and by deliberate design, each FTZrepresentsaspecialjurisdictionwhereinfederaldutiesandexcisetaxesdifferfromthoseelsewhereapplicable,makingthemnotuniformthroughouttheUnitedStates.

The long and apparently unchallenged existence of FTZs offers something like anexistenceproofoftheirconstitutionality.TheoristsofacertainstripemightexcusethatasconsistentwiththeallegedaimoftheUniformityClause:to“cutoffallunduepreferencesofoneStateoveranother.”51BecauseFTZsexistineverystate,theyhardlyshowthatsortofgeographicalbias.PragmaticlawyerscansimplyresttheirdefenseofFTZsonUnitedStates v.Ptasynski,wherein the SupremeCourt effectively gave lawmakers free rein toallocate duties, imposts, and excise taxes as they see fit – so long as the laws speak infunctional rather thangeographic terms (andoften evenwhen they speak ingeographicterms).52FTZlawsandregulations,because theydefine theareasexempt fromcustomsdutiesorexcisetaxesintermsofwhoappliesforandreceivespermissionfromtheFTZBoard,andnotingeographicterms,thereforedonotviolatetheUniformityClauseundertheinterpretationnowfashionablebeforetheSupremeCourt.

***Beforetakingleaveofthistopic,aterminologicalnote:Theircommonacronym,“FTZ,”risks causing confusion between the Foreign-Trade Zones peculiar to theUnited Statesandthemoregeneralclassoffreetradezonesfoundworldwide.TheForeign-TradeBoarddescribesFTZsas“theU.S.variationonthegeneral‘freetradezone’concept,”suggestingthat the native version makes only modest changes to the world standard.53 In fact,however,foreignanddomesticFTZsdifferinimportantways.Because“littleconsistencyexistsinthedenominationandclassificationofzones,”takingnoteoftheseterminologicalissuesmightimprovethestudyofspecialjurisdictions.54

In most formulations, a free trade zone does little more than ease cross-bordertransactions at a port of entry.55 In contrast,U.S. Foreign-TradeZones support not just

commercebutmanufacture,andnotjustatportsofentrybutmilesawayfromsuchportsandinisolatedfactories.Elsewhere,specialjurisdictionswiththosefeatureswouldmorelikely sport the names “Export Processing Zones” (EPZs) and “Single Unit EPZs,”respectively.56 In the law of the United States, in contrast, those would respectivelyconstitute “Foreign-Trade Zones” and “Subzones” (formerly) or “Alternative Sites”(currently).

***Bywhatever name,FTZshave spread far andwide across theUnitedStates, shelteringservicesandmanufacturefromthefullbruntoffederal,state,andmunicipal laws.FTZsareapprovedbyafederalboardbutrunbypublicorprivatecorporations.Aboutathirdofall approved FTZs fail – an indication that, far from enjoying subsidies at taxpayerexpense,FTZshavehadtoearnsuchsuccessastheyhaveenjoyed.FTZoperatorsmustevenpayfor thecustomsservices that theyuse. Inall theseways,FTZsprovideanaptmodel–followedinsomeareas,divergedfrominothers–for theUnitedStatesSpecialEconomicZones(USSEZs)proposedinChapter3.7.

5ConclusionSinceitsbirthfromaclusterofprimitiveproto-SEZs,andasevidencedbythepluralityinits very name, the United States has enjoyed a long and rich history with specialjurisdictions.Inrecentdecades,U.S.ForeignTradeZones(FTZs)haveprovenespeciallypopular, spreading across the country and handling vast amounts of commerce. FTZsexemptselectcompaniesfromfederalcustomsdutiesandexcisetaxes,aswellasstateandlocalad valorem (i.e., assessed on the value of property) taxes. That maymake FTZsnotable in theUnitedStates,but itmarksroutinepracticeabroad,wheremanifoldSEZsofferexemptionsfromlocalcustomsandtaxesasamatterofcourse.FTZscomenowherenear the sophistication and size of the most advanced special jurisdictions abroad,describedinthepriorchapter,whereimportedlawencourageslocaleconomicgrowthandwholenewcitiesarise.

Could the United States again take the lead in tapping the power of specialjurisdictions?Havingbeenbornfromspecialjurisdictionsandmadethemacentralpartofitstradepolicy,itcertainlyhasthecredentialsforthejob.Abroad,thenextgenerationofspecialjurisdictions,whichofferbespokelegalsystemsandhostresidents,haveariseninlargelyundevelopedregions,suchasDubaiandHonduras.Hardsituationsoccasionboldaction. But theUnited States has underdeveloped areas sorely in need of development,too: vast stretches of largely unused federal lands.Chapter3.7 proposes a new kind ofzone–theUSSEZ–forthoseareassothattheUnitedStatesmightbeginthenextandbeststageofitsspecialrelationshipwithspecialjurisdictions.

*ThischapterderivesinpartfromSpecialEconomicZonesintheUnitedStates:FromColonialCharters,toForeign-TradeZones,towardUSSEZs,64BUF FALO L . R EV.959(2016).

1See,forexample,U . S . CON S T. A RT. I , § 2 , § 8 ,cl.3(limitingfederalregulatorypowertocommerce“amongtheseveralstatesandwiththeIndiantribes”).

2SeeVirginiav.WestVirginia,78U.S.(11Wall.)39(1871)(implicitlyratifyingthesecessionofthestateofWestVirginiafromtheCommonwealthofVirginia);

CHR I S TOPHER LYLE MC I LWA IN , C I V I L WAR A LABAMA62(2016)(describingthenear-creationofthesomewhatfabledFreeStateofWinston).

3SeeChapter1.4.

4S TA F F O F J . COMM . ON TAXAT ION , 11 2 TH CONG . , F E DERAL TAX L AW AND I S S UE S

RELATED TO THE UN I T ED S TATE S T ERR I TOR I E S2(Comm.Print2012),www.jct.gov/publications.html?func=startdown&id=4427.

5UnitedStatesv.Kagama,118U.S.375,381–82(1886)(“[Indians]were,andalwayshavebeen,regardedashavingasemi-independentpositionwhentheypreservedtheirtribalrelations;…andthusfarnotbroughtunderthelawsoftheUnionoroftheStatewithinwhoselimitstheyresided.”);CONFERENCE W. AT TORNEY S G EN .,AMER I CAN

I ND I AN L AW DE SKBOOK10–11(2015)(“[A]sextra-constitutionalpoliticalbodies,IndiantribesarenotsubjecttotheconstraintsimposeduponthefederalgovernmentandthestatesbytheBillofRights,andtheymaintainbroad,largelyunreviewablepowersoverinternaltribalmatters.”).

6Alsocalled“patents”inEnglishusageoftheday.

7J AME S HORN , A L AND A S GOD MADE I T: J AME STOWN AND THE B I RTH O F AMER I CA

34–37(2005)(describingthegrantofaroyalpatenttoJamestown’sfoundersin1606followedbythecolony’sfoundingtheyearafter).

8NATHAN I E L PH I L BR I CK , MAYFLOWER : A S TORY O F COURAGE , COMMUN I TY, A ND WAR

19(2006)(describingtheprocessbywhichthePilgrimsobtainedasubsidiary,or“particular,”patentfromthesameVirginiaCompanythathadobtainedapatenttofoundJamestown).

9RU S S ELL S HORTO , THE I S LAND AT THE C ENTER O F THE WORLD55(2004)(describingdocumentationaboutthepurchaseofManhattanbytheWestIndiaCompanyas,“ineffect,NewYorkCity’sbirthcertificate”).

10BROOKS ADAMS ,THE EMANC I PAT I ON O F MA S S ACHU SE T T S15(Boston,Houghton,Mifflin&Co.1899)

11Seeid.at190–92.

12SeeJ AME S E . MCW I LL I AMS , B U I LD I NG THE B AY COLONY: LOCAL E CONOMY AND

CULTURE I N E ARLY MA S SACHU SETT S4–6(2007).

13PAUL S . B OYER E T A L . , T HE E NDUR I NG V I S I ON : A H I S TORY O F THE AMER I CAN

PEOPLE , VOLUME I : TO 1 8 7 7pp.35–36(8thed.2013).

14Id.

15PH I L BR I CK ,supranote9,at19.

16BOYER E T A L . ,supranote14,at34.

17SeeJ ERRY L . A NDER SON & DAN I E L B . B OGART, P ROPERTY LAW: P RACT I CE ,

P ROBLEMS , A ND P ER S P ECT I VE S 1 3 0– 3 1 (2014).

18ItseemsfairtocreditNewAmsterdamastheoriginnotjustofNewYork,NewYork,buttherestofthestate,too.Indeed,wemightfairlyincludeaquitelargechunkofthesurroundingNortheasternUnitedStates.See,SHORTO , supranote10,at256(reproducingthe“Jansson-Visscher”map).

19SeeWelcometotheCommunityRenewalInitiative,OFF I C E O F CMTY. R ENEWAL,U . S .

D E P ’ T O F HOU S . & URBAN D EV.http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/economicdevelopment/programs/rc(lastvisitedNov.30,2016)(relatingthevariousenactments,extensions,andultimateexpirationsofEmpowermentZone(EZ),EnterpriseCommunity(EC),andRenewalCommunity(RC)Initiatives).

20SeeOFF I C E O F CMTY. R ENEWAL , U . S . D E P’ T O F HOU S . & URBAN D EV. , EMPOWERMENT

ZONE TAX I NCENT I VE S S UMMARY CHART(2013),http://portal.hud.gov/hudportal/documents/huddoc?id=ez_tis_chart.pdf(summarizingthevariousfederaltaxincentivesenjoyedbyEnterpriseZones).

21SeeOFF I C E O F CMTY. R ENEWAL , U . S . D E P’ T O F HOU S . & URBAN D EV.,EMPOWERMENT

ZONE S , E N TERPR I S E COMMUN I T I E S , A ND R ENEWAL COMMUN I T I E S I N I T I AT I V E S(2013),www.hudexchange.info/resources/documents/EZ-RC-EC-Program-Overview.pdf.

22WelcometotheCommunityRenewalInitiative,supranote20,at2.

23See,e.g.,GregoryKorte,AuditsaysCincinnatiWastedMuchofEmpowermentGrant,C I NC I NNAT I E NQU I RER(Feb.4,2003),http://enquirer.com/editions/2003/02/04/loc_empower04.html.

24See,e.g.,LEG I S LAT I VE O F F I C E O F E CON . & D EMOGRAPH I C R E S EARCH , S TATE O F

F LOR I DA , L I T ERATURE R EV I EW AND P REL IM I NARY ANALY S I S O F THE IMPACT O F

ENTERPR I S E ZONE S ON S TATE & LOCAL R EVENUE COLLECT ION S6–8(2010),http://edr.state.fl.us/Content/special-research-projects/economic/EnterpriseZoneAnalysis.pdf(reviewingvariousstudiesofzones).

25SeeShikhaDalmia,RandPaulWon’tBeAbletoSaveDetroit:EconomicFreedomZonesCan’tSurvivetheRegulatoryState,REA SON (Dec.15,2013),http://reason.com/archives/2013/12/15/rand-pauls-non-plan-to-save-detroit.

26SeeForeign-TradeZonesAct,Pub.L.no.73-397(1934),amendedby19U.S.C.§§81(a)–81(u)(2012);15C.F.R.§400(2016).

27U.S.FORE IGN - TRADE ZONE S BOARD , 7 7 TH ANNUAL R E PORT O F THE FORE IGN - TRADE

ZONE S BOARD TO THE CONGRE S S O F THE UN I T ED S TATE Spreface(2016)http://enforcement.trade.gov/ftzpage/annualreport/ar-2015.pdf(lastvisitedNov.30,2016).

28Id.

29ForarareandnowsomewhatdatedlegalacademicdiscussionofFTZs,seeJohnPatrickSmirnow,Comment,FromtheHanseaticCitiesofthe19thCenturyEuropetoCannedFish:TheRadicalTransformationoftheForeignTradeZonesActof1934,10COOLE Y L . R E V.697(1993).ForatrenchantandapparentlyfutilecritiqueofFTZs,seeWilliamG.Kanellis,Comment,ReiningintheForeignTradeZonesBoard:MakingForeignTradeZoneDecisionsReflecttheLegislativeIntentoftheForeignTradeZonesActof1934,15NW. J . I N T’ L L . & B U S.606(1995).

30Id.at618.

31Id.at610,618–19.

3219U.S.C.§81o(e)(2012).

33GlossaryofFTZTerms,U . S . F ORE IGN - TRADE ZONE S B D . ,

http://enforcement.trade.gov/ftzpage/grantee/glossary.html(lastvisitedNov.13,2016);WhatIstheASF?,ENFORCEMENT & COMPL I ANCE , U . S . F ORE IGN - TRADE ZONE S B D . ,

http://enforcement.trade.gov/ftzpage/info/asf.html(lastvisitedNov.30,2016).

34ForanexplanationofthesuddenriseinFTZsinthe1980s,seeMarshallV.Miller,ThereIsaGoodReasonforFTZs’StartlingGrowth:ItMakesGoodBusinessSense,GLOBAL T RADE MAGAZ I NE,Sept.1988,www.millerco.com/pdfdocuments/reason.pdf

35Sources:ManyvariousForeign-TradeZoneBoardordersandreportsavailableatU.S.ForeignTrade-ZonesBoard,EnforcementandCompliance,OrderSummary(1935–2016),http://enforcement.trade.gov/ftzpage/orders/ftzorder.html(lastvisitedDec.17,2016),andU.S.ForeignTrade-ZonesBoard,EnforcementandCompliance,AnnualReportoftheForeignTradeZonesBoardtotheCongressoftheUnitedStates,http://enforcement.trade.gov/ftzpage/annual-report.html(offeringreportsorexcerptsfromreportsfrom1994,inclusive)(lastvisitedDec.17,2016).Note:Temporaryzonesarenotincludedinthiscount.Alsothisfiguretracksapprovedlocations,notnecessarilyactiveones.Ofthe258ApprovedZonesshownin2014,forinstance,theBoardclassified179zonesasactive.SeeFigure1.3-2.

36See19U.S.C.§§81a(d)–(g)(2012).Seealso15C.F.R.§400.12(2016)(definingeligibleapplicantsforFTZs).

3719U.S.C.§81n(2012).

38Id.

3919U.S.C.§81l(e)(2012).

40U.S.FORE IGN - TRADE ZONE S BOARD , 7 7 TH ANNUAL R E PORT O F THE FORE IGN - TRADE

ZONE S BOARD TO THE CONGRE S S O F THE UN I T ED S TATE S1(2015)http://enforcement.trade.gov/ftzpage/annualreport/ar-2015.pdf(lastvisitedNov.30,2016).

41AnnualReportoftheForeign-TradeZonesBoardtotheCongressoftheUnitedStates,U.S.FORE IGN - TRADE ZONE S B D . ,http://enforcement.trade.gov/ftzpage/annual-report.html(lastvisitedNov.30,2016)(offering56ththrough77thAnnualreports,covering1995–2015,inclusive).

42Id.at6(FTZexportfigure);U . S . D E P’ T O F COMMERCE , A NNUAL R EV I S I ON O F THE

U . S . I N T ERNAT IONAL T RAN SACT ION S ACCOUNT S6tableB(July2016)www.bea.gov/scb/pdf/2016/07%20July/0716_annual_revision_of_international_transactions_accounts.pdf(lastvisitedNov.30,2016)(goodsexportedfromtheU.S.in2015).

43U.S.FORE IGN - TRADE ZONE BOARD ,supranote42,at6.

44Wherearezonescurrentlylocated?,ENFORCEMENT & COMPL I ANCE , U . S . F ORE IGN -

TRADE ZONE S B D . ,http://enforcement.trade.gov/ftzpage/info/location.html(lastvisitedNov.30,2016).

45SeeU.S.Foreign-TradeZones,ENFORCEMENT & COMPL I ANCE , U . S . F ORE IGN - TRADE

ZONE S B D . ,http://enforcement.trade.gov/ftzpage/letters/ftzlist-map.html(updatedNov.30,2016).

46Id.

47U . S . C U S TOMS & BORDER P ROTECT ION , C P B’ S ROLE I N S TRENGTHEN I NG THE

ECONOMY (2014),www.cbp.gov/sites/default/files/documents/401784%20CBPs%20Role%20in%20Strengthening%20the%20Economy.pdf.

4819U.S.C.§81b(a)(2012);15C.F.R.§400.11(b)(2)(i)(2016).

49WherecanaZonebeLocated?,ENFORCEMENT & COMPL I ANCE ,U.S.FORE IGN -

TRADE ZONE B D . ,http://enforcement.trade.gov/ftzpage/info/adjacency.html(lastvisitedNov.30,2016).Seealso15C.F.R.§400.11(b)(2)(ii)(2016)(authorizingthecreationofsub-zones,whichtypicallyconsistofsinglefactorysites,almostanywhereintheUnitedStates).

50U . S . CON S T. ,art.I , §8,cl.1.

511J O S E PH S TORY, COMMENTAR I E S ON THE CON ST I TUT ION O F THE UN I T ED S TATE S

706(5thed.1891).

52462U.S.74,84–86(1983).

53U.S.FORE IGN - TRADE ZONE S BOARD ,Prefaceto7 4 TH ANNUAL R E PORT O F THE

FORE IGN - TRADE ZONE S BOARD TO THE CONGRE S S O F THE UN I T ED S TATE S(2013),http://enforcement.trade.gov/ftzpage/annualreport/ar-2012.pdf.

54ClaudeBaissac,BriefHistoryofSEZsandOverviewofPolicyDebates,inS P EC I AL

ECONOM IC ZONE S I N A FR I CA : COMPAR I NG P ER FORMANCE AND L EARN I NG F ROM

GLOBAL E X PER I ENCE24(ThomasFaroleed.,2011).

55SeeThomasFarole&GokhanAkinci,IntroductiontoS P EC I AL E CONOM IC ZONE S :

P ROGRE S S , EMERG ING CHALLENGE S , A ND F UTURE D I R ECT ION S2tbl.1.1(ThomasFarole&GokhanAkincieds.,2011),http://documents.worldbank.org/curated/en/2011/01/14813550/special-economic-zones-progress-emerging-challenges-future-directions.

56Id.;ThomasFarole,IntroductiontoS P EC I AL E CONOM IC ZONE S I N A FR I CA ,supranote56,at4.

1.4

CaseStudy1:Fordlandia*◈

WewillgetourmeninBrazil.WearenotgoingtoSouthAmericatomakemoneybuttohelpdevelopthatwonderfulandfertileland….We’lltraintheBraziliansandthey’llworkaswellasanyothers.

HenryFord,describingplansforFordlandia,19281

BrazilforBrazilians!KillalltheAmericans!

Fordlandiaworkers,drunkandrioting,1930.2

1Introduction:HeroicFailurePeople frustratedwith the foibles of statism have often advocated proprietary forms ofgovernment.AynRand imaginedGalt’sGulch,3 Robert Nozick called for a “utopia ofutopias,”4 and Randy E. Barnett described how competing companies could create apolycentric legal order.5 It’s not just all talk, either. As discussed below, reformers inHondurasandFrenchPolynesiahavemadegreatprogress towardcreating thenext,andpotentiallybest,generationofspecialjurisdictions.

It turns out that government is not all that easy, though. Special jurisdictions haveoftenfailed.6AsdocumentedinChapter1.2,theyhavemadegreatstridesforward–butonlyatthecostofmanystepsbackward.Theweaknessshownbymanyindividualspecialjurisdictionsshows,inaseemingparadox,thestrengthofthespeciesasawhole.Justasselection pressures have shaped corporations into efficient institutions for aggregatingownership and control, as discussed inChapter3.4, large economic and political forceshaveforcedspecialjurisdictionstoadaptordie.

Thischaptertellsaboutanespeciallyheroicflop:Fordlandia.Itoffersavaluablecasestudyinhownottodevelopormanageaspecialjurisdiction.Farfromamodelofthenext,bestkindofgovernment,Fordlandiarepresentedanevolutionarydeadend.

2ModelWorkersforModelTIn1927,theAmericanindustrialistHenryFordbeganbuildingaprivatecityinthedepthsoftheBrazilianAmazonforest.7Hiscompanyhadgottenrightstonearly2.5millionacresofland–morethan3,800squaremiles,anarealargerthanthestateofDelawareandwelloverhalfthesizeofConnecticut–foraplannedrubberplantationandcompanytown.TheFordMotorCompanyspentmorethan$20million(worthmorethan$275milliontoday)puttinginroads,waterlines,electricpower,raillines,factories,offices,medicalfacilities,homes, schools, and stores.8 Drawn by the prospect of good jobs and modern living,thousandsofworkersandtheirfamiliesflockedtoFordlandia.Thepopulationboomed.

Butlikemanybooms,Fordlandiawentupinsmoke.

Vermin and disease killed trees and humans alike. Waves of rioting, looting, andburningroiledthecommunity.Fordabandonedhisnamesakesettlementin1945,leavingittorotinthejungle.

WhydidFordlandiaendinfailure?Perhapsbecauseitsprungfromanunwholesomeurgetorunothers’lives.NobodycoulddoubtthatFordknewathingortwoaboutliving.Hebecametherichestmanin1920sAmericabyfoundingandrunningoneoftheworld’slargest andmost profitable firms, theFordMotorCompany.ButHenryFordwanted tomakemorethanjustcarsandmoney.Hewantedtomakeanewkindofworker.

Ford’smassproductionassemblylinesneededregimented,reliableemployees.Forddrew them in by paying nearly double the prevailingwage. He then set to workmassproducing theworkers themselvesby running them through theFordMotorCompany’sownSociologyDepartment.Deployingtheseandotherindustrialprocesses,Forddirectedworkers’personalhygiene,householdmanagement,andoff-hoursrecreation.

FordexercisedstillmorecontrolovertheworkerswholivedinFordMotorCompanytowns scattered across the upper Midwest, stationed there to harvest timber from thecompany’svastandremoteforests.HenryFordtookadetailedinterestinthesecompanytowns,dictatingwhatworkersshouldplantintheirfrontyardsandwhatdancestepstheirchildrenshouldlearnatthecompanyschool.

Fordlongedforalargercanvas,however.Heworkedupplanstodevelopa75-mile-longstretchoflandalongtheTennesseeRiver–anentirelynewkindofcity,builtaroundhighwaysanddedicatedtoindustrialproduction.PerhapsFordwouldhavefaredbetterifhe had not announced his intention to create a regional “energy dollar” backed by thepowerofhisdams.InsteadofFord,thefederalTennesseeValleyAuthoritytookchargeoftheregion’swaterways.

Frustratedathome,Fordlookedabroad.InBrazil,acountrythatspecializesinsuchthings,hesawafutureofbothwealthandpower.Thewealthwouldcomefromrubber;thepower…fromFordlandia.

3FordlandiaFlopsTheFordMotorCompanyneededvast amounts of rubber – not just for theModelT’stires but also for gaskets, hoses, wires, and other parts. Because commercially viablealternatives tonatural rubberhadnotyetbeen invented,natural rubberprovidedabasicand irreplaceable feedstock for auto production. FordMotor Company beganworryingabout supplies during the 1920s, when it found itself relying on plantations located inEurope’sSoutheastAsiancolonies.RisingpricesandpoliticaluncertaintyconvincedFordtofind–orrather,tocreate–anothersourceofrubber.

The solution seemedobvious. Just as theFordMotorCompanygotwood from itsown forests, itwouldget rubber from its ownplantation.And just as it built towns fortimberworkers and their families,Fordwouldbuild an entire city to support its rubberplantation–Fordlandia.

Fordlandia failed formany reasons. Ecological pressures doomed the project fromthestart.Itwasnotwellplanned,placed,orsupported.Itdidnottakelocalculturalnormsintoaccount.Itneverwonasolidlegalfooting.

Mostfundamentally,Fordlandiafailedasabusinessventurebecauseitsrubbertreesfailed.Thoughnativetotheregion,HeveaBrasiliensis(rubbertrees)donotgrowtogetherin thewild.Packing them into aplantationmade themeasyprey for localdiseases andpests. Plantations might work in Southeast Asia, where rubber trees had no naturalenemies,buttheyseemeddoomedtofailinFordlandia.

ThisrevealsalargercauseofFordlandia’sfailure:poorplanning.Remarkablyforsolargeandsuccessfulacompany,theFordMotorCompanydidnotexcelinworkingthingsoutbeforehand.AsthefamousaviatorCharlesLindberg,whoworkedwiththecompany’saviationdivision,observedwithchagrin,“Theirpolicyistoactfirstandplanafterward,usuallyoverlookingcompletelyessentialdetails.”9

Ford distrusted experts. He staffed the Fordlandia project with capable men andexpected themtoworkout thedetailsbysimplecommonsenseandelbowgrease.Fordembraced“learningbydoing”asbothmanagementphilosophyandacoreprincipalofthepedagogyemployedatthemanyschoolsheran.

Fordlandia thus launched without anyone bothering to figure out what madeSoutheast Asian rubber plantations work – or what might make a Brazilian rubberplantationfail.AndwhiletheFordMotorCompanyknewsomethingaboutbuildingandrunning company towns, it evidently never thought to consult with the United FruitCompany,whichranthrivingcompanytownsinneighboringregions.Fordwouldhavetolearnforitselfhowtodealwiththealiencultureandforeigngovernment.

Consistentwithhisdisdain forexperts,Forddidnotaskqualifiedattorneys to ironoutthedetailsofhisagreementwithBrazilianofficials.Onpaper,Ford’snegotiatorswonwide-ranging concessions:millions of acres of public lands; the right to exploit naturalresources,constructbuildings,railroads,andairfields,organizeaprivatepoliceforce,andrunschools;andexemptionsfromexport taxesand importduties.Fordhadnoeffectivewaytoenforcethosepromises,however,whenlaterpoliticaladministrationsfoundtheminconvenient.

Logistical difficulties hobbled Fordlandia ever and again. It was not simply aproblemofremoteness–thoughtheAmazonjungleprovedremoteindeedfromDetroit.NobodynoticeduntilitwastoolatethattheonlyeffectivewaytoreachFordlandia–theTapajos river than ran through the property – ran too shallow during the dry season toallow passage of any but the smallest ships. The freighter sent from Detroit, full ofsuppliesnecessarytogetFordlandiagoing,hadtowaitfourmonthsafteritreachedBrazilfor the wet season to arrive and the Tapajos river to rise. When the freighter finallyreached thework site, Fordworkers discovered that the cranes needed to unloadheavycargohadbeenpackedfirst,puttingthematthebottomoftheship’shold.

ThoseandotherlogisticalmistakesleftFordofficialsunabletoprovideworkerswithadequatefood,decenthousing,andgasolineforpowertools.Clearingthejunglebyhandproved grueling and often deadly work.Workers fell prey to biting insects, poisonoussnakes,scorpions,exhaustion,andillness.

After one too many meals of rotten meat, they rioted, arming themselves withmachetesandputtingtheAmericanstoflight.AlthoughFordofficialsrestoredcalminthatinstance, later maltreatment of workers – including strident programs to clean upresidentialareasandfutileattemptstoimposeprohibition–triggeredworseoutbreaksofviolence. In the lastof them, rampagingworkers set fire toFordlandia as theychanted,“BrazilforBrazilians!KillalltheAmericans!”10

TherioterssearchedFordlandiaforvictimsonwhomtoventtheirire.Findingnone,the men smashed the hated work clock and set fire to buildings. The placid Brazilianjungleabsorbedtheirfury,justasiteventuallyabsorbedtheashesofHenryFord’sdream.

Fordlandia’s officials-in-exile finally had to call in the Brazilian army to restoreorder.Thedeeplywoundedcompany townstruggledon for someyearsbutnever cameclosetoturningaprofit.TheGreatDepressionmadebusinessofanysortdifficult,muchless a business plagued with dying trees and unruly workers. Ford finally called theexperimentoff in1945,surrenderingFordlandia to theBraziliangovernment formerely$244,200–theamountFordowedtolaid-offworkersunderBrazilianlaw.

4Conclusion:LessonsfromanEdselGovernmentLittlegoodwillcomefromdreamingaboutnewformsofgovernmentunlesswefaceuptothe possible nightmares. Fordlandia offers valuable lessons in what not to do. Born inhope,itendedintragedy,butitneednothaveendedinvain.

WhydidFordlandiafail?Blamepoorplanning,impossiblelogistics,ecologicalandcultural ignorance,andweak legal foundations.Moregenerally, though, it failedso thatthenextgovernment,orthenext,orthenext,mightsucceed.

*ThisChapterderivesfromTomW.Bell,Fordlandia:HenryFord’sAmazonDystopia,FREEMAN ,Apr.2013,at19,https://fee.org/media/3760/20130327_freemanapril2013bluelinefinalacceptedsmall.pdf.

1TheHenryFord,FordRubberPlantationsinBrazil,www.thehenryford.org/collections-and-research/digital-resources/popular-topics/brazilian-rubber-plantations/(lastvisitedJan.2,2017)(quotingDecioDePaulaMachado,IsHenryFordaGenius?,MAG . B U S .,May1928).

2GREG GRAND I N , F ORDLAND I A : THE R I S E AND FALL O F H ENRY FORD’ S F ORGOTTEN

JUNGLE C I TY 2 3 1(2009)(punctuationedited).

3AYN RAND , AT LA S S HRUGGED652ff(1957).

4ROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A297ff(1974).

5RANDY E . B ARNETT, T HE S TRUCTURE O F L I B ERTY284–97(1998).

6SeeThomasFarole&LottaMoberg,ItWorkedinChina,soWhyNotinAfrica?:ThePoliticalEconomyChallengeofSpecialEconomicZones(WorldInst.forDev.Econ.Research,WorkingPaperNo.2014/152,2014),www.wider.unu.edu/sites/default/files/wp2014-152.pdf.

7Fortheseandotherfactualclaims,seegenerallyTheHenryFord,supranote1,andGRAND I N ,supranote2;Fordlândia,WIK I P ED I A ,http://en.wikipedia.org/wiki/Fordlândia(lastvisitedJan.2,2017).Onlyquotesandclaimsfromothersourcesreceiveciteshereinafter.

8CPIInflationCalculator,U . S . D E P’ T L AB . , B UREAU LAB . S TAT.,https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1.00&year1=1930&year2=2016(lastvisitedJan.2,2017).

9GRAND I N ,supranote2,at302.

10Id.at2 3 1 (punctuationedited).

1.5

CaseStudy2:HonduranREDsandZEDEs*

◈

1Introduction:UpsandDownsandUpsHonduras has its ups and downs, literally and figuratively. Literally because its landcontainsgreatheightsanditswaterscontaingreatdepths(HondurasmeansTheDepths).FigurativelybecauseHondurashasswungfromempiretojungletocolonytoafoundingmember of the Central American Republic to what it has become today: the smartestnationstateintheworldwhenitcomestospecialjurisdictions.Thischapterexplains.

Special jurisdictions, mostly in the form of export-processing zones, have alreadyprovidedHonduraswithararebrightspotinitsotherwisetoo-oftentroubledfortunes.Itsleadershaveevidentlydecided todoubledownonwhatworks.With theexpressaimofbringingHongKong–stylegrowthtoCentralAmerica,Hondurasamendeditsconstitutionin 2011 to allow the creation of quasi-sovereign special development regions. CalledREDs after the acronym for their Spanish name, Regiones Especiales de Desarrollo(SpecialDevelopment Regions), these zones were supposed to attract foreign investorswith low taxes, free trade, and transparent government. The plan instead attractedconfusedgrandstanding,criticalpress,andcripplinglitigation.

Foracountrythatmightnotcomefirsttomindundertheheadingof“RuleofLaw,”however,Hondurashandledthatconflictwithcomparativegrace.TheHonduranSupremeCourt declared the RED plan illegal, and it died without a fight. The larger campaigncontinued,pressedbyabroadcoalitionofHonduranreformersinandoutofgovernment.They regrouped, amended the Constitution, passed a new statute, and won judicialapprovalofthewhole.

Asdescribedinthefollowingsections,theresultingZEDEprogram(fromZonasdeEmpleo yDesarrolloEconómico orZones of Employment and EconomicDevelopment)represents themost innovative andcomprehensive special jurisdiction framework in theworld today.Section4 explainswhy. To fully understand the ZEDEs requires studyingtheirancestor,theREDs.Section3coversthattopic.AndtounderstandtheREDsrequiresstudyingtheirenvironment,Honduras.Tothatthenextsectionturns.

2Honduras,fromAfarYouprobablydonotknowalotaboutHonduras.Whywouldyou?MostpeoplewouldbeluckytoplaceitinCentralAmerica.Forreasonsdescribedbelow,however,Hondurasjustmightrepresentthebirthplaceofthenext,newkindofgovernment.MaybeyoushouldgettoknowHondurasalittlebetter.Thissectionoffersanintroduction.

You already know to look for Honduras in Central America, the winding, lumpyisthmus that connects Mexico to South America. Given its charms, you might pictureCentralAmericalikeaglitteringnecklace.Itsjeweledlinks–emeraldwithforests,rubywith passion, gold with, well … gold – wind between tropical oceans, framing thefloweredlandwitheverykindofblue.Itmakesforalovelypicture,evenifthisnecklacehasafewsharpedges.

AndifCentralAmericarecallsabejewelednecklace,Hondurasresemblesagiantcutdiamond, seen from the side. It sits between about a third of theway southward downCentralAmerica’sspine,withGuatemalaandElSalvadortothenorthwestandNicaraguatothesoutheast.

Hondurasspanstheisthmus.ThepointedbottomofitsdiamondoutlinejutsintotheGulfofFonseca,onthePacificOcean.Itsbroad,flattopfacesnorthward,lookingacrosstheCaribbean,withaviewencompassingtheYucatanPeninsulaonthewestandCubaontheeast.Inbetweenthosenearerlandfalls,alittlelessthanathousandmiles(around1,500kilometers)acrosstheGulfofMexico,liestheUnitedStates.

Mountainscovermorethanthree-fourthsofHonduras.1Thesecannotpretendtorivaltheheightsof theAndesinSouthAmerica,orevenof theSierraNevadas inCalifornia.The highestHonduran peak,CerroLasMinas, reaches only 9,420 feet (2,870meters),2

whereas the Andes reach 22,831 feet (6,959 meters)3 and Sierra Nevadas 14,494 feet(4,418meters).4WhatHonduranmountainslackinheight,however,theymakeupforinpersistence.

Far fromgivingout after amere ridgeor two, themountainsofHonduras fillvaststretchesofthecountry,muchofitforested,someofitdeforested,andtherestcoveredinbrush, grass, and rocky slopes. It is not a land that invites farming, habitation, or even

simplygettingaround.Honduranscluster in theraresmoothspots,suchas thefloorsofmountainvalleysandthecomparativelysmallcoastalplainsthatriseabovevastmangrove

swamps.5 Alas for local agriculture, the land has little of the rich volcanic soil thatblanketsneighboringcountrieslikeGuatemalaandNicaragua.6Hondurasisnoplaceforfoolishness; it takes a special kind of smarts to carve out a living there. Perhaps thatexplains why Honduras has one of the lowest population densities of any Central

Americancountry.7

Hondurashasnot sauntered throughhistoryona smooth, flat road. Its jungleshadalreadyswallowedwholeculturesbeforefirsttheSpaniardsandthentheAmericanstriedtoimposetheirownversionsofcivilizationontheruggedland.8BornfromtheshardsofafailedCentralAmericanRepublic,Honduraswonitsindependencein1821.Inthenearly200 years that have passed since its founding, the Republic of Honduras has enjoyedeconomic growth, political reform, and social progress. It has also suffered dismayingamounts of war, revolution, and disaster.9 Up and down, literally and figuratively,Hondurashascrossedmountainstogettowhereitistoday.

Thejourneyhastakenitstoll.

Honduras as awhole is not very safe; it ranks in the bottom third of all countriesranked in theWorld Peace Index.10 The Index also reports that the costs of containingviolence inHonduras–34percentof itsGDP–put itat thesixthworst in theworld.11

Hondurasmakes an especially poor showing in the Index’smeasure of personal safety,whereitranksveryclosetotheworst:191stoutof193countries.12

Hondurasrecentlyheldthedubioushonorofthemurdercapitaloftheworld.From2010 through2014,with ratesofbetween75and93homicidesper100,000peopleperyear,Hondurastoppedthecharts.13Bywayofperspective,whenWashington,DCearnedthetitle“MurderCapitalofAmerica”inthelate1980sandearly1990s,ithadahomiciderateofaround80per100,000population.14 Inmorerecentyears, theHonduranratehasfallen to around60, and it has ceded its thornycrown toElSalvador, the latestmurdercapitaloftheworld.15

The impact of the violence suffered by the Honduran people goes beyond theimmediateblast zone tohavebroadereffects.Honduras ranks in thebottom thirdof allcountries ranked in the Human Development Index.16 Those numbers reflect grim a

desperatereality.Expressingtheultimatevetopower,manyHonduranshavetriedtofleethecountry.OfallpeopleborninHonduras,morethan10percentnowliveintheUnitedStates(anestimated60percentofthemasundocumentedresidentaliens).17ManyofthoseUS-based Honduransmade themove at considerable cost and peril. Some – includingchildrensetadriftbyparentsunabletoofferanythingbetterathome–triedtomakethetripandfailed,died,orsimplydisappeared.18Morethan18,000unaccompaniedHonduranchildren and adolescentsweredetained attempting to enter theUnitedStates in 2014.19

Theyoftenfleenorthonthecheapbyhitchingrideson“TheBeast”–afreighttrainthathassentmorethan700Honduranshomeasamputees.20

Whetheracause,effect,orsimplyanotherexampleofthewoesofHonduras,neitherits government nor the economy in its charge have done very well in internationalrankings.PeopleevidentlydonottrusttheHondurangovernmentverymuch;itranksinthe bottom third of Transparency International’s Corruption Perceptions Index.21

Honduras has done comparatively better in the economic sphere, where the GlobalCompetitivenessReport,ayearlyreportpublishedbytheWorldEconomicForum,ranksHondurasat88outof140–belowaveragebyaworrisomeamount,butnotquiteafailinggrade.22

TheWorldBankfindsmore than62.8percentofHonduranssubsistat thenationalpovertyline;16percentlive,ifyoucancallitthat,onlessthan$1.90aday.23Politiciansin other countries hand out t-shirts or government jobs to woo voters; Honduranpoliticians hand out coffins.24 Hondurans deserve better than that, certainly. Everybodydeservesbetterthanpoverty,corruption,anddeath.

Onebrightspotinthelitanyofwoes:Honduranfreetradezones,createdinthemid-1980s,generatedaround140,000jobson-siteandanother400,000jobsintherestofthecountry.25 To build on that success, Octavio Rubén Sánchez Barrientos and otherHonduranreformerscameupwithREDsspecialdevelopmentregionsofferinglowtaxes,streamlined regulations, and institutional safeguards against political interference.26 TheplangainedmomentumwhenPresidentPorfiroLoboappointedSánchezashisChiefofStaff,andinJanuary2011theHonduranCongressvoted124-1infavorofaconstitutionalamendmentauthorizingthecreationofREDs.27

3HonduranREDsTheREDsweredesignedbystatute to implementdecentralization fromabove,bringingsomethinglikefederalismtowhatwasotherwiseasystemofgovernmentrunlargelyoutof Tegucigalpa, the capital of Honduras.28 They were afforded a great deal moreindependence thanU.S. states enjoy, however.Onceup and running, theREDswere tohavefar-reachingauthoritytosetuptheirownpublicadministration,commercialandcivillaws,policeforces,andcourts.REDswouldhavebeenabletoestablishandspendtaxes(subject to a mandatory caps), enter into international agreements (with congressionalapproval),andsetimmigrationpolicies(solongasHonduranswerenotbarredentry).AnindependentTransparencyCommission andNormativeCouncils electedby eachRED’spermanentresidentsweretooverseethenewcities,ensuringrespectcertainfundamentalrights.Despite thoselimits, theREDheraldedanewgenerationofspecial jurisdiction–onecongenialnotjusttotradebuttopeople.

AroundthesametimethatSánchezandhisfellowreformersweredevelopingREDs,economist Paul Romer began promoting a facially similar idea: charter cities. UnderRomer’splan,ahostcountrywouldinviteatrustedfirst-worldcounterpart–heoftencitedCanada as an example – to help govern a portion of its territory.29 In thisway, Romerargued,peoplelanguishingunderpoorgovernmentswouldnotneedtoimmigratetobetterones.Instead,chartercitieswouldbringgoodgovernmenttothedevelopingworld.

Thankstohisfameasarespectedacademicandsuccessfulentrepreneur,somecameto see Romer as the genius behind the Honduran RED project.30 That characterizationsellsHonduransshort,butcitingRomer’swork–includingaveryconvincingTEDtalk31–didhelptheLoboadministrationexplainREDstotheNationalCongress.32RomervisitedHonduras,advisedthegovernment,andevidentlyviewedtheREDsasanopportunitytoimplementchartercities.Itwasnottobe,however.

The Hondurans balked at Romer’s proposal to have foreigners – even ones asfriendlyandcompetentasCanadians–governtheir territory.Nopatriotwouldwelcomeseeing another nation’s flag over native soil, after all. Imagine how it would rankleHondurans,wholovetheircountrydespiteitsfaults,andwhohavesufferedthesharpendofcolonialism’sstick.RomerandtheHonduranshadafalling-out.33

Notthatitmatteredverymuch.OnOctober18,2012,theHonduranSupremeCourtruled theREDsunconstitutionalongrounds that theyviolated thecountry’ssovereigntyandalienateditsterritory.34ThefailureoftheREDprogramdisappointedmany,butitdidnotstopthoseeagertoreformHondurangovernmentfromtheinsideout.Theyregroupedandreturnedwithversion2:ZEDEs.

4HonduranZEDEsHonduraspassed legislation authorizing the creationofZEDEs in June2013, designingthemtohavewide-rangingautonomytopassandadministertheirownlaws,regulations,andtaxes.35Assuch,ZEDErepresentthemostadvancedformofspecialjurisdictiontheworld has seen – one that offers not just special economic rules but administrative andlegal ones, too. Rightly crediting a great deal of HongKong’s success to its effectiveimportationofthecommonlawtoanislandinthePearlRiverdelta,andaimingtocreatesomething similar in Central America, the Hondurans designed ZEDEs to importgoverning principles different from those that apply in the rest of the country.36 TheenablinglegislationexplicitlyallowsZEDEcourtstofollowthecommonlaw,forinstance– a striking innovation in a country that has historically followed the civil law.37 TheZEDEstatutealsoincludesanumberofprovisionsdesignedtoensurethatzonesrespecttheirresidents’constitutionalandhumanrights.38

A Committee for the Adoption of Best Practices (CAMP from its Spanish name,Comitépara laAdopcióndeMejoresPrácticas),madeupofnotablepublicandprivatefiguresfromHondurasandtheworld,overseestheZEDEsinmuchthewaythataboardof trustees oversees a college or charity.39 TheCAMP receives applications, supervisesZEDEoperations,andwieldsthepowertodenytheappointmentoforremoveeachzone’sheadadministrativeofficial,itsTechnicalSecretary.40

Onaday-to-daybasis,eachZEDE’sTechnicalSecretaryadministersitsoperations.41

The authority delegated to the zone, and exercised through its Technical Secretary,includes passing and enforcing internal legislation, police powers, and other governingservices.AstheZEDEActmakesclear,however,thezonesremainaninalienablepartofHonduras, subject to its constitution and the national government on core issues ofsovereigntysuchasterritory,nationaldefense,foreignaffairs,andpassports.42

Thankstothoseandotherfixes,theZEDEprogramhasfaredbetter,legally,thantheREDprogram thatpreceded it.Agroupofmore than fiftyNGOschallenged theZEDElaw andZEDE-related constitutional amendments in theConstitutionalChamber of theHonduran Supreme Court, which unanimously rejected their arguments.43 The ZEDEprogram’s supporters worry less about legal challenges than they do political ones,

however;someobserverssaythatifazoneisnotupandrunningbeforethenextelection,slatedforthefallof2017,thewholeprogrammightbeinperil.

5Conclusion:Progress…forWhom?TheZEDE, a boldHonduran approach to special jurisdictions, remains for themomentuntested;theCAMPhaspublishedtherequirementsforanapplicationtocreateaZEDEbegan processing submissions.44 Several groups have begun pursuing plans to launchZEDEs but will publicly disclose nothing more than claims of “progress.” Friends ofhumanityshouldwishthemluck.Ifyoudonotcareaboutthefateoftheirattempttobuildthenextgenerationofspecialjurisdiction,considerwhatitmightmeanfortheHonduranpeople.

Unlike government programs in so many parts of the world, even those wheregovernments can ill afford to throw away scarce public resources, the ZEDE programoffers nothing to foreign investors but some broad guidelines, the freedom to createwealth,and…abillfortheprivilege.EachzoneintheZEDEsystemhastocontributetothepublic12percentofalltaxrevenuesitcollects.45Thesespecialjurisdictionswillhavetopaytheirway.

Thatcleverbitoflawmakingbynomeansguaranteessuccess,ofcourse.AhundredthingsormoremightgowrongbetweenthegoodintentionsinspiringtheZEDEprogramandreal improvementsinthelivesofaverageHondurans.Butbettergovernmentcannothappenwithoutgoodintentions,andtheverybonesofthese,theworld’smostadvancedspecial jurisdictions, showagood-faithattempt to safeguardagainst thewasteofpublicfunds.ForthatexamplealonewecanthanktheHondurans.

*PortionsofthischapterderivefromTomW.Bell,StartupCityRedux,FREEMAN (June27,2013),http://fee.org/articles/startup-city-redux/;TomW.Bell,NoExit:AreHonduranFreeCitiesDOA?,FREEMAN (Nov.26,2012),https://fee.org/articles/no-exit-are-honduran-free-cities-doa/;TomW.Bell,SpecialEconomicZonesintheUnitedStates:FromColonialCharters,toForeign-TradeZones,towardUSSEZs,64BUFF. L .

R E V. 959(2016).

1J.RobertoMoncadaR.etal.,Honduras,ENCYC . B R I T TAN I CA,www.britannica.com/place/Honduras(lastupdatedDec.13,2016).

2CerroLasMinas,WIK I P ED I A ,https://en.wikipedia.org/wiki/Cerro_Las_Minas(lastvisitedJan.6,2017).

3MountAconcagua,inArgentina.NormanR.Stewart&M.TulioVelásquez,AndesMountains,ENCYC . B R I T TAN I CA,www.britannica.com/place/Andes-Mountains(lastupdatedOct.20,2016).

4AtMt.Whitney,inCalifornia.MountWhitney,ENCYC . B R I T TAN I CA,www.britannica.com/place/Mount-Whitney(lastupdatedOct.23,2007).

5MoncadaR.etal.,supranote1.

6BarbaraAnnis,TheEconomy,inHONDURA S : A COUNTRY S TUDY124(TimL.Merrilled.,3ded.2005),http://memory.loc.gov/master/frd/frdcstdy/ho/hondurascountrys00merr_0/hondurascountrys00merr_0.pdf.

7PopulationDensity:OverviewperCountry(2015),WORLD BANK,http://data.worldbank.org/indicator/EN.POP.DNST?year_high_desc=false(showingonlyPanamaandNicaraguawithlowerdensities).

8DouglasPreston,TheLureoftheLostCity,NAT ’ L G EOGRAPH I C,Oct.2015,at102;RichardHaggerty&RichardMillet,HistoricalSetting,inHONDURA S : A COUNTRY

STUDY 1.

9Haggerty&Millet,supranote9;Honduras,Background,C I A WORLD FACTBOOK,www.cia.gov/library/publications/the-world-factbook/geos/ho.html(lastupdatedDec.12,2016);ExtensionoftheDesignationofHondurasforTemporaryProtectedStatus,81Fed.Reg.30,331,30,333(May16,2016),www.gpo.gov/fdsys/pkg/FR-2016-05-16/pdf/2016-11306.pdf#page=1.

10I N S T. F OR E CON . A ND P EACE , G LOBAL P EACE I NDEX10(2016),http://static.visionofhumanity.org/sites/default/files/GPI%202016%20Report_2.pdf(rankingHonduras111outof163countries).

11Id.at108,tbl.6.1.

12Id.at83,tbl.5.3.

13U . N . O F F I C E ON DRUGS AND CR IME , I N T ENT IONAL HOM IC I DE , COUNT S AND RATE S

P ER 1 0 0 , 0 0 0 P O PULAT ION,https://data.unodc.org/(click“CrimeandCriminalJustice”;thenclick“Homicide”;thenclick“HomicideCountsandRates(2000–2014)”;thenclick“RunReport”)(lastvisitedJan.6,2017).

14PhilipP.Pan,KillingsContinueDeclineinD.C.;HomicidesRoseinSuburbsin‘98,WASH . P O S T,Jan.1,1999,atA1,http://wpo.st/geWQ2.

152016:OVVestima28.479MuertesViolentasenVenezuela,OB SERVATOR IO

VENEZOLANO D E V I OLENC I A(Dec.28,2016),http://observatoriodeviolencia.org.ve/2016-ovv-estima-28-479-muertes-violentas-en-venezuela/(estimatingElSalvador’s2016murderrateatapproximately100/100K/year).

16U . N . D EV. P ROGRAMME , HUMAN D EVELOPMENT R E PORT 2 0 1 5 : WORK FOR HUMAN

DEVELOPMENT 210tbl.1(2015),http://hdr.undp.org/sites/default/files/2015_human_development_report.pdf(rankingHonduras131outof188countries).

17See,Honduras,supranote1(reportingHonduranpopulationof8,893,259);U.S.RelationswithHonduras:FactSheet,U . S . D E P’ T O F S TATE(Apr.9,2015),www.state.gov/r/pa/ei/bgn/1922.htm(estimatingonemillionHonduransintheUnitedStates,60percentundocumented).

18See,e.g.,UN I CE F, B ROKEN DREAMS : C ENTRALAMER I CAN CH I LDREN’ S D ANGEROU S

JOURNEY TO THE UN I T ED S TATE S(2016),www.unicef.org/infobycountry/files/UNICEF_Child_Alert_Central_America_2016_report_final(1).pdf.

19Inter-Am.Comm’nH.R.,SituationofHumanRightsinHonduras,¶145,OAE/Ser.L/V/II.Doc.42/15(Dec.31,2015),www.oas.org/en/iachr/reports/pdfs/Honduras-en-2015.pdf.

20SilviaAyuso,TheMutilatedDreamsofCentralAmericanMigrants,EL PA I S(June24,2015,4:32PM),http://internacional.elpais.com/internacional/2015/06/23/actualidad/1435088948_696048.html.

21TRAN S PARENCY I N T’ L , CORRUPT ION P ERCE PT ION S I NDEX2015,at7(2015,www.transparency.org/cpi2015#downloads(rankingHonduras112outof167).

22KLAU S S CHWAB , WORLD ECON . F ORUM , THE G LOBAL COMPET I T I V ENE S S R E PORT

2 0 1 6 – 2 0 1 7 xiii(2016),www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf.

23WorldDevelopmentIndicators:Honduras,WORLD BANK,http://databank.worldbank.org/data/reports.aspx?source=2&country=HND#(lastvisitedJan.6,2017)(2014data;percentageofpopulationlivingonlessthan$1.90adayisbasedon2011internationalprices).

24LindaPressly,HondurasMurders:WhereLifeIsCheapandFuneralsAreFree,BBC

MAG . ,May3,2012,www.bbc.com/news/magazine-17870673.

25www.ahm-honduras.com/orwww.ahm-honduras.com/memorias/pdf/memoria-2015.pdf.

26SanchezhimselfgivesallthecredittothreeHonduranpresidents:RicardoMaduro,PorfirioLobo,andJuanOrlandoHernandez,explainingthattheydeliveredthevotesandralliedthepoliticalsupporttomaketheREDandZEDEprogramspossible.

27DecretoNo.04-2011,RatificarelDecretoNo.283-2010defecha19Enerode2011[RatifictionofDecretoNo.283-2010,Jan.19,2011],LA GACETA , D I AR IO O F I C I A L D EL

LA R E PUBL I CA D E HONDURA S,Mar.7,2011,http://lcweb5.loc.gov/glin/jurisdictions/Honduras/pdfs/258090-323476.pdf.

28DecretoNo.123-2011,EstatutoConstitutcionaldelasRegionesEspecialesdeDesarrollodel29deJuliode2011[ConstitutionalStatuteoftheSpecialDevelopmentRegions,July29,2011],LA GACETA , D I AR IO O F I C I A L D EL L A R E PUBL I CA D E HONDURA,Sept.23,2011,http://lcweb5.loc.gov/glin/jurisdictions/Honduras/pdfs/258313-324044.pdf.

29BRANDON F ULLER & PAUL ROMER , S UCCE S S AND THE C I TY: HOW CHARTER C I T I E S

COULD TRAN S FORM THE D EVELOP I NG WORLD ( 2 0 1 2 ),www.macdonaldlaurier.ca/files/pdf/How-charter-cities-could-transform-the-developing-world-April-2012.pdf.

30See,e.g.,HongKonginHonduras,ECONOM I S T (Dec.10,2011),www.economist.com/node/21541392(claimingREDS“aremodelledonaconceptcalled‘chartercities’developedbyPaulRomer”).

31PaulRomer,WhytheWorldNeedsCharterCities,TED(July2009),www.ted.com/talks/paul_romer.

32OctavioSánchezBarrientos,ASingaporeinCentralAmerica?AnInterview,65J .I N T ’ L A F F.,no.2 ,Spring/Summer2012,at1 2 1 , 1 2 1(“Thegovernmentwasn’ttalkingaboutachartercityinitially”).

33ElizabethMalkin,PlanforCharterCitytoFightHondurasPovertyLosesItsInitiator,N . Y. T IME S,Sept.30,2012,www.nytimes.com/2012/10/01/world/americas/charter-city-plan-to-fight-honduras-poverty-loses-initiator.html.

34Cortedeclarainconstitucionaldecretoquecrea“ciudadesmodelo,”EL H ERALDO

(Oct.18,2012),www.elheraldo.hn/Secciones-Principales/Pais/Inconstitucional-decreto-de-ciudades-modelo.

35DecretoNo.120-1203,LeyOrgánicadelasZonasdeEmpleoyDesarrolloEconómico(ZEDE)[OrganicActforZonesforEmploymentandEconomicDevelopment(ZEDE)]LA GACETA , D I AR IO O F I C I A L D EL L A R E PUBL I CA D E HONDURA S,Sept.6,2013,http://zede.gob.hn/english/gaceta/Gaceta%206%20de%20septiembre%202013.pdf[hereinafterZEDEAct].Foranunofficialtranslationofthestatute,seehttps://goo.gl/zyU8uj(lastvisitedOct.2,2016).

36ForbackgroundaboutZEDEs,seeBrianDoherty,TheBlankSlateState,REA SON

(June2013),http://reason.com/archives/2013/05/13/the-blank-slate-state;:PoliticalPriority,EconomicGamble;SpecialEconomicZones:Free-tradezonesAreMorePopularThanEver–withPoliticians,ifNotEconomists,ECONOM I S T ,Apr.4,2015.at65.

37ZEDEAct,supranote34,art.14.Striking,butnotentirelyunprecedented;see,e.g.,Dubai’sInternationalFinancialCentre.

38Id.art.9(requiringequalrightsandfreedomfromdiscriminationwiththeZEDE);id.art.10(guaranteeingprotectionofconstitutionalandhumanrights);id.art.16

(establishingspecialcourtstoenforcehumanrights),id.art.33(requiringfreedomofconscience,religion,laborprotection,andfreedomofassociationwithintheZEDE);id.art.35(protectinglaborrights);id.art.41(requiringcriminalsanctionsagainsthumantrafficking,genocide,terrorism,childpornography,childexploitationandorganizedcrime);id.art.43(protectingthepropertyrightsofindigenouspeoplesandspecialcommunitiesofdescendantsofescapedslaves).

39SeeAppointmentofMembersofCAMP,REPUBL I C O F HONDURA S,https://web.archive.org/web/20160313233811/http://zede.gob.hn/?p=502(pagesavedMar.13,2016).

40ZEDEAct,supranote34,art.11.

41Id.art.12.

42Id.art.1.

43AdriennePeralta,HonduranSupremeCourtRejectsClaimsofZEDEUnconstitutionality,PANAM PO S T (June21,2014,9:09AM),https://panampost.com/adriana-peralta/2014/06/21/honduran-supreme-court-rejects-claims-of-zede-unconstitutionality/.

44ZonasdeEmpleoyDesarrolloEconómico:AdmissionRequirements,REPUBL I C O F

HONDURA S ,http://zede.gob.hn/?page_id=16(lastvisitedAug.29,2016).

45ZEDEAct,supranote34,art.44.

1.6

CaseStudy3:Seasteads*◈

1Introduction:SeasteadsandUnicornsSeasteads,likeunicorns,foreverflickerattheedgeofthepossible,inadreamyrainbowhazeofsweetperfection.Imaginelivingunderyourownrules,inyourownkingdom,farfromearth-boundlaws.Itsoundsatleastasgoodasahorsewithahorninthemiddleofitsface.

Seasteads seemmore near at hand than unicorns, too.1You or anybody can sail avessel into international waters, run up a homemade flag, and play sovereign to yourheart’scontent.Butthatmakesavesselintoaseasteadinthesamewaythattapingapapertubetoahorse’sheadmakesitintoaunicorn:notbymuch.

Animalsverymuchlikeunicornsexistinnature–rhinosandnarwhals,forinstance.And institutions very much like seasteads exist, too: proto-seasteads, in the form offloating residential communities. Section 2 discusses those, and how they differ fromseasteadsproper.

Section 3 discusses how seasteads could govern themselves, both today and in anenvironment friendlier to self-flagged vessels. Section4 details the precarious status ofseasteadsininternationallaw.Section5outlinesatwo-partspecialjurisdictionadaptedforseasteading–adesignwellfittedforFrenchPolynesiaandthatcountry’sMemorandumofUnderstandingwithTheSeasteadingInstitute.

In sum: Though seasteads already enjoy a fair amount of self-determination inquestions of law and governance, the advent of special jurisdictions and special flagregistries may soon give seasteaders even greater independence from terrestrialsovereigns. Carried to their logical conclusion, these trends might eventually result inassociations of seasteads that can stand as equals with nation states in internationalrelations. Seasteading communitieswould then enjoy full sovereignty in choosing theirownlawsandformsofgovernment.

2Proto-SeasteadsMaybeseasteads,likeunicorns,donotexist.Butwhataboutthenear-misses?Ifanarwhalcomesclosetoanaturalunicorn,whatistheclosestthingtoaseasteadintherealworld?Proto-seasteads:sailingvesselsownedandmanagedbytheirresidentpassengers.

Thesefloatingcondominiumsarenotfullysovereign;theyflytheflagsofterrestrialsovereignsand thuscannotself-govern inallmatters.But theystilloperate in largepartunderlawsoftheirownchoosing.Contractandshipboardrulesregulateshipboardlifeonaday-to-daybasis,with the lawsof the flagging terrestrial sovereign takingprecedenceonlywithregardtosomematters,atsometimes.

ConsiderTheWorld, a residential cruise liner.2 Physically, it resembles a high-endluxurypassengervesselwith165apartment-likecabins.Legally,TheWorld resemblesafloating condominium. “Every home is fully owned by a Resident(s). Together, theResidentsowntheShip.”3

With ownership comes privileges; through a representational voting process, theship’sowner-residentsdeterminetheirowncourse.4AndwhatlawappliestolifeonTheWorld?Thevessel’sTermsofCarriage specify that eitherBahamiancourtsand lawsorU.S.law,dependingonthetypeofvoyageatissue,willgoverndisputesarisingoutofitsservices.5Itempowerstheship’sowners,manager,andcaptaintoregulateshipboardlifein considerable detail and, in accord with maritime custom, grants the captainextraordinarypowersinemergencycircumstances.6

Add it all up, and The World represents a self-owned and largely self-directedcommunity that chooses among many terrestrial sovereigns for a flag of convenience.Othersuchfloatingcondominiumshaveenteredplanning.7Allwilllikelyfollowthesameproto-seasteadmodelexemplifiedbyTheWorld:invokethelawsofterrestrialsovereignstoregulatesomeaspectsofshipboardlifewhilerelyingonship-specificrulestomanageday-to-daylife.

Whydoproto-seasteads seek terrestrial flags?Under international lawandcustom,every seafaring vessel must fly the flag of some terrestrial nation.8 Among its otherresponsibilities,theflaggingnationservesastheultimateauthorityinmattersofshipboard

lawandgovernance.9 In theory, a nation could dictate every detail of life on board theships that fly its flag, such as forbidding alcohol andmandating prayer.Matters do nottypicallygothatfar.Traditionalregistriesoftenimposeunion-friendlyrulesonthevesselstheyflag,though,occasioningcomplaintsfromownerswhowouldratherrunthingstheirownway.Othernationshaverespondedtothosecomplaintsbyofferingso-called“flagsofconvenience” that impose very little byway of controlling theway ships are run – too

little,criticssay.10

Howwould seasteads proper resembleTheWorld and other proto-seasteads? Likeextantresidentialvessels,seasteadswillprobablynotgenerateall their lawfromwithin.Instead,seasteaderswilllikelyincludeclausesintheircarriage,residency,andownershipagreements that invoke the laws of some larger legal system. And of course, liketraditionalvessels,seasteadswillregulateday-to-daymatterswithshipboardrulesandthecaptain’s commands, according toagreement andmaritimecustom.Legally speaking, itwillnotmatterifseasteadslookmorelikefloatingplatformsthanships.Thoughasalwaysthedefinitiongetsfuzzyatitsedges,internationallawclassifiesasa“vessel”anyfloatingstructures capable of being navigated from place to place – a class that includes oilplatforms,unpoweredbarges,andpresumablyseasteads.

Unlikemereproto-seasteads,seasteadsintheirfullestflourishwillflyself-generated,seasteading flags. That is not a possibility as of yet; seasteads would likely needsubstantial populations before they could begin to take on the attributes of sovereignty.Butifeventstranspireasprojectedlaterinthischapter,seasteadswillatleastwingreaterfreedom to choose their own laws than mere proto-seasteads, bound as they are toterrestrial sovereigns,canenjoy. Ideally, thatwould includea flaggingpowerborrowed,under supervision and for a fee, from the host country, administered by and forseasteading communities. Details about that scenario follow in the following sections.First,considersomeoptionsforseasteadself-governance.

3GovernanceonSeasteadsHow will seasteaders govern themselves? Perhaps they will follow The World andstructure themselvesas floatingcondominiums,wherein residents own their cabins, payfees in support of common areas and services, and exercise democratic control of theship’sitineraryandgeneralpolicies(vestingimmediatecontroloftheshipinthecaptain’shands).Orseasteadersmightfindthat,asinmarinas,theirwaterbornecommunitiesworkbestwhenasingleowneroverseesmanytenants,bothlongandshortterm.11Combiningthose approachesmight put seasteaders in floating residential cooperative corporations,ownedandmanagedbytheirtenant-passengers.Thatmodelhasalreadyfoundsuccessinprojects likeCo-OpCity, a residential community in theBronxofNewYorkCitywithmore thanfifty thousandowner-leaseholdersand itsownschools,shops,offices,streets,parks,andhousesofworship.12

Suffice it to say thatwhen it comes to thegovernanceof theirvessels, seasteaderswillenjoymanypromisingthoughstillnotfullytestedoptions.13Nobodycanorshoulddecideforallseasteaderswhatmodelofgovernancewillworkbest.Eachseasteadwillgettochooseforitself.Somewillfail.Some,maybe,willthrive.Andastheythrive,theywillchange, colonizing theenvironmentnewlyopened to seasteaderswhilegrowing in size,complexity,andself-sufficiency.

4Seasteads’StandinginInternationalRelationsSuppose,likeaunicornsteppedfromthepagesofafairytale,aseasteadsuddenlypoppedupinthemiddleoftheocean,bobbingaroundfreefromlegalbondstoanynationstate.Whatkindofstatuswould thesparklynewseasteadhave in its relationswith terrestrialsovereigns?Onecouldfairlypegthestatusofthebabycommunityas…low.Verylow.Thebelowzerokindoflow.

Rightnow,aso-calledself-flaggedseasteadwouldhaveeffectivelynostatusatallininternationallaw–or,moreprecisely,nostatusdifferentfromwhatterrestrialsovereignsaffordtoanyunflaggedoceangoingvessel.Theyregardsuchvesselsasinherentlysuspectaspresumptivepirate,smuggler,illegalfisher,orotherenemyofcivilization.Internationallawrequiresalloceangoingvesselstoflytheflagofasupervisingnationalstate.Wherewould that put a seastead trying to run solo in its relationswith terrestrial sovereigns?Withsunkenprospects,onemightsay.

Perhaps theworld is nomore ready for a seastead than it is for amagical hornedhorse.Suppose,though,thatseasteadersworkedtheirwayuptoself-flaggingorthat,asapreliminary to that ultimate goal, they administered flagging powers on behalf of afriendly terrestrial sovereign, subject to its oversight, and on sufferance of continuinglicensingfees,therebycreatingaflagbyandforseasteaders.Eventhen,seasteaderswouldnotgettorulethemselvesastheyaloneseefitexceptontheopenocean(andperhapsintheDeepBluezonesdescribedlaterinthechapter).Largeandveryinterestingpartsoftheglobe–partsbothclosetoshoreandpartsfarfromsightofit–fallunderthefullorpartialcontrolofterrestrialnationstates.

For seasteads as for all oceangoing vessels, therefore, self-governance varies fromplacetoplace.Generallyspeaking,underinternationallaw,navigablewatersfallintooneof three types: inland waters, territorial waters, or the high seas. Terrestrial sovereignsexercisedifferentamountsandkindsofcontrolovereachtype.Thehighseasthemselvesinclude areas subject to varying levels of sovereign control. These run, in order ofdeclining influence: contiguous zones, exclusive economic zones, and the seabeds ofcontinentalshelves.Howmuchseasteaderswouldhavetocedetoterrestrialpowerswoulddependonwhichkindofnavigablewaterstheysailedandwhattheydidthere.

Inlandwaters,enclosedbyanationstate’slands,suchasriversorprotectedbays,fallunderthesamecomprehensivesovereignpowersthatapplytoitslands.Seasteadssailingahostcountry’s inlandwaterswould thereforebydefaulthave thesame legal statusas,say,aCanadianrecreationalvehicledrivingthepublichighwaysoftheUnitedStates.Ifitflew no flag or one not recognized by patrolling officials, a seasteadwould have evenfewer privileges than a Canadian-registered vehicle on U.S. roads. To the local coastguard,anunflaggedseasteadwouldhaveabout thesamestatusasanunlicensedvehicledrivingpublicstreets:suspectassuchandsubjecttoarrest,search,andseizureatwill.14

Territorialwatersabutanationstate’slandsandinlandwaters,bufferingthoseareassubject to unmitigated sovereignty from the ungoverned high seas. By convention andinternationalagreement,andsubjecttomodificationintightspots,territorialwatersextend12 nautical miles (about 14 terrestrial miles by U.S. statute, or 22 kilometers) from anationstate’s baseline (typically, the nearest shore’s low-watermark).15 Jurisdictionallyspeaking,thesedifferlittlefrominlandwaters.Theterrestrialsovereigncontrolsthemtothefullestextentallowedbyitswill,ability,andrespectfor international law.Also,andnotably for present purposes, international law limits terrestrial powers from interferingwiththeinnocentpassageofdulyflaggedships.16

Thatlimitationonthepowerofterrestrialsovereignswouldhardlygiveseasteadersthe right to loiter in territorial waters; innocent passage “shall be continuous andexpeditious,”cautionstheConventionontheLawoftheSea.17Querywhetherseasteaderscouldevengoabouttheirnormal,everydaywaterborneliveswhileintransitacrosshostileterritorialwaters;theConventiondeniestheprotectivelabel,“innocent,”toany“activitynothavingadirectbearingonpassage.”18Absent theconsentorneglectof the relevantterrestrial nation, therefore, seasteaders should not expect to anchor long, if at all, interritorialwaters,andmightwellexpecttohavetoputtheirlivesonholdwhileinnocentlypassingthroughthem.19

Beyond territorial waters, absent special conditions, a terrestrial sovereign’scontiguouszoneextendsyetanother12nauticalmiles.20There,aclaimantstatecanacttopreventorpunishviolationsof lawspertaining to its territorialwaters closer to shore.21

The U.S. Coast Guard might within its contiguous waters detain a ship suspected offishing illegally within the territorial waters of the United States, for instance, whilegrudginglytoleratingthesamefishinginthosecontiguouswaters.Sogoestheory,atany

rate.Far fromshore,onchoppyanddarkseas, in theconfusionofchase,perhapsotherresults might obtain. At some point, though, even the sovereign powers of the UnitedStateswane.Theworldstillhasinternationalwaters.

Application of these rules of international law to seasteaders is both relativelystraightforwardandnotveryencouraging: If theypass throughcontiguouswatersundersuspicion of violating a terrestrial sovereign’s laws in adjoining territorial waters,seasteaders should expect trouble.22 That could well force seasteading vessels – thoseofferingsurgicalproceduresnotallowedbytheU.S.FoodandDrugAdministration, forinstance– to keepwell away fromcertain ports.But true seasteaders shouldhave littleproblemwiththat.

Beyond thecontiguouszonecome thehighseas.Here, seasteadersmight transitorfloatwithimpunity,solongastheyflyrecognizedflagsandpresentnohazardstotraffic.Whetherseasteaderscanexploitnaturalresourcesonthehighseasdependsonstillothercomplicatingfactors,however.

Beyondanationstate’scontiguouswatersmayextendanexclusiveeconomiczone(EEZ)reachingupto200nauticalmiles(about200statutemilesor370kilometers)fromthe relevant baseline, be it the shore or some legal equivalent.23 Therein, the UNConvention’sCovenantoftheLawoftheSea(UNCLOS)affordscoastalstatessovereignrights“forthepurposeofexploringandexploiting,conservingandmanagingthenaturalresources,whetherlivingornon-living,ofthewaterssuperjacenttotheseabedandoftheseabed and its subsoil, andwith regard to other activities for the economic exploitationandexplorationofthezone,suchastheproductionofenergyfromthewater,currentsandwinds.”24

Whetherseasteadersoffendedthosepowerswoulddependontheiractionswhile inanEEZ.Merelypassingthroughshouldrousenoobjections.Seasteaderswhofishormine(extract minerals not lay floating bombs) within the EEZ of a claimant coastal state,however, might face boarding, inspection, arrest, and judicial proceedings.25 Querywhether seasteaderswouldalsoneedpermission togeneratepower fromsolar,wind,orwater-based resources; the passage from the UNCLOS quoted above suggests theymight.26

Notably for seasteaderswhomightwant to sinkdown roots, so to speak, a coastalstatehastheexclusiverighttobuildartificial islands, installations,andstructureswithinitsEEZ.27Similarly,but separately,acoastal statemayenjoycertainexclusive rights toexploit themineralandothernonliving resources in the seabedandoceansubsoilof itscontinental shelvesup to350nauticalmiles (about403statutemilesor648kilometers)offshore.28TheConventionaffordsnoexcuseforasovereigntointerferewithseasteadersmerelyfloatingabovethecontinentalshelf,however–quitetheopposite.29

Finally,we reach thehighseasabove theocean floorbeyondanysovereignclaim:the Area. Here, vessels find as much freedom from terrestrial sovereigns as ever theyallowonEarth.Whichistosay:notmuch,really.

Under establishedprinciples of international law, once vessels reach the high seas,they generally fall under the exclusive jurisdiction of the issuers of such flags as thevessels fly.Registeryour seasteadingvesselwithPanama, for instance,andon thehighseasitwouldbealmostasifyousailedonapieceofthatsovereign’sterritory.30Thoughwith important exceptions, this protects a vessel from interference by other sovereigns,includingadutybytheflaggingcountrytoassumejurisdictionovertheship.31Asnotedearlier, that constrains both the laws applicable on board and, to a lesser degree, thepermissibleformsofgovernance.

5SpecialJurisdictionsforSeasteading:SeaZonesAs documented elsewhere in the book, special economic zones have in recent decadesspreadacrosstheglobe,growinginnumberandsophistication.Thesuccessofland-basedspecialjurisdictionssuggeststhattheymightworkonwater,too.Supposeforinstancethata host country wanted to encourage aquaculture, tourism, and other “blue economy”industrieswithin a special jurisdiction designed for floating communities – a SeaZone.Howwouldthatwork?

The host would first create a land-based Anchor Zone – a special jurisdictiondesigned to serve as an interface between the local host and a larger Floating Zone tofollow.Itwouldthusserveasbothaphysical transitionszone,betweenearthandwater,andalegalone,betweenthehost’sdefaultlawsandtheSeaZone’sspecialrules.BoththeAnchorandtheFloatingZoneswould,likeSEZselsewhereintheworld,escapetheusualburdensofotherwiseapplicabletaxesandregulations.Ideally,inthefashionofHonduranZEDEs,32aSeaZonewouldalsoofferbroadexemptionsfromlocallawsandconsiderableautonomy.

The Hondurans ZEDEs set another good example: far from handing out publicbenefits to private parties, the ZEDE system requires zones to pay for the specialprivileges that they enjoy. Seasteaders might find it easier to convince a terrestrialsovereigntohostaSeaZoneifthey,too,promisedtopayaleaseorconcessionfeetothehost nation. These ongoing payments might, for instance, aim to ensure that the hostgovernmentsuffersnonetlossontaxesfromareaswithinthespecialjurisdiction,perhapsalsomaking provision for larger payments in the event of an unexpected boom,whichmightoverburdenlocalinfrastructure.Itishardtosaynotoadealthathasnodownsideriskandtheprospectofconsiderableupsidegain.

ThesecondstageoftheSeaZonewouldentailthecreationofalargelyself-managedfloatingislandcommunity.Thefloatingplatformsthatmakeuptheislands,aswellasitsbroadercommunityofvessels,wouldeitherflyflagsdesignedbythehostnationtosuittheir particular needs or, better yet,manage themselveswith the host’s oversight usingdelegatedpowers.Thetermsofthatandotherinstitutionalarrangementswouldofcoursehave toconformto thehostcountry’sconstitutionand laws.Oneormoreagreements–

contracts, licenses, concessions, leases, sales, and so forth – would further define therelationshipbetweenthehosttheSeaZone.

Tocreateanespeciallysuitableenvironmentfornurturingandhostingseasteads,theSeaZonewould ideally include an area simulating the high seas, legally speaking. Thissortof“DeepBlue”zone(sonamedafterthecolorofthedeepestoceans)wouldimposelittle security risk to the host, as only specially flagged seasteaders would enjoy itsprivileges.Atthesametime,thearrangementwouldgiveseasteadersaprotectedharbor,legallyandliterallyspeaking,inwhichtogrowtheirfledglingcommunities.

It makes for a lovely picture. The host country offers protected waters for theembryonic seastead. Like a coral polyp, the fledgling community grows, enriching itsenvironmentandattractingstillmorelife.Justasareefgeneratesaswirlingnetoflife,theSeaZonestimulateseconomicgrowthinnearbycommunities.TheAnchorZonekeepstheseasteadersfromdriftingaway;theFloatingZonepreparesthemfordeeperwaters–andtheirultimatedestiny.

Theseasteaderscreate,raise,andfinallyreleasetheirchildren,free-floatingandfullyself-governingseasteads,intothewide-openspacesoutsidetheprotectionsoftheirhomereef. These, the first genuine seasteads, colonize the oceans. Other hosts create otherSeaZones,andseasteadingvesselstravelbetweenthem,orcongregateinmid-oceangyres,shelteredwithin floatingbreakwaters.Anewkindofgovernmentarises,born inEarth’slastfreeplaces,fatedtocarryhumanstonewfrontiers.

Inthatnearpossiblefuture,seasteaderswouldmaturetothepointofflyingtheirownflagsandfaceterrestrialsovereignsasequalsininternationalrelations.Otherstoriescantellofotherfutures,granted.Somemightdoomseasteaderstoremainforeveranchoredtoterrestrialmasters.Humanswill fall far short of the stars if they cannot shake off theirearthlychains,though.Self-governedseasteadsofferatrialrunforgranderthings.JustastheDeepBlueZonewould train seasteaders for lifeon theopenocean, theopenoceanwould train steasteaders for life in space.We cannot knowwhat will come out of thefervent of their invention, but we can rest assured that spacesteaders will find inseasteading lotsofusefulmodels for formingharmoniouscommunities,stretchedacrossvastspaces,thatmustrelyontechnologyandtheirwitstosurvive.

Nobodycanknowwhat the futurewill bring,of course.But recent evidencegivesreason to think that it will bring more seasteading. Tomorrow, as of this writing, thePresidentofFrenchPolynesiawillsignaMemorandumofUnderstanding(MOUfromtheEnglish;Recueild’Intentions Réciproques in the original French)with The SeasteadingInstitute.33Chapter3.8 offers a firsthand account of the drafting and negotiation of theMOU,andthepublicwillsoonlearnmoreaboutitscontents,sohereitsufficestoobservethat seasteaders may finally have found a safe harbor for creating the vessels andinstitutionstheyhopetosomedaysetfree.

6Conclusion:LikeHerdingUnicornsThischapterhasdiscussed the law,governance, and international relationsof seasteads,drawing both on extant practices and extensions of recent trends. The picture, in sum:Seasteads look likely toevolvefromproto-seasteads, floatingcondominiumsflaggedbyterrestrial sovereigns, into largely independent communities, hosted by SeaZones. Thevessels in these communities will sail under flags either created specifically forseasteading under powers delegated from the host nation or created under a registrymaintainedbyaself-governedcommunityofvessels.Thatwillgiveseasteadersaformofgovernmentworthyofconqueringtheoceansandbeyond.

Seasteaderswouldthenenjoyalmostcompletelibertytochoosetheirownlawsandgovernthemselvesastheyseefit.Theseasteaders’bespokeflagswouldsuittheparticularneedsoftheirwanderingcommunitieswhilegivingthemthestatusofequalsintheeyesofterrestrialsovereigns.Likesmallcountries,theywouldfacepressurefromlargercountriesandinternationalorganizationstoconformwithabroadsetofnorms;sovereigntydoesnotmeanirresponsibility.But,finally,theseasteadinallitsglory,andwithallitslimitations,wouldfinallygraceEarth’soceans.Unicornsalonewouldthenremainpurelyimaginary.

*ThematerialinthischapterderivesinpartfromTomW.Bell,Law,Governance,andInternationalRelationsofSeasteads,inS EA S TEAD S : F OUND I NG SMALL S OC I E T I E S

—OPPORTUN I T I E S , R I S K S , A ND P REREQU I S I T E S FOR S UCCE S S159(VictorTiberiused.,forthcoming2017).

1Seegenerally,J OE QU I RK AND PATR I F R I EDMAN , S E A S TEAD I NG : HOW F LOAT I NG

NAT ION S W I L L R E S TORE THE E NV I RONMENT, E NR I CH THE POOR , C URE THE S I CK , A ND

L I B ERATE HUMAN I TY F ROM POL I T I C I AN S(2017).

2Sophie-ClaireHoeller,PeopleAreBuyingSecondHomesonCruiseShips(Aug.10,2015,2:35PM),BU S . I N S I D ER,www.businessinsider.com/what-are-condo-cruise-ships.

3TheWorld–FrequentlyAskedQuestions,WORLD (Apr.2 0 1 6 ) ,http://aboardtheworld.com/wp-content/uploads/2016/04/FAQ_April2016.pdf.

4Id.at1.

5TermsofCarriage,WORLD ,http://aboardtheworld.com/wp-content/uploads/2015/12/Terms-of-Carriage-2015.pdf(lastvisitedJan.3,2017).

6Id.para.22.

7Hoeller,supranote2.

8DeirdreM.Warner-Kramer&KristaCanty,StatelessFishingVessels:TheCurrentInternationalRegimeandaNewApproach,5OCEAN & C OA S TA L L . J .227,230–31(2000).

9UnitedNationsConventionontheLawoftheSeaart.94(2),Dec.10,1982,1833U.N.T.S.397[hereinafterUNCLOS].

10RobertNeff,FlagsThatHidetheDirtyTruth,A S I A T IME S ONL I NE(Apr.20,2007),www.atimes.com/atimes/Korea/ID20Dg03.html.

11BRAD TAYLOR , THE S EA S TEAD I NG I N S T. , GOVERN I NG S EA S TEAD S : A N OUTL I NE O F

THE O P T ION S13–18(2010),http://seasteadingorg.wpengine.com/wp-content/uploads/2015/12/Taylor_2010_GoverningSeasteads.pdf.

12ElsaBrenner,EverythingYouNeed,inOneGiantPackage,N . Y. T IME S,Apr.6,2008,www.nytimes.com/2008/04/06/realestate/06live.html?pagewanted=all&_r=0.

13Forfurthergovernancemodels,thoughnotlifestyles,seasteadersmightconsidertheexamplesdescribedinP ETER T. L E E SON , THE I NV I S I B L E HOOK : THE H I DDEN

ECONOM IC S O F P I RATE S(2009).

14Warner-Kramer&Canty,supranote8,at230–31.

15UNCLOS,supranote9,art.3,5.

16Id.art.17.

17Id.art.18(2).

18Id.art.19(2)(1).

19Id.art.18(2).

20Id.art.33(2).

21Id.art.33(1).

22O.ShaneBalloun,TheTrueObstacletotheAutonomyofSeasteads:AmericanLawEnforcementJurisdictionoverHomesteadsontheHighSeas,24U . S . F. M AR . L . J .409,440(2011–12).

23UNCLOS,supranote9,art.57.

24Id.art.56(1)(a).

25Id.art73(1).

26FrancescaGalea,ALegalRegimefortheExplorationandExploitationofOffshoreRenewableEnergy,25OCEAN Y . B . O N L I N E101(2011).

27UNCLOS,supranote9,art.60(1)(a)-(b).Suchstructuresdonotresettheclaimingsovereign’sborders,incidentally.

28Id.art.76,77.

29Id.art.78.

30Id.art.92(1).

31Id.art.94.

32SeeChapter1.5.

33Conseildesministresdu30novembre2016,Signatured’unprotocoled’ententeentrelaPolynésiefrançaiseetTheSeasteadingInstitute[SignatureofaMemorandumofUnderstandingbetweenFrenchPolynesiaandTheSeasteadingInstitute],LA

PRÉ S I D ENCE D E L A POLYNÉ S I E F RANCA I S E(Nov.30,2016),www.presidence.pf/index.php/cm/3265-conseil-des-ministres-du-30-novembre-2016.

PartII◈

Theory

2.1

TheCenteroftheLaw*◈

1Introduction:_____-centricLaw?Wherethecenterofthelaw?

Thatmightsoundlikeatrickquestion.Thelawisnotaphysicalthing,afterall.Ithasnoedges,muchlessacenter.Thelawmusthaveasortofcenter,though,sinceobserversclassifyitintotwoverybroadtypes:monocentriclawandpolycentriclaw.

Monocentric law has a single uniform authority – typically, a nation state – at itscore.Powercomesfromthetopdown,fromthecenterout.Polycentriclawcomesfrommanydifferent sources of authority,which interact in an unplanned anddynamic order.Powercomesfromthebottomup,fromsmallorganizationssuchaschurches,clubs,andbusinesses,andflowshorizontallythroughanetworkofconnections.

Thoserepresentsomewhatidealizedformulations,ofcourse.Inpractice,monocentricandpolycentricfeaturesappearinvaryingdegreesinalmostalllegalsystems.Section2ofthisbriefchaptercontraststhosetwokindsoflaw,butdoesnotcastthemintermsofgoodand bad. Whether a legal order has one authority at its center or many centers ofauthorities interacting as a whole matters less than consent. Why? Because consentmeasures the justifiabilityof the exerciseof coercive forceby a systemofgovernment.Thechapterthusconcludesinfavornotofmonocentriclaworpolycentriclaw,butofthekindoflawthathasindividualchoiceatitscenter:autocentriclaw.

2MonocentricversusPolycentricLawWhenmostpeople thinkabout the law, they thinkaboutpolice, judges,courts, lawyers,prisons,rules,andalltheothermachinerythroughwhichamusculargovernmentenforcesitswill.TheythinkaboutTheMan–orperhaps,inrecognitionofthesexismimplicitinthatphrase–thePerson.Here,though,monocentriclawsuffices.

Monocentric lawoffers a rough-and-readyguide tohownation states execute theircode. With regard to many important issues, one rule has all the answers. Considercopyright law: authorized in the Constitution and enacted into federal statute, it aloneregulates theprivilegesafforded toauthorsoforiginal fixedexpressions,preemptingalllesser laws to the contrary.1 There can be no doubt about the source of copyright law(thoughitsexactcontentremainsanother,moredoubtfulmatter).

Mostpeopleunderstandthebasicsofmonolithiclaw.Indeed,theyoftenassumethatitistheonlykindoflawpossible.Butwhileithasanimportantroletoplay,monolithiclawisnottheonlyforcegoverninghumanbehavior.Polycentriclawhasanimportantroletoplay,too.

Lawarosepriortothenationstate.FriedrichA.Hayeklocateditsoriginsinthesamesortof inherentlypolycentric, evolutionaryprocess that shapes species.Not all typesofbehaviorsupportsociallife,afterall.Some–likeviolence,theft,anddeceit–destroyit.“Society can thus exist only if by aprocessof selection rules have evolvedwhich leadindividuals tobehave inamannerwhichmakes social lifepossible,”explainedHayek.2

Farfrombeingissuedbyacentralauthority,theserulesdevelopedbeforecourts,writtenlaw,andeventheconceptoflawitself.Indeed,thelawarguablypredateevenhumans.Weobservesomethinglikeitinnature,afterall.AsHayeknoted,“Atleastinprimitivehumansociety,scarcelylessthaninanimalsocieties,thestructureofsociallifeisdeterminedbyrules of conduct which manifest themselves only by being in fact observed.”3 Acrossfencesinsubdivisionsthroughout theland,birdschirpanddogsbarkindefenseof theirownkindsofpropertyrights.

To describe the polycentric, customary legal systems that arose prior to the nationstateasprimitivewouldnotdothemjustice.Well-documentedexamplesincludethelegal

systems of theAnglo Saxons,4Medieval Iceland,5 Celtic Ireland,6 the Comanche,7 andmanyothercustomarysocieties.8BruceL.Benson,surveyingtheseandothercustomarylegalsystems, identifiedsuchadmirablecommonfeaturesas respect forproperty rights,standardizedproceduresforpeacefullyresolvingdisputes,strongincentivesfortheguiltyto yield to prescribed punishments due to the threat of ostracism, and legal change via

gradual,decentralized,evolutionaryprocesses.9

PolycentricprocessespervadeWesternlegalhistory.Thenationstatearoseonlyaftermanylongstrugglesbetweenmanycompetingandoverlappingjurisdictions.10Eventhen,polycentriclawcontinuedtothriveinandamongmonolithicgiants.Thelawmerchant,forinstance, sprung up to help medieval traders navigate the variegated jurisdictions theyserved,aroleitplaysininternationalcommercetothisday.11

Englandproved especially fertile ground for polycentric law.Competitionbetweencourt systems there drove the development of the common law, a great boon to thatcountryandthroughittheworld.12HavinganabundanceoflegalauthoritieshelpedkeeptheEnglishpeoplefree.WhenintheVictorianErathestatelegalsystembeganfailingtoservethepeople’sneedsforefficientadjudication,forinstance,theyfoundreliefinprivatearbitrationandtherevivalofoldjurisdictions.13

EnglandmusthavebequeathedatendencytowardpolycentricitytotheUnitedStates,which hosts a rich variety of competing jurisdictions. Each federal, state, county,municipal,andmilitarycourtsystemhasitsownsubstantiveandproceduralrules–rulesthatoftencome intoconflict.But thesepolitical jurisdictionsbarely scratch the surface.Private-sectorlegalsystemssprungupamongearlyPuritan,Quaker,andDutchsettlers;inthemanyvariousnineteenth-centuryutopian communes; among thenewly freed slaves;among the Mormons; among the Chinese, Jewish, and other immigrant communities;betweenmerchants;andintheserviceoflabor/managementcouncils.14Pioneersinwagontrains,miningcamps,andnewsettlementsbeyondthereachofextantauthoritiescreatedtheirownlegalsystems.15

Privately produced law continues to thrive in the United States and gives everyindication of growing stronger. Americans have a special knack for forming privateorganizations,eachofwhichgenerates itsownprivate law.LonFuller,whodefined thelawas“theenterpriseofsubjectinghumanconducttothegovernanceofrules,”explainedthat

thisenterpriseisbeingconducted,notontwoorthreefronts,butonthousands.Engagedinthisenterprisearethosewhodraftandadministerrulesgoverningtheinternalaffairsofclubs,churches,schools,laborunions,tradeassociations,agriculturalfairs,andahundredandoneotherformsofhumanassociation…thereareinthiscountryalone“systemsoflaw”numberinginthehundredsofthousands.16

Many of the organizations on Fuller’s list provide law in areas that the state hasoverlooked or willfully ignored. In recent years, however, privately produced law hasgrownmost rapidly in areaswhere it competes directlywith nation states: in resolvingcommercialdisputes.17

Fewpeoplehavetroublenoticingmonocentriclaw.Ithascourtroomsandbadgesandguns.Itisnotaseasytonoticepolycentriclaw.Andyet,onceyoulearntolookforit,yousee iteverywhere.And themoreyousee it, themoreyouappreciate itspower toshapeandsustainourcivilization.

Exceptwhentheycompletelyimprisontheirsubjects,nationstateshavetocompeteagainsteachotherforfinancialandhumancapital.Thatsomewhatcheckstheirexcesses.Townscompetewithcommoninterestdevelopmentstoprovidecivicliving,mainstreetscompetewithmallstoprovideshoppingenvironments,religiousinstitutionscompetewitheachother toprovidemoral instruction, and so forth.Becauseeachof these institutionssubjectshumanconducttothegovernanceofrules,eachprovidesaformoflegalsystem.Somecompete;allinteract.Together,likeanecosystemoflivingthingsgreatandsmall,theycreatealarger,unplanned,polycentricorder.

AsChapters1.2and1.3document,theworldhasbecomemorepolycentricinrecentdecades. Special jurisdictions and common interest developments have grown morecommon,large,andsophisticated.Thosetrendslooklikelytocontinue,moreover,judgingfrom theplansdescribed inChapter1.5. Is that agood thing? Inmostmarkets,makingsupplierscompetetendstoredoundtothebenefitofconsumers.Assumingthatprovesjustas true in the market for governing services as in other markets, the increasingpolycentricityofthelegalsystemshouldgivecitizen-customerseverywheresomethingtocelebrate.

But polycentricity is not good in and of itself. More variety is not always better.Transacting across jurisdictional boundaries generates transaction costs, for instance.18

Sometimes,havingeverybodyunderthesamelawmakesiteasiertogetthingsdone.And

how polycentricity happens matters, too. Does it come about because a peaceful andprosperous republic has fallen into isolated and warring parts, because a union ofsovereigns has calmly disentangled its functions while maintaining civil relations, orbecauseanationstatehaschosentorelaxsomeofitsordinaryconstraintsinaspecifiedregion?TheanswertothatquestioncouldmakethedifferencebetweenanotherDarkAgeornewandbetterdays.

3Conclusion:ForAutocentricLawWikipediacreditsmewithcoiningpolycentriclaw.19 Itwouldseemrudehardlybecomemetocontesttheclaim,givenhowoftenIrelyonWikipedia.Ibeganpublishingworksonpolycentriclawevenbeforestartinglawschool.20Manyotherpapersfollowed,leadingtothis book. This book is not a paean to polycentric law.Nor is it a polemic against themonocentriclawofnationstates.Instead,itpresentsmonocentricandpolycentriclawastwomanifestationsoffundamentallythesamephenomenon:thelaw.Thequestionisnotwhich predominates, but how they interact and to what end. The structure of a legalsystem – whether its power issues from one center or many, whether it dominates theenvironmentorsharesit–isnotasimportant,normativelyspeaking,aswhetherthelegalsystem’spoweroperateswith theconsentof those it touches. Insteadofmonocentricorpolycentriclaw,friendsofhumanityshouldseekautocentriclaw.

Theremainingchaptersinthisparttakeupthattask.Thenextone,Chapter2.2,takesamomenttoappreciatethecrucialrolethatconsentplaysinlegal,moral,andeconomicthinking.Chapter2.3revealsthegraduatednatureofconsentanditsroleinassessingthejustificationofgovernmentpower.Chapter2.4appliesthoselessonstoconstitutionallaw,creating a contractarian theory designed to maximize the consent of those subject toconstitutional government.These and other aspects of consent play a vital role in legalsystems that – whether monocentric, polycentric, or something in between – haveindividualchoiceattheircore.

*ThischapterderivesinpartfromTomW.Bell,WhatIsPolycentricLaw?FREEMAN

(Feb.26,2014),www.fee.org/the_freeman/detail/what-is-polycentric-law,andTomW.Bell,PolycentricLaw,7HUMANE S T UD . R E V.1(1991/92),http://osf1.gmu.edu/~ihs/w91issues.html.

1U . S . CON S T.art.I,§8,cl.8;17U.S.C.§301(a)(2012).

21FR I EDR I CH A . H AYEK , L AW, L EG I S LAT ION , A ND L I B ERTY: R ULE S AND ORDER44(1973).

3Id.

4J.E . A . J O LL I F F E , T HE CON ST I TUT IONAL H I S TORY O F MED I EVAL E NGLAND F ROM THE

ENGL I SH S E TTLEMENT TO 1 4 8 5(4thed.1961).

5DAV I D D . F R I EDMAN , THE MACH INERY O F F REEDOM(2ded.1989).

6S TUD I E S I N E ARLY I R I SH L AW(D.A.Binchyed.,1936).

7E.AdamsonHoebel,Law-WaysoftheComancheIndians,inLAW AND WARFARE183(PaulBohannaned.,1967).

8SeegenerallyE . A DAMSON HOEBEL , T HE L AW O F P R IM I T I V E MAN(1954).

9BRUCE L . B EN SON , THE E NTERPR I S E O F L AW: J U S T I C E W I THOUT THE S TATE21(1990).

10HAROLD J . B ERMAN , L AW AND R EVOLUT ION : THE FORMAT ION O F THE WE STERN

LEGAL TRAD I T I ON(1983).

11LEON E . T RAKMAN , THE L AW MERCHANT: THE E VOLUT ION O F COMMERC I AL L AW

(1983).

12ToddJ.Zywicki,TheRiseandFallofEfficiencyintheCommonLaw:ASupply-SideAnalysis,97NW. L . R E V.1551(2003).

13H .W. A RTHUR S , ‘W I THOUT THE L AW’ : A DM IN I S TRAT I VE J U S T I C E AND L EGAL

PLURAL I SM I N N I N ETEENTH - CENTURY ENGLAND(1985).

14J EROLD S . A U ERBACH , J U S T I C E W I THOUT LAW?(1983).

15TERRY L . A NDER SON & P E TER J . H I L L , T HENOT S OWILD , W I LD WE ST(2004).

16LON L . F U LLER , THE MORAL I TY O F L AW124–25(rev.ed.1969).

17EDWARD P E TER S TR I NGHAM , P R I VATE GOVERNANCE : C REAT I NG ORDER I N

ECONOM IC AND S OC I AL L I F E(2015).

18WilliamM.Landes&RichardA.Posner,AdjudicationasaPrivateGood,8J . L E GA L

S TUD . 235(1979).

19PolycentricLaw,WIK I P ED I A ,https://en.wikipedia.org/wiki/Polycentric_law(lastvisitedDec.17,2016).

20Bell,PolycentricLaw,supranote*,at1–2,4–10.

2.2

WhyConsenttoConsent?*◈

1Introduction:TheEasyCaseforConsentWhatdoyouthinkaboutconsent?

Mostpeoplehaveaprettypositiveresponse to it.Anyword thatevokesnotionsofagreement, of cooperation, and of social harmony is not likely to rouse anger or fear.Everybody,itseems,likesconsent.

What everybody likes, though, risks becoming something that everybody takes forgranted.Consentisnotjustanuninteresting,anodyne,feel-goodconcept.Itmeritsrespectand sustained attention. This chapter takes a moment to appreciate consent in full, todemonstratewhyitdeservesacentralplaceinanytheoryofgovernment.

Thischapter’sstudyofconsentrevealsmanyandgoodreasonstovalueconsent.Thenext three sections discuss the important role that consent plays in legal, moral, andeconomicthought.Granted,noneofthesedisciplinestreatsconsentasitssoleorhighestvalue.All,however, regard itassomethingpossessingextraordinary–almostmagical–power.Whateveryouthinkaboutconsent,youmightwanttothinkaboutitmore.

2TheLegalValueofConsentConsentplaysaveryprominentroleinthelaw–somuchsothatthepointhardlyneedselaboration. The common law regards consent as a necessary ingredient for creating abinding contractual bargain, for instance.1 Or consider thematter in the negative: tortssuchasbattery2ortrespass3stemfromunconsensualtransactions.

Especiallyinthelawofcontracts,consenthasacarefullydefinedmeaning.Commonlawcourtsdonottakeclaimsofexpressconsentatfacevalue;instead,theyexaminethemfor duress,4 undue influence,5 incapacity,6 fraud,7 mistake,8 misunderstanding,9

unconscionability,10 or other invalidating factors.Tort law, in contrast, tends tomanagewith amore basic, even atavistic notion of unconsent; fact-finders evidently have littletroubletellingwhenaplaintiffdoesnotlikesomething.11

The law of contracts and torts tends to regard consent objectively, as somethingestablishedornegatedbyobservableproofs,suchasaparty’smanifestations.12Inthat,thecommon law shares the skepticism of economists who limit themselves to measuringrevealedpreferences.13Courts hesitate to base judgments onwhat parties impliedlydidagree to or hypotheticallywould have agreed to, relying on such comparatively weakproofs onlywhen express consent fails and salient injustice looms as the alternative.14

Even then, the common law tends to stick to such general and objective standards ascustomarypractices15orthereasonableperson.16

3TheMoralValueofConsentConsentplaysaprominentroleinmoralreasoning.Eachofthethreemajortypesofmoraltheory – consequentialist, deontological, and aretaic (also known as virtue theory) –recognizeconsentasatleastaprimafaciegood.Thatishardlynews;mostpeoplealreadyrecognizeconsentasanimportantfactorinmoralreasoning.Butconsentdoesmorethanmaximizegoodconsequences,orprotectrights,orcultivatevirtue.Apartfromthose,asamatteroflogic,consentcanclaimthesupportofanirrefutabletranscendentalargument.

Consequentialistmoral reasoningaims tomaximizesomegood,suchaspleasure,17

happiness,18conformitywithrules,19orsocialwealth.20Consentplaysanimportantrole,ifnotacentralone,ineachofthose,butconsequentialistslimitthemselvestocelebratingconsentasausefulmechanismforpromotingsomeother,highergood.21

Deontological arguments establishmoral side-constraints on action – rights – thatmarkoffsomehumaninteractionsasatleastpresumptivelywrong.22Rightsandconsenthaveacloserelationship.Consenthasthepowertoworkmoralmagic,excusingactsthatdeontological moral theory would otherwise condemn.23 Consent can turn assault andbatteryintoaboxingmatch,forinstance.

Aretaicmoral theories value virtue.Agoodperson, in that view, evinces habits ofrightaction,suchasmoderation,industry,civility,andgenerosity.24Thankstotheirregardfor virtue, aretaicmoral theories also value consent. The virtue of justice, for instance,constrainsusfromviolatingothers’rightswithouttheirconsent.Moregenerally,consentplays a vital role in cultivating habits of right action. Virtue weakens, withered byinaction,whennotexercisedthroughfreedomofchoice.

Consequentialist, deontological, and aretaic moral theories circle around consent,showingitrespectwithoutgraspingitsfundamentalnature.Consent,unlikeotherputativeobjects of moral value, connects directly to argumentation. To engage in moralargumentation presumes the value of consent. Consent thus has an irrefutable claim tovalueinmoralarguments.

Didthatgotooquickly?Welcometophilosophy.Perhapsunpackingitabitwillhelp(evenifitdoesrequiresummoningthatgiantofcontinentalobfuscation,ImmanuelKant).

Kantfamously(foraphilosopher)usedthetranscendentalformofargumentagainstmetaphysical skepticism.25 He had no monopoly on the move, though; Epicurusreportedlyuseda transcendent formofargument thousandsofyears earlier26 and it hasseenother,lessprominentusessince.27

Howdoesatranscendentalargumentwork?Basically,itfindswithinanargumentaclaimessentialtotheargumentitself.Kantthusarguedthatyoucannotdoubtthattimeandsubstanceexistbecausethesethings,asnecessarycomponentsofreason,areessentialtodoubting.Ifyoudoubtthattimeandsubstanceexist,youjustprovedthattheydo.

Thetranscendentalargumentforconsentrunsasfollows:

1.Ajustificationaimstowintheconsentofitsintendedaudience.

2.Ifajustificationaimstowintheconsentofitsintendedaudience,thentheconsentitwinsprovidesthebestmeasureofitsvalueasajustification.

3.Therefore,ajustificationpresumesthevalueofconsent.

Like a judo throw, transcendental arguments can leave you wondering, “How did thathappen?”Aslow-motionreplaymighthelp.Thisargumentforconsent’smoralrelevancebeginswithatruismaboutthenatureofjustification.Askepticmightcallthisasupposedtruism,countering that justificationssometimesaimtomisleadtheir intendedaudiences,as when political leaders mislead gullible citizens by blaming foreigners for nativefailures.That sort of justificationdoesnot aimat anythingworthyofourmoral regard,however; it aims atwinning ignorant acquiescence through rhetoric and lies. Insofar aspropaganda,advertisements,andotherpersuasivedevicesrelyonfalsehoods,theycannotproperly bind those they sway.28 Sprinkling the argument above with “in good faith”should suffice to quell skepticism about the scope of justification, but doing so seemsunnecessary, given the general presumption of good faith in all binding moralcommitments.

The claim made in step two of the transcendental argument for consent’s role injustificationmight, like theclaimmade in stepone, strikemany readersas obvious.Aslong ago as Aristotle, philosophers have regarded the end, or telos, of a thing as themeasureof itsproper function.29On that reasoning, ifa justification (or,moreproperly,thepersonofferingthejustification)aimstowintheconsentofaparticularaudience,wecan judge whether or not the argument succeeds by measuring the consent that the

argument rouses. An aesthete might counter that other factors should enter into ourevaluation of a justification, such as grace or popular acclaim. But step two modestlydisclaimsanysayoverthosematters,insteadfocusingsolelyonajustification’sefficacy.And on that count, as step one established,we askwhether a justification haswon theconsentofitsintendedaudience.

Thethirdstepoftheargumentforthemoralrelevanceofconsentfollowsasamatteroflogicfromthefirsttwo.Evenhard-coreskepticsdonotchallengemodusponens,sotheargumentforconsentcouldperhapsendthere.First,though,adouble-check:Doesitmakesense to claim that consent has amoral value becausemoral arguments presuppose itsvalue?

If you answer “no,” then your refusal to consent to the claim invalidates itsapplicationtoyou.Nobodycanforceyoutovalueconsent.Yourunconsentprotectsyoufromhavingwordsputinyourmouth.Youremainfree,amongcivilizedandunprovokedpeople,todissenttoconsent.Whichyouwouldlike,right?Thusprovingconsent’svalue.Alternatively, to put a rougher spin on it, if you deny that consentmatters, you cannotlogically object if, falling in among brutes or provoking the ire of gentler folk, theydisregardyourrights.Whyshouldtheyheedtheprotestsofsomeonewhothinksconsenthasnomoralvalue?

But if you answer “yes,”when asked if consent has amoral value (becausemoralreasoningpresupposesthevalueofconsent),thenwecansmile,nod,andmoveon.

4TheEconomicValueofConsentThesupply/demandcharts sooftenseen ineconomic textsportrayexpresslyconsensualtransactions.Thosechartspresumethatsaleshappenwithoutcoercion,allowingeachoftheutility-maximizingparties towalkawayfromtheirexchanges relativelymorehappythan before. Only rarely do economists make a similar effort to portray unconsensualtransactions, such as battery or theft.30 This somewhatmonomaniacal focusmightwellpuzzlesomeonetrainedinthelaw,adisciplinethatstretchesfromcontractsbetweenfullyinformedequalstocriminalbattery.Whydoesconsentmattersomuchineconomics?

Fromitsoriginas thestudyofhouseholdmanagement,31economicshasconcernedchoice–specifically,howtochoosethemostefficientallocationofscarceresources.Butgood choices require good information.32 Consensual transactions, because they revealotherwise hidden preferences, draw forth the information necessary for maximizingeconomicefficiency.33Unconsensualtransactions,incontrast,offeronlyarelativelynoisysignalaboutparties’preferences,onethattendstoignorethevictim’spreferences.

Consent’spowertorevealpreferences,andthuspromoteefficiency,wouldnotmatterifwecould readminds.Butwecannot. Instead,eachpersonandassociationofpersonspossesses information that others cannot access easily, if at all. Consent draws thatinformationforth;economicsputsitintotheconvenientformofprices.

5Conclusion:HowCouldYouNot?This chapter tackled an admittedly easy job: answering, “Why consent to consent?” Itsreviewof the important role that consentplays in legal,moral, andeconomic reasoninggivestheanswer:Howcouldyounotlikeconsent?

Thisappreciationofconsentshowedthatwehaveverygoodreasonstochooseitasacentralorganizingfeatureofoursystemsofgovernment.Perhapsitisnottheanswertoalloftheworld’sproblems.Certainly,effectivegovernmentreliesondoingthingsthatevoketheoppositeofconsentinsomepeople,someofthetime.(Everprotestaspeedingticket?)Butonanyfairaccounting,consentrepresentssomethingofgreatvalue.Morethanguns,morethanlaws,consenthasamightypowertoshapesociallife.

*PortionsofthischapterderivefromTomW.Bell,GraduatedConsentinContractandTortLaw:TowardaTheoryofJustification,61CA S E W. R E S . L . R E V.17(2010).

1RE S TATEMENT ( S ECOND ) O F CONTRACT S§17(1)(AM . L AW I N S T.1981).Inrareinstances,contractlawalsoenforcesnonbargains.Eventhese,however,requireproofsofconsent.See,e.g.,id.§90(1).

2RE S TATEMENT ( S ECOND ) O F TORT S§13&cmt.d(AM . L AW I N S T.1965).

3Id.§158&cmt.c.

4RE S TATEMENT ( S ECOND ) O F CONTRACT S§175.

5Id.§177.

6Id.§14(infants);id.§15(mentalillnessordefect);id.§16(intoxication).

7Id.§§162–164.

8Id.§§151–154.

9Id.§20.

10Seeid.§208;§211(3).Seealsoid.§77.

11RE S TATEMENT ( S ECOND ) O F TORT S§892(1)(AM . L AW I N S T.1979).

12See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§17(1);id.§24;id.§38(2);RE S TATEMENT ( S ECOND ) O F TORT S§892(2);id.§892reporter’snotecmt.b(1982).

13SeeDAV I D D . F R I EDMAN,PR I CE THEORY: A N I N T ERMED I ATE T EXT25(2ded.1990).

14See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§208.

15See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§203(b).

16See,e.g.,RE S TATEMENT ( S ECOND ) O F TORT S§283(AM . L AW I N S T.1965).

17See,e.g.,GeorgeK.Strodach, T H E PH I LO SOPHY O F E P I CURU S72–85(GeorgeK.Strodachtrans.,1963)(describingandanalyzingtheEpicureanhedonism).

18See,e.g.,J OHN S TUARTMILL ,UT I L I TA R I AN I SM (GeorgeShered.,HackettPubl’gCo.2ded.1979)(1861).

19See,e.g.,J.J.C.Smart,AnOutlineofaSystemofUtilitarianEthics,inUT I L I TAR I AN I SM : F OR AND AGA I N S T3,9–10(J.J.C.Smart&BernardWilliamseds.,1973).

20See,e.g.,R I CHARD A . P O SNER , E CONOM IC ANALY S I S O F L AW15(3ded.1986).

21SeeLawrenceB.Solum,LegalTheoryLexicon042:Consent,LEGAL THEORY

LEX I CON ,http://lsolum.typepad.com/legal_theory_lexicon/2004/11/legal_theory_le.html(lastupdatedSept.18,2016).

22ROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A29(1974).

23HeidiM.Hurd,TheMoralMagicofConsent,2L EGA L THEORY121,122(1996).

24See,e.g.,AR I S TOTLE ,N I COMACHEAN E TH I C Sbk.I,reprintedin2THE COMPLETE

WORKS O F AR I S TOTLE1729(JonathanBarnesed.,W.D.Ross&J.O.Urmsontrans.,1984)(c.384B.C.E.).

25Reasonnecessarilypresumesbothtimeandsubstance,Kantargued,thusputtingthelatterbeyondthescopeofmetaphysicalskepticism.IMMANUEL KANT, C R I T I QUE O F

PURE R EA SON120–28(NormanKempSmithtrans.,Macmillian&Co.2ded.1953)(1781).

26AdrianBardon,TranscendentalArguments,I N T ERNET E NCYCLOPED I A PH I L .(July13,2006),www.iep.utm.edu/trans-ar.

27See,e.g.,HANS - HERMANN HOP PE , A THEORY O F S OC I AL I SM AND CA P I TAL I SM :

ECONOM IC S , P OL I T I C S , A ND E TH I C S133(1989);H I LARY P UTNAM , R EA SON , T RUTH AND

H I S TORY 1–21(1981).

28See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§§162–164(AM . L AW I N S T.1981)(definingwhenfraudulentmisrepresentationsnegateacontract).

29AR I S TOTLE ,supranote25,at1729.

30See,e.g.,BruceL.Benson,PropertyRightsandtheBuffaloEconomyoftheGreatPlains,inS E L F - D ETERM INAT ION : THE O THER PATH FOR NAT I VE AMER I CAN S29,58–61(TerryL.Andersonetal.eds.,2006).

31SeeAR I S TOTLE ,POL I T I C S bk.I ,reprintedin2 THE COMPLETE WORKS O F AR I S TOTLE

1986(JonathanBarnesed.,B.Jowetttrans.,1984)(c.350B.C.E.).

32EjanMackaay,EconomicIncentivesinMarketsforInformationandInnovation,13HARV. J . L . & P U B . P O L’ Y 867,895(1990).

33RandyE.Barnett,AConsentTheoryofContract,86COLUM . L . R E V.269,282(1986).

2.3

UptheLadderofConsent*◈

1Introduction:FromBinaryConsenttoAnalogYesorno?

Agreeordisagree?

☺or☹?

Sometimesthereisnothingmoretosay.Lifepresentsanopportunity,youconsentornot, and the consequences follow. Itmakes for a pretty simple picture, as Figure2.3-1demonstrates.

Figure2.3-1.ConsentasaBinaryFunction

Butthatsimplepictureofconsentobscuresimportantdistinctions.Inbetween“yes”and“no”hidesaspectrumofanswerstolife’schoices.Inthegradualstepsthatgofromunconsent,throughimpliedconsent,uptoexpressconsent,governmentscanfindapathtoreform.Thischapterexplains.

ItbeginsinSection2byrevealingthemanyrungsintheladderofconsent,rangingfromvehementprotestat thebottomtoexpressagreementat thetop.Section3explainshowthesegradationsinconsentrelatetojustification(hint:theclosertoexpressconsent,the better). Section 4 describes the embarrassment that nation states encounter when

pressed to justify their coercive enforcement of the law. In an attempt to remedy thatproblem,Section5appliesgraduatedconsenttheory,generatinganumberofsuggestionsabout hownation states andother institutions can climbup towardgreater justification.Thechapterconcludes that such reforms,whilewelcome,wouldstill leavenationstatesshortofexpressconsent.That,thegoldstandardofjustification,willlikelyhavetowaitforthenextgenerationofgovernments.

2StepsintheLadderofConsentWhethertheyrealizeitornot,judges,moralists,andpoliticalphilosopherstypicallytreatconsentasamatterofdegree.Thissectionrevealsthegradationsinandbetweendifferenttypes of consent, as well as its negative counterpart, unconsent. Refinements in thetaxonomy show still further distinctions. Together these create a scale that, as the nextsectionshows,measuresthejustifiabilityofsocialtransactions.

Consentcomesinthreemaintypes–express,implied,andhypothetical.Bothofthefirst two types qualify as actual consent; they differ primarily in how that consent iscommunicated.A conscious affirmation, such as signature, a verbal “I agree,” or someothercommunicativeact,1canconveyexpressconsent.Inthecaseofimpliedconsent,incontrast,apersonmayshowacceptanceofadefaulttermbydecliningtoexpresslyobjecttoit.Hypotheticalconsentdiffersfromitsactualcounterpartsinthatitignoresfactsaboutwhatanygivenpartydoesordoesnotwant,insteadrelyingonasuppositionaboutwhatthepartywouldhavewanted.Therelationshipsbetweenthesethreebasictypesofconsentrecurinmirrorform,amongthevarietiesofunconsent.Figure2.3-2illustrates.

Figure2.3-2.TypesofConsent

Each of those three main types of consent and their unconsensual counterpartsreceive detailed discussion later in the chapter. The entirely different category ofnonconsentgetsamention,too.Thatisaboutasfarasthischaptergoes,though.Consentand unconsent include various subtypes, illustrated in Figure 2.3-3, but for the sake ofbrevity, interested readers are directed elsewhere to learnmore.2 Suffice it to note thatgradationsevenfinerthanthemaintypesdiscussedhereexistandthattheyhavethesamerelationshiptojustification.

Figure2.3-3.TypesandSubtypesofConsent

Expressconsentbearsmorepowertojustifyatransactionthaneitherlesserformofconsent can muster, while implied consent in turn has more power to justify thanhypotheticalconsentdoes.Physicianswhorenderemergencycareonunconsciousvictimsescape liability for battery, for example, because the law presumes that their patientswouldhaveconsentedtotreatmentiftheyhadbeenconscious.3Hypotheticalconsentthushassomepowertojustifyatransaction.Ithaslesspowertojustifythanexpressorimpliedconsent,though.Ifanemergencypatientwakesupandobjectstoreceivingmedicalcare,adoctorwould commit assault and battery by continuing.4Aboxer’s express consent, incontrast,canexcuseevenafatalblow.5

Contract law likewise reveals a finely tunedappreciationof thedifferentgradesofconsentandtheirpowertojustifytransactions.Partiesimpliedlyconsenttocertaindefaultterms–thatacceptanceofanofferhappensuponitsoffer,6thatwordshavetheirordinarymeanings,7 and so forth. The parties can change those defaults by mutual agreement,showingthatexpressconsenttrumpsimpliedconsent.8Asforhypotheticalconsent,itfillsinonlywhenstrongerformsofconsentcannotbehad,asincasesofquasi-contract.9Itallgoestoshowthatincontractlaw,nolessthanintortlaw,consentvariesbydegreesandcorrespondstojustifiabilityofhumaninteractions.

Why care about justifiability? Because the law remedies unjustified transactions,suchasunexcusedassaultorbattery,andauthorizesenforcementofjustifiedones,suchascontractual agreements. That is not to say that courts care only about justifiability orconsent,ofcourse;stateandfederalcourtsroutinelyauthorizetheenforcementofstatutes,

regulations,ordinances, and so forth, evenondefendantswhostridentlyobject to them.Whatsuchproceedingslackinjustificationtheyevidentlymakeupforinpower.Sofar,asprivateconcernsgo,however,courtspaydevotedattentiontoconsentwhencalledontoresolvedisputes.

Alltheformsofconsentdescribedaboverecuragainintheshadesofunconsent.Forinstance, a party might expressly refuse to accept some proposition or transaction bysaying(abitpedantically,butnolesseffectively):“Idonotconsent!”Similarly,wemightdescribe an exchange as impliedly unconsensual because it does not conform toestablished practices. We thus condemn the tort of conversion (such as the theft ordestructionofmoveableproperty)asamatterofcourseandaffordlegalremedieseventovictimswhohavenot announced, “I object to all interferencewithmy chattel property,nowandhereafter.”Andfinally,whenwepostulatethatapersonwouldnothaveagreedtosomething,wemarkitashypotheticallyunconsensual.Justasconsentcomesinexpress,implied,andhypotheticalforms,inotherwords,sodoesunconsent.

Unconsentherestandsforsomethingdistinctfromnonconsent.Theformerconcernstransactions that generate anti-consensual reactions in at least one party, ranging fromhypothetical suppositions toviolentandvocaldisagreements.Nonconsentariseswhenapartyneitheragreesnordisagreestosomecondition,whetherbecauseconsenthasnoroletoplayatallorbecauseithasbeenwillfullysuspended.Suchconditionsoccurroutinelyinthesmallandpeacefulmomentsthatfilleverydaylife,suchasinwakingorblinking,andseemtoslipbyunnoticed.Incontrast,theopposingforcesofconsentandunconsentfilllegal,moral,andeconomicreasoningwithdramaandmeaning.

3Up,toJustificationAs thepreceding sectiondemonstrates, legal, ethical, andeconomic reasoningevidentlyrecognizesmanydifferentgradationsofconsent.Itremainsonlytoshowthesignificanceoftheirdifferences.Thissectionpositsascaleofjustificationrunningdownfromexpressconsent, through implied consent, to hypothetical consent. The scale continues into thenegative range – “below the x-axis,” one might say – running from hypotheticalunconsent,throughimpliedunconsent,toexpressunconsent.Figure2.3-4illustrates.

Figure2.3-4.TypesofConsentandTheirRelationtoJustification

The scale in Figure2.3-4measures not simply different types of consent but theiramounts.Anexpresslyconsensualtransactionclaimsthebackingofmoreconsentthanahypothetically consensual one can claim, for instance, though both have more consentthananinteraction,suchasbetweenawould-bemuggerandhisvictim,thatevokesloudprotest. To describe consent in those terms perhaps suggests thatwe canmeasure it inpreciseunits.Butexceptforprices,whichserveasafairproxyofitincertainconditions,nobody should pretend that consent submits to quantification.Nonetheless, the scale ofconsentprovidesapracticalmeasureofthejustificationofagivensocialexchange.

Although it understandably treats consentwith rather less detail than contract lawdoes,tortlawlikewiserecognizesthevaryingpowerofdifferenttypesofconsent.Unlikecontractlaw,though,tortlawfocusesonthedarkregionsofunconsent,revealinghowitsvarioustypesandsubtypesrangealongascaleofjustification.Expressunconsent–suchasthecry“Stophittingme!”–evokestortremediesmorereadilythandoesmereimpliedor hypothetical unconsent. The latter two types of unconsent might, after all, facecountervailingdefensesbased in express consent.10 Similarly, despite the fact thatmostpeoplewould object to suffering bodily injury, courts sometimes excuse hypothetically

unconsensualharmsasimpliedlyassumedrisks.11Tortlawthusranksexpressunconsentas less justifiable than impliedunconsent,and impliedunconsentas less justifiable thanhypotheticalunconsent.

Though they naturally tend to address the issue in theoretical terms, moral andpoliticalphilosophy joincourts in rangingvarious typesofconsentalonga spectrumofjustification. Locke thus offered implied consent (“tacit consent,” in his usage) togovernment only as a second-best alternative to express consent, which “[n]o bodydoubts,”createsverystrongobligations.12Almosteveryone–includingLocke–discountsthe possibility that governments can claim to rule by the express consent of theirsubjects.13EvenHobbes,despiteclaimingthatthenationstatearises“whenamultitudeofmendoagree”toformit,recognizestheimpossibilityofuniversalexpressconsentforanationstate.14Thosewhowouldjustifythenationstatethusfaceatrade-offbetweenthesortofconsentthatcanbehadandthesortofconsentthatmatters.

Despite theirappealingclarity, therefore,attemptstocast justificationinblack-and-whitetermsruntheriskofobscuringimportantdistinctions.Settingupexpressconsentasa necessary and sufficient condition for justification would naively gloss over thecomplexityoftherealworld.Inborderlinecases,expressconsentproveshardtodefine.Howshouldweinterpretanagreement,suchastheonethatUlyssesmadewithhiscrewbeforetheybravedthesirens,thatpurportstolimitaparty’sfreedomofrevocation?15Canachildgiveexpressconsent?Howaboutsomeonedesperatelyseekingprotectionfromamurderousassailantinhotpursuit?Instillothercases,expressconsentcannotbehad.Adispute over an ambiguous contract might require a judgment based on the parties’impliedconsenttodefaultterms,forinstance,16whileprotectinganunconsciouspatient’srightsmaycallfortheinvocationofhypotheticalconsent.17

In these and other cases, using express consent as an either/or test of justificationwouldleaveusunabletochoosefromawidespectrumofless-than-perfectcircumstances.Butnoadequate theoryof justificationcan turnablindeye to themessinessof the realworld.Expressconsentstillhasaroletoplay,butnotasathresholdtest.Rather,itservesasanidealstandardforrankingsurrogatessuchasimpliedandhypotheticalconsent.Thenearer these substitutes come to obtaining a person’s express consent, the better theyjustifytheobligationsthattheyallegedlycreate.

4TheProblemwithJustifyingNationstatesNation states do a notoriously poor job of winning the consent of those they govern,leaving the justification of their power on shaky ground. Even though founded on theclaim that rulers derive “their just powers from the Consent of the Governed,” theAmericanexperimentfallsrathershortofthatideal.18Mostnationstatesdoevenworse.

Noneofthiswillcomeasasurprisetoanyonewhohasreadpoliticalphilosophyinthe last fewhundredyears.DavidHume, for instance, said that the assertion that everylawfulgovernmentwas“foundedonconsentandavoluntarycompact…isnotjustifiedby history or experience, in any age or country of theworld.”19He allowed that early,customary, stateless societies might have enjoyed self-governance thanks to mutualcompact,thetermsofwhich“wereeitherexpressed,orweresoclearandobvious,thatitmight well be esteemed superfluous to express them.”20 Hume denied that samejustificationtomodernnationstates,however,ongroundsthatnewsystemsofgovernancerequirenewconsent.21

Moremodernly,RandyE.Barnett likewisedenies that a contemporarynation statecan rightly lay claim to the express or implied consent of those over whom it claimsjurisdiction.22 JustasHumegranted thepossibilityof justifyingancientgovernmentsonconsent,soBarnettgrantsthat“unanimousconsenttoobeythelawisquitepossible,butonlyif thecostofexit issufficientlysmall,eitherbecausejurisdictionisnotterritoriallybasedorbecausetheterritoryisnottoolarge.”23Onthatview,notypicalnationstatecanrightlyclaimthatitssubjectsactuallyconsenttoitsrule.

Thenationstate’sfailuretoobtaintheexpressconsentofthoseitgoverns,tomanycommentators, is irrefutable proof that it cannot be justified.24 Lysander Spooner, forinstance, famously complained: “If any considerable number of the people believe theConstitution to be good, why do they not sign it themselves, and make laws for, andadminister them upon, each other; leaving all other persons (who do not interferewiththem)inpeace?”25RobertWolff,likewiseconfrontingtheproblemofjustifyingpoliticalcoercion, concluded, “the solution requires the imposition of impossibly restrictiveconditionswhichmakeitapplicableonlytoaratherbizarrevarietyofactualsituations.”26

Here,atleast,philosophershaveprovenremarkablyintouchwiththepeople;arecentpoll

purportstoshowthatonly21percentofitsvotersthinkthattheUnitedStatescanclaimtheconsentofthegoverned.27

Granted, a few self-selected citizens have given their express consent to the U.S.Constitution. The document itself requires that the president “swear (or affirm)” to“preserve,protect,anddefend”it,28andthatalllegislators,judicialofficials,andexecutiveofficers,whetheroffederalandstategovernments,“beboundbyOathorAffirmation,tosupport this Constitution.”29 Naturalized citizens must swear that “I will support anddefend the Constitution and laws of the United States of America against all enemies,foreignanddomestic;thatIwillbeartruefaithandallegiancetothesame.”30Theoathstakenuponmilitaryenlistmentimposesimilarterms.31

Run-of-the-mill citizens are not, however, required to expressly consent to theConstitution.Noraretheyrequested,invited,orofficiallyencouragedtodoso.Thatisnomereoversight; theproblemwithconsenting toanation state runsdeeper thanwinningapparentpromisesof fidelity.Officials couldnot require that everyonegovernedby theConstitution pledge fidelity to it without making a mockery of consent. The difficultyarisesnotfromalackofoathsbutafailureoftheconditionsunderwhichanoathreliablydemonstratesgenuineconsent.32Nocourtworththenamewouldgranttheenforceabilityof a supposed agreement imposed on a single individual person by an awesomelypowerfulunnaturalentityclaiming thesole right to initiatecoercion.Anationstate thuscannotgenerallyclaimjustificationbyexpressconsent.33

Nordoesimpliedconsent,despiteitsinvocationby“loveitor leaveit”patriots,goveryfartowardjustifyinganationstate’spower.Peopleliveincountriesformanyreasons–familyrelations,culturalpreferences,economicopportunities–thathavenothingtodowith thegovernment. Indeed,mostcitizens seem toputupwith theirgovernmentsonlygrudgingly,forwantofbetteroptions.

Atmost,anationstatecanclaimthehypotheticalconsentofthoseitgoverns.Thisitmight do by offering governing services so fair and efficient that hypothetical citizenswouldagreetothemifasked.RandyE.Barnettdoesaswellasanyoneat justifyingtheConstitutionon thosegrounds.34Someprefer thehypotheticalconsentgeneratedbehindJohnRawl’sveilofignorance35orRobertNozick’saccountofhowthenationstatemighthave arisenwithout violating any rights (even if in practice it never has).36 Regardless,thoseimaginativeargumentscandoonlysomuchtojustifytheveryrealpowerthatnation

states direct against their subjects. Tomake nation statesmore justified, wemust helpthemascendtheladderofconsent.Thenextsectionexplains.

5HowtoMakeNationstatesMoreConsent-RichIt is not easy to justify the rule of nation states.AsLysander Spoonerwryly observed,thosewhoassertthebindingnatureoftheConstitutionrelyonargumentsthatelsewherewouldappearridiculous.

Wherewouldbetheendoffraudandlitigation,ifonepartycouldbringintocourtawritteninstrument,withoutanysignature,andclaimtohaveitenforced,uponthegroundthatitwaswrittenforanothermantosign?thatthisothermanhadpromisedtosign?thatheoughttohavesignedit?thathehadhadtheopportunitytosignit,ifhewould?butthathehadrefusedorneglectedtodoso?YetthatisthemostthatcouldeverbesaidoftheConstitution.37

InSpooner’sview,theConstitutionhasnolegalauthoritybecauseitmakesnoprovisionforindividualcitizenstosignonthedottedline(or,morepointedly,torefuse tosignit).Spooner’s complaint illustrates how the ideal of an expressly consensual exchangenegotiated between equals serves as the gold standard for justification even when –especiallywhen–itcannotbehad.

WhereSpoonersawonlyblackorwhite,though,morediscerningeyesdetectshadesofgrey.Thejustifiabilityofasocialinstitution’sexerciseofauthorityoveranindividualdepends on how strongly the person has consented to it. Consent and thus justificationvariesbydegrees.Applicationofthisgraduatedconsenttheorygeneratesassessmentsofjustificationthatapplybothrelativetoparticularparties(ratherthanrelativetothewholeundifferentiatedmass of humankind) and relative to alternative institutions (rather thanrelativetoanunrealizedideal).

Because it failed to satisfy the requirementsofabindingagreementundercontractlaw,Spooner concluded that theConstitution had no legal authority.Graduated consenttheory offers a more tempered and precise analysis, explaining that despite thedeficiencies in its claim, theConstitutionmay have amore justified claim to authorityoveraspecificsubjectthaninstitutionstoutingonlyweakerproofsofconsent.ItcertainlyseemsfairtosaythataU.S.federalcourthasastrongerclaimtoadjudicatetherightsofaninterstateshipperthan,say,acourtinChinawould.

That is not to say that the U.S. Constitution is completely justified for everyone,everywhere. Unless the Constitution can claim the same sort of consent thatmakes anexpress agreement negotiatedbetween equals so indisputablybinding–andasSpoonernoteditcannot– theConstitutioncanalwaysstand towinmoreconsent.Goodpatriots,ardent to make their government as justified as possible, will thus aspire for theConstitutiontowinasmuchconsentaspossiblefromthoseitgoverns.

WecanincreasethejustifiabilityoftheConstitutionbyreadingitinamannermostlikelytomaximizetheconsentofthoseitgoverns.Howdowedothat?Byborrowingthetools that common law courts have developed, over hundreds of years and throughthousands of cases, to recognize a consensual transaction and remedy its violation.Applied to the Constitution, those rules suggest that we should interpret the documentaccording to the understanding of the parties allegedly bound by it – the citizens andresidentsoftheUnitedStates–andapplyitsoastofavorindividualliberties.Chapter2.4saysmoreonthatcount.

This contractarian constitutional theory also casts doubts on the justifiability ofgivingfederalagentsexclusivepowertodecideprivateclaimsagainstthegovernment.Nogovernment courtwouldupholda termof a standard formagreement, oneofferedbyagargantuanandpowerfulunnaturalpersontoarelativelypowerlessindividual,providingthatanydisputesbetweenthepartieswouldbejudgedandenforcedbytheformer.Ifthatholdstrueofcommercialdisputesbetweencorporationsandconsumers,itmustalsoholdtrue of disputes between the federal government and those subjected to its authority.Chapter3.3detailstheproblemandoffersacurethatwouldmakegovernmentsadoptingitmorejustified.

We can also render a nation state more justified by implementing reforms thatincreasetheimpliedconsentofthoseitgoverns.Mereresidenceinanationstatedoesnotreliably prove that someonehas impliedly consented to its rule. People livewhere theyliveformanyreasonsandoftenendureunwantedgovernanceonlyduetohighexitcosts.Residenceinsuchcasessaysmoreaboutforbearancethanconsent.Perhapsaverysmallnation state that allowed free emigration, in a world withmany attractive immigrationoptions,couldpointtomereresidenceassolidproofofconsent;perhapsnot.ThesizeoftheUnitedStates,atanyrate,arguesagainstinterpretingmereresidencyasconsenttoitsgovernance.

In favor of its claim to residents’ implied consent, the United States can citefederalismand respect forcontractualchoiceof lawprovisions,bothpolicies thatallowresidents a limitedkindof exit from theConstitution’s jurisdiction.Those apologies donot govery far, however.TheUnitedStates has in recent decades failed to take states’rights seriously,making federal law supreme even inminutely localmatters.38 In otherareasoflaw,moreover,suchasinvarioussocialinsuranceschemesorwithregardtomostofitscopiousregulations, thefederalgovernmentdoesnotgenerallyrespect therightofuninterestedcitizenstooptout.

Anotherwaytobolsterclaimsofimpliedconsent?Allowmorefreedomofexit.Onthat count, at least, the United States fares reasonably well. During much of the mid-twentiethcentury, for instance, theUnitedStatesallowed itscitizensgreater freedomofexit than did the SovietUnion. Thatmarked difference between the countries gave theformer a comparatively stronger justification for exercising jurisdiction over its citizensthan the latter could claim over its own. Hence the moral force of Ronald Reagan’sdemand, “Mr. Gorbachev, tear down this wall!”39 Hence, too, the celebration, by thatwall’sdestroyers,oftheirnewlywonfreedomfromoppression.

Tosay that theUnitedStatesofferedamoreconsent-richformofgovernment thantheSovietUniondidisnottosay,finallyandflatly,“TheUnitedStateswasjustified.”Anationstatecannot fail to fall shortofwinning theuniversalexpressconsentofalloverwhom it claims a monopoly on the initiation of coercion, but instead can claimjustification only by degrees, relative to some alternative mode of social organization.EvenifitbestedtheSovietUnionintermsofwinningtheconsentofitssubjects,themid-twentieth-centuryUnitedStatesstillfellfarshortofconsent’shigheststandard:universalandexpressconsent.Nonationstatereasonablycould.Granted, theUnitedStates in the1950sdidjustlyclaimacomparativelygreaterdegreeofconsentfromitssubjectsthantheSoviet Union could, and even today the United States remains a fairly consent-richjurisdiction.TheUnitedStateswouldhave enjoyeda stronger claim to thehypotheticalconsentofitssubjectsifithaddoneastillbetterjobofprotectingtheirnaturalandcivillibertiesbackinthe1950s,however.WecouldsaythesameoftheUnitedStatestoday.

The United States could for instance heed Ilya Somin’s call for recognition ofgeneralizedexit rights,underwhich individualsandgroupswouldenjoy the freedom toopt out of all but a few government functions relating to national defense and legal

rulemaking.40OritcouldimplementtheUSSEZsdescribedinchapter3.6.Insofarassuchmeasuresmake it easier to escape federalmandates, theywould render those programsmoreconsensualand,thus,justified.

Intheseandotherways,wecanreformanationstate tomakeitmoreconsent-richand thus more justified. At the very least, that would represent a presumptive good.Indeed,wemightwell regard justificationas theultimategoodofanysocial institution.Evenafterdeepandwide reforms,however,mostnationstateswouldstillprobably fallshortofwinningtheexpressconsentofalltheygovern.Toachievethat,thegoldstandardof justification,wewould have to turn to institutions that provide government servicesundercontract.

6Conclusion:CantheNationstateBeSaved?This chapter has argued, in a nutshell, that consent varies by degrees and provides astandard for evaluating the justification of governing services. It laid out graduatedconsent theory and then applied it to the problem of justifying nation states. Thisgenerated some suggestions about how to make them more (though still imperfectly)justified.What about other governing institutions?Can theywin the express consent oftheirmembers?Cantheyclaimgreaterjustificationthannationstates?

Most social institutions must seek and win the express consent of their membersbefore trying to constrain their conduct.Employers, churches, schools, clubs,unions…these and countless other organizations regulate their members’ behavior through rule-based mechanisms. Homeowner associations, residential co-ops, condominiums, malls,cruiseships,arbitrators,mediators,andsecurityguardsaddtothemix.Privateinstitutionsalreadyofferinbitsandpiecesthesamekindofgovernanceservicesthatthenationstateoffers as a packagedeal, supplying rules, resolvingdisputes, and enforcing justiceon apiecemeal basis.41 Soon, if plans for ZEDEs, seasteads, and other special jurisdictionscome to fruition, proprietary governments may put these parts together. Add a privatesolution for public goods problems – which Alex Tabarrok’s Dominant AssuranceContracthasdemonstratedinfieldteststhatitcanprovide–andthebestreasonsfornationstatesbegintolookshaky.42

Part3ofthisbooklooksaheadtothecominggoverningservicesindustry,describingpractices that canhelpusnot just climb the ladderof consent tobettergovernmentbutthriveoncewegetthere.First,though,graduatedconsenttheoryhasapressingjobcloserto home: fixing constitutional law. The next chapter takes up the task, arguing that acontractarian approach to the Constitution maximizes the justifiability of federalgovernance.

*PortionsofthischapterderivefromTomW.Bell,TheConstitutionasifConsentMattered,16CHAP. L . R E V.269(2013),TomW.Bell,PrinciplesofContractsforGoverningServices,21GR I F F I TH L . R E V.472(2012),andTomW.Bell,GraduatedConsentinContractandTortLaw:TowardaTheoryofJustification,61CA S E W. R E S . L .

R E V. 17(2010).

1Suchasshippingconforminggoods.See,e.g.,U.C.C.§2–206(1)(b).

2SeeBell,PrinciplesofContractsforGoverningServices,supranote1,at34–42.

3RE S TATEMENT ( S ECOND ) O F TORT S§892Acmt.3,illus.2(AM . L AW I N S T. 1 9 7 9).

4See,e.g.,Curtisv.Jaskey,759N.E.2d962(Ill.App.Ct.2001).

5McAdamsv.Windham,94So.742(Ala.1922).

6RE S TATEMENT ( S ECOND ) O F CONTRACT S§63(a)(AM . L AW I N S T. 1 9 8 1 ).

7KarlN.Llewellyn,RemarksontheTheoryofAppellateDecisionandtheRulesorCanonsaboutHowStatutesAretoBeConstrued,3VAND . L . R E V.395,404(1950)(“Wordsaretobetakenintheirordinarymeaningunlesstheyaretechnicaltermsorwordsofart.”)(footnoteomitted).

8See,e.g.,Carlillv.CarbolicSmokeBallCo.[1893]1QB256(Eng.)(holdingthatofferorcontrolsthetermsoftheoffer);RE S TATEMENT ( S ECOND ) O F CONTRACT S ,supranote7,§§60,202(b).

9See,e.g.,Callanov.OakwoodParkHomesCorp.,219A.2d332(N.J.Super.Ct.App.Div.1966)(affordingrestitutionforbenefitsmistakenlybestowed).

10SeeRE S TATEMENT ( S ECOND ) O F TORT S§496B(AM . L AW I N S T.1965).

11Seeid.§496C(explainingthataplaintiffwhounderstandstheriskofharmtohimselfcannotrecoverforaninjuryasaresultofthedefendant’sconductifthatplaintiffvoluntarilychoosesnottoremovehimselffromtheareaofrisk).

12J OHN LOCKE ,TWO T R EAT I S E S O F GOVERNMENT365(PeterLasletted.,CambridgeUniv.Press2ded.1967)(1690).

13Id.at365–66.

14THOMAS HOBBE S , L EV I ATHAN(1651),reprintedin3THE ENGL I SH WORKS O F

THOMAS HOBBE S O F MALMESBURY1,159,162–63(SirWilliamMolesworthed.,JohnBohn1839).

15SeeKurtEggert,LashedtotheMastandCryingforHelp:HowSelf-LimitationofAutonomyCanProtectEldersfromPredatoryLending,36LO Y. L . A . L . R E V.693(2003).

16See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§202(3)(b)(AM . L AW I N S T.1981).

17See,e.g.,RE S TATEMENT ( S ECOND ) O F TORT S§892D(AM . L AW I N S T.1979).

18THE D ECLARAT ION O F I N DE PENDENCEpara.2(U.S.1776).

19DAV I D HUME,E S SAY S MORAL , P OL I T I CAL AND L I T ERARY471(EugeneF.Millered.,LibertyClassicsrev.ed.1987)(1777).

20Id.at468.

21Id.at470–71.

22RANDY E . B ARNETT, R E S TOR I NG THE LO S T CON ST I TUT ION18(rev.ed.2013).

23Id.at43.

24SeegenerallyIlyaSomin,RevitalizingConsent,23HARV. J . L . & P U B . P O L’ Y 753,775n.78(2000)(collectingauthorities).

25LY SANDER S POONER,NO TREA SON NO . V I : T HE CON ST I TUT ION O F NO AUTHOR I TY

(1870),reprintedinTHE LY SANDER S POONER R EADER71,87(GeorgeH.Smithed.,1992).

26ROBERT PAUL WOLF F, I N D E F EN S E O F ANARCH I SM22–23(1970).

27Only21percentSayU.S.GovernmentHasConsentoftheGoverned,RA SMUS S EN

REP. (Feb.18,2010),www.rasmussenreports.com/public_content/politics/general_politics/february_2010/only_21_say_u_s_government_has_consent_of_the_governed.Thesurveyalsopurportstoshowthat63percentofthepoliticalclassthinksthegovernmenthastheconsentofthegoverned,whereasonly6percentofvoterswithmainstreamviewsdo,andthat71percentofallvotersviewthefederalgovernmentasaspecialinterestgroup.Id.

28U.S.CONST. art.I I , § 1 ,para.8.

29Id.art.VI,§3.

30UnitedStatesOathofAllegiance,8C.F.R.pt.337(2016).

31OathofEnlistment,10U.S.C.§502(2012).

32DON HERZOG , HA P PY S LAVE S : A C R I T I QUE O F CON SENT THEORY192(1989).

33HUME ,supranote20,at470–71.

34BARNETT, supranote23,at29–30,etpassim.

35J OHN RAWLS , A THEORY O F J U S T I C E3–45(rev.ed.1999).

36ROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A118–19(1974).

37S POONER , supranote26,at24.

38See,e.g.,Gonzalesv.Raich,545U.S.1(2005)(holdingmarijuanagrownathomeandforprivateusesubjecttofederallaw).

39RemarksonEast-WestRelationsattheBrandenburgGateinWestBerlin,1PUB .

PA P ER S 634,635(June12,1987).

40Somin,supranote25,at782–84.

41JohnHasnas,TheObviousnessofAnarchy,inANARCH I SM /M I NARCH I SM : I S A

GOVERNMENT PART O F A F R EE COUNTRY ?111(RoderickT.Long&TiborR.Machaneds.,2008).

42AlexanderTabarrok,ThePrivateProvisionofPublicGoodsviaDominantAssurancesContracts,96PUB L I C CHO I C E345(1998).

2.4

ForgetItIsaConstitution*◈

1Introduction:ConstitutionalLaw?ForgetAboutIt

U.S.JusticeJohnMarshall,intheearlyandinfluentialcaseofMcCullochv.Maryland,letfederal lawmakersexercisepowersbeyond thosespecificallyenumerated in thenation’sfounding document with the pronouncement that “we must never forget, that it is aConstitution we are expounding.”1 Marshall did not clarify why remembering it is aConstitution justifies forgetting itswords. If that result follows fromhisnot-so-stunninginsight,though,thischaptercounselsdoingexactlytheopposite:forgetitisaConstitution.

Treat the Constitution like it is no big deal, in other words – just another legaldocument. In fact, treat it like the legal document it most resembles: a standard formagreementofferedbyalarge,powerful,unnaturalpersontoitsmanyrelativelypowerlessindividualsubjects.

WhyadoptthatapproachtotheConstitution?Inordertomaximizethejustifiabilityofthegovernmentactionstakeninitsname.Section2explainshowthisresultsinatheoryof constitutional law – call it contractarianism – that differs from prevailing ones.2

Section 3 contrasts this approach to the Constitution with originalism; Section 4 doeslikewise with living constitutionalism. The chapter concludes by looking forward tocommunitiesthatwillfinditeasiertoreadtheirfoundingdocumentsinconsent-richways.In themeantime, the lesswe treat theConstitution like somethingspecial, themore thegovernmentwillrespecttheconsentofthePeople.

2TheContractarianAlternativeHowshouldwereadaconstitution?Theanswerdepends,inlargepart,onwhywewanttoattribute any particular meaning at all to its words. A constitution serves as a socialcoordination device, one that we read with an eye to promoting peace, prosperity, andpersonalfreedom.3WecanbestachievethoseendsbyreadingtheConstitutioninthewaythatmaximizes the consent of those it governs, rendering the application of its laws asjustifiedaspossible.4Thatmeansapplyingtoitthesamerulesthatcourtsroutinelyapplywhenreadinghumblecontracts.

Though that approach to interpretation might strike some scholars as too simple-minded toguide the subtleties ofConstitutional jurisprudence, theSupremeCourt itselfhas repeatedlyavowed that“weareguidedby theprinciple that ‘[t]heConstitutionwaswritten tobeunderstoodby thevoters; itswordsandphraseswereused in theirnormalandordinaryasdistinguishedfromtechnicalmeaning.’”5Constitutionallawdoesnothavetobeespeciallycomplicated.GiventheConstitution’sstraightforwardtext, itshouldnotbe.TheproblemisnotwiththeConstitution,butwithconstitutionaltheory.

Readingaconstitutiontypicallycallsbothforinterpretation(findingthemeaningofthetext)andconstruction(applyingcontestableinterpretationstoparticularproblems).6Acontractarian approach interprets the Constitution’s words according to their plain,present, publicmeaning – themeaning thatwe the living, facedwith claims of federalauthority, give to the Constitution’s text. Contractarianism constructs the words of theConstitution,applyingthemtotheproblemathand,soastomaximizetheconsentofthegoverned. Specifically, a contractarian approach follows the same sort of rules ofconstructionthatcommonlawcourtsroutinelyapplyincasesinvolvingstandardizedformagreementsthatallegedlybindindividualconsumers.Inotherwords,weshouldnotreifytheConstitution,orindeedanyfoundingpoliticaldocument,butshouldinsteadregarditasakintoastandardformagreement.

Granted,theconstitutionisnotexactlylikeothercontracts.7Itiscertainlynotmuchlikeacontractdickeredbetweenequals,likeabusinessmergeragreementoracommerciallease.Instead, itresemblesthesortsofcontracts thatInternetusersandotherconsumersagree toeveryday, sometimes simplybyclicking“OK.”Courts routinelyenforce those

sortsofagreements.But theydosowithanacutesenseof theneedtoprotectrelativelypowerlessindividualsfromtheirlargerandsavviercounterparts.

If we subject the Constitution to the same demands the law generally imposes onthese sorts of weakly justified agreements, argues Ethan J. Leib, we should adopt thefollowingprinciplesofconstitutionalinterpretationandconstruction:

(1)investigatethetypeofassentwecanjustifiablyascribetocitizens;

(2)enforcebitsoftextthatareplain,uncontroversial,andparticularlyclear;

(3)construeambiguousphrasesagainstthe“drafter”andinfavorofthosewhoareassentingtoday;

(4)protectthekindsofinalienablerightsthatthecontractualdocumentmustbereadtorespect…;

(5)protectthereasonableexpectationsoftoday’sparties;and

(6)assesswhetherthedocumentanditspotentialapplicationsaccordwithfundamentalfairness.8

Standard contract law suggests adding one more principle: (7) given the grossirregularitiesthatofnecessityplagueaconstitution’sadoptionandenforcement,itshouldnot takemuch substantive unconscionability to justify striking a provision as void andunenforceable.

Tothetextnotwinnowedoutasunconscionable,run-of-the-millcontractlawwouldassignaplainmeaningconsistentwiththeunderstandingofallcontemporarypartiestotheconstitution,politiciansandcitizensalike.Ifwecanfindnocommonmeaning,weshouldassign the text its plain public meaning, because we can impute to political actorsknowledge of what citizens think about the constitution’s meaning.9 As agents of thepublic,politiciansoweafiduciaryobligationtounderstandandimplementthepreferencesof those in whose name they claim to act.10 A politician who adopted or enforced aconstitutionwithout regard to themeaning ascribed to it by the citizenswould therebybreachnotonlyhisfiduciaryobligationsbutalsothedutyofgoodfaithandfairdealingincumbent on every party to a contract.11 Such a wayward act could not rightfullycommandobedience.

Uncertaintywill remain,of course;wordsdonot alwayshaveplainmeanings, andcontext does not always clarify. The job then turns from interpretation to construction.Nonetheless, it still calls for favoring readings most likely to advantage the partiessubjectedtoaconstitution’sjurisdiction–thepeoplewhomitclaimstogovern,inotherwords. After all, a constitution represents the ultimate in standard form agreements,offeredonatake-it-or-leave-itbasisbyanall-powerfulandpotentiallyimmortalunnaturalpersontocomparativelypowerlessindividualofferees.Courtsenforcingcontractsformedinsimilarcircumstancesroutinelyreadvaguetermsin thefavorof theparty–usuallyasoleindividualperson–presentedtheagreementonatake-it-or-leave-itbasisbytheotherparty – usually a soulless collective legal person, such as a corporation. In theConstitutionalcontext, thatbasicallygetsus to thepresumptionof liberty thatRandyE.Barnetthaseloquentlydefended(albeitonothergrounds).12

Other toolsof constructionmight alsohelp resolvevagueness in theConstitution’stext.A courtmight, for instance, look to prior performances between the parties to theconstitutionalagreement13– legal precedents, in particular.Next, itmight look to otherdealings between the same parties, such as statutes passed under authority of theConstitution.14And,should thosedevices fail todecipher theconstitution’s text,acourtmightrefertocustomarypractices,suchascommon-lawrights15andinternationallaw.16

Thosesupplementarytoolsforconstructingaconstitutionwould,however,comeintoplayonly after a court has done all it can to protect the rights of any citizen or residentsubjected to the constitution’s standardized terms. The one-way nature of theconstitutionalbargaindemandsaverycriticalscrutinyofgovernmentpower.

In some respects, this contractarian theory resembles other prominent theories ofconstitutionaldecision-making.Bothoriginalistsandadvocatesoflivingconstitutionalismvoicegreatregardforindividualrights,forinstance,17andclaimtoresorttotheirfavoredsupplementarydevices onlywhen the plainmeaningof the text proves elusive.18But acontractarian approach would place far greater weight on the plain public meaning ofconstitutional terms thanprevailingmethodsof interpretationseemwilling toadmit.Nocourt facedwith a standard formagreement that grants theofferor authority to regulateonly“interstatecommerce”wouldreadit tolimit therightofacomparativelypowerlessofferee to grow wheat19 or marijuana20 for personal consumption, for instance. Nor,

therefore, should a court that aims to respect the consent of the governed read theconstitution’stextanydifferently.

Thiscontractariantheoryalsodiffersfromcurrentlyprevailingtheoriesbyfocusingon thecontemporarypublicmeaningof theconstitution’s text, rather thanon thepublicmeaningascribed to the text at the timeof its ratificationor the contemporarymeaningascribedtothetextbylatter-dayjudges.Ifweaimtorespecttheconsentofthegoverned,afterall,wecarewhat they thinkwhen theyread theplain textof theconstitution–notwhatpeoplelongdeadoncethoughtaboutthetext,orwhatjudgesandlegalcommentatorsnow think.Thenext two sections explore these contrasts between first contractarianismandoriginalism,thenlivingconstitutionalism.

3ContractarianConstitutionalTheoryversusOriginalism

Originalists these days advocate reading theConstitution in light of themeaning of itswords at the time of their ratification.21 That offers a relatively objective and certainmeansofinterpretingtheConstitution,especiallywhencomparedtotheusualalternatives,which favor precedents and judicial discretion over plain language. The virtues oforiginalismstemmorefromitsfidelitytothewordsoftheConstitution,however,thantoits fidelity to what those words used to mean. Textualism, not historicism, givesoriginalismitscharms.

For friends of freedom, originalismhas the virtue of generating such substantivelyattractiveresultsaslimitedgovernment,theruleoflaw,andrespectforindividualrights.We can credit that both to theConstitution’s bold and timelesswords aswell as to thesupermajoritarian constraints imposed on its ratification proceedings.22 Query, though,whetherweshouldpickourpreferredtheoryofconstitutionalmeaningbasedsolelyonitssubstantive results. If so, we would favor a philosopher king over a Constitutionalrepublic.Notjusttheresultsbutalsothejustifiabilityofourinterpretivetheorymatters.23

At any rate, it is not so evident that originalism offers the best way to protectindividualsfromoverweeningstatepower.Granted,readingtheConstitutiontodayfromapretendedeighteenth-centurypointofviewsometimesbolstersindividualrights,aswhenDistrictofColumbiav.HellergaveanoriginalistinterpretationtotheSecondAmendment.Inotherareas,however,thearcanepracticeofresurrectingmeaningsdeadformorethan200 years can put our twenty-first-century rights at risk. Consider, for instance, theadmissionofthearch-originalistJusticeAntoninScaliathatbecausepublicfloggingswerecommon in the Founding era, they would not qualify as unconstitutional “cruel andunusual”punishmentstoday.24

Contractarianismoffersallthetextualfidelityoforiginalismwithoutgettingstuckinimagined understandings from long, long ago. Indeed, by relying on the plain, present,publicmeaningof theConstitution,contractarianismcanachievegreaterexactitude thanoriginalism, which relies on a limited set of various and variously interpreted writtendocuments to try to resurrect long-deadmeanings.Conveniently, originalists speakonly

forthosewhocannotspeakforthemselves.Incontrast,wecaninvokeawidevarietyofmechanisms–polls,publiclyeditedencyclopedias,empiricalstudiesofwordcountsandassociations–todiscernhowtheConstitution’slivingsubjectsunderstanditswords.And,quiteappropriately,onlyourunderstanding–not theunderstandingof someonewhonolongerexists–canbindus.

In defense of originalism, and as John O. McGinnis and Michael B. Rappaportobserve,thesupermajoritiesrequiredtoadoptoramendtheU.S.Constitutionhavehelpedensure its “beneficence.”25 On their view, original-meaning jurisprudence generates notonlygoodresultsbut,sincetheConstitutionaimsto“promotethegeneralwelfare,”helpsrendertheConstitutionmorejustified.26Thatdefenseoforiginalismcomeswithatwist,however; the authors require modern-day courts to adopt interpretative rules from theFoundingera.27

It thusremainsunclearwhatMcGinnisandRappaportwouldsayabout reading theConstitutionthewaythatmoderncourtsreadstandardformagreementsbetweenunequals,offeredonatake-it-or-leave-itbasis,backedwithonlyweakproofsofconsent.WecannotverywellknowexactlywhatinterpretiverulesFounding-eracourtswouldhaveappliedtothat,atransactioncharacteristicofthemoderncommercialage.Perhapstheywouldhaveregardedsuchsupposedagreementsasunenforceableinsultstofreedom;thespiritofthethen-recentRevolutionof1776certainlysuggestsasmuch.28

At any rate,we have no reason to think that the Founding generationwould haveobjected to the methods of interpretation and construction that a modern court wouldtypically apply before enforcing anyweakly justified standard form agreement betweenextantandnewparties.Allcourtswouldfavorreadingthecontractsoastobestsafeguardtheconsentofthoserelativelypowerlesslatecomersfromwhomtheolder,morepowerfulparty has asked submission. That approach would moreover have the commendablepragmatic resultofprotectingnatural,common-law,andconstitutional rights–probablymoresothanoriginalism,withitsapologiesforpublictorture,does.29

In seeming agreement with the contractarian approach, originalism has beendefendedasawaytohonortheconsentofthefirstpartiestoenterintotheconstitutionalcompact.30 The analogy suggests that citizenship comes with a covenant, one createdmany generations ago, that “runswith the nation” as it were, binding the living to the

meaningsofthedead.Evenifthatanalogyfits,however,itdoesnotgeneratearesultthatgivesoriginalistscomfort.

True,youmayadoptacontract initially formedbetweenothers. Itdoesnot follow,however, that courts will thereby bind you to meanings held by the original parties.Suppose, for instance, that you purchased land bound by a covenant, formed in 1789betweenneighborsagreedonmaintaininga fire-freeenvironment, forbidding theuseof“outdoor lighting” on the property. Today, thanks to technological advances, that termeffectivelymeanssomethingquitedifferentfromwhatitoncedid.Whatcovenantdidyouagree to?One that forbidsonly rustic torchesand lanterns inyourbackyardorone thatalsobanscoolLEDs?

That nice puzzle of the private law has evidently escaped judicial attention. Theclosestprecedentappears incaseswhereparties toagreementshaveevidently thought itsagetospellthattheywantedtheoriginalmeaningtocontroltheinterpretationsoffutureparties to the same agreement.31 That suggests, but does not prove, a default that late-coming parties to a preexisting agreement would enjoy the benefit of an interpretationattributing the late-coming party’s understanding to the agreement, rather than theunderstandingsofthepartieswhooriginallyformedtheagreement.Soundtheorysuggestslikewise.

Wemustchoosetofavoronereadingoveranother,afterall–theobjectivemeaningofthepartiesat thetimeofthecontract’sinitialformationorthemeaningofthepartieswho later join the agreement. Time erodes meaning, poisoning it with error. Simpleefficiency tells us to favor the meaning that we can find most quickly, easily, andaccurately.Thattestfavorsusingthepresentpublicmeaningofthelate-joiningparty.

Iftheoriginalpartiestoanagreementwanttomakesurethattheirinterpretationofitsmeaningprevailsoverthatofanylater-joiningparty,theyshouldcomeoutansayso.TheConstitution contains no such clause. Evidence suggests, moreover, that a clauseattempting to bind the Constitution to Founding-era meanings would not have wonratificationinthateraitself.32Asaconsequence,theoriginalistcasefounders.

Itbearsnotingthatinmanycasescontractarianismandoriginalismgeneratethesamesubstantive results. The plain public meaning of the Constitution’s words has changedlittle over the intervening years. “We the People,” still means those who “ordain and

establish”theConstitution;“nolaw”remains“nolaw.”Judicialdriftposesamuchworsethreat to textual fidelity than linguistic drift. Witness such absurdities as holding that“commerce”coverseatingthefruitsofyourownlabor,33orthat“forpublicuse”allowsprivategifts.34Bothcontractarianismandoriginalismcondemnthosejudicialperversions.

Originalists evidently admire the Founders, and rightly so. All can appreciate theboldnessofThomas Jefferson, thewisdomof JamesMadison, and the independenceofBenjaminFranklin.Thoseandothersoftheirgenerationdidnotdemandanyonetoswearallegiance to their reading of the Constitution, however. They realized that latergenerationswouldreaditbytheirownlights,fortheirowntimes.Theydoubtlesshopedthattheirdescendantswouldhavethecouragetocastoffthechainsofdistantrulersforthelivingbondsofself-governance.Onthatcount,contractarianismhonorstheFoundersnotbytryingtorecreatetheirthinking,butbyfollowingtheirexample.

4ContractarianConstitutionalTheoryversusLivingConstitutionalists

Just as it differs from originalism in important respects, so too does the contractarianapproachdifferfromso-calledlivingconstitutionalism.Thattheoryvestsjudgeswithwidelatitude to adapt the Constitution to modern times, embracing flexible meanings whilerespectingjudicialprecedent.35Underlivingconstitutionalism,“thebestinterpretationofthe Constitution’s meaning changes in accordance with changing circumstances andevents,and…itisthedutyofallactors,includingjudges,tochangetheirinterpretationsoftheConstitutiontoreflectthesechangingcircumstances.”36

Acontractarianapproach,incontrast,readstheConstitutioninamannercalculatedtomaximizetheconsentofthegoverned.Acontractarianstarts,andoftenfinishes,withtheplain,present,publicmeaningof the text.Thatmeaningwouldcertainlycountformorethanjudicialrulingstothecontrary,whichfromthepointofviewofcontractlawofferatbestonlyevidenceofpriorperformancesbythesamepartiesunderthesameagreement.37

Are living constitutionalists willing to give up such cases asKelo v. City of NewLondon,38inwhichtheSupremeCourtheldthataforcedtransferfromoneprivatepartytoanotherqualifiedasa“publicuse”under theFifthAmendment;HomeBuilding&LoanAssociationv.Blaisdell,39whicheffectivelyguttedtheConstitution’smandatethatstatespassnolaw“impairingtheObligationofContracts”;40orGonzalesv.Raich,41whichreadthepowerto“regulatepurelyintrastateactivitythatisnotitself‘commercial’”42intotextallowingCongressonlyto“regulateCommerce…amongtheseveralStates”?43Itwouldseem hard to countenance those and other judicial deviations from the Constitution’splain,present,publicmeaning.Inthoseandothercases,a livingconstitutionwouldpartwayswithacontractarianone.

Because it aims to maximize consent here and now, rather than 200 years ago,contractarian constitutionalism shares with living constitutionalism a concern for thepresent.ContractarianismfocusesonwhatcitizensandresidentsoftheUnitedStatesthinkthe Constitution means, however, rather than what select employees of the U.S.governmentthinkitmeans.44Intheirattempttoescapethedeadhandofthepast, livingconstitutionalistshavehandedtoomuchpowertopresent-daycourts.

5Conclusion:RemembertheNowThis chapter has argued that to maximize the consent of those governed by theConstitution, we should interpret it according to its plain, present, publicmeaning andconstruct any remaining vagueness to favor individual rights. With all due respect toJusticeMarshall,thatmeanssubjectingtheConstitutiontothesameinterpretiverulesthatwe routinely apply to humble contracts.45 The result: a contractarian approach toconstitutional law. By combining the textual fidelity of originalism with theresponsiveness of living constitutionalism, the contractarian approach captures the bestfeaturesofboth.Atthesametime,itavoidstheconfusionandinequitythatwouldfollowfromdefining theConstitutionaccording toa reconstructedunderstandingof thosewhofirstratifiedit(originalism’squixoticgoal)andthepitfallsofvestingagentsofthefederalgovernment with the sole authority to define the Constitution (a salient flaw of livingconstitutionalism).When it comes to justifying federalpower, theconsentof thosewhofirst ratified the Constitution, or those employed by the government itself,matters lessthantheconsentof“WethePeople”wholiveundertheConstitution,hereandnow.46

*PortionsofthischaptercomefromTomW.Bell,TheConstitutionasifConsentMattered,16CHAP. L . R E V.269(2013);TomW.Bell,GraduatedConsentinContractandTortLaw:TowardaTheoryofJustification,61CA S E W. R E S . L . R E V.17(2010).

1McCullochv.Maryland,17U.S.(4Wheat.)316,407(1819)(emphasisintheoriginal).

2Althoughid.favoredthetermconsensualist,thisChaptereschewsthattermasinelegant.

3See,e.g.,U . S . CON S T.pmbl.(introducingtheConstitutionasameansto“insuredomesticTranquility,provideforthecommondefence,promotethegeneralWelfare,andsecuretheBlessingsofLiberty”).

4SeeChapter2.4.

5DistrictofColumbiav.Heller,554U.S.570,576(2008)(quotingUnitedStatesv.Sprague,282U.S.716,731(1931)).

6LawrenceSolum,LegalTheoryLexicon063:InterpretationandConstruction,LEGAL

THEORY L EX I CON,http://lsolum.typepad.com/legal_theory_lexicon/2008/04/legal-theory-le.html(lastupdatedSept.3,2015).

7SeeMARK V. T U SHNET, R ED , WH I T E , A ND B LUE : A C R I T I CAL ANALY S I S O F

CON ST I TUT IONAL L AW23(1988).

8EthanJ.Leib,ThePerpetualAnxietyofLivingConstitutionalism,24CON S T.

C OMMENT. 353,368(2008)(footnoteomitted).

9SeeRE S TATEMENT ( S ECOND ) O F CONTRACT S§201(2)(AM . L AW I N S T.1981)(specifyingwhichmeaningprevailswhenthepartiesattachdifferentmeaningstoanagreementandoneofthemknowsorshouldknowoftheother’sunderstanding).

10RE S TATEMENT ( S ECOND ) O F AGENCY§13(AM . L AW I N S T.1958).

11RE S TATEMENT ( S ECOND ) O F CONTRACT S,supranote9,§205.

12RANDY E . B ARNETT, R E S TOR I NG THE LO S T CON ST I TUT ION(rev.ed.2013).

13See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT Ssupranote9,§202(4).

14See,e.g.,id.§203(b).

15Alikepresumptionalreadyappliesinquestionsofstatutoryinterpretation.See,e.g.,UnitedStatesv.Texas,507U.S.529,534(1993).

16See,e.g.,Atkinsv.Virginia,536U.S.304,316n.21(2002).

17See,e.g.,DistrictofColumbiav.Heller,554U.S.570(2008)(citingtheoriginalunderstandingoftheSecondAmendmentinsupportofanindividualrighttokeepandbeararms);Roev.Wade,410U.S.113(1973)(citingrecentdevelopmentsinmedicaltechnology,changingsocialmores,anddevelopmentsinthecaselawinsupportofarighttoabortion).

18See,e.g.,Heller,554U.S.at580–91;Roe,410U.S.at152.

19ButseeWickardv.Filburn,317U.S.111(1942)(finding“interstatecommerce”toencompassgrowingwheatforprivateconsumption).

20ButseeGonzalesv.Raich,545U.S.1(2005)(finding“interstatecommerce”toencompassgrowingmarijuanaforprivateconsumption).

21SeeLawrenceSolum,LegalTheoryLexicon019:Originalism,LEGAL THEORY

LEX I CON ,http://lsolum.typepad.com/legal_theory_lexicon/2004/01/legal_theory_le_1.html(lastupdatedApr.3,2016).

22JohnO.McGinnis&MichaelB.Rappaport,APragmaticDefenseofOriginalism,31HARV. J . L . & P U B . P O L’ Y 917,925(2008).

23ButseeFrankH.Easterbrook,Pragmatism’sRoleinInterpretation,31HARV. J . L . &

PUB . P O L’ Y 901,905(2008).

24BetsyBlaney,Scalia,BreyerSparoverHowtoDecideCases;JusticesShowHowTheyDifferatTexasTechEvent,HOUS . CHRON .,Nov.13,2010,atB3.

25McGinnis&Rappaport,supranote22,at925.

26Seeid.at920.

27Id.at926.

28Therevolutionariescomplained,forinstance,thattheKingofEngland“hasmadeJudgesdependentonhisWillalone,”THE D ECLARAT ION O F I N DE PENDENCEpara.11( U . S . 1 7 7 6 ),“impos[ed]TaxesonuswithoutourConsent,”id.para.1 9 ,andansweredhumblepetitions“onlybyrepeatedinjury,”id.para.3 0 .

29AsMcGinnisandRappaportobserve,theoriginalConstitutionhadaflawedviewoftherightsofslavesandwomen,whichlateramendmentshavecorrected.McGinnis&Rappaport,supranote22,at932–35.

30SeeEasterbrook,supranote23,at905.

31SeeTrostelv.Am.Life&Cas.Ins.Co.,168F.3d1105,1107(8thCir.1999).

32SeeH.JeffersonPowell,TheOriginalUnderstandingofOriginalIntent,98HARV. L .

R E V. 885,912(1985).

33Wickardv.Filburn,317U.S.111(1942).

34Kelov.CityofNewLondon,545U.S.469(2005).

35SeeScottDodson,ADarwinistViewoftheLivingConstitution,61VAND . L . R E V.

1319,1322–25(2008)(collectingandreviewingauthorities).

36JackM.Balkin,“WrongtheDayItWasDecided”:LochnerandConstitutionalHistoricism,85B . U . L . R E V.677,698(2005).

37See,e.g.,RE S TATEMENT ( S ECOND ) O F CONTRACT S§203(b)(AM . L AW I N S T.1981).

38545U.S.469(2005).

39290U.S.398(1934).“TheeconomicinterestsoftheStatemayjustifytheexerciseofitscontinuinganddominantprotectivepowernotwithstandinginterferencewithcontracts,”themajorityopined.Id.at437.Astonishingly,however,itnowheresawfittoquotetheConstitution’splainlanguageonthesubject.

40U . S . CON S T.art. I,§10.

41545U.S.1(2005).

42Id.at18.

43U . S . CON S T.art.I ,§8,cl.3.

44SeeChapter3.3foraremedytothatparticularproblem.

45McCullochv.Maryland,17U.S.(4Wheat.)316,407(1819).

46U . S . CON S T.pmbl.

PartIII◈

Practice

3.1

BestPracticesinGoverningServices*◈

1Introduction:ThomasPaine’sScienceThomasPainewasnot the type tosimplyaccepthissupposedfate.Ayoungmanin themid-1700s, he doubtless paced the dull lanes of Thetford, England, looking west andimaginingthefreedomsonoffer in theNewWorld.Unhappilyapprenticedtohisfather,who made corset stays out of whalebone, Paine ran away from home to serve on aprivateer. His first attempt to flee drudgery failed; Paine’s father dragged him back tostaymaking. Paine soon tried again, though, and escaped to pursue ventures such aspreaching,runninga tobaccoshop,and(remarkably,givenhis laterpolemics)collectingexcisetaxes.1

Paine experimentedwith somany professions because he failed in all.Nor did heachieve theother trappingsof respectableEnglish life.He losthis firstwife todeath, asecondtoseparation,andfatheredchildrenbyneither.Atagethirty-seven,insearchofabetteroratleastdifferentfate,PainefinallyescapedtoAmerica.2

Today,werememberPaineforhiswritings,whichrousedandunifiedrevolutionaryAmericans.“Withoutthepenoftheauthorof‘CommonSense,’theswordofWashingtonwouldhavebeenraisedinvain,”claimedJohnAdams.3Painewasnomerepamphleteer,however. He also showed a penchant for industry and entrepreneurship, inventing thesingle-spanironbridgeandasmokelesscandle.Heevengotinvolvedinencouragingthedevelopment of his day’s highest technology: steam engines.4 Paine was no merepropagandist;whether in political science or physical science, he turned cold facts intoboldaction.

WhatwouldPainethinkifhecouldrevisittodaythecountryhehelpedcreatemorethantwocenturiesago?Oncepasttheshockingchangeswroughtbygrowthandchange,Paine would doubtless subject the U.S. experiment in constitutional governance to acoolly objective appraisal.Where did it succeed?Where did it fail?Howcould it havebeenbuiltandoperatedbetter?Painewould,inotherwords,givetheU.S.governmentthesametreatmenthehadgiventheBritishone.

PainemercilesslycriticizedhowtheCrownhadruledand,alltoooften,misruleditsAmericancolonies.Findingfaultinmonarchy,hecalledforadifferentandbetterformof

government–one thatwouldsecure“TheRightsofMan” (ashe titledhis bookon thetopic) and pay due regard to the consent of the governed.5 Paine moreover had hispoliticaltheoriesputthroughtherigorsofrealworldtesting,andlivedtoseehisnewbornAmericaofftoapromisingstart.

If we cannot recreate Paine’s revolutionary thinking, we can still emulate hisapproach to that greatest of human challenge: how to improve our social institutions.SincePaine’sday,wehave learnedagreatdealabouthowgovernmentswork in theoryand actuality.This chapter reviews the best practices of public and private providers insearchoffeaturessuitedforthenextgenerationofgoverningservices.Itfindssix.

To call these six practices best is not to call them universal. Far from it. Bestpractices represent something better than the commonplace. They certainly representsomething better thanmost nation statesmanage.Why do nation states fall so short ofideal?Theylackadequateincentivestodootherwise.

A nation state provides governing services within a specified territory, demandingpayment in the form of taxes, regulations, and compulsory service. Some citizensexpresslyconsent to that bargain, aswhen the President of theUnited States swears topreserve, protect, and defend the Constitution.6 With regard to many of its subjects,however, the nation state can claim no better than hypothetical consent, leaving itsexerciseofauthorityonlyweakly justified.Wantamore justifiedmodeofgovernment?Supplylaws,adjudication,andenforcementservicesonexpresslyconsensualterms,undercontract.7

Happily, thegoverningservicesindustryseemsheadedinthatdirection.Traditionalpolitieshavelongallowedpeopletooptoutofpubliclaws,courts,andpoliceservicesbyopting into private alternatives.8 Of late, nation states have begun outsourcing theirfunctionsatverylargescales,creatingprivatelyownedandoperatedcommunitieswithallthe size, sophistication, and independence of conventional cities.9 Contracting forgoverningservicesthuslookslikelytogrowmorecommon.

As contracting for governing services growsmore common, competitive pressureswilllikelyforceproviderstorespondtothedemandofcitizen-customers.Andwhatwilltheydemand?Theywilldemand–andgladlypay for–governing services that hew tobestpractices.

ThisChapter draws on history and theory to distill these six best practices for theprovisionofgoverningservices:

More about each of those six best practices follows below. The fine-grained details ofparticular governing services will of course vary from application to application, andmarkettomarket.Thesebestpracticesspeaknotsomuchaboutparticularrulesasaboutgeneralguidelines.

Drawingfromhistoricalandtheoreticalexamples,section2describessomegeneralprinciples that do, will, and should shape the next generation of governing services.Section 3 observes that competition from contract-based alternatives stands to improvegovernmentintheU.S.andthroughouttheworldbyencouragingthebettertreatmentofcitizen-customers,makingjurisdictionalcompetitionasortofsuperbestpractice.Section4runsthroughsomeobjectionsandanswerstoinvitinggreatercompetitioningoverningservices. The Chapter concludes that growing recognition of these principles willnormalizegovernment,turningitfromthespecialprovinceofafewpoliticalmonopolistsintojustanotherserviceindustry.

Respectforconsent;

Protectionoffundamentalrights;

Independentadjudication;

Clearandfairinterpretiverules;

Remediesforwrongs;and

Freedomofexit.

2ObservationsofBestPracticesforGovernanceServices

This section surveys the theory and practice of governing services in search of generalprinciples.Itbreakstheresultsintosixbestpractices.Thefollowingsubsectionsaddresseachinturn.

Subsection 2.1 explains the importance of maximizing consent. The process ofcontractingforgovernmentservicesitselfcandomuchtosecureexpressconsent,thegoldstandardof justification.Othermeasures, such as providing fair notice of jurisdictionalboundaries and respecting fundamental human rights, can help to win implied andhypotheticalconsent.

Subsection2.3saysabitmoreaboutprotectingfundamentalhumanrights,asubjectwellworthspecial treatment.Fundamentalhumanrightsmerit respecting,nodoubt.Buthowandhowmuchtodoso?

Subsection 2.4 discusses a problem that nation states hardly acknowledge: agoverning servicemust resolvenotonlydisputesbetween its citizen-customersbut alsotheirclaimsagainst it. Inanysuchdispute,agoverningserviceshouldprovidefor trulyindependentadjudication–notbypaidemployeesofeitherpartybutinsteadbymutuallyacceptable third parties.Nation states fall far short of that ideal; the next generation ofgoverningservicesneednot.

Subsection 2.4 praises clear and fair interpretations of governing laws. Esoterictheories of jurisprudence, developed andpracticedby their official judges, allownationstates toevade theplain languageof theirownrules.Surelyagoverningservicecandobetter.Itcan,byfollowingthesamestraightforwardandfairinterpretiverulesthatalreadyapply to contracts between private parties. In general, and in contrast to prevailingjurisprudential fashions, this interpretative approach would give governing documentstheirplain,present,publicmeanings.

Subsection 2.5 discusses why, to ensure the enforcement of their laws, governingservicesmight want to consider alternatives to the incarceration so often employed bynation states. It argues instead for exiling lawbreakers and requiring that citizens and

guestsprovidebondsagainsttheriskofwrongdoing.Relatedly,section2.6arguesthat,toguardagainstdefactoimprisonment,governmentsshouldpreservefreedomofexit.

2.1MaximizeConsent

Asnotedabove,wecanmaximizethejustifiabilityofsocialrelationsbyfoundingthemonexpressconsent.Nationstates,becausetheytypicallyrelyonlittlemorethanhypotheticalconsent, fall far short of that ideal. To a notable degree, however, private parties canalready opt out of a nation state’s default legal system and into another, mutuallyagreeable one. Choice of law and choice of forum clauses, widely used and enforced,allow contracting parties to choose what rules will govern their relationship and whatforum will resolve their disputes. Contracts also determine membership in privatecommunitiessuchashomeowners’associationsandhotels,whichcompetewiththenationstateinprovidingrules,housing,security,recreation,andotherservices.

Contractualgovernmentrepresentssimplyanotherstepalongthecontinuumfromtheunjustifiable imposition of objectionable rules to the justified embrace of freely chosenones. The Seasteading Institute, for instance, has outlined a variety of approaches togovernment,modeledonsuchexamplesascommoninterestcommunities,multiple-tenantincome properties, and corporations, all of which rely at root on expressly consensualcontractual arrangements.10 Advocates of establishing a free port in Somalia – an areanotablyfreeofanynationstate’scontrol–haveofferedadetailedagreement, largely inthe nature of a lease, that asks for the express consent of those itwould govern.11 TheHonduran’s ZEDE statute provides that landowners can put their property within thejurisdictionofazoneonlynotice,thusensuringboththelandowner’sconsentandthatofotherpartieswhomightclaimaninterestintheland.12

Howcanasystemofgovernmentdesignedtowintheexpressconsentofitscitizen-customers satisfy that worthy goal? As a general legal principle, signed and writtenagreements–especiallywhenbackedwithvideo recordingsandotherproofsof sincereand comprehending assent – provide reliable proof of express consent. At least withregard toagreementswith its residents, therefore, agoverning servicewoulddowell toembraceaStatuteofFrauds.Giventhatanelectronic“OK”suffices,moreover,itshouldnotbetoodifficultforagoverningservicetoadoptapracticeofhavingeventemporaryvisitorsexpresslyagreetolocallaw.

Actions can speak as loudly aswords in establishing consent.Agoverning servicemight thus fairlyclaim thatanyonewho intentionallyenters its territoryundernoticeof

localrulestherebyexpresslyconsentstothem.Attheveryleast,thatformofproofshouldapplytothosewhotrespassdespitepostednotices.13

What about cases where getting express consent to a governing service just isn’tpossible,aswhentwoshipscollideinthefogontheopenocean?Customaryrulesofferasafebackup.Ingeneral,inthelaw,theycontrolbyimplication,leavingthosewhoobjecttoexpresslyobject.Claimsofimpliedconsentalsogrowstrongertotheextentthatthosewho joina legal jurisdictionhave the right tochoose somethingother than its lawsandcourts for their private arrangements.14 As with regard to the right of physical exit,discussedbelowinsubsection2.6,keeping the rightof legalexitopen representsabestpractice,too.

Hypotheticalconsentoffersathird-bestalternativewhenneitherexpressnorimpliedconsentobtain.Thoseofferinggoverningservicescanwinitbyactinginwaystowhichtheircitizen-customerswould agree, if asked.Nation states thusaugment their authorityby pledging, in such documents as the U.S. Bill of Rights and the UNDeclaration ofHumanRights, to respect fundamental rights.15 Like those documents, adoption of bestpracticesingoverningservicescallsforrespectingcitizen-customers’persons,properties,andpromises.Thenextsubsectionexplains.

2.2ProtectPersons,Property,andPromises

Should governing services explicitly guarantee certain fundamental rights, such asfreedomofspeechandrespect forprivateproperty?Nationstates routinelydoasmuch,promisingtoprotectlonglistsofenumeratedrights.16Sometimesthosepromisesamountto little more than pretty words; sometimes, as with the First Amendment of the U.S.Constitution,enumeratedrightsactuallydolimitgovernmentaction.Iffornootherreasonthanmarketdemand, contracts forgoverning servicesmight also list someof the rightsenjoyedbytheircitizen-customers.TheU.S.Constitution’sBillofRightsoffersaworthyexample in that regard. It protects both specifically named rights and, in the NinthAmendment, other unenumerated ones. In that spirit, MacCallum and van Notten’sproposed agreement for a Somali free port offers a detailed list of freedoms, many ofwhichechothoseintheBillofRights,whichwouldtrumpanylegislativeorcontractualrule to the contrary.17 The Honduran ZEDE statute incorporates by reference foreignconventionsandotherinternationalprotectionsofhumanrights.18

But are specific enumerations of rights necessary? The success of Hong Kong inattractingimmigrantsandgrowingathrivingcitysuggeststhatcombiningtheruleoflawwiththecommonlawcandoagreatdealtoprotectfundamentalhumanrights.FromitsverybeginningHongKongoffered,asoneearlypromotertouted,“ampleprotection,forpersons and property.”19 Protected from afar by England’s unwritten constitution, thecitizens and residents of Hong Kong long enjoyed freedom of speech and religion,protection from unwarranted prosecution, and respect for commercial interests.20 TheBasicLawthroughwhichtheChinesereassertedtheirauthorityoverHongKongtookanewapproach,expresslyrecognizingagenerouslistofrights.Yetthegovernment’s faithtothosewordshasnowbecomeamatterofsorecontroversy.Historyholdsmanifoldsuchparadoxes.

HongKongowesitssuccessnottomerepaperpromises,buttoalegalculturedeeplyrootedintheprinciplesofthecommonlaw.Thecommonlawrulesfortorts,property,andcontracts go very far, indeed, to protect our freedoms of conscience, expression, andassociation, our liberty fromcruel or arbitrary legal procedures, and the security of ourhomes,papers,effects,andotherproperties.21Whethertheruleoflawcombinedwiththecommon lawwouldsuffice toprotect fundamentalhumanrights,precluding theneed to

list certain protected rights, remains uncertain.Only real-world testing can tell uswhatcitizen-customerswilldemandinsuchmatters,andhowthegoverningservicesindustry,publicandprivate,willreply.

Attheveryleast,prudencesuggeststhatgoverningservicesshouldrespecttheruleoflaw and provide credible guarantees of the sanctity of persons, property, and promises.Toward that end thecommon lawoffersawell-tested setof rules–mostnotably, thoseembodied in tort, property, and contract law.Although the common law itself developsincrementally on a case-by-case basis, the American Law Institute has in its variousRE S TATEMENT S O F L AW conveniently summarized the relevant principles in astatute-like format.22 A contract for governing services could incorporate selectRE S TATEMENT S O F L AWbyreference,usingachoiceoflawclausetomakethosethedefaultrulesfortort,property,contract,andotherareas.23OritcouldsimplyciteUlex1.1,theopens-sourcelegalsystemdescribedlaterinthispartofthebook.

And what about expressly listing sacrosanct fundamental human rights in acommunity’s fundamental governing documents? It seems like a popular practice andsometimesworkstogoodeffect.Butratherthantryingtoachievetheperfectformulationof rights, a governing service might do better to simply offer a Most Free PersonGuarantee–apromisetorespectaclaimant’srightsagainstgovernmentactionatleastaswell as any nation state. The clause would thus operate like theMost Favored Nationclausespopular in international andcommercial agreements,wherebyoneof thepartiespromises another to extend to it the same favorable treatment also offered to any of agroupofsimilarpromisees.

Suppose for instance that a governing service tried to stop one of its citizen-customers from publishing a controversial religious tract. The defendant could win bycitingFirstAmendmentoftheU.S.Constitution.Butifthesamegoverningservicetriedtoputthedefendantinsolitaryconfinement,shemightfindanothercountry’sprotectionsagainst inhumane punishment more helpful to her cause. The Most Free PersonGuarantee would give citizen-customers peace of mind that their fundamental humanrightswouldgetthebestprotectionsonthemarket.

2.3ProvideIndependentAdjudication

To resolve disputes fairly requires independent adjudication.As John Locke explained,justiceserves“toavoid,andremedythoseinconvenienciesoftheStateofNature,whichnecessarily follow from every Man’s being Judge in his own Case.”24 The courts ofpolitical institutions offer private litigants an independent forum for resolving disputes.Thenationstate’scourtsdonot,however,offera truly independent forumfor resolvingdisputes that name the state itself as a party, aswhen a citizen complains of a statute’sunconstitutionality.25 Contracts for governing services could do better in that regard byfollowing the lead of the private sector, where contracts routinely include clausesprovidingthatthirdpartieswillresolvedisputesarisingundertheagreementbytheuseofmediationorbindingarbitration.

Longpracticehasledtothedevelopmentofrules,suchasthosepromulgatedbytheAmerican Arbitration Association26 and the International Chamber of Commerce,27

providing for the fair and efficient resolution of disputes by independent parties. Thecontractual clauses necessary to invoke those rules have likewise been polished intostandardforms;forexample:“Alldisputesarisingoutoforinconnectionwiththepresentcontract shall be finally settled under the Rules of Arbitration of the InternationalChamberofCommercebyoneormorearbitratorsappointedinaccordancewiththesaidRules.”28Variousproceduralruleshelpensuretheindependenceofsucharbitrators.TheAmericanArbitrationAssociations,forinstance,offersasystemwhereeachpartychoosesanarbitratorandthenthosetwoarbitratorschooseanother,resultinginabalancedthree-partypanel.29Ulex1.1,describedmorefullylaterintheBook,usesthesamedevice.

Theorists have often suggested that consent-rich legal systems should use similarmethods to resolvedisputes.30Contracts for governing serviceswould probably includethesamesortofmediationandarbitrationclausessooftennowseenincontractsgenerally.Contractingoutdisputeresolutionoffersnotonlygreaterefficiencythananationstate’scourtsdobutalso,andcruciallyinthiscontext,abetterprospectforunbiasedjudging.

2.4FollowClearandFairInterpretativeRules

Many and various factions debate how founding political documents, such as the U.S.Constitution, ought to be interpreted. Their disputes go not just to the meaning ofparticular provisions, such as “unreasonable searches”31 or “cruel and unusualpunishments,”32buttohowcourtsshouldapproachtheproblemofreadingaconstitutionorotherfoundingpoliticaldocumentinthefirstplace.LivingconstitutionalistsarguethattheConstitutionmeanswhatcurrentjudgessayitdoes;originalismarguesforthemeaningheldbythosewhooriginallyratifiedtheConstitution.33

Governing services could avoid that interpretive mess by the simple expedient ofremaining true tocontract law.Compared toconstitutional law, the lawofcontractshaslargely solved the problemof interpretation.Constitutions remain relatively newfangledinventions, after all,whereas humans have hadmillennia to figure out how to interpretlegallyenforceableagreements.Thecommonlaw,inparticular,seemstohaveevolvedaset of rules that encourage peace and prosperity.34 The American Law Institute’sRE S TATEMENT O F CONTRACT S ( 2 D ) offers a convenient summation of thecommon law’s approach to interpreting contracts.35 Governing services need onlyincorporatethoserulesbyreferenceinthechoiceoflawclauseinitsfoundingagreements.

This best practice would offer a welcome respite from the interpretive puzzlesriddling nation states’ constitutions, statutes, and other rules. Applying contract lawprinciples to a governing service’s founding documents would give better notice tocitizen-consumersofhowthosedocumentswouldbeinterpreted.TheU.S.Constitution,incontrast, authorizes the creation of a judicial branch without limiting its interpretivepower.36

Notonlywouldthecitizen-customersofacontractualgoverningserviceknowwhatinterpretiverulestoexpect;theycouldalsoexpectthoserulestogenerateinterpretationsfriendlytotheirconcerns.Thecommonlawgenerallylooksfortheplain,present,publicmeaningofacontract’swordsandresolvesuncertaintiesagainstadocument’sdrafter.37Ina contract for governing services, “no law” would thus mean what a typical citizen-customerwouldtakethosewordstomean–presumablysomethingalongthelinesof“nota single legally enforceable restriction is allowed.” The common law approach tointerpreting contracts would moreover resolve any remaining uncertainties in favor of

citizen-customers,giventherelativebargainingpowerofthepartiesandthefactthatthegoverningservicewouldhavewrittenthecontract.38

2.5EnforceLawsviaExileandBonding

Nationstatesenforcetheirrulesviaavarietyofmechanisms,includingdamagesorfines,equitableremedies,andimprisonment.Agoverningservicecouldconceivablyborrowanyofthosedevices.Honduras,forinstance,vesteditsZEDEswithfullauthoritytoenforcenotonlycivilbutalsocriminal law, includingexclusivecontrolof theirownpoliceandprison system.39 This subsection focuses, however, on two related mechanisms forenforcing the law thatmight prove especially useful for private providers of governingservices:exileandbonding.

Historydemonstratesthatmicrostatesandquasi-sovereignsoftenimposeexileratherthan imprisonment or capital punishment. In the mid-1800s, for instance, Hong Kongofferedconvictedcriminalsachoicebetweensufferingtheirsentencesorbeingsentintoexilewithanidentifyingtattoo.Anysuchtattooedcriminalwhoreturnedinviolationofexilefacedboththeoriginalsentenceandanadditionalflogging.40TheHanseaticLeaguereliedonthethreatofeconomicblockadestocontrolforeignsovereignsandthethreatofexclusion to control its ownmember cities.41 Exile has also proven widely popular incustomarylegalsystems,whichgenerallydonotpossesstheinfrastructurenecessaryforimprisonment.42

Exileneednotbeanall-or-nothingaffair.Especiallyinmodern,networkedsocieties,it can comebydegrees, aswhen a spendthrift loses access to credit or an ex-employeefinds himself locked out of a former workplace. Properly implemented, exile offers aprecise, inexpensive, and humane alternative to imprisonment. Theorists have thusdescribedvariationsofexile,ranginginseverityfromoutlawrytoostracism.Thelatter,inparticular,mightofferausefulenforcementmechanismforcontractualgovernments.43

Whereasexilegetsridoftroublemakers,abondingmechanismcankeepthemoutinthe first place. To require that wrongdoers compensate their victims will mean little ifwrongdoers cannot pay. To better enforce such laws, a contract for governing servicescouldrequirethatpartiestoitpostbond,showproofofinsurance,orprovidesomeotherguaranteethatvalidclaimsagainstthemwillbepaid.

Nationstatesimplementbondingpoliciespiecemeal,aswhentheyrequiredriverstocarry insurance or licensees in certain professions to post bonds. Bondingmechanisms

frequently appear in customary legal systemswhen, as amongAnglo-Saxon bohrs44 intimespastandSomali jilibstoday,45agrouppromises tostandfor thegoodbehaviorofany itsmembers.To help enforce laws designed to compensate victims ofwrongdoing,theorists have suggested that a contract for governing services require its citizen-customerstopostbondsandthathostsagreetovouchfortheirguests.46

Such a bondingmechanismwould not only protect the rights of citizen-customersafter the fact by ensuring that they get compensation; itwould also protect their rightsbeforethefactbyscreeningoutpartiestoodangeroustowinanythirdparty’sconfidence.It need not prove especially difficult to implement, either. With regard to the law ofsuretyshipsandguaranteesaselsewhere,thecommonlawoffersatrustedandtime-testedsetofrules,whichacontractforgoverningservicescouldimportbyreference.47

Best practices also requires, of course, that a governing service guarantee citizen-customersthatitwillpayanyvalidlegalclaimsthattheyhaveagainstit.48Simplefairnessdemandsnothing less. Itarguablydemandsconsiderablymore.TraditionalAfrican legalsystemsoftenrequireofficialssuchasjudgesorpoliticianstopaygreaterthanusualfines,for instance, when they violate the same rules that they would presume to enforce onothers.49 A governing service might likewise reassure wary citizen-customers bypromisingtopaymorethanjustcompensationforanyabuseofitsauthority.Perhapsthemarketwillcome todemand that fromeveryprovider,makingdoubledamages thenewbestpractice.Fornow,though,bestpracticeswouldseemtogonofartherthantorequirethatagoverningserviceensureitssolvencyinthefaceoflegalliability.

2.6KeepExitsOpen

Politicalscientistshavelongrecognizedthatfreedomofexitcanlimittheexcessesofbadgovernment.50Forthesamereasonsthatnationstatesshouldandgenerallydoallowtheunhappy residents to emigrate, more consent-rich governing services would doubtlessguaranteethefreedomofcitizen-customerstoexittootherlegalsystems.Bothhistoryandtheorysupportthatpolicy.

Althoughmoregenerallyknownforaffordingfreedomofimmigration,forinstance,HongKongsotypicallysupportedfreedomofemigrationthattheexceptiontothatrule–an instance in 1922 when Hong Kong officials used armed force to prevent strikingChinese laborers from leaving the territory – stands out as a blackmark.51 Customarylegalsystemsalsotypicallyaffordamplefreedomofexit;theyfairlywellhaveto,giventhattheylackthemeanstodenyit.52

Unsurprisingly, theoreticians describing contractual government have given carefulthoughttoensuringfreedomofexit.Surprisingly,theyhavegonebeyondmerelyallowingit. Barnett explains that to err on the safe side of justification, “consent-based regimesmight have to subsidize the exit of those who do not consent.”53MacCallum and vanNottenimplementedthatideaintheirmodelleaseforaSomalifreeportbyprovidingthatatenantleavingtheterritoryaftersufferingviolationsoftheagreementshallhavetherighttoclaimreimbursementofthecostsoftransportinghisorherpersonandeffectstoanotherlocation(withsuchreimbursementcappedat thecost that thedisgruntled tenantbore tooriginally immigrate to the community).54With regard to freedom of exit as generally,governing serviceswill have towork hard to earn the express consent of their citizen-customers. Guaranteeing to help pay exit costs can make a governing service moreattractivetowould-beemigrants.

3AMeta-BestPractice:JurisdictionalCompetition

Insofarasaserviceproviderenforcesamonopolyoverthesupplyofgoverningservices,its justification suffers. Few of the supposed beneficiaries of a nation state’sgoverningservicesexpresslyconsenttoreceiveit.Manydonomorethanquietlysufferrule;someexpresslyobjecttoit.Anationstatecantypicallyclaimlittlemorethanthehypotheticalconsentofthoseitgoverns,arguingthatanimaginary,abstractpersonwouldhaveagreedtoitsrule,ifasked.Sometimesnationstatesfaileventhatweaktest,insteadunjustifiablytrapping and preying on their subjects.55 A nation state thus cannot very convincinglyclaim the implied consent of its subjects based simply on their failure to exit itsjurisdiction.Mostpeoplelivewheretheyliveforother,nonpoliticalreasons.

Anationstatecanimproveitsclaimtoimpliedconsent,however,insofarasitmakesiteasierforunhappysubjectstooptoutofitsrule.Freedomofexit,whilelongunderstoodasanecessary step toward improving thecompetitivenessofgoverning services, coversonlyhalfof theequation.As theoreticianshaverecentlybegun to takenote, freedomofentryintobettersystemsofgovernmentmatters,too.56Choosycitizen-customerscarenotsimplyaboutthecostsofleavingonejurisdictionorthecostsofjoininganotherone,afterall;theycareaboutthenetcostsofmakingsuchamove.

At some limit, of course, freedom of exit and freedom of entry blend together.Someoneunabletoescapeabadlegalsystemnecessarilylackstheoptionoffleeingtoabetterone,forinstance.Thedifferencebetweenthetwofreedomsbecomesclear,however,whenweconsiderthatcitizenscaningeneralnowexitfromthefryingpanofonenationstateonlybyjumpingintothefireofanother.Thatlackofchoicemakesithardtoregardlivingundertheruleofnationstatesgenerallyasimplyingmuchaboutconsent.

In amore consensual world, people unhappywith the rule of nation states wouldhaveanotheroption: contracting to receivegoverning services fromprivateparties.Theresulting increase in competition, far from threatening nation states, would ender themmore justified. It becomesmore plausible to claim that sedentary subjects consent to agovernment,afterall,whentheycaneasilyaccessalternativelegalsystems.

Respecting the choice of law provisions in private parties’ contracts – a routinematterforcourtsintheUnitedStates–representsastepinthatdirection,asdothepocketsof relative autonomy that China has created with its SEZs and that Honduras plans tocreatewithitsZEDEs.Contractsforgoverningservices,insofarastheycometosubstituteforanationstate’s foundingdocuments,promote thatbeneficial trend. In the search forbestpracticeingoverningservices,jurisdictionalcompetitionworkslikeameta-principle,onethathelpsensurethateventhebestgovernmentskeeptryingtogetbetter.

4ObjectionsandAnswersThis section briefly raises and answers some objections to this chapter’s account ofgeneralbestpracticesingoverningservices.

4.1ImperfectConsent

Objection:Aconsent-basedapproachtoanalyzinggoverningservicescannotaccommodatepartieswhobecauseofage,ignorance,mentalincapacity,intoxication,orotherfactorscannotreliablyactintheirownself-interest.

Answer:Thecommonlawofcontractshaslongexperienceinpolicingthelimitsofconsent,providinguswithgoodrulesforthehardcasesthatgoverningserviceswouldface.Whereage,mentalincapacity,orintoxicationmakeconsentdubious,adisadvantagedpartysuffersonlyvoidablecontractobligations,empoweredtoenforcegooddealsyetfreetoshakeoffbadones.57Incaseswhereonepartypressesastandardizedformagreementonanother,aswhenagoverningserviceinvitesanimmigranttobecomeacitizen-customer,thecommonlawprotectstheadheringpartyfromtermsthatthecontract’sdrafterknowsorshouldknowwould,ifbroughttotheattentionoftheadheringparty,evokerejection.58Partiessufferingfrommistake,misrepresentation,undueinfluence,duress,orfraudfindreliefthroughacollectionofwell-craftedandtestedrules.59

Nobodycanreasonablyexpectperfectionfromanysocialinstitution.Inthecommonlaw,however,wefindacomprehensiveandpracticalsetofrulesformakingsurethatconsentcountsonlywhenitshould.Theserules,appliedtogoverningservices,wouldprotectdisadvantagedpartiesfromunjustifiedlegalobligationsreasonablywell,andlikelybetterthananyalternativemechanism.

4.2JudicialIndependence

Objection:Paperpromisesmeanlittleifnotprotectedbyanindependentauthority.Whatcourtwillhavethepowertointerpretthetermsofacontractforgoverningservices,andhowcanwebesureitwillprotectcitizen-customers?

Answer:Subsection3.3arguesthatgoverningservicesshoulduseanindependentthirdpartytoadjudicatealldisputesarisinginitsjurisdiction–notonlydisputesarisingbetweenitscitizen-consumersbutalsodisputesarisingbetweenthemandthegoverningserviceitself.Forexample,someoneaggrievedaboutroughtreatmentatthehandsofthegoverningservice’sofficialsmightseekreliefbeforeapanelcomposedofonejudgeoftheplaintiff’schoosing,oneofthegoverningservice’schoosing,andathirdjudgechosenbythefirsttwo.Suchaprocedure,borrowedfromtheprivatesector,ensuresbothprofessionalismandimpartiality.Indeed,itoffersconsiderablymoreimpartialitythanthemoreordinarypractice,underwhichofficialsofthenationstatejudgeclaimsagainsttheiremployer.

4.3Voting

Objection:Thislistofbestpracticessaysnothingaboutvoting;governingservicesruntheriskofadoptingvotingrulesthatfailtorespectdemocraticprocessesandrunroughshodoverindividualrights.

Answer:Extantgovernmentscanhardlyclaimtohaveperfecteddemocracyoritsvariants,suchasconstitutionalorparliamentaryrepublics.Newergovernments,becausetheyhavetoattractresidents,havepowerfulincentivestostudyandadoptthevotingrulesmostlikelytobothinviteparticipationandprotectindividualrights.Traditionalnationstatesmayormaynotprovidethebestmodels.Thesmallsizeandrelativeindependenceofnewergovernmentswillencouragethesearchfornewandbetterwaysoftranslatingresidents’preferencesintogoodpublicpolicy.(Chapter3.5suggests“doubledemocracy.”)Thoughwecannotbesurewhatwillresultfrombringinggreaterentrepreneurshiptogoverningservices,wehavelittlereasontoassumeitwillresultinvotingrulesanyworsethanthosenowinwideuse.

4.4TragedyoftheAnti-Commons

Objection:Becausetheyuseprivatelawmechanismstosupplantpubliclawones,governingservicesfoundedincontractruntheriskofover-privatizingresources,resultinginatragedyoftheanti-commonswhereconflictingpropertyclaimsgumupsociallife.

Answer:Privatelawmechanismsdonotruleoutcommonownershipandaccess.Ashomeownersassociations,condos,andhousingcooperativesdemonstrate,contractualcommunitiesofferawiderangeofcommonproperties,includingbuildings,streets,parks,andpools.Strikingtherightbalancebetweenindividualandjointownershipcanprovetricky,butthereisnoreasontothinkthattraditionalpoliticalcommunitiescandoanybetteratitthanthenextgenerationofgoverningservices,whichwillhavetocompetefortheircitizen-customers.

4.5BackwardFeudalism?

Objection:Theprospectofapolycentricorderofquasi-sovereigngoverningservicesrunsagainstthehistoricaltrendtowardmoreandmoreuniversalandglobalsystemsofgovernment,threateningtoreturnustoasimplerbutmorebrutaleraoffracturedpolities,localdespots,andpowerlessserfs.

Answer:Farfromrunningagainstthetideofhistory,theadventofincreasinglyconsent-richgoverningservicesrepresentacontinuationofatrendfamouslydescribedbySirHenrySumnerMaineasthemovefromstatusrelationstocontractones.60AlthoughMainespokeprimarilyofthetransitionfromfeudaltocommercialsocieties,thesameholdstrueofthetransitionfromtraditionalcitizenship,typicallypremisedonmereresidencywithinthejurisdictionofthelocalpoliticalmonopoly,totherelativelymoreconsensualrelationshipsarisingbetweennewergovernmentsandthosethattheymustcompetetoattract.Thoughtheresultingpolycentricorderwilllikelyendupmoresimplethanthemodernnationstateintermsofsubstantiverules,itwillalsolikelyencouragethegrowthofamorecomplex,variegated,andsophisticatedcivilization.Thatisnoparadox.Overlycomplexrulesstiflegrowth,whereastherightfewsimplerulescangenerateinnovation.

Norwillamoreconsent-richsocialorderleadtoadarkageoffracturedfeudalism.Trulyandhappily,weshouldexpectthetrendtowardgreaterinternationalcooperationtocontinue.Itisheadednottowardamega-state,likeanarmedUnitedNations,though.Instead,asexplainedthebook’sconclusion,thesetrendswillmorelikelygiverisetoanetworkofstatelessassociations.61

5Conclusion:AProgramforFieldTestingHowcanhumanslivetogetherinpeaceandprosperity?Theanswerhastooofteneludedus.Thefailuresofhumaninstitutionsrunfromthechronictotheacute,fromthelocaltothepandemic,andfromtheannoyingtothefatal.Here,asinsomanyotherareas,sciencecanhelp.

To advance the science of government requires both a theoretic framework andexperimental evidence. Graduated consent theory, which provides a way to assess thejustificationofgoverninginstitutions,providestheformer.Forexperimentalevidence,wecan draw on a wide range of examples, including traditional polities, homeownerassociations, Hong Kong under both English and Chinese rule, and Somalia undernobody’s.Allshowrespectforthesamebasicbestpractices.HonduranZEDEs,seasteads,andotherstart-upcommunitiesmaysoonteachusevenmore–ifnationstateswillallowthecompetition.

Why should anyone expect a nation state to invite competition in the supply ofgoverning services? To some degree, even if they abhor the prospect of competinggovernments, nation states face a common pool problem. It takes just one nation statewillingtoeffectivelylendoutitssovereignpowers–Honduras,forinstance–toshowthewholeworld a new and improved form of government. The experimentmight flop, ofcourse,andleavetraditionalpoliticiansstrutting.Theoryandpracticesuggest,though,thatintroducingmore competition tomarkets for governing serviceswill improve the lot ofcitizen-customers at the expense of former nation state monopolies. The principles ofsupply and demand apply to all sorts of exchanges, after all – not just expresslyconsensualones.62

Thatmay not sound like an appealing prospect to everyone, granted, but politicalinstitutions should welcome the prospect of more consensual alternatives. Somewhatparadoxically, a nation state that relaxes its monopoly on power grows stronger in theprocess.Bymakingiteasierforitssubjectstooptoutofitsruleandintobetterformsofgovernment, a nation statewins a stronger claim to the implied consent of its subjects.That, in turn, gives it stronger claim to justified legal force.What greater power couldpoliticianswant?

Anationstatethatfostersalternativegoverningserviceslearns,moreover,toserveitssubjectsbetter.Competitionforcitizen-customerswilldrive innovation,uncoveringnewsolutionstotheage-oldproblemsofviolence,theft,accident,andfraud.Bynurturingandstudying small-scale, semi-sovereign start-up communities, a country can learn moreabouttheparticularneedsofthepopulationsitserves.TheU.S.government,forinstance,might learn from Sandy Springs, Georgia about the benefits of a political institutionprovidingservicesthroughoutsidecontractorsidentifiedthroughopen-biddingprocessesandcloselymonitoredbyelectedofficials.63

Friendly competition inspires improvement in markets, games, and governments.Informedvotersshould thus favorpolicies that increase freedomofchoice ingoverningservices.Granted,thosewhoenjoypoliticalsinecuresorprivilegesmaynotwelcometheimmediate results of giving up some monopoly power. The bracing effects of a freemarketingoverningserviceswouldbenefitalmosteveryoneinthelongrun,though.

Wherewouldthatlongruntowardbettergovernmenttakeus?Toaworldwherethebestpracticesdescribedinthischapterbecomemerelystandardpractices.Then,governingserviceseagertosatisfythedemandoftheirconsumer-citizenswillroutinelyguarantee:

That offers only a generalization of best practices for governing services, of course.Exactly how governing services meet those standards will depend on contingent facts,such as consumer demand and market competition. Only actual practice can discoverthosedetails.Fornow,itsufficestonotethatthejurisdictionalcompetition,asortofmeta-best practice for governing services, offers the best prospect of generating resultsmostagreeabletocitizen-customers.

Thomas Paine, surveying the prospects for a government founded on popularconsent,concludedthat“wehaveeveryopportunityandeveryencouragementbeforeus,

Respectforconsent

Protectionoffundamentalrights

Independentadjudication

Clearandfairinterpretiverules

Remediesforwrongs

Freedomofexit.

to form the noblest, the purest constitution on the face of the earth.We have it in ourpower to begin theworld over again.”64With words such as those, Paine inspired theFounders to try a bold experiment in self-government, to their honor and posterity’sbenefit.

The next several chapters of this part do not try to match Paine’s rhetoric. Whocould?Instead,theydescribeavarietyofpractices–holdinggovernmentsliable,citizencourts,sharedcities,doubledemocracy,andUlex–designedtohelpthenextgenerationofgoverningservicesbecomethebestgenerationofgoverningservices.Inthat,thisBookpays homage not to the heat that Paine cast, but to the illumination provided by hisscientificapproachtoimprovinggoverningservices.

*ThisChapterderivesinpartfrom,TomW.Bell,PrinciplesofContractsforGoverningServices,21GR I F F I TH L . R E V.472(2012).

1HARVEY J . K AYE , T HOMAS PA I N E AND THE P ROM I S E O F AMER I CA22(2005).

2ER I C FONER , TOM PA I N E AND R EVOLUT IONARY AMER I CA1–3(1976).

3JillLepore,TheSharpenedQuill,NEW YORKER,Oct.16,2006,www.newyorker.com/archive/2006/10/16/061016crbo_books?currentPage=all.

4KatherineMangu-Ward,ClaimingPaine,REA SON ,July2007,at60,63,http://reason.com/archives/2007/06/12/claiming-paine.

5THOMAS PA I N E , R I GHT S O F MAN(Everyman’sLibrary,AlfredA.Knopf1994)(1791).

6U . S . CON S T.artII,§1,para8.

7SeeChapter2.3.

8EDWARD P.S TR I NGHAM ,P R I VAT E GOVERNANCE : C R EAT I NG O RDER I N E CONOM I C A ND

SOC I A L L I F E(OxfordUniversityPress,2015);BRUCE L . B EN SON , THE E NTERPR I S E S O F

LAW 179–234(1990).

9Seesuprach.1.2.

10BradTaylor,GoverningSeasteads:AnOutlineoftheOptions(TheSeasteadingInst.,2010)http://seasteadingorg.wpengine.com/wp-

content/uploads/2015/12/Taylor_2010_GoverningSeasteads.pdf(lastvisitedNov.29,2016).

11SpencerH.MacCallum&MichaelvanNotten,ProposedMembershipAgreementforaFreeport-Clanapp.C197,inMICHAELVAN NOTTEN , THE L AW O F THE S OMAL I S

(SpencerHeathMacCallumed.,2005).Thatagreementderivedfromanearlierone,designedforahypotheticalspacesettlementcalled“Orbis,”alsostructuredasaleaseagreement.SpencerH.MacCallum,AModelLeaseforORBIS,VOLUNTARY I S T ,Aug.1996,at1,www.voluntaryist.com/backissues/081.pdf.

12DecretoNo.120–1203,supranote18atart.26,39.

13SeeRE S TATEMENT ( S ECOND ) O F CONTRACT S§50(AM . L AW I N S T.1981)(describingtherequirementsforacceptancebyreturnpromiseorperformance).

14ROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A330(1974).

15RANDY E . B ARNETT, T HE S TRUCTURE O F L I B ERTY32–52(1998).

16See,e.g.,G.A.Res.217(III)A,at71,UniversalDeclarationofHumanRights(Dec.10,1948).

17MacCallum&vanNotten,supranote12at214–15.

18DecretoNo.120–1203,LeyOrgánicadelasZonasdeEmpleoyDesarrolloEconómico(ZEDE)[OrganicActforZonesforEmploymentandEconomicDevelopment(ZEDE)]art.10,16,35,&43LA GACETA , D I AR IO O F I C I A L D EL L A

RE PUBL I CA D E HONDURA S,Sept.6,2013,http://zede.gob.hn/english/gaceta/Gaceta%206%20de%20septiembre%202013.pdf.

19FRANK WEL SH , A BORROWED P LACE : THE H I S TORY O F HONG KONG138(1993)(quotingFriendofChina,Mar.1842).

20Id.at532–36.

21R I CHARD A . E P S T E I N , S IMPLE RULE S FOR A COMPLEX WORLD16(1995).

22RestatementsoftheLaw,A.L.I.,www.ali.org/publications/#publication-type-restatements(lastvisitedNov.28,2016).

23BARNETT ,supranote15,at289.

24J OHN LOCKE ,TWO T R EAT I S E S O F GOVERNMENT344(PeterLasletted.,CambridgeUniv.Press1988)(1690).

25TomW.Bell,GraduatedConsentinContractandTortLaw:TowardaTheoryofJustification,61CA S E W. R E S . L . R E V.17,68–71(2010).

26AM . A RB I TRAT ION A S S’ N ,COMMERC I AL ARB I TRAT ION RULE S AND MED I AT ION

PROCEDURE S (2013),www.adr.org/aaa/faces/rules/searchrules/rulesdetail?doc=ADRSTG_004130.

27I N T ’ L CHAMBER O F COMMERCE , A RB I TRAT ION RULE S : R ULE S O F ARB I TRAT ION O F

THE I N T ERNAT IONAL CHAMBER O F COMMERCE(2012),www.iccwbo.org/Data/Documents/Buisness-Services/Dispute-Resolution-Services/Mediation/Rules/2012-Arbitration-Rules-and-2014-Mediation-Rules-ENGLISH-version/.

28Id.at68.

29See,e.g.,AM . A RB I TRAT ION A S S’ N ,supranote26,atR-12,R-13(describingtheprocessbywhichdirectlyappointedarbitratorschooseathirdarbitrator).

30See,e.g.,BARNETT ,supranote15,at266–88;BEN SON ,supranote8,at264–68;DAV I D F R I EDMAN , THE MACH INERY O F F REEDOM114–20(2ded.1989);MORR I S

TANNEH I L L & L I NDA TANNEH I L L , T HE MARKET FOR L I B ERTY65–76(LibertarianReviewFound.1984)(1970).

31U . S . CON S T.amend.IV.

32U . S . CON S T.amend.VIII.

33TomW.Bell,“Property”intheConstitution:TheViewfromtheThirdAmendment,20WM . & MARY B I L L R T S . J .1243(2012).

34RafaelLaPorta,FlorencioLopez-de-Silanes,&AndreiShleifer,TheEconomicConsequencesofLegalOrigins,46J . E CON . L I T E RATURE285(2008);PaulG.Mahoney,TheCommonLawandEconomicGrowth:HayekMightBeRight,30J . L E GA L S T UD .

503(2001).

35RE S TATEMENT ( S ECOND ) O F CONTRACT S § § 2 0 1 - 0 4 ( AM . L AW I N S T.1981).

36U . S . CON S T.artIII,§§1–2.

37EthanJ.Leib,ThePerpetualAnxietyofLivingConstitutionalism,24CON S T.

C OMMENT. 353,368(2007).

38SeeBell,supranote25,at71–83.

39DecretoNo.120–1203,supranote18atart.22.

40WELSH , supranote19,at258.

41HENDR IK S P RUYT, T HE S OVERE IGN S TATE AND I T S COMPET I TOR S127,163(1994).

42BEN SON ,supranote30,at21.

43See,e.g.,BARNETT, supranote15,at291–92.

44BEN SON ,supranote30,at23–26.

45MICHAELVAN NOTTEN , THE L AW O F THE S OMAL I S20(SpencerHeathMacCallumed.,2005).

46MacCallum&vanNotten,supranote12,at201§III.D,H.

47See,e.g.,RE S TATEMENT ( TH I RD ) O F S URETY SH I P AND GUARANTY ( AM . L AW I N S T.

1996).

48MacCallum&vanNotten,supranote12,at200§II.1.

49VAN NOTTEN,supranote45,at37,51,97.

50Foraseminalexample,seeCharlesM.Tiebout,APureTheoryofLocalExpenditures,64J . P O L . E CON .416(1956).

51Therecordrevealsonlyoneexception:Inearly1922,inresponsetoageneralstrike,HongKongofficialsusedarmedforcetopreventChineselaborersfromleavingtheterritory.WELSH ,supranote19,at370.

52BEN SON ,supranote30,at17–21;VAN NOTTEN,supranote45,at97.

53RANDY E . B ARNETT, R E S TOR I NG THE LO S T CON ST I TUT ION43(2004).

54MacCallum&vanNotten,supranote12,at204§IV.E.1.b.2.

55See,forexample,theformerSovietUnionorthecurrentNorthKorea.

56See,e.g.,PatriFriedman&BradTaylor,BarrierstoEntryandInstitutionalEvolution(TheSeasteadingInst.,Apr.2011)http://seasteadingorg.wpengine.com/wp-content/uploads/2015/12/friedman_taylor_barriers_to_entry.pdf(lastvisitedNov.29,2016).

57RE S TATEMENT ( S ECOND ) O F CONTRACT S§§9-16(AM . L AW I N S T.1981).

58Id.at§211(3).

59Id.at§§151–77.

60HENRY S UMNERMA INE ,ANC I EN T L AW(CambridgeUniv.Press2012)(1861).

61SeeChapter3.5.

62SeeAppendixA.

63PaulFeine&AlexManning,SandySprings,Georgia:TheCityThatOutsourcedEverything,REA SON . TV (Apr.12,2011,12:55PM),http://reason.com/blog/2011/04/12/reasontv-sandy-springs-georgia.

64THOMAS PA I N E , COMMON S EN S E(Everyman’sLibrary,AlfredA.Knopf1994)(1776).

3.2

AbolishGovernmentalImmunity*◈

1Introduction:AreYouKidding?Law professors have what in their circles passes for a joke. There is not much to it.Typically,theprofessorleansforwardwithraisedeyebrowsandasks,“What’sthecorrectanswertoeverylegalquestion?”

Afterapause,withanimpishgrin,comesthepunchline:“‘Itdepends.’”

Whatisfunnyaboutthat?Notmuch.Butprofsliketofollowupthatso-calledjokewithanexplanation–suredeathtoanysurvivinghumor:“Yousee,thecorrectanswertoanylegalquestiondependsontheparticularcircumstancesofthecaseathand.Sothat’salways a correct answer.But it’swhat you addafter ‘It depends’ that clients pay for.”Studentvictimsusuallyalsohearanupliftingcodaalongthelinesof“That’swhatyou’reheretolearn!”Ugh.

Thischapterasksaveryseriousquestion:Doesthegovernmentfacelegalliabilityforitswrongs?Youknowtheanswerwillnotbefunny:“Itdepends.”

Anditonlygetsworse.Ifyoukeepspinningouttherestoftheanswer,likeanygoodattorneywould,yousoondiscoverthatwhetherthegovernmentfaceslegalliabilityforitswrongsdependsonalotoffactors,butalmostallofthemleadtoaverysadconclusion:No.Thegovernmentdoesnotgenerallyfacelegalliabilityforitswrongs.

Thescopeofgovernmentalimmunityfromcivillawdepends,ofcourse,onwhatsortofgovernmentyouhaveinmind.1Privategovernments,suchas those that runcommoninterest developments, businesses, churches, universities, and so forth, do not typicallyenjoyspecialprivilegesagainstlegalliability.Iftheyintentionallyornegligentlyharmoneoftheirmembers,ordefraudthem,orotherwisecommitcivilwrongs,theymustfacetheconsequencesinacourtoflaw.Incontrast,politicalgovernmentsoftengrantthemselvesimmunityfromcivilliability.

Again, it depends on the particular government in question, but throughout theUnitedStates,alllevelsofgovernment–federal,state,andlocal–enjoyimmunityfromcivil lawsuits. Courts have, moreover, extended this privilege from sovereigns to theirofficials.InspiredbythesortofroyalprivilegesthattheConstitutionexpresslyrejects,andinventedbypublicofficialsall tooeagertoexemptthemselvesfromthesamelawsthey

wouldimposeonothers,governmentalimmunityviolatesthemostfundamentalpreceptsof the rule of law.Aggrieved subjects have rioted over lesser things than being denied

judicialreliefforlegalwrongs–thingsliketeaimposts,forinstance.2Andwholecolonieshave revoltedagainst the idea that aprivileged fewenjoy immunity toviolateeveryone

else’srights.3

GovernmentalimmunityintheUnitedStatesoriginatedfrombadauthorityandbaldassertion, tookrootwhen judgesexempted themselves fromcivil liability,andspread toimmunizeallmannerofgovernmentalbodiesandagents.Thishistoricalevolutionshowsall toowellwhat followswhengovernmentcourtsdecide thegovernment’s exposure tocivil litigation:They tend, forpredictablepublicchoicereasons, to increasegovernmentpowerattheexpenseofindividualrights.

The doctrine of governmental immunity exempts sovereigns and their agents fromthe law of the land, empowering them to invade private rights without facing judicialremedies.Sovereignimmunityextendsinwholeorparttothe21.8millionemployeesofstate and federal governments in the United States, giving them qualified good-faithimmunity.4 The largest andmost powerful institutions in our country thus claim to beabovethelaw,exposingthemselvestoitscivilprocessesonlypiecemealifatallandthenonlyasagraciousconcessiontothepeopleitnominallyserves.

Consider the paradox: Exemption from normal civil liability was a characteristicenjoyedbythoseholdingnobletitlesinEnglishlaw–titlesthattheConstitutionexpresslyrejected and forbade.5 And while nobles once constituted 5 percent of the Englishpopulation,6governmentemployeesnowconstitutenearly7percentofours.7

This chapter suggests another approach to governmental immunity: abolish it.Abolishitandsubjectsovereignsandtheiragentstonormalcivilliability.Theruleoflawdemandsnothingless.

Perhapsthatdoesnotgofarenough.Perhaps,asintraditionalAfricanlegalsystems,governmentofficials shouldbehelddoubly liablewhen theyviolateprivate rights.8Fornow, though, itwould suffice to subject all governments in theUnited States and theirofficialstoordinarycivilliability.

Governmentalimmunityfindsnodefenseinthesupposedparadoxthatwouldariseifthegovernment stood as adefendant in its owncourts.Perhaps theFounders couldnot

think of any forum except federal and state courts for resolving claims against thegovernment. Since that day, though, the private sector has developed impartial andefficient mechanisms for resolving civil disputes. The best practices developed byAmerican and international nongovernmental organizations, implemented in the citizencourts described in Chapter 3.3, would prove ideal for deciding suits betweengovernmentsandindividuals.

First,though,thischaptermakesthecaseagainstgovernmentalimmunity.Section2reviewsthestatusofgovernmentimmunityintheUnitedStates,revealingtheprivilegesitbestowsuponsomeofthemostpowerfulinstitutionsinthecountryandabout7percentofitspopulation.Section3summarizestheoriginsandgrowthofgovernmentalimmunityinthe United States. Section 4 surveys expert assessments of government immunity(preview:“Areyoukidding!?”).Buteverydogmusthaveitsday,soSection5reviewsthebest arguments forgovernmental immunity.Despite itsmoment in the sun, thedoctrineremains a dog, so to speak. The chapter thus concludes by calling for the abolition ofgovernmentalimmunityintheUnitedStatesandwhereveritthreatenstheruleoflawandcivilliberties.

2GovernmentalImmunityintheUnitedStatesToday

The doctrine of governmental immunity reaches far and wide in the United States,exempting powerful institutions and millions of people from some or all liability forviolating common law or constitutional rights. This section briefly reviews howgovernmentalimmunityenteredthelawoftheUnitedStatesandwhatcommentatorssayaboutthedoctrinetoday.Thisexercisedoesmoretoexplaingovernmentalimmunitythantoexcuseit.

Becauseofgovernmentalimmunity,citizensandresidentsoftheUnitedStatessufferfewerremediesforviolationsoftheirownrightsthanpublicparties,whetherinstitutionsoremployees,do.Thegovernmentcouldsueyoufor,say,intentionallysmashingthehoodofoneofitsvehiclesbyusingittobreakyourfallfromathird-storywindow,justlikeanyother party. If anything, in fact, offenses against the sovereign trigger evenmore legalliability – including possibly criminal charges – than similar offenses against privateparties.Butwouldyouenjoyasimilarclaimagainstthegovernmentoritsagentifduring,say,amovie-grademelee,anofficialgoodguycommittedasimilarsmashingofyourcar’shood?Likelynot.9

Thosewhoenjoy theprivilegesofgovernmental immunity includeawiderangeoffederal and state institutions, from the most powerful sovereign known to history tomunicipal wastewater treatment districts, and some 21.8 million employees (about 7percent of the national population).10 What could justify granting so the great andnumerousahostthesespeciallegalprivileges?

The expense and indignity that governmental immunity imposes on private partiesmightmakesenseifitqualifiedasanecessaryevil.Butthatseemsunlikely;governmentsabroad do well enough without it.11 Governmental immunity bears little of the honorbestowedonwell-foundedprecedentsorwisepublicpolicy,andmoreoverbearsmuchofthe taint of self-service. Sovereign immunity and its direct offspring, official immunity,makeprivateindividualsbearthebruntofwrongscommittedinpursuitofthepublicgood.Neitherhistorynorefficiencynorequitycanjustifygovernmentalimmunity.Wecanbest

explain it asapublicchoice tragedy, thepredictable resultof lettinggovernmentagentsjudgegovernmentwrongs.

3TheOriginandGrowthofGovernmentalImmunityinU.S.Law

Exactlyhowageneralpresumptionofgovernmental immunitywormed itsway into thelawoftheUnitedStatesmayremain“oneofthemysteriesoflegalevolution,”butitgiveseveryappearanceofproceedingundercoverof ignorance, ifnotbad faith.12“Obscurityand uncertainty” shroud the origins of the doctrine.13 Commentators find “the case forimmunity[]inconclusiveandunpersuasiveonhistoricalgrounds,”14blamingitsreceptionin the United States “on a pervasive misunderstanding of English legal history and aconvenientdisinclination toconsider thedistinctivehistoryandpoliticalphilosophy thatunderliesthefederalgovernment.”15

Edwin M. Borchard, a seminal scholar of governmental immunity in the UnitedStates,summedupitsignominioushistorythisway:“Thereasonforthislong-continuedandgrowing injustice inAnglo-American lawrests,ofcourse,uponamedievalEnglishtheory that ‘the King can do no wrong,’ which without sufficient understanding wasintroducedwiththecommonlawintothiscountry,andhassurvivedmainlybyreasonofitsantiquity.”16Despitespringingfromsomewhatdubiousseed,governmental immunityhasspreadthroughoutthelawoftheUnitedStates,exemptingalltypesofsovereignsandofficialsfromordinarycivilliability.

TheFounderstookcaretospelloutoneverynarrowkindofgovernmentalimmunityin theConstitution’sSpeechandDebateClause. It provides that legislators “shall in allCases,exceptTreason,FelonyandBreachofthePeace,beprivilegedfromArrestduringtheirAttendanceattheSessionoftheirrespectiveHouses,andingoingtoandreturningfromthesame;andforanySpeechorDebateineitherHouse,theyshallnotbequestionedinanyotherPlace.”17

Theinterpretiveprincipleofexpressiouniussuggeststhatbyprovidinganexemptionfromcivilliabilitysolelyinonesmallarea,theFoundersmeanttoleavethegovernmentand its officials subject to ordinary civil liability in all other respects.18 And indeed,nowhereelsedoestheConstitutionprovideimmunitytothegovernmentoritsagents.19

Other provisions of the Constitution likewise suggest that the Founders did notassumethatsovereignsortheirofficialscouldescapeordinarycivilliability.20Indefiningthe scopeof theSenate’s impeachmentpower, for instance,which reachesall executiveand judicial officers,21 the Constitution provides that “the Party convicted shallnevertheless be liable and subject to Indictment, Trial, Judgment and Punishment,according to Law.”22 Suffering impeachment by the Senate, in other words, does notforecloseliabilitytoprivateparties.Also,theConstitutionforbidstheUnitedStatesfromgranting any “Title ofNobility”23 – a grant characterized by the privilege of violatingcommoners’rightswithoutsufferingliabilitytothem.24Moregenerally, theConstitutionprovides that it “shall be the supremeLawof theLand”– something that could hardlyholdtrueifthegovernmentoritsofficialscouldviolatetheConstitutionwithoutsufferingthesamelegalstricturesthattherestofusface.25

Although theSupremeCourtderogatedgovernmental immunityata timewhen theFounders remained in living memory, it later gave judges immunity from civil suit,establishingaprecedentthatspreadthroughoutthelawoftheUnitedStates.26The1793caseofChisholmv.Georgiaheldthatacitizenofonestatecouldmaintainasuitagainstanother state’s government; sovereign immunity offered no exemption from civilliability.27 The states rushed to ratify the Eleventh Amendment soon thereafter, givingthemselvesimmunityfrompayingtheonerousdebtstheyhadincurredduringtheWarofIndependence.28 Notably, it took a constitutional amendment to privilege sovereignsagainst civil liability in that instance.Soon thereafter, governmental immunity began tocreep less ostentatiously into the law of the United States, through rare and scatteredcases.

The process of crafting governmental immunity began by hints, found voice indictum,andwasbornbyjudicialpronouncement.Inholdingthatthegovernmentcouldbesubject to suit only by its own consent, in the 1821 case of Cohens v. Virginia, theSupreme Court strongly implied that the government could not be sued if it did notconsent.29ChiefJusticeMarshallventuredbeyondtheholding,assertingthat“asovereignindependent State is not suable, except by its own consent,” and that the “generalpropositionwillnotbecontroverted.”30

TheCourtcitednoauthorityfortheproposition;itprovideditsown.Moreover,itdidsounnecessarily.TheCourtultimatelyheld thatVirginiahadconsented tosubmit to the

jurisdictionof federalcourtswhen it ratified theConstitution.Sovereign immunityaddsnothing to that holding and wrongfully forecloses the possibility that Virginia was notimmune from its own civil law in its own courts.Marshall thus did not need to inventgovernmentalimmunity.Butinventithedid.

Marshall could not have found the doctrine of governmental immunity in Englishlaw,whereindividualscouldinfactwinreliefforprivateclaimsbroughtagainstthecrownor its agents.31 As Professor Donald L. Doernberg put it, with fitting irony, “[T]heAmericanformofsovereignimmunitycreatedasystemofofficialaccountabilityevenlessprotectiveofindividualrightsvis-à-visgovernmentthantheEnglishsystemthecolonistshad thrown off because it denied them those rights.”32 Despite Marshall’s somewhatcreative approach to the doctrine, by 1882, theSupremeCourt could cite hisdictum inCohens as the genesis of governmental immunity in the law of the United States,explaining,perhapswithahintofapology,that“theprinciplehasneverbeendiscussedorthereasonsforitgiven,butithasalwaysbeentreatedasanestablisheddoctrine.”33

Just as sovereign immunity took root in the law of the United States by somecombinationofmisapprehensionandjudicialinvention,sodidtheprivilegeofimmunityspread from the sovereign to its officials. The process began with government judgesexempting themselves from the jurisdiction of government courts, based on amisstatementofEnglishlaw.34Today,tensofthousandsoffederalandstateofficialsenjoycompleteorpartialimmunityfromordinarycivilprocesses.

Over a century ago, in Bradley v. Fisher, the Supreme Court asserted that theimmunity of judges from civil suits relating to abuse of authority “has been the settleddoctrineoftheEnglishcourtsformanycenturies,andhasneverbeendenied,thatweareawareof, inthecourtsofthiscountry.”35 In that, theCourterred.English lawgenerallypresumedjudicialliability,infact,andAmericandecisionshadthroughoutthenineteenthcenturyexhibitedamixtureofjudicialimmunityandliability.36

Englishlawrecognizedoneexceptiontothepresumptionofjudicialnon-immunity:ajudgeofacourtofrecordwasliableforwrongfulactsonlyifhecommittedthemoutsidethe scope of his authority.37 All other judges faced liability for all theirwrongful acts,committedundercolorofauthorityorotherwise.38Whydidjudgesofcourtsofrecordgetspecial treatment?Because the king asserted that hisword concerning events that took

place in his presence was indisputable, and he extended that privilege to his judges.39

Judicialimmunitythussprangfromsovereignimmunity.

Though state courts had shown diverse approaches to the question of judicialimmunity,Bradley set the theme forU.S. law thereafter, establishing a presumption ofimmunityforalljudicialactsexceptthoseclearlyoutsidethecourt’sjurisdiction.40Judgeslater extended their own immunity to a wide range of their fellow governmentalemployees,suchasprosecutorsandadministrativefunctionariesengaginginquasi-judicialacts.41Courtshaveevenextendedtheprivilegetoprivatearbitrators,protectingthemfromcivil claims of wrongful judging.42 (Notably, from a public choice perspective, retiredgovernmentjudgesconstituteacomparativelyhighpercentageofprivatearbitrators.43)

Bradleypaintsatellingportraitofthemachinationsofself-interest:Assoonastheyfacedsuitsforfailuretofulfilltheobligationsoftheiroffices,judgesintheUnitedStatesheld themselves immune as a class from the same civil liability that they imposed onothers.44Bradley did not skimp on the privilege either, instead holding that “judges ofcourts of superior or general jurisdiction are not liable to civil actions for their judicialacts,evenwhensuchactsareinexcessoftheirjurisdiction,andareallegedtohavebeendone maliciously or corruptly.”45 The case proved controversial, denounced bycommentatorsas“reflectingjudicialmisunderstandingofbothwhatthelawwasandhowand why it developed.”46 But it proved effective, establishing a channel by which thesovereign immunity created in Cohens might flow to the benefit of the sovereign’sofficials.

Today, all manner of sovereigns and officials enjoy complete or partial immunityfromordinarycivilprocesses.Sovereignimmunityappearsmostcommonlyintheguiseofthe privilege against civil liability claimed by default by federal, state, and municipalinstitutions.47 Courts have extended sovereign immunity to public bodies as small anddiverse as school districts,48 airport corporations,49 and wastewater managementoperations.50Governmententitiescanandoftendowaivetheirpresumptiveimmunityinwholeorinpart,asthefederalgovernmentdidinwaivingitsnon-tortactionimmunityintheTuckerAct,51 and its tort immunity in theFederalTortClaimsAct.52But aprivateparty’srighttosuethegovernmentremainsamatteroflegislativediscretion;courtswillnotenforceitabsentstatutoryauthorization.53

Largely barred from suing sovereigns for violations of their rights, plaintiffs haveresorted tosuingofficialspersonally throughBivensactions(for federalofficials)54or§1983actions(forstateorlocalones).55Thesesuitshavelimitedeffect.Legislators,judges,andhigh-levelexecutiveofficersenjoyabsoluteimmunityfromcivilsuit,exemptingthemeven fromallegationsofunreasonableormaliciousaction.56Lower-levelofficialsenjoyqualifiedgood-faithimmunity,shieldingthem“fromliabilityforcivildamagesinsofarastheirconductdoesnotviolateclearlyestablishedstatutoryorconstitutionalrightsofwhicha reasonable person would have known.”57 All these privileges operate not merely asdefenses to liability, but as immunities to suit, allowing dismissal of litigation at theearliestpossiblestage.58

How can we summarize the long and complicated development of governmentalimmunityinthelawoftheUnitedStates?ThoughtheFoundersevidentlytookadimviewofputtingthegovernmentoritsagentsabovethelaw,theirrevolutionaryidealssoonfelloutoffavor.Fromanunsupporteddictum,sovereignimmunitygrewcasebycaseintoanunquestioneddoctrine. Insofaras theprivileges thatEnglish lawafforded to royaltyhadany application to an independentAmerica– a dubiousproposition at best – theyweremisunderstoodormisconstrued.Nonetheless,governmentalimmunitynowcompletelyorpartially exempts a wide range of sovereigns and officials from liability for violatingothers’constitutionalandcommonlawrights.

4CommentaryonGovernmentalImmunity,Proand(Mostly)Con

A long and distinguished line of academic commentators has disparaged governmentalimmunity,oftenintonesofincredulity,dismay,andoutrage.Theyhavecondemneditas“the antithesis of government by consent,”59 complained that it “turns human rightsprotection on its head, protecting the government against the citizenry rather than thereverse,”60 and worried about “the adverse effects of sovereign immunity on courts’capacities to provide individual justice.”61 Commentators have called it “a repugnantdoctrine, at oddswith themost basic precepts of theAmericanConstitution,”62 and an“unwantedandunjustconcept.”63Theyhavebluntlyconcludedthatit“mustgo.”64

AkhilReedAmarthunderedthatincreatingandsustaininggovernmentalimmunity,theSupremeCourt“misinterpretedtheFederalistConstitution’stext,warpeditsunifyingstructure, and betrayed the intellectual history of theAmerican Revolution that gave itbirth.”65DonaldL.Doernbergdevotedanentirebooktoarguingthatsovereignimmunitydoesnotcomportwith theruleof lawandviolates theLockeanprinciplesonwhich theUnited States was founded.66 Some authority weighs in favor of the governmentalimmunity,ofcourse–academiawouldbeapoorerplacewithoutsuchdissent–butevenitsstaunchestdefenderchides thedoctrinefora lackof“coherent justification.”67Manymorecommentatorsregarditwithskepticismifnotscorn.

DoubtlessbecauseitrepresentsestablishedlawintheUnitedStates,judgeshavenotcriticized governmental immunity with anything like the same passion. The SupremeCourt has noted the legislative branch’s “disfavor of the doctrine of governmentalimmunityfromsuit,”asevidencedbythepassageoflawswaivingtheprivilege,andhasfollowed the leadof lawmakersby construing suchwaivers liberally.68Dissenting fromwhat he regarded as a deviation from that policy, Justice Stevens went further still,decrying governmental immunity as “nothing but a judge-made rule” and “a persistentthreattotheimpartialadministrationofjustice.”69Forthemostpart,however,governmentjudges find little to criticize ingovernmental immunity. (But thenagain, it bearsnotingthatthedoctrinedirectlybenefitsjudgesbyprotectingthemfromcivillawsuits.)

5PolicyArgumentsforGovernmentalImmunityHow do government judges justify governmental immunity? Apart from whateverauthoritylongacceptanceofdubiousclaims,suchasthosemadeinCohensandBradley,can afford, they tend to explain governmental authority as essential to prevent publicbusiness from undue interference. As the Supreme Court explained in Harlow v.Fitzgerald,“publicofficersrequirethisprotectiontoshieldthemfromundueinterferencewith their duties and from potentially disabling threats of liability.”70 The Court hasvoiced particular concern for the immunity of the president because “diversion of hisenergies by concern with private lawsuits would raise unique risks to the effectivefunctioningofgovernment.”71

Note how this defense of governmental immunity implicitly condemns our civiljustice system. It presumes that if private plaintiffs could sue governmental institutionsandagents, thecosts imposedondefendants,and thus indirectly imposedon thepublic,wouldoutweighthenetbenefits.FederalandstategovernmentsintheUnitedStateshaveimportantobligations,nodoubt,andcivillitigationcanprovedistracting(evenwhenmostoftheworkcanbefobbedoffongovernmentattorneys),butgovernmentsabroadseemtomanagesimilarstresseswithoutunduedifficulty,asdoprivateinstitutionsandindividualsthroughoutour society.Common interestcommunitiescan rival cities in size, andoftensurpass them in quality, without enjoying the privilege of immunity. And how can agovernmentbureaucratclaimamoreurgentneedtoescapecivilliabilityandgetbacktoworkthanaprivatehospitalordoctor?

This counterargument to the claim that private lawsuits risk distracting importantgovernmentoperationssoundsinhypocrisybutdoesnotrelyonit.Theproblemwiththedoctrineofgovernmentalimmunityisnotsomuchtheuglycontradictionofrecreatingtheprivileges of royalty in a constitutional republic founded on the principle of protectingindividualrightsunderequalityoflawasitisthepracticaleffectofexemptingsovereignsand their agents from ordinary civil liability. Private organizations “eat their own dogfood”forgoodreason;consumingwhatyouofferthepublicgivesyouakeenappreciationof your failings and a strong incentive to do better. Because it dampens an importantfeedbackloop,governmentalimmunityleadstogovernmentalimpunity.

6Conclusion:ThePunchlineThedoctrineofgovernmentalimmunitydisrespectsourrightsandmakesmockeryoftherule of law. And for what? Not for any good reason, so far as the above analysis candiscern. This chapter therefore concludes by calling for the abolition of sovereign andofficialimmunity,intheUnitedStatesandwhereveritpersists.

Abolishing governmental immunity would redress the complaint, widespread andwellfounded,thatthedoctrinecontradictsthefundamentalprinciplesandplainlanguageof the U.S. Constitution. Far from removing a necessary feature of our politicalinstitutions,thereformwouldbringthelawoftheUnitedStatesintoconformitywiththatof therestof thedevelopedworld.Notably,“restofthedevelopedworld”here includesEngland, the supposed inspiration for governmental immunity, both at the time of itsdomestic reception72 and today.73 It also proves instructive that private communities,manyofthemrivalingthesizeofcities,thrivedespiteenjoyingnothinglikethebenefitsofsovereign or official immunity. Good government evidently does not have to meanexcusingbadacts.

But if government courts do not hear claims against the government, who will?Federal regulations already allow some relatively small claims against the government,broughtundera fewstatutes, togo tocourt-annexedarbitration.74Thesameregulationsexpresslybarcommonlaworconstitutionalclaimsfromsuchproceedings,however,andrefusetorecognizeanyarbitralawardofinjunctiveordeclaratoryrelief.75ThelawoftheUnitedStatescanandshoulddomoretoensurethefairresolutionoflegalclaimsbroughtagainstthegovernmentoritsagents.Thenextchaptertakesupthatchallengeandofferscitizencourtsasitsanswer.

Merely pointing out the foibles of governmental immunity has evidently not yetsufficed to topple the doctrine. Perhaps competition from newer and better ways ofremedyinglegalwrongswillhelpspeedreform.Andthatisnothingtolaughat.

*PortionsofthischapterderivefromTomW.Bell,UnconstitutionalQuartering,GovernmentalImmunity,andVanHalen’sBrownM&MTest,82T ENN . L . R E V.497(2015).

1Thischapterusesgovernmentalimmunityforthemostgeneraldescriptionoftheexemptionfromcivilliabilityclaimedbysovereignsandtheirofficials,reservingsovereignimmunityforprivilegeagainstcivilliabilityenjoyedbygovernmententitiesthemselves,qualegalpersons.Officialimmunityhereinreferstotheprivilegesjudgeshaveaffordedtheirking,themselves,andotheragentsofthesovereign.

2Taxesonteaimposedbyanon-representationalParliament,forinstance.PAUL

JOHN SON , A H I S TORY O F THE AMER I CAN P EOPLE142–43(HarperCollins1997).

3See,e.g.,theAmericanWarforIndependence.Id.at212–67.

4ROBERT J E S S E W I L LH I DE , U . S . C EN SU S B UREAU , A NNUAL S URVEY O F P UBL I C

EMPLOYMENT AND PAYROLL S UMMARY R E PORT: 2 0 1 3 ( 2 0 1 4 ),www2.census.gov/govs/apes/2013_summary_report.pdf.

5U . S . CON S T.art. I ,§9,cl.8.

6J ONATHAN D EWALD , THE E UROPEAN NOB I L I TY, 1 4 0 0–1 8 0 0 , at25(1996).

7Quickfacts,U . S . C EN SU S B UREAU ,www.census.gov/quickfacts/table/PST045216/00(lastvisitedDec.20,2016)(showingasofJuly1,2016,aU.S.populationestimateof323,127,513).

8MICHAELVAN NOTTEN , THE L AW O F THE S OMAL I S37(SpencerHeathMacCallumed.,2005).

9See,e.g.,Suroccov.Geary,3Cal.69(1853).

10Seesupra,notes15–18andaccompanyingtext.

11DeniseGilman,CallingtheUnitedStates’Bluff:HowSovereignImmunityUnderminestheUnitedStates’ClaimtoanEffectiveDomesticHumanRightsSystem,95GEO . L . J .591,636–37(2007).

12EdwinM.Borchard,GovernmentLiabilityinTort,34YA LE L . J .1,4(1924).

13GeorgeW.Pugh,HistoricalApproachtotheDoctrineofSovereignImmunity,13L A .

L . R E V.476,477(1953).

14JayM.Feinman&RoyS.Cohen,SuingJudges:HistoryandTheory,31S . C . L . R E V.

201,204(1980)(speakingofjudicialimmunity).

15DonaldL.Doernberg,TakingSupremacySeriously:TheContrarietyofOfficialImmunities,80FORDHAM L . R E V.443,443(2011).

16Borchard,supranote13,at2(footnoteomitted).

17U . S . CON S T.art. I,§6,cl.1.

18Doernberg,supranote16,at455.

19VickiC.Jackson,SuingtheFederalGovernment:Sovereignty,Immunity,andJudicialIndependence,35GEO . WA SH . I N T’ L L . R E V.521,523(2003).

20Doernberg,supranote16,at455–56.

21U . S . CON S T.art. I,§3,cl.6;id.art. I I,§4.

22Id.art.I ,§3,cl.7.Theimpeachmentpowerdoesnotreachlegislators,whoinsteadfaceexpulsionundertherulesofeachhouse.Id.art. I,§5,cl.2.

23Id.art. I,§9,cl.8.

24M . L . B U SH , NOBLE P R I V I L EGE66(1983).

25U.S.CONST .art.VI,cl.2;Doernberg,supranote16,at464;RodolpheJ.A.deSeife,TheKingIsDead,LongLivetheKing!TheCourt-CreatedAmericanConceptofImmunity:TheNegationofEqualityandAccountabilityUnderLaw,24HOF S T RA L .

R E V. 981,984–86(1996).

26deSeife,supranote26,at986.

272U.S.(2Dall.)419,420,422–23(1793).

28U . S . CON S T.amend. XI.

29Cohensv.Virginia,19U.S.(6Wheat.)264,380(1821).

30Id.

31SeeDoernberg,supranote16,at445–48,453–54(althoughthekingwasuntouchable,hisroyalpropertywasnot).

32Id.at451(footnoteomitted).

33UnitedStatesv.Lee,106U.S.196,207(1882).

34SeeBradleyv.Fisher,80U.S.(13Wall.)335,347(1871).

35Id.

36Feinman&Cohen,supranote15,at203–04.

37Id.at210.

38Id.

39Id.at206.

40Stumpv.Sparkman,435U.S.349,355–57(1978).

41See,e.g.,VandeKampv.Goldstein,555U.S.335(2009)(prosecutors);Butzv.Economou,438U.S.478,512–13(1978)(executivebranchadministratorsperformingadjudicativefunctions);FrankJ.Menetrez,LawlessLawEnforcement:TheJudicialInventionofAbsoluteImmunityforPoliceandProsecutorsinCalifornia,49S AN TA

C LARA L . R E V.393(2009)(describingandcriticizingscopeofabsoluteimmunityinCalifornialaw).

42SeeJ AY E . G REN IG , A LTERNAT I VE D I S P UTE R E SOLUT ION§24:51(3ded.2005&Supp.2015/16).

43SeeCraigSander,RetiredJudgesPopularasPrivateArbitrators,N.H.B.NEWS

(May14,2010),www.nhbar.org/publications/display-news-issue.asp?id=5554.

44Bradleyv.Fisher,80U.S.335,347(1871).

45Id.

46Feinman&Cohen,supranote15,at203.

47SovereignImmunity,BLACK ’ S L AW D I C T IONARY1396(6thed.1990).

48Barrettv.Bd.ofEduc.,13F.Supp.3d502,514(E.D.N.C.2014).

49SeeInreAirCrashatLexington,No.5:06-cv-316-KSF,2007WL4206687(E.D.Ky.Nov.26,2007).

50PYCAIndus.,Inc.v.HarrisonCty.WasteWaterMgmt.Dist.,81F.3d1412,1419(5thCir.1996).

5128U.S.C.§1346(a)(2)(2012).

5228U.S.C.§1346(b)(2012).

53Cohensv.Virginia,19U.S.(6Wheat.)264,380(1821).

54Bivensv.SixUnknownNamedAgentsofFed.BureauofNarcotics,403U.S.388,389(1971).

5542U.S.C.§1983(2012).

56SeeHarlowv.Fitzgerald,457U.S.800,807(1982)(describingfederallaw);Arteagav.NewYork,527N.E.2d1194,1194–96(N.Y.1988)(describingNewYorklaw).

57Harlow,457U.S.at818.

58Scottv.Harris,550U.S.372,376n.2(2007).

59Doernberg,supranote16,at447.

60Gilman,supranote12,at624.

61Jackson,supranote20,at522.

62ErwinChemerinsky,AgainstSovereignImmunity,53S TAN L . R E V.1201,1223(2001).

63Pugh,supranote14,at476.

64KennethCulpDavis,SovereignImmunityMustGo,22ADM IN . L . R E V.383,383(1970).

65AkhilReedAmar,OfSovereigntyandFederalism,96YA LE L . J .1425,1466(1987).

66DONALD L . DOERNBERG , S OVERE IGN IMMUN I TY OR THE RULE O F L AW(2005).

67LawrenceRosenthal,ATheoryofGovernmentalDamagesLiability:Torts,ConstitutionalTorts,andTakings,9U . PA . J . C ON S T. L .797,799(2007);seealsoCalebNelson,SovereignImmunityasaDoctrineofPersonalJurisdiction,115HARV. L . R E V.

1559(2002)(defendingthedoctrineonoriginalistgrounds);AlfredHill,InDefenseofOurLawofSovereignImmunity,42B . C . L . R E V.485,497(2001)(same);RoderickM.Hills,Jr.,TheEleventhAmendmentasCurbonBureaucraticPower,53S TAN . L . R E V.

1225,1234–35(2001)(defendingsovereignimmunityascurbongovernmentexpenditures);HaroldJ.Krent,ReconceptualizingSovereignImmunity,45VAND . L .

R E V. 1529,1534–39(1992)(defendingsovereignimmunityonseparationofpowergrounds).

68Fed.Hous.Admin.v.Burr,309U.S.242,245(1940)(citingKeifer&Keiferv.ReconstructionFin.Corp.,306U.S.381(1939)).

69UnitedStatesv.NordicVillage,Inc.,503U.S.30,43(1992)(Stevens,J.,dissenting).JusticeBlackmunjoinedinthedissent.

70Harlowv.Fitzgerald,457U.S.800,806(1982).

71Nixonv.Fitzgerald,457U.S.731,751(1982).TheCourtalsovoicedconcernabouttheseparationofpowers,butadmittedthatwouldnotstopitfromdiscipliningtheExecutiveinappropriatecases.Id.at753–54.

72SeeDoernberg,supranote16,at453–54;deSeife,supranote26,at984–86.

73Gilman,supranote12,at637.

7428C.F.R.§50.20(b)(2016)(allowingclaimsunder$100,000broughtunderspecifiedfederalstatutestoberesolvedbycourt-annexedarbitration).

7528C.F.R.§50.20(d)(2),(3)(2016).

3.3

CitizenCourts*◈

1Introduction:GunsversusGavelsTheFounders of theUnitedStates did not trust standing armies.They remembered toowelltheBostonMassacre,whereRedcoatsfiredonacrowdofcivilians,killingfive.1TheDeclarationofIndependencecitedtheEnglishpracticeofimposingstandingarmiesuponthecoloniesasjustgroundsforrevolution.2DuringtheConstitutionalConvention,JamesMadisonandotherscautionedagainst standingarmies.3TheFoundershad learned frombitterexperiencethedangerofputtinggunsinthehandsofamultitudeswornandtrainedtousethemingovernmentservice–apotentiallylethalmistake.

TheFoundersdidwelltoworryaboutguns.Maybetheyshouldhaveworriedmoreaboutgavels,though.Both,afterall,havethepowertodestroy.Andneithercanclaimtoalwayshititsmark.

TheFoundersdidnot create anypermanent standingarmy to speakof (thatwouldwaituntilWorldWarII).Theydidcreateastandingjudiciary, though.How?Byputtinggavelsinthehandsofamultitudeswornandtrainedtousethemingovernmentservice.4

TheFoundersmight not have thought about it thatway, but thatwas the practicaleffectofcreatingafederaljudiciaryvestedwithjurisdictionovercasesarisingundertheConstitution.5Thatjurisdictionincludescasesinwhichthefederalgovernmentisitselfaparty, problematic combination. Nor it is a minor gaffe. Such cases have amounted tomorethan10percentofallfederalcasesinrecentyears.6

Letting federal officials assume exclusive jurisdiction to decide cases against thefederalgovernmenthashadresultsaspredictable,andinthelongtermasdestructive,asloosingmillionsofintenselyindoctrinatedandheavilyarmedyoungmenupontheworld.ThelegalchicanerythatintroducedthedoctrineofgovernmentalimmunitytotheUnitedStates,described inChapter3.2, offers just one ofmany examples of the phenomenon.Addup thecases inwhichgovernment judgeshaveunfairly favored thegovernment, inwayslargeandsmall,obviousandsubtle,andyouendupexplainingalotofthegrowthinfederal power over the past century. The way that bullets destroy flesh, self-judgmentdestroystheruleoflaw.

Thisbriefchapterdescribestheproblemandoffersacure.Section2repeatsthecase–asurprisinglyobviousone,inretrospect–againstgivinggovernmentcourtsamonopolyondecidinglegalclaimsagainstthegovernmentitself.Futuregenerationswilllookbackonpresentjudicialnormsthewaythatthisgenerationshuddersinrecollectionoftrialsbyordeal. Section 3 explains how to implement citizen courts. It is not at all difficult –anotherreasonwhyhistorywillmarvelthatgovernmentseverdidthingsdifferently.Thechapterconcludesbytakingastandagainstastandingjudiciary.

2TheJudgmentagainstSelf-JudgingIt stands as a fundamental principle of justice that no party to a dispute should haveunilateral power to decide it. Locke cited the threat of self-judgment as a fundamentalreason for having a State, reasoning it can offers a neutral third party for resolvingdisputes between contesting parties.7 James Madison echoed the same sentiment: “Nomanisallowedtobeajudgeinhisowncause:becausehisinterestwouldcertainlybiashisjudgment,and,notimprobably,corrupthisintegrity.”8Smartmen,both,butyoudonothavetobeageniustoseethatnobodyshouldgettojudgetheirowncase.

If a court breaks that rule, the other ones do not much matter. If a court cannotprovideverystrongguaranteesthatitcanadministerjusticeimpartially,itcannotwinthetrust of those before it.And if theydonot trust the court, the parties before itwill nothonoritspeace.

A biased court cannot, properly speaking, adjudicate at all. It can only command,forcingoneparty toserveanother’swill.As the label suggests,apartialcourt lacks thevirtuesofareal,entire,impartialone.

Thisposesaproblemfortheresolutionofdisputesbetweenagovernmentandthosesubjectedtoitslegaljurisdiction.Howimpartiallycanagentsofanationstate,actingasthe judgesof itscourts,decidesuchdisputes?“Notwellenough,”citizensandresidentsmightunderstandablyworry.

Itthuslooksatleastunwise,andarguablyunjust,togivefederalauthoritiesexclusivejurisdictionoverdisputes thatcall forapplying theU.S.Constitution.Granted, federallyappointed judges typically grapple with issues that raise no immediate risk of self-judgment,suchasadiversitytortclaimbetweenprivatepartiesratherthan,say,litigationovertheconstitutionalityofaffordingjudgeslifetenure.Still,though,suchjudgesremainemployeesofthefederalgovernment,dutyboundtoserveitsinterests.

More significantly, from the point of view of parties ordered to appear in federalcourt,theconfirmationprocessforfederaljudgesdiscriminatesagainstthosemostlikelytodefendprivaterightsagainstpoliticalpower.NojudgewhoreadstheConstitutionwithan eye to sharply limiting the federal government will likely survive the confirmation

process. Federal politicians prefer to appoint judges who will, at the margin, benefitfederalpoliticians.Andwhatcouldbenefitapoliticianmorethanmorepower?

IfweviewtheU.S.Constitutionasakin toacontract–astandardformagreementoffered on a take-it-or-leave-it basis by an awesomely powerful government to acomparatively powerless individual9 – we cannot help but note the glaring inequity ofletting only federal authorities decide questions of federal power. No just court wouldenforceastandard formagreementbetweengrosslyunequalparties, imposedbyoneontheotherunderconditions that raiseseriousdoubtsabout theofferee’sconsent, that letstheall-powerfulofferoralonedecidedisputesarisingundertheagreement.10Thatwouldmake amockery of consent. A clause reading, “I have the sole power to interpret thisagreement,” reeks too much of substantive unconscionability to win any court’sapproval.11Indeed,thepatentunfairnessofsuchaclausecannothelpbutraiseproceduraldoubts about whether the parties to such a supposed exchange bargained at all,12

underminingtheenforceabilityoftheentireagreement.13

3HowtoCreateCitizenCourtsHappily,wecaneasilyread theU.S.Constitution toavoid theviceofself-judgment. Itsplaintextbynomeansmandatesthatonlyfederallyemployedjudgescandecidethescopeof federal power. Rather, it provides that the Constitution itself – not federal judges –“shallbethesupremeLawoftheLand.”14

EvenArticle III,whichestablishesconstitutionalcourts,goesonlyso faras tosay,“The judicial Power shall extend to all Cases, in Law and Equity, arising under thisConstitution”;15 it does not claim exclusive jurisdiction over all such cases. We thusremainatcompletelibertytoremedytheproblemofself-judgmentbyestablishingcitizencourts: adjudicativebodies empowered to resolvedisputesbetween thegovernment andotherpartiesandconstitutedaccordingtothebestpracticesusedbyprivateservices.16

Privatepartieseagertokeeptheiraffairsoutofgovernmentcourtshavelongreliedonvariousalternativemechanismsforsettlingtheirdisputes.17Thesealternativesincludeformal rules of civil procedure crafted by nongovernmental organizations according toworldwide best practices.18 Consider, for instance, how nongovernmental organizationshavesolvedtheproblemofgettingconflictingpartiestoagreeonajudgetoresolvetheirdispute:eachpartychoosesanarbitrator,thosetwoarbitratorschooseathird,andthethreethen decide the case by majority vote. This mechanism, embraced by both the UnitedNations Commission on International Trade Law and the American ArbitrationAssociation, offers a fairer approach to assessing claims against the government thanletting a judge chosen by either party, including the government, monopolize theproceedings.19 It isalso,not incidentally, the ruleadoptedbyUlex1.1, theopen-sourcelegalsystemdetailedinChapter3.7.

Howwould citizen courtswork?Theywould arise at the option of any party to alegaldisputewiththefederalgovernment.Eachparty–includingthefederalgovernment–wouldchooseonejudge.Thosetwojudgeswouldthenagreeona third.Together, thepanelof three judgeswoulddecidetheparties’dispute,applying theapplicable lawlikeanycourt.

Wherewouldthepoolofpotential judgescomefrom?Plainly,people likebusinesspartnersorspousesshouldnotqualifyforserviceinacitizencourt.Someconflictscannotbewaived.Also, there is no reasonwhy the federal government could not draw on itsstable of favorite, trained professionals. Many private parties would doubtless choosethose experienced and vetted judges, too. Andwhoever ends up filling the benches oncitizen courts should have to take oaths of impartiality (and under the reasoning ofChapter3.2,sufferpersonalliabilityforviolatingthoseoaths,too).

Giving citizens direct access to the “judicial power” created by the Constitutionwould,granted,representaratherdifferentapproachtoadjudicatingdisputesthantheonecurrently in force. Does the U.S. Constitution allow such a thing? The exact questionremains untried, but it proves encouraging that the Constitution grants federal officialsbroad leeway in appointing inferior officials20 and that federal judges already showremarkableflexibility infollowingrulesofprocedureagreedtobylitigatingparties.21Iflawmakers made citizen courts an option in all legal disputes by or against thegovernment,theywouldfindlittleintheConstitutiontostopthemandeveryprincipleofjusticeintheirfavor.

4Conclusion:StandingagainstaStandingJudiciary

ThoughtheFoundersdidnot truststandingarmies,neitherdidtheytrustenemiesof theUnitedStates to leave it inpeace.They thusprovided forothermeansofdefending thefledglingnationstate, suchas through the federalizationof statemilitias.22WhatwouldtheFoundershavedoneiftheyhadworriedaboutgavelsasmuchastheyworriedaboutguns?

Arbitrationwas not so common in their day as it is in ours (thoughneitherwas itentirelyunknown).Perhapsiftheyhadthoughtthingsthroughabitmore,theywouldhavespotted the bug in their constitutional program.Theymight have foreseen the conflictsthatwouldariseiffederalcourtsassumedexclusivejurisdictionoverclaimsinvolvingthefederalgovernment.PerhapsthentheywouldhavethoughtofaddingafewlinestoArticleIIIof theConstitution,orperhapsintheBillofRights,providingfor thetrulyobjectiveresolutionoflawsuitsbyandoragainstthegovernment.

Even then, the federal judiciarywould remainonhand to resolvedisputesbetweenotherparties,suchastradersembroiledinacontractsuitthatcrossesstatelines.Andthereisnoreasonwhythegovernmentcouldnotkeepapaidstableofqualifiedjuristsreadyathandtofillinwhenconstitutingcitizencourts.Incasesincludingthefederalgovernmentasaparty,suchasanEPAenforcementproceedingagainstaprivatepolluterorachurch’sclaimthatafederallawviolatestheFirstAmendment,thegovernmentwouldgettohavesome (but not all) of the say in who decides the dispute. Perhaps the total number offederal judgeswould increase.No longer, though,would they threaten individual rightsthewaytheFoundersfearedstandingarmiesmightthreatenpeace.

TheU.S.PostalServicerunsinparallelwithprivatedeliveryservices,andeventheFounders allowed for a Coast Guard.23 The federal government can lay just claim toneedingsomefull-timejudgesonstaff.Butgiving themamonopolyoncases involvingthegovernment?Thatgoesasteptoofar.Andatthatline,thischaptertakesastand.

*PortionsofthischapterderivefromTomW.Bell,UnconstitutionalQuartering,GovernmentalImmunity,andVanHalen’sBrownM&MTest,82T ENN . L . R E V.497

(2015),andTomW.Bell,GraduatedConsentinContractandTortLaw:TowardaTheoryofJustification,61CA S E W. R E S . L . R E V.17(2010).

1NE I L L . YORK , THE BO S TON MA S SACRE : A H I S TORY W I TH DOCUMENT S ( 2 0 1 0 ) .

2THE D ECLARAT ION O F I N DE PENDENCEpara.12,13,&14(U.S.1776).

3SeeJ AME S MAD I SON , THE D EBATE S I N THE F EDERAL CONVENT ION O F 1 7 8 7 WH I CH

FRAMED THE CON ST I TUT ION O F THE UN I T ED S TATE S O F AMER I CA 5 6 5 (GaillardHunt&JamesBrownScotteds.,int’led.1 9 2 0 ) . Seealsoid.at424(commentsofGerry).Onthisasonothercounts,AlexanderHamiltonrepresentedsomethingofanoutlieramongtheFounders;seeTHE F EDERAL I S TNo.24,at157(Hamilton)(CliveRossitered.,1961).

4SeeTRACY L . S N ELL , B UREAU O F J U S T I C E S TAT I S T I C S , C A P I TAL P UN I SHMENT, 2 0 1 2 –

S TAT I S T I CAL TABLE Stbl.3(2014),www.bjs.gov/content/pub/pdf/cp12st.pdf(listingforty-onefederalcrimespunishablebythedeathsentence).

5U . S . CON S T.art.I I I .

6In2013,U.S.Attorneywasinvolvedin79,735criminaltrialproceedings,134,674civilones,andacombined12,368appellate,foratotalof226,777proceedings.U . S .

D E P ’ T O F J U S T I C E E XEC . O F F I C E FOR U . S . AT TORNEY S , U . S . AT TORNEY S’ G ENERAL

ANNUAL S TAT I S T I CAL R E PORT7,23,37(2013),www.justice.gov/sites/default/files/usao/legacy/2014/09/22/13statrpt.pdf.Therewereatotalof2,131,429pendingproceedingsinfederalcourtsin2013.U.S.FederalJudiciary,JudicialCaseloadIndicators(2013),www.uscourts.gov/sites/default/files/statistics_import_dir/2013-indicators.pdf(lastvisitedDec.21,2016).

7J OHN LOCKE ,TWO T R EAT I S E S O F GOVERNMENT344(PeterLasletted.,CambridgeUniv.Press2ded.1967)(1690).

8THE F EDERAL I S T NO . 1 0 ,at55–56(JamesMadison)(E.H.Scotted.,1898)(1788).

9SeeChapter2.4foranexpressionofthatview.

10SeeRE S TATEMENT ( S ECOND ) O F CONTRACT S§§175,177,&208(AM . L AW I N S T.

1981).

11SeeGrahamv.Scissor-Tail,Inc.,623P.2d165,177(Cal.1981).

12SeeRE S TATEMENT ( S ECOND ) O F CONTRACT S ,supranote11,§§71(1),77.

13Seeid.§17(1).

14U . S . CON S T.art.VI,§2.

15Id.art.III,§2.

16See,e.g.,AM . A RB . A S S’ N , COMMERC I AL ARB I TRAT ION RULE S AND MED I AT ION

PROCEDURE S (2013),www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTG_004103&revision=latestreleased.

17SeegenerallyBRUCE L .BEN SON ,THE E N TER PR I S E O F L AW: J U S T I C E W I THOUT THE

S TATE (TheIndependentInstitute,2ded.2011).

18See,e.g.,Am.LawInst.&Int’lInst.fortheUnificationofLaw,PrinciplesofTransnationalCivilProcedure,9UN I FORM L . R EV.758(2004),www.unidroit.org/english/principles/civilprocedure/ali-unidroitprinciples-e.pdf;U.N.COMM ’N ON I N T’ L T RADE L AW,UNCITRALMODEL LAW ON I N T ERNAT IONAL

COMMERC I AL ARB I TRAT ION,1985,WITH AMENDMENT S A S A DOPTED I N2006,U.N.SalesNo.E.08.V4(2008),www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07–86998_Ebook.pdf;AM . A RB I TRAT ION A S S’ N , supranote17.

19U.N.COMM ’N ON I N T’ L T RADE L AW,supranote19,art.10(2)(settingdefaultnumberofarbitratorsatthree);id.art.11(3)(a)(describingmethodbywhichpanelofthreearbitratorschosen).SeealsoAM . A RB I TRAT ION A S S’ N , supranote17,R-12(b),R-13.

20SeeU . S . CON S T.art. I I,§2,cl.2(“[ThePresident]shallnominate,andbyandwiththeAdviceandConsentoftheSenate,shallappointAmbassadors,otherpublicMinistersandConsuls,JudgesofthesupremeCourt,andallotherOfficersoftheUnitedStates”).

21See,e.g.,HenryS.Noyes,IfYou(Re)BuildIt,TheyWillCome:ContractstoRemaketheRulesofLitigationinArbitration’sImage,30HARV. J . L . & P U B . P O L’ Y 579(2007).

22U . S . CON S T.art.I,§8,cl.15(givingCongresspowertocallforththemilitia);cl.16(samewithregardtoorganizing,arming,anddiscipliningmilitia).

23See,e.g.,I RV I NG H . K I NG , G EORGE WA SH I NGTON’ S COA S T GUARD : OR IG I N S O F THE

U . S . R EVENUE CUTTER S ERV I CE , 1 7 8 9– 1 8 0 1 ( 1 9 7 8 ) ; I RV I NG H . K I NG , THE COA ST GUARDUNDER S A I L : T HE U . S . R EVENUE CUTTER S ERV I CE , 1 7 8 9– 1 8 6 5 ( 1 9 8 9 ) .

3.4

FromOrphanedCitiestoSharedCommunities*

◈

1Introduction:TheOrphanCityWhoownsacity?Setasidepoeticfanciesabouthometownprideandcivicspirit.Sticktothedrylawofproperty.Itallowsonlyoneanswer:nobody.

No single person or group of people holds title to the entirety of a conventional,politicalcity.Privatepartiesownpiecesofit,ofcourse–thehomesandbuildingsthatlinestreets,forinstance.Butthatdoesnotgivethemownershipofthecityitself.Nobodyownssharesinthecityquamunicipalcorporation.Thatputsitinsharpcontrasttomanyothertypesofcorporations, suchasbusinesscorporationsand residentialcooperatives. It alsoputsthecity–theconventional,political,unowned,andorphanedcity–inperil.

The owners of business corporations, residential cooperatives, and other privateinstitutions have strong incentives to see to the care of their joint endeavors.Butwhennobodyownsacity, too fewpeoplecare for it.Orphanedcities, likeorphanedchildren,risksufferingterribleneglect.Thischapterdescribesthatproblemandoffersacure:citiesownedby thosewho invest, build, and live in them.Large diversified corporations andcity-sized common interest developments demonstrate how ownership can align theincentivesoflargeanddiversegroups.Thosesuccessfulexamplessuggestthattheownersofprivatecitiesgovern thembyelectingdirectorsonaone-share/one-votebasis. Itwilltakemorethanmerejointownershiptoimprovefuturecommunities–thenextchapter,inparticular,callsforprotectingindividualrightsonaoneperson/votebasis–butcitieswillneverthriveunlessanduntiltheycanescapetheneglectthattoooftenafflictsorphans.

2NobodyOwnsaCityPerhapsyouneednoconvincingthataconventionalcitylacksowners.Indeed,youmightcelebratethatcondition,claimingthatitputscitiesintotheserviceofnoblepublicidealsratherthancrabbedprivateinterests.Inthatevent,skipaheadtoSection3,whichexplainswhytheunownedstatusofcitiesleavesthemunloved.Butshouldyouharboranydoubtsaboutthestatusofcities-qua-property,thissectionsetsupthepinsandknocksthemdown.Itfirstexplainswhynobodycanclaimtohaveexclusiverightsinacityandthenextendsthesameanalysistotheotherrightsthattogethermakeupproperty’s“bundleofsticks.”

The conventional city, though a municipal corporation, has no shareholders. It ishardlyaloneinthat.Charitable,educational,andrelatedtax-exemptcorporationsalsolackshareholders. These kinds legal entities, because they do not seek profits, have nooccasion to make distributions. Cities and other tax-exempt organizations thus do notrecognizeaclassofpeopleholdingfractionalsharesoftheentiretyoftheentity’sassets–the “shareholders” of business corporations. Instead of private profit, these tax-exemptorganizations pursue the public good; instead of shareholders who govern on a one-share/one-vote basis, cities have citizens who govern on (something roughlyapproximating)aone-person/one-votebasis.1

Youmightcounterthatcitiesinfactdohaveowners–notinstrictlegalterms,butinterms of in-the-street politics. On that view, the people who control a city – whetherpoliticians, voters, bureaucrats, or criminals – effectively own it.2 But even the mostcomplete practical control of a citywould not afford the same rights that property lawwould.

Asany lawstudentwill tell you,propertycomprises abundleof rights.3Foremostamong them ranks the right to exclude others.4 The United States Supreme Court hasdescribedtherighttoexcludeas“oneofthemostessentialsticksinthebundleofrightsthat are commonly characterized as property,”5 and as “the hallmark of a protectedproperty interest.”6 The right to exclude epitomizes property – just as its absencecharacterizesaconventionalcity.

Theopenness of a conventional, political,unowned citymarks it as fundamentallydifferentfromagated,privatecommunity.Thecity’sstreets,sidewalks,andparksstandfree forpublicuse; itscommonnetworks– sidewalks, roads, subways,utilities, and thelike–standreadyforanyonewhosatisfiescertaingenerallyapplicablerulesofuse.Citiesownsomepropertyopenonlytocitypersonnel,ofcourse–cityoffices,vehicles,stormdrains, and so forth.But that shows only that a cityqua legal person can own its ownproperty.It isnottosaythatanyotherperson,naturalorotherwise,ownsashareoftheundividedentiretyofthecityitself.

Grantedthatsomerightsassociatedwithcitygovernment–thesolerighttooccupythemayor’sseat,forinstance,ortonotbeterminatedfromthepoliceforcewithoutcause–cannotbeenjoyedexceptexclusively,onanindividualbasis.Thesamemightbesaidofthemanyvariousparcels of private real estate that line city streets.Somepeople enjoyexclusiverightstosomepartsofthecity,true,whetherintermsofprivilegesundercivicgovernment or property under the common law.Nobody owns a conventional, politicalmunicipality,however.

Whatabouttheotherrightsinthebundlethatmakesupproperty?Citiesdonothaveverygoodclaimtobestowingthoserightsonanyone,either.Forinstance,somescholarshavedescribedtherighttoenjoyproperty–tooccupyortoprofitfromit–asoneofitsmostfundamentalattributes.7Aswiththerighttoexclusiveuse,however,thecityaffordsthe right to enjoy its benefits only sporadically and piecemeal. Whereas you can goanywhereyoupleaseinyourownhome,youcanvisitonlyspeciallydesignatedareasofthe city.Andwhereas you can claim yourpro rata share of any gains to be had fromowning stock in a commercial corporation, whether by way of distributions or equityvalue,nobodyexpectsacitytoenjoygainsinexcessofcosts,muchlesstodisgorgethosegains to gratified taxpayers. Shareholders not only expect distributions from businesscorporations;theydemandthem.

Legalauthoritieshavecharacterizedthepowerofalienation–bywhichtheownerofapieceofpropertycandestroyitor transfer title toanother–asoneofproperty’smostfundamentalattributes.8Butcananyonegiveuporgiveawaytheirrights toacity?Thequestionhardlymakessense.Youcannotalienatewhatyoudonotowninthefirstplace.The same mismatch mars claims that rights in a city can be acquired, preserved, orprotected against takings for public use – rights that owners of property exercise as a

matterofcourse.Movingtoacityorotherwisewinningsomepoliticalpoweroveritsfatehardly equates to acquiring it and, no title having been obtained, there is nothing topreserveorprotectfromtakings.

3TheProblemwithNotBeingOwnedSome readers might happily concede that the municipal corporation lacks owners,embracingitascommonknowledgeandcelebratingitasanessentialanddesirablefeatureofcivicgovernment.“Isn’tthatthewholepointofapublicinstitution?” theymightask.Perhapsso.Buttheunownedstatusofthecityleavesitsomethingofanorphan.

Withnoowners,thecitylacksforguardianswhoregarditswelfareastightlyboundto their own. Yet the city, despite having legal personality, cannot really act in owndefense.Itisthuslefttosufferneglect.Andwithitsufferallthemanypeoplewhorelyonthecityforprotection.

Noneofthistragedyshouldcomeasasurprise.Politicaltheoristshavelongobservedthatunownedresourcessufferoveruse.AsGarrettHardinputitinhisseminalessayonthetopic, “Freedom in a commons brings ruin to all.”9 Hardin wrote with environmentalconcerns in mind, but the same general concept applies to a city: If nobody owns it,anyonecanexploitit.Whattheorysuggests,experienceconfirms;consider,forexample,thebleakwastesofpresent-dayDetroit,Michigan.10

NoteverycityisaDetroit,ofcourse,andnocitysufferscompleteneglect.Insteadofowners,citiesrelyonhiredprofessionalsandcivicallymindedvolunteerstoprotecttheirassetsfromunrestrainedexploitation.Thosedevicesseemfatedtoalwayspermitagreatdeal of nibbling around the edges, however, and they often allow special interests toconsumegreatchunksofthepublicgood.

Privately owned corporations likewise suffer from the imperfect enforcement ofpropertyrights,resultingintragediesofthecommonsrangingfromstolenofficesuppliestostolenretirementaccounts.Noinstitutionseemscapableofcorrectingallills.Wespeakhere of questions of degree, and on that basis it seems fair to say that cities suffercomparativedisadvantagesfromnotbeingowned.Buthowcananybodyownacity?

4HowtoOwnaCityTosaythatownershipmightsavecitiesisnottosayhow.Propertyrights,likeall-purposeconstructionmaterials,canbecombinedinagreatmanydifferentways.Whichtypesofownershipwouldbestsuitacity-sizedprivatecommunity?

As discussed in Chapter 1.2, homeowner associations, cooperative residentialcorporations,andcondominiumdevelopmentshavealreadyputvariousformsofpropertyownership to the test. These arrangements differ in detail, but all appear capable ofsupporting large communities. In every respect but its origins and legal status, forinstance, the homeowner association of Highlands Ranch, Colorado, resembles aconventionalcityofmorethan96,000residentsand30,000homes.11

Perhaps those same forms will prove sufficient for the private cities now beingplanned in the developing world. Those look likely to dwarf even Highlands Ranch,though. These new private cities will go far beyond offering housing and associatedamenities; theywill encompass ports, factories, and resorts.12 At this scale, institutionsdesigned primarily for residents will not likely serve well. Instead, as their use in thecontext of KAEC and similar projects suggests, other forms of collectively ownedenterprisemightdobetteratcoordinatingtheinterestsofdevelopers,investors,residents,andotherswhobuildthesenewcities.Theproblemarisesnotjustfromthescaleofthesenewprivatecities,butthediversityofintereststheyencompass.Inparticular,suchcapital-intensiveprojectsmustreassureinvestorsthattheywillnotlosecontroland,thus,money.

Which types of institutions do a good job of coordinating the interests of manydifferent kinds of owner-shareholders?Large, publicly tradedbusiness corporations likeIBMorAppledoareasonablygoodjobofit, judgingfromtheinvestmentstheyattract.Corporationscaneasilyhaveasmanyshareholdersaslargecitieshaveresidents,too.TheIndianconglomerate,RelianceIndustriesLimited,bysomeaccountsthemostwidelyheldcorporation in theworld, has approximately 3million shareholders.13 Note furthermorehowwidelypracticedprinciplesofcorporategovernancebothgiveshareholdermajoritiescontrol over firm management and protect the rights of minority shareholders. Privatecitiescouldlearnfromthatsortofbalancedapproach.

Private cities can also learn from other kinds of commercial firms that, while notclassifiedasbusinesscorporations,havethefunctionalequivalentsofshareholder-owners.Business trusts look especially promising on that count. Their owners, though calledbeneficiaries instead of shareholders, can choose to govern themselves with the samerulesused togovernbusinesscorporations.14That strategymight allowacommunity tocreate at common law a custom-designed firm that can bring investors, residents, andotherinterestedpartiestogethertobuildaprivatecity.

Cooperative residential corporations (co-ops) probably offer the best starting pointfordesigninganentitycustomizedfortheneedsofaprivatecity.Inco-ops,residentsownsharesofthecorporationthatownstheresidencestheylease.Thesealreadyrivalcitiesinsize and sophistication. The largest of them, Co-Op City, provides more than 50,000shareholder-tenantswithhousing,utilities,roads,stores,offices,schools,parks,placesofworship, security, and others amenities normally associated with a municipality.15 Farfrom an enclave for the rich, Co-Op City serves a distinctly middle-class and raciallydiversepopulation;censusfiguresclassifyabout55percentoftheresidentsasblack,25percent as Hispanic, and 20 percent as white.16 It resembles, in other words, a typicalurbancommunity–exceptthatitsresidentsownandrunit.

In their present guise, however, residential cooperative corporations are not wellsuitedtoattracttheamountofcapitalrequiredtobuildanewcityortomediatethemanyvariousinterestsofdevelopers,investors,residents,andothercitydwellers.Theresidentsofexistingco-ops tend to run them like,well, residences.Hereagain,privatecitiescanlearn from other private enterprises. Specifically, they can learn from worker-ownedbusinesseshowjointownershipcantranslateintojointprofit.

TheUnitedStates currentlyhasmore than11,000employee-ownedcompanies andmore than 130 million worker-owners.17 Across the world, worker-owned businessesrangeinsizefromsoleproprietorships,toprofessionalassociations,tocompaniesthesizeofBasque-basedmultinational,MondragonCorporation,whichhadrevenuesofmorethan$13 billion and employed more than 74,000 people in 2015,18 and U.S.-based PublixSupermarkets, which employs more than 182,500.19 Far from the province of woolly-headedhippies,worker-ownedbusinessespredominate in theaccounting, legal,medical,and investmentbankingprofessions, aswell as in securities and futures exchanges, andthroughoutthetaxiandtruckingindustries.20Equitysharingplaysacentralroleinhelping

start-upcompaniesgetofftheground;convertiblenotes,stockoptions,andotherequity-distributionmechanismsmakeSiliconValley’seconomygonot just around,butupandup.

Why do worker-owned businesses thrive? Because equity sharing aligns theincentivesoftheworkerswiththoseofthebusinessasawhole.Fieldstudiesindicatethat,holdingallelseequal,aworker-ownedfirmcangenerate6–14percentgreateroutputthanitsconventionalcounterpartcan.21Thatisnottosaythatco-ownersalwaysworkharderthanmerewageearners;rather,theytendtoworkmoreefficiently.Equitysharingfostersaconvergenceofinterestsbetweenthoseworkinginthecorporationandthecorporationasa whole. Shared management protects both investors and worker-owners. What mightresultfromfittingthosesameprinciplesofequitysharingtocities?

Suppose for instance that a new private citywanted to follow the example set bystart-up companies, and distribute shares of the city to its investors and residents. Aconventionalmunicipalcorporationorresidentialcooperativecorporationwouldnotallowthatkindofdistributedownership.Ifstructuredasashare-issuingcorporation,incontrast,acitycouldinvokethepowerofequitysharingtoaligntheinterestsofthecity’sresidentswiththeinterestsofthecommunityasawhole.Ineffect,theresidentsofthatkindofcitywould own it. The success of other owned cities – the huge proprietary communitiesdescribedinChapter1.2–suggeststhelikelyoutcome.

The next generation of governments might use equity vesting schedules to goodeffect.Atfirst,asinotherstart-ups,thecity’sfoundinginvestorswouldholdmostofitsshares.Throughastandardizedprocess,however–byvesting residentswithonevotingshareperyear,say–thosewholiveinthecitywouldtendovertimetoownandcontrolmoreandmoreofit.Imaginethepositiveeffectsthiswouldhaveonthesagacityoflocalgovernmentandhometownpride.

In many respects, this large common interest development would operate like acommercial corporation.Residents andotherswhoholdvoting shares in the citywouldchoose directors, amend bylaws, and otherwise exercise the privileges of ownership inproportion to thenumberof shares theyown.Thosewhoownmore shareswouldhavemoreinfluenceoversomeaspectsofthecity’sgovernance.Butacityisnotsimplyafor-profitcorporation;ithasresidents,andresidentshaverights.Toattractnewcomers,acitywouldhavetooffercredibleguaranteesofindividualfreedom,afairandefficientmeans

ofdefendingpersonal liberties,andagovernmenthealthyenough toprovide the ruleoflaw.Presentgovernmentsalreadycompete,onsomethinmargin,toofferthoseboonstowould-be immigrants. The changes documented in this book suggest more suchcompetitionwillsoonsweeptheglobe.Asafurthersafeguardofindividualrightsthenextgeneration of special jurisdictionsmight implement double democracy, described in thenextchapter,therebyupdatingcorporatelawtosuitcivicpurposes.

5FromOrphanedtoOwnedto…Conventionalcitiesarenotwellrunbecausenobodyownsthem.Mostmuddlealong,butfew thrive andmany rely onhometownheroes for their continued existence.That suchpeopleexistisnotremarkable.Tothecreditofhumannature,individualsalmostalwaysappear to satisfy dire collective needs, even if at great personal loss. Detroit doubtlessboastsapantheonofthosetypes.Butrelyingonheroismtosolveforeseeable,avoidable,anddireproblems,suchasfires,22floods,23orpublichealthdisasters,24seemslikeaverydiceywaytogoaboutself-government.

Owned cities offer a better approach to living together. Common interestdevelopmentsintheUnitedStatesalreadydemonstratethatprivatecommunitiescangrowaslargeandascapableassmallcities;developmentsabroadwillsoonintroducetheworldto even larger private cities. These new kinds of communities need new kinds ofgovernments,though.Here,too,theprivatesectorofferstestedapproaches.Thischapterhas focused on the lesson from commercial corporations, co-ops, and worker-ownedenterprises:Letthosewhojointlyownthecitymanageitbyelectingitsmanagingboardonaone-share/one-votebasis.Tosafeguardagainstabusesofthatpower,thenextchapteradvocatesaddinganotherelement:allowingresidents tovetoselectcity lawsorofficersonaone-person/one-votebasis.Together, thesegoverningpractices canmakecitiesnotjustownedbutloved.

*ThischapterderivesinpartfromTomW.Bell,WhatCanCorporationsTeachGovernmentsaboutDemocraticEquality?31S OC . P H I L . & P O L’ Y .,no.2,Apr.2015,at230(2015)(invited),reprintedinEQUAL I TY AND P UBL I C POL I CY230(MarkLeBar,AntonyDavies&DavidSchmidtzeds.,2015),andTomW.Bell,WanttoOwnaCity?FREEMAN , Oct.2013,at15,https://fee.org/media/3745/20130925_freemanoct13finalaccepted.pdf.

1Theircounterparts,inthecaseofthoseprivatetax-exemptentities,arecalled“members.”Notholdingfractionalsharesoftheentitythesemembers,likeresidentsofacity,voteonaone-person-per-votebasisinmattersofcorporategovernance.

2See,e.g.,WILL I AM A . F I S CHEL , T HE HOMEVOTER HY POTHE S I S30(2005)(describinghomeownersasakinto“theprimarystockholdersofmunicipalcorporations”).

3See,Property,BLACK ’ S L AW D I C T IONARY1216(6thed.1990)(defining“property”as“anaggregateofrights”).

4SeeThomasW.Merrill,PropertyandtheRighttoExclude,77NEB . L . R E V.730,731(1998).

5KaiserAetnav.UnitedStates,444U.S.164,176(1979).

6Fla.PrepaidPostsecondaryEduc.ExpenseBd.v.Coll.Sav.Bank,527U.S.627,673(1999).

7SeeAdamMossoff,WhatIsProperty?PuttingthePiecesBackTogether?,45AR I Z . L .

R E V. 371,390–403(2003).

8Asevidence,considerthecommonlaw’straditionalrepugnanceforunreasonablerestraintsonalienation,asexpressedin,RE S TATEMENT ( TH I RD ) O F P ROPERTY:

S ERV I TUDE S §§3.4,3.5(AM . L AW I N S T.2000).

9GarrettHardin,TheTragedyoftheCommons,162S C I . 1243,1244(1968),http://science.sciencemag.org/content/sci/162/3859/1243.full.pdf.

10JenaMcGregor,WhatKilledDetroit?Let’sNotForgetthe“Who,”WASH . P O S T: ON

LEADER SH I P (July19,2013),www.washingtonpost.com/blogs/on-leadership/wp/2013/07/19/what-killed-detroit-lets-not-forget-the-who/.

11Facts,H IGHLAND S RANCH CMTY. A S S’ N ,https://hrcaonline.org/area-resources/highlands-ranch/facts(lastvisitedDec.12,2016).

12See,e.g.,About,K ING A BDULLAH ECON . C I T Y,www.kaec.net/about/(lastvisitedDec.14,2016).

13RelianceIndustries,WIK I P ED I A ,http://en.wikipedia.org/wiki/Reliance_Industries(lastvisitedDec.15,2016).

14J . D ENN I S HYNE S & MARK J . L OEWENSTE I N , AGENCY, PARTNER SH I P, A ND THE L LC :

THE L AW O F UN I NCORPORATED BU S I N E S S E NTERPR I S E S5(abr.7thed.2008).

15ElsaBrenner,EverythingYouNeed,inOneGiantPackage,N . Y. T IME S,April6,2008,www.nytimes.com/2008/04/06/realestate/06live.html.

16Id.

17GarAlperovitz,Op-Ed,Worker-OwnersofAmerica,Unite!,N . Y. T IME S,Dec.14,2011,www.nytimes.com/2011/12/15/opinion/worker-owners-of-america-unite.html?_r=0.

18MONDRAGON , A NNUAL R E PORT(2015),www.mondragon-corporation.com/eng/about-us/economic-and-financial-indicators/annual-report/(dollarfigurescalculatedatUS$1.0861/Euro).

19TheEmployeeOwnership100:America’sLargestMajorityEmployee-OwnedCompanies,NAT ’ L C TR . F OR EMP. OWNER SH I P(Aug.2016),www.nceo.org/articles/employee-ownership-100.

20JohnPencavel,WorkerCooperativesandDemocraticGovernance,inHANDBOOK O F

ECONOM IC ORGAN I ZAT ION462,462(AnnaGrandoried.,2013).

21Id.at471.

22See,e.g.,S IMON W INCHE STER , A C RACK I N THE E DGE O F THE WORLD223–29(2006)(describinghowrampantcorruptioninSanFrancisco’sgovernmentmadethecityespeciallyvulnerabletoGreatQuakeof1906).

23CampbellRobertson&JohnSchwartz,DecadeafterKatrina,PointingFingerMoreFirmlyatArmyCorps,N . Y T IME S,May23,2015,www.nytimes.com/2015/05/24/us/decade-after-katrina-pointing-finger-more-firmly-at-army-corps.html.

24S T EVEN J OHN SON , THE GHOST MAP : THE S TORY O F LONDON’ S MO ST T ERR I FY I NG

EP I D EM IC –AND HOW I T CHANGED S C I ENCE , C I T I E S , A ND THE MODERN WORLD(2007).

3.5

DoubleDemocracy*◈

1Introduction:DoublingDownonDemocracyIfdemocracywerestandingforelection,itsoddswouldnotlookgood.Judgingfromtheresultsnowcomingin,voting…islosing.Observerscomplainthatelectoratesthroughoutthe developed world have begun acting erratically – some would say insanely – asevidencedbyEngland’sexitfromtheEuropeanUnionandtheUnitedStates’exit, so tospeak,fromtheDemocraticPartyitself.1Commentatorsexcoriatedemocracyasignorant,2

irrational,3andbroken,4broken,5broken.6

Iusedtosharethoseviews.“Democracyistwowolvesandalambdecidingwhattohaveforlunch,”I’dquip,thenquicklylaunchintoastaunchdefenseofindividualrights.Now,though,Iseenewpromiseindemocracy.Theproblemisnottoomuchofit,butnotenoughoftherightkind—doubledemocracy.Thischapterexplains.

Doubledemocracycombinestheone-share/one-votesystemdescribedinChapter3.3with theone-person/one-votesystemmore typical inpoliticalcontexts.Thefirstkindofvoting, often used to create and run large, private, jointly owned enterprises such ascorporations and residential communities, provides constructive democratic procedures.The second kind of voting, though borrowed from traditional political systems, hereoperatesonlytovetoparticularactsorappointments.Itthusservesacorrectivefunction.7

The one-share/one-vote constructive process combines with the one-person/one-votecorrectiveprocesstocreatedoubledemocracy.

So goes a snapshot of double democracy. To understand it more fully requiresstudying its parts. Section 2 takes a closer look at one-share/one-vote arrangement,revealing why that system works so well in business corporations and cooperativeresidentialcommunities.Section3focusesontheone-person/one-votesystempopularinpoliticalcontexts, finding that ithonors importantprinciples (thoughmore inword thanpractice).Section4saysabitmoreaboutcorrectivevoting,arelativenoveltyinelectoralcontexts, thoughnotone far removed from theveto afforded tomembersof theUnitedNation’s SecurityCouncil, a parliamentary vote of no confidence, or an executive vetopower.

Havingtherebystudiedallitscomponentparts,thechapternextturns,inSection5,toputting them all together. The result?The one-share/one-vote rule protects the propertyrightsofthosewhoownthecommunity,encouragingthemtobuilditandallowingthemtodirect itsgovernance,while theone-person/one-vote ruleprotectspersonaldignitybyrecognizingapublicrighttovetooffensiveactsorappointments.

To evokeWinstonChurchill’s standard, double democracy stands a fair chance ofcreatingabetterworstkindofgovernment.Whichisnotasbadasitmightatfirstsound.Andnotbadforademocracyatall.

2WhyOne-Share/One-Vote?Though not originally the norm, the one-share/one-vote model now predominates inbusinesscorporationsandotherlargeprivateentities.8Why?Becausetyingmanagementcontrol to proportionate ownership affords greater returns on investments than a simpleone-person/one-vote rule would.9Whether entrepreneurs choose that business structurebecausetheyreasonfromfirstprinciplesorsimplyfollowthecrowddoesnotmatter.Inthefinalanalysis,theone-share/one-voterulehascometopredominatethegovernanceofbusiness entities because it affords them a competitive advantage. In commerce as innature,onlythefitsurvive.

Investorsdonotneedabstracttheorytohelpthemdecidewheretoputtheirmoney.Acorporation governed by the one-person/one-vote rule would obviously force them tomake a disproportionate sacrifice to the collective good.What rational investor wouldagree to buy half of a corporation in return for only one vote among thousands inquestionsofitsgovernance?

Without the one-share/one-vote rule, business corporations would never attractenoughcapital togetoff theground.Thatpracticalobservationalone suffices to rendermoot critiques premised on the notion that property rights deserve less protection thanotherrights.Allthephilosophizingintheworldwillnotconvinceindividualinvestorstoputtheirrightsatthemercyofmajoritywhims.

Buttheone-share/one-voterulehasmoregoingforitthanpracticalfinance.Nolessthan theone-person/one-vote ruleused inpoliticalcontexts, itprotects rights–propertyrights, in this case.Though the two systemsdiffer in the particular values they protect,bothaimfortheequalprotectionofequalrights.10Theone-share/one-votesystemtreatsproperty owners fairly because some people ownmore property than others. The one-person/one-vote system treats individuals fairly because nobody has more of a rightagainstoppressionthananyoneelse.

The private sector evidently has little trouble delivering on promises to give eachshare of a collectively owned organization exactly one vote in questions of commongovernance.Eventhelargestpubliclytradedcorporationsfacenothingliketheproblems

occasioned by electoral districts of different populations and the rough-and-tumble ofstreet politics. Furthermore, court decisions and statutes regulating the governance ofjointly owned and managed businesses protect those who own minority stakes frommajority owners wielding the one-share/one-vote rule to unfair effect. Notably, theseprotectionsdonotworkbydirectlyattackingtheone-share/one-votesystem,but instead

byprovidingforjudicialreviewofcertainpractices.11

Corporations and similar entities do not always implement the one-share/one-votemechanism in itspurest form.They sometimes instead issueclassesof shares thathavemore or fewer voting privileges than common stock does.12 Entrepreneurs havepresumptivelygood reasons tooffer theseoptions, andmust always convincewould-beinvestors that theshareshaveotherredeemingfeatures,so theoccasionalusebyprivatefirms of weighted or nonvoting stocks does not raise the same equitable concerns thatdeviationfromtheone-person/one-voteprincipleraisesinpoliticalcontexts.

3WhyOne-Person/One-Vote?TheDeclarationofIndependencecallsit“self-evident, thatallMenarecreatedequal…withcertaininalienableRights,”amongwhichitincludes“Life,Liberty,andthePursuitofHappiness.”13 The one-person/one-vote principle affirms that proposition by promisingeachmemberofapolityequalsayinmattersofcommongovernance.Symbolically,ifnotinactuality,itconstitutesafoundationalprincipleofgoodgovernment.

Politicianstendtoinvoketheone-person/one-voteprincipleasanunquestionedgood.NelsonMandela, for instance,proclaimed that “Africans require,want, the franchiseonthebasisofone-man/one-vote.”14Closer tohome,U.S.SenatorBarbaraBoxer recentlyasserted,“Everycitizenofthiscountryshouldbeguaranteedthattheirvotematters,thattheirvoteiscounted,andthatinthevotingbooth,theirvotehasasmuchweightasthatofanyCEO,anymemberofCongress,oranyPresident.”15

Once the platitudes run thin, though, it quickly becomes apparent that the one-person/one-vote rule does not represent the only or best approach to democracy. Thealternative, the one-share/one-vote rule, seems to work reasonably well for governinglarge proprietary communities. Even in political contexts, the one-person/one-voteprinciple is not nearly as universal as its rhetorical power might suggest. Due to theinevitable vagaries of practical politics, the principle remains only partly realized. Inthousandsofspecialdistrictsscatteredthroughout theUnitedStates,moreover, ithasnoeffectatall.Instead,somewhatremarkably,ithasbeensupplantedbysomethingliketheone-share/one-votesystemmorecommonintheprivatesector.

Courtshavestruggledtoenforcetheone-person/one-voteprinciplewithanythinglikethe sortofmathematical rigor that thephrase suggests.The lawhasdeveloped in casesdisputing the allocationofvotes across electoraldistricts,whichby theirnaturevary inpopulation. TheU.S. SupremeCourt has founded the principle in bothArticle I of theConstitution,whichrequiresthatCongressionalrepresentativesbechosen“bythepeopleoftheseveralStates”16and“apportionedamong theseveralStates…according to theirrespectiveNumbers,”17 and in the FourteenthAmendment,which requires that no state“denytoanypersonwithinitsjurisdictiontheequalprotectionofthelaws.”18Fromthoseprovisions, the Court concluded that “as nearly as practicable one man’s vote in a

congressionalelection is tobeworthasmuchasanother’s.”19TheCourt later extendedthesameprincipletostateandmunicipalelections.20

Granted, those and other decisions have paid homage to the principle of one-person/one-vote. Read in context, however, they do not stand for the proposition thatfederal,state,andlocalelectionmustgiveequalweighttoeachperson’svote.Howcouldthey,giventhattheConstitutionitselfassignseverystate,regardlessofitspopulation,twopopularly elected senators?21 Despite the rhetorical power of the one-person/one-voteprinciple, therefore, it evidently stops well short of demanding perfect equality. Courtshave instead held that the principlemandates that districts drawnup for the purpose ofholdingpopularelectionsprovideeachvoterwithroughlythesamepoliticalpower.

Doconventionalpolitiesfailtopayadequaterespecttotheprinciplesofdemocraticequality?Regardless,newerformsofpoliticalgovernanceentirelyturntheirbackontheprinciple.How?Throughspecialdistricts.

The United States includes a large and growing number of special districts thatallocatevotesinamannermoreresemblingcorporatethanpublicgovernance.Scholarsofthesepoliticalodditiescallthem“specialpurposedistricts”whenimplementedatthestatelevel and “special assessment districts” at the city level, but the same principles applythroughout.22Inanycase,votingpowergetsallocatednotonaone-person/one-votebasis,but insteadaccording tohowmuchofagivenvoter’spropertyfallswithin thedistrict’sjurisdiction.Inthat,specialpoliticaldistrictsmimictheone-share/one-voterulefollowedbybusinesscorporationsandrelatedprivateentities.

Consider for instance the special-purpose districts at issue in the Supreme Courtcases of Salyer Land Co. v. Tulare Lake Basin Water Storage District23 and Ball v.James.24 Both imposed mandatory fees on landowners who received water from thedistrictsandbothallocatedtherighttovotefordistrictdirectorsonthebasisoftheamountofproperty–measuredaccordingtoassessedvaluationsintheformercase25andacreagein the latter26– a given voter hadwithin the district. Though challengers accused eachdistrict of violating the principle of one-person/one-vote, the Supreme Court heldotherwise.27

Inlikefashion,theSecondCircuitinKesslerv.GrandCentralDistrictManagementAss’nupheldasconstitutionalaspecialassessmentdistrictestablishedbyNewYorkCity

tofundtheprovisionofservicesintheneighborhoodsurroundingGrandCentralStation.28

AsinSalyerandBall,thedistrictatissueinKesslerallocatedthepowertovotefordistrictdirectorsinproportiontotheamountofpropertyeachvoterhadwithinthedistrict.29And,asinSalyerandBall,thecourtinKesslerfoundthisdeviationfromtheone-person/one-vote principle constitutional on grounds that the district had narrow functions and hadmuchmoreofanimpactonlandownersthanonthepublicatlarge.30

AlthoughSalyer andBall proved more influential as a matter of law, the sort ofdistrictatissueinKessler–amunicipallycreatedandadministeredbusinessimprovementdistrict(“BID”)–hasprovenmorepopularinpractice.TheUnitedStatesnowhasnearly1,000BIDs,with 67 inNewYorkCity alone andothers in almost everyoneof the 50largest cities, including Los Angeles, Chicago, Houston, Philadelphia, Atlanta, SanFrancisco, Seattle, and Washington, DC.31 No longer can political institutions in theUnited States claim to uphold one-person/one-vote as sacrosanct. Instead, they have inmany cases come to follow corporate law in allocating voting power in proportion toownership. Whatever its virtues, then, the one-person/one-vote principle is not verycompletely or consistently fulfilled in actual practice. In fact, double democracy, bysimplygivingeachresidentonevote,arguablyhonorstheprinciplemorecompletely.

4CorrectiveVotingDouble democracy limits one-person/one-vote procedures to correcting abuses ofgovernment power. It would allow residents to negate any specific law, regulation,ordinance, order, or official appointment. You might think of it as the electorate’sequivalentofthepresident’svetopower.

This featurequalifiescorrectivevotingasa typeofdisapprovalvoting, thegeneralnameappliedtosystemsthatallowonlyvotesagainstcertainchoices.Disapprovalvotinghas seen use in a number of contexts, most famously on reality game shows whereparticipantscanvoteeachotheroffbutalso,andmoreconventionally,inrecallelectionsandno-confidencevotes.32(Ithasnotattractedmuchformalstudy,though,orbeenputtotheparticularuseadvocatedhere.33)

Acorrectivedemocracycouldnotbeusedtocreateagovernmentagencyorprogram;creatingnew institutionswould require the passageof new laws.Corrective democracythuscomeswithapowerfulbuilt-inlimitation.Evenifthelazyandviciousoutnumberedthe industrious and virtuous – a tragic but unlikely situation – they could not use acorrectivedemocracytovotethemselvesbreadandcircuses.

Thenarrowpowersaffordedbyacorrectivedemocracymakeitsafertoadoptaverybroad franchise.Many supposedly advanced democracies deny the vote to ex-felons, apolicy that can leave in excess of 7 percent of the population of some minoritycommunities unable to vote.34 Yet who better than an ex-felon to know whether thecriminaljusticesystemlivesuptoitsname?

Acorrectivedemocracycould letex-felonsvotewithoutworrying that theywould,say,electapro-felonypolitician.Indeed,evenfelonsstillservingtimecouldvote.Nobodyshouldworry that a few criminalswould vote away the protections popularwithmorelaw-abidingfolk.Howlikelyisit,afterall,thatbadguyswouldoutvoteeveryoneelseonthe question of, say, striking a ban on burglary? Few burglars would vote for thatproposition;evenpeoplewhosometimesbreakthelawstillgenerallywantitsprotection.

In addition to ex-felons, children and noncitizen residents might also be affordedvotes in corrective procedures. Does not government action affect their rights, too? In

these ways, corrective voting could improve on extant one-person/one-vote politicalsystemsbyofferingtrulyuniversalsuffrage.

What percentage of the vote would be required to get rid of a challenged law,regulation, ordinance, or order? Different communities might choose differentpercentages.Simplefairnesssuggests,however,thataruleshouldnotstandifmorethan50percentofeligiblevotersdisapproveofit.

Evenonthatsimple-majoritystandard,itwouldnotproveespeciallyeasytogetridof unpopular rules. Every “no” voter has to take the trouble to cast a ballot, after all,whereasjuststayinghomeeffectivelycountsasa“yes”vote.Therulesonthebookthusgetapresumptionofvalidity;theburdenofchangingthemfallsonchallengers.

Itisthusunlikelythatfundamentalrights,suchasfreedomofexpressionorreligion,wouldfallpreytoacorrectivevote.Nonetheless,worriesonthatfrontcouldbeassuagedby protecting certain rights with supermajority requirements or completely exemptingthemfrompopularchallenges.Hereaselsewhere,implementationmightvaryfromplacetoplaceandfromtimetotime.Regardless,thepointremainsthatfundamentalrightsneednotfaceundueriskofrepeal.

Howtoprovideopenaccesstocorrectivedemocracywithoutwastingtimeonfutilevotes?Letanyonecallanelectiononanyrule,butmakeloserspaythecosts.35Apartfromperhaps requiring that challengers post bond, this system would let anyone target anyunpopular law or officer. Elections in a corrective democracy could thus arise directlyfrom voters themselves, the popular will unmediated by party politics, electoralcommissions,orintermediarydevicessuchastheElectoralCollege.

Thisone-person/one-voteprocedureoffersdemocracy,corrected.Becauseitoperatesonly to trim back government excesses, corrective democracy runs little risk ofdegenerating intomob rule. It thus gives voters amore direct say in their governmentwithoutgivingthemdirectaccesstopower.Correctivedemocracyisnotalesserformofdemocracy, however. To the contrary, it affords a safe means to broaden the votingfranchise and open up public access to the initiative process. It does not solve everyproblem of government – somebody still has to write the rules, for instance – butcorrectivevotingoffersapowerfulprogramforupgradingdemocracy.

5DemocracyPlusDemocracyTheprecedingsectionsdescribedtheoperation,intheoryandpractice,intheprivateandpublic sectors, of various democratic processes. It remains only to combine their bestfeaturesintoaworkingwhole:doubledemocracy.Thissectiondescribeswhyandhow.

Double democracy includes both one-share/one-vote and one-person/one-voteprocedures. Each of a community’s shareholders partakes in constructive democraticprocedurestocreateandoperateoftheirjointlyownedenterprise,typicallybyelectingitsboardofdirectors.Residentsexercisecorrectivedemocraticproceduresindefenseoftheirpersonalrightsbysubjectingthecommunity’srulesandofficialstopopularveto.36

Theone-person/one-votewinswidespreadsupportasageneralidealbecauseitshowsdueregardforeach individual’sequal right to life, liberty,and thepursuitofhappiness.More particularly, democratic processes typically aim to uphold the principles ofanonymity,ensuringthatvoterscanexercisetheirelectoralrightswithoutfearofreprisal;andofneutrality,ensuringthateachvotegets(roughly)thesameweight.Bothprinciplesmerit respect; both can easily be accommodated by the corrective voting proceduredescribed herein. It takes only a bit of administrative competency to assure anonymousvoting,afterall,while theverywidefranchise thatcorrectivedemocracyallows,and itsuse of a direct rather than representative process, gives it better claim to ensuringneutralitythanconventionaldemocracies.

Evensoimprovedaformofdemocracywillofnecessityproveincomplete,however.The one-person/one-vote rule proves a poorway tomanage complex joint ventures, asevidencedbothby thewidelybemoaned inefficienciesofdemocraticpoliticsandby thefact that business corporations and related private enterprises, which face intensecompetitivepressurestooperateefficientlyorperish,haveabandonedit.Thelesson:eventhebestformofone-person/one-votedoesabetterjobdefendingtherightsofthepeoplethanitdoesrunningtheirgovernment.Itworksbestasasword–notasascepter.

Instead of one-person/one-vote, corporations and related business entities governthemselves by the one-share/one-vote rule. This helps them raise capital and runefficiently,true–butitstandsforsomethingmore.Theone-share/one-voteruleembodies

anunderappreciated formofdemocraticequality: thatof treatingeachpropertyowner’srightswithequalrespect.

Subjecting property rights to popular vote, as politicians too often threaten to do,riskssubjectingaminority’sfortunestothemajority’swill.Despiteitsshort-termpoliticalappeal, ample historical examples, most of them ending in tragedy, demonstrate thedestructive effectsof redistributingpropertyonaone-person/one-votebasis.37Theone-share/one-voterule,incontrast,encouragesinvestmentandgoodstewardship.

One-share/one-vote would prove inadequate as the sole means of governing acommunity with residents, however, who enjoy certain inalienable rights. These theyenjoy in equal measure regardless of wealth. If it served as a community’s onlydemocratic process, the one-share/one-vote rule would leave individual liberties at themercy of an oligarchy. But suppose that wealthy investors, controlling most of theconstructivevotesinadoubledemocracy,enactedrulesthattreatedaveragecitizenswithcontempt–denyingthemtherighttocriticizetheirgovernment,forinstance.Correctiveprocedureswouldallowthepeopletoreasserttheirrightsbystrikingdowntheoffensivelaw.

Does thatmean that themasses couldvote awayevenprotections for property? Intheory,perhaps–butitishardtoimaginethatactuallyhappening.Firstofall,thoughwecanimagineexposingeachandeveryruletopopularreview,itisnotlikelythatinvestorswould agree to subject the very definition of their assets to popular vote.More likely,successful communities would put certain foundational rules, such as the definition ofpropertyorbasichumanrights,outsidecorrectivevotingprocedures.Evenwithoutsuchproceduralsafeguards,however,itisnotlikelythatthepeoplewouldvotethemselvesintoanarchybynegatingproperty.

How might a proprietary community implement double democracy? At first, thefounders and initial investorswouldownmostof the shares, and thushave thegreatestinfluence over constructive voting processes. As in other commercial enterprises, theywoulduse thispower toelect theenterprise’smanagingboard.Over time,otherswouldcometoownshares,too.

Residentswouldalwaysenjoyequalrepresentation,onaone-person/one-votebasis,incorrectiveelections.Thatwouldsafeguardtheirindividualandpersonalrights.Undera

vestingprogram–onedeliberatelydesignedtogiveresidentsaproprietaryinterestintheircity– thosewho live in the citymight furthermore come to ownmore andmore of itsshares over time. Long-time residents would thus have comparatively greater say inconstructive democratic processes, allowing them to translate their local expertise intogoodgovernment.Investorsandresidentsalikewouldbenefitfromsuchanarrangementbecausealigning incentivesgeneratescivicharmony. Indeed,givingresidentsownershipintheircitymighthavesopowerfullybeneficialaneffectthatitencouragestheadoptionofpoliciesforbiddingresidentsfromtransferringtheirshare,allowingtheirredemptionforvalueonlyintheeventthattheresidencyterminates.

Theratiobetweeninvestor-heldandresident-heldshareswouldfluctuateover time,dependingonthecharacterofresidentpopulations,periodicinfusionsofcapital,andotherfactors.Eventuallyinalllikelihood,moreresidentswouldenjoymoreandmoreinfluenceover their owngovernment.Some suchproprietary communitiesmight becomeentirelyself-ownedand,thus,entirelyself-determined.Verysuccessfulonesmightevencometoinvest in their own start-up communities, continuing the cycle of creation, growth, andindependence.

6Conclusion:TowardLessWorstGovernmentEvenitsmostardentfansadmit thatdemocracy in itssimplest form–abroadfranchisegivingdirectcontrolofallgovernmentoperations–offersapoorwayofrunningthings.Givingtotalanddirectcontrolofgovernmenttoadominantnumberofvoterscanwork,ifatall,only in thesmallestandmost intimateofgroups. Itcannotworkat thescaleofacity,much less a nation state.Even self-proclaimeddemocracies limit thepowerof thevote, filtering it through representationalmechanisms and setting aside certain rights asbeyondsimplemajorityrule.Forthoselimitsonpopularpowerwisepeoplesighinrelief.

Winston Churchill aptly described democracy as “the worst form of governmentexcept all those other forms that have been tried from time to time.”38 Note well hiscarefulwording:“thathavebeentried.”Churchillleftroomforimprovement.Hehadnotabandonedhopeinalessworstkindofgovernment.Neithershouldwe.

The answer lies not in simply more voting or less voting, but in better voting.Subjecting private property to the popular vote would disrespect its owners’ rights,discouraging investment and ultimately bringing public woe. Subjecting individualpersonallibertiestotheexclusivedictatesofpropertyownerswouldriskoligarchicabuse.Awell-roundeddemocracymustincludesafeguardsforbothpropertyrightsandpersonalrights.Doubledemocracyprovidesconstructivevotingonaone-share/one-votebasisandcorrectivevotingonaone-person/one-votebasis.Together,theseprovidenotabetterformofgovernmentthandemocracy,butagovernmentmadefromabetterformofdemocracy.

*ThisChapterderivesinpartfromTomW.Bell,WhatCanCorporationsTeachGovernmentsaboutDemocraticEquality?31S OC . P H I L . & P O L’ Y .,no.2,Apr.2015,at230(2015)(invited),reprintedinEQUAL I TY AND P UBL I C POL I CY230(MarkLeBar,AntonyDavies&DavidSchmidtzeds.,2015),andTomW.Bell,CanWeCorrectDemocracy?FREEMAN , July/Aug.2013,at4,https://fee.org/media/3751/20130627_freemanjulyaug2013textfinal.pdf

1See,e.g.,UriFriedman,ShouldtheBrexitVoteHaveHappenedatAll?,ATLANT I C

ONL I NE (June27,2016),www.theatlantic.com/international/archive/2016/06/brexit-vote-referendum-democracy/488654/;DavidA.Graham,DoestheDemocraticPartyHaveaFuture?,ATLANT I C ONL I NE(Nov.9,2016),

www.theatlantic.com/politics/archive/2016/11/can-the-democratic-party-survive/507116/.

2J A SON BRENNAN , AGA I N S T D EMOCRACY(2016).

3BRYAN CA PLAN , THE MYTH O F THE RAT IONALVOTER : WHY D EMOCRAC I E S CHOOSE

BAD POL I C I E S(2007).

4MehdiHasan,Opinion,TheAmericanPoliticalSystemIsBroken,WASH . P O S T:

GLOBAL O P I N I ON S(Nov.25,2016),www.washingtonpost.com/news/global-opinions/wp/2016/11/25/the-american-political-system-is-broken/.

5RoslynFuller,WhyIsAmericanDemocracySoBroken,andCanItBeFixed?NAT ION

(June9,2016),www.thenation.com/article/why-is-american-democracy-so-broken-and-can-it-be-fixed/.

6KurtEichenwald,Don’tBlameTrump:AmericanDemocracyWasBrokenBeforeHeMuscledIn,NEWSWEEK (May13,2016),www.newsweek.com/2016/05/13/american-democracy-electorate-voters-election-2016-donald-trump-454655.html.

7Thoughsuperficiallyattractive,negativevotingdoesnotdojusticetothepositiveaspectsofgivingthevictimsofbadgovernmentareadydefenseoftheirrights.

8WILL I AM A . F I S CHEL , T HE HOMEVOTER HY POTHE S I S34–35(2005).

9YoramBarzel&TimR.Sass,TheAllocationofResourcesbyVoting,105Q . J . E CON .

745(1990).

10Thisapproachdoesnot,however,aimtodirectlypromoteequalityofstatusorotheroutcomes;itallowsforthepresenceofinequalities,solongastheydonotarisefromviolationsofrights.Whynot?SeeROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A

160–64(1974)(explaininghowlibertyupsetspatterns).

11SeeRobertC.Illig,MinorityInvestorProtectionsasDefaultNorms:UsingPricetoIlluminatetheDealinCloseCorporations,56AM . U . L . R E V.275,296–305(2006).

12R I CHARD D . F R EER & DOUGLA S K . MOLL , P R I NC I P L E S O F B U S I N E S S ORGAN I ZAT ION S

386(2013).

13THE D ECLARAT ION O F I N DE PENDENCEpara.2(U.S.1776).

14AlexisC.Madrigal,NelsonMandela’sFirstTVInterview,May1961,ATLANT I C

(Dec.6,2013),www.theatlantic.com/international/archive/2013/12/nelson-mandelas-first-tv-interview-may-1961/282120/(quoteatvideo1:05).

15PressRelease,OfficeofSenatorBarbaraA.Boxer,Sens.Clinton,Boxer,Rep.Jones,OthersUnveilMajorElectionReformBill(Feb.18,2005),www.boxer.senate.gov/?p=release&id=1707.

16U . S . CON S T.art.I ,§2cl.1.

17Id.cl.2.

18Id.amend.XIV,§1.

19Westberryv.Sanders,376U.S.1,8(1964).

20Reynoldv.Sims,377U.S.533(1964)(state);Bd.ofEstimatev.Morris,489U.S.688(1989)(municipal).

21U . S . CON S T.amend.XVII.

22SeeKennethA.Stahl,NeighborhoodEmpowermentandtheFutureoftheCity,161U . PA . L . R E V. 939,963(2013)(contrastingthetwokindsofdistricts).

23410U.S.719(1973).

24451U.S.355(1981).

25410U.S.at725.

26451U.S.at359.

27Salyer,410U.S.at728;Ball,451U.S.at370.SeealsoS.Cal.RapidTransitDist.v.Bolen,822P.2d875,877(Cal.1992).

28158F.3d92(2ndCir.1998).

29Id.at97.

30Id.at108.

31BusinessImprovementDistrict,WIK I P ED I A ,http://en.wikipedia.org/wiki/Business_improvement_district(lastvisitedDec.16,2016).

32SeeMichaelS.Kang,VotingasVeto,108M ICH . L . R E V.1221(2010)(examiningnegativepreferencesinvotingcontexts).

33Forarareexception,seeJoséCarlosR.Alcantud&AnnickLaruelle,DisapprovalVoting:ACharacterization,43S OC . C HO I C E WE LFARE1(2014).

34CHR I S TOPHER UGGEN E T A L . , S E NTENC I NG P RO J ECT, S TATE - L EVEL E S T IMATE S O F

F ELON D I S EN FRANCH I S EMENT I N THE UN I T ED S TATE S , 2 0 1 0 ,at12( 2 0 1 2 ) ,http://felonvoting.procon.org/sourcefiles/2010_State_Level_Estimates_of_Felon_Disenfranchisement.pdf(notingthat7.66percentofAfricanAmericanadultsintheUnitedStatesaredisenfranchised).

35Ulexcouldaccommodatethisapproachwiththesimpleexpedientofaddingaprivaterightofactiontoenjoinanyruleorappointmentthatmeetsaspecifiedtestofunpopularity.SeeChapter3.7.

36Thiswouldandprobablyshouldoperateinparallelwithotherprotectionsofindividualrights,suchastheBillofRights.

37FR I EDR I CH A . H AYEK , THE CON ST I TUT ION O F L I B ERTY 3 0 6– 2 3 (1960);AR I S TOTLE ,

POL I T I C S , bks.V & V I ,in2THE COMPLETE WORKS O F AR I S TOTLE2066–2100(JonathanBarnesed.,B.Jowett,trans.,1984)(c.350BCE).

38OXFORD D I C T IONARY O F QUOTAT ION S221(ElizabethKnowlesed.,6thed.2004).

3.6

UnitedStatesSpecialEconomicZones(USSEZs)*

◈

1Introduction:ANewOldFavoriteThischapterproposesthecreationofanewbutcharacteristicallyAmericankindofspecialjurisdiction: theUnitedStatesSpecialEconomicZone(USSEZ).TheUSSEZrepresentsthenaturaloffspringofacountrybornfromahandfulofprimitiveproto-SEZsandnowhost to hundreds of sophisticated and successful Foreign Trade Zones (FTZs). TheUSSEZsdescribedherewouldariseonfederallandsandofferreducedexposuretoselecttaxes, laws, and regulations in exchange for lease and concession fees. The aim: large,successful,start-upcities.

The ideasput forthhere, far from radical, arenot evenveryoriginal. Instead, theyarisefromexamplesbothdeepinhistoryandincurrent,flourishinguse.1Politiciansandcommentatorshavealreadycalledforsettingasidepartsof theUnitedStatesforspecialprotectionfromthefullbruntofstateandfederallaws.2Indeed,asIndianreservationsandFTZsdemonstrate,theyhavemadeitpartofofficialgovernmentpolicy.3

WhatisaUSSEZ?Bywayofpreview,andrecognizingthat theirflexiblestructurepermitsmanyvariationsonthesethemes,USSEZswould:

The next few sections explore those themes, in order. The chapter concludes that,regardlessof their inevitable fate,USSEZswill happenonly if someone first puts thembeforethepublic.Consideritdone.

Offerexemptionsfrommanyfederalandallstatelawsandregulations;

Ariseonselectfederallands,allocatedbycompetitivebidding;

Raiserevenueforfederalandstategovernments;

Encourageinnovativegovernanceunderfederaloversight;and

Facepowerfullegalandmarketpressurestorespectresidents’rights.

2WhatMakesaUSSEZ“Special”?LikeForeign-TradeZones,USSEZswouldofferexemptionsfromfederalandstatelaws.TheenablinggrantofeachUSSEZwouldlimittheeffectofselectfederallawswithinthezone,easingtheburdenofawiderangeofregulationsandtaxes,andcompletelypreempttheeffectof localstate laws.4Fundamentalconstitutional rightswouldofcourseremainunaffected;federallawmakershavenopowertonegatethose.Italsoseemsbest,forlegaland political reasons explained later in the chapter, to not extend to USSEZs theexemptionfromcustomsalreadyenjoyedbyFTZs.Beyondthat,theexactcontoursoftheUSSEZ’sexemptionswouldremainsubjecttopoliticalbargaining–agoodthing,inthiscontex,asitwouldallowlawmakerstoshapeUSSEZstosatisfyvitalconstituencies.

USSEZswouldfollowtheirforebears,FTZs,inarisingfromindividualinitiativeandimposingnonetcostsonthegoverningagenciestaskedtosupervisethem.5JustasFTZshave topayforanyadditionalcustomsservices that theirzonesrequire,USSEZswouldhavetopayfortheburdens,ifany,theyimposeonfederalandstategovernments.Ifthezone remains subject to EPA regulation, for instance, and its newly opened factoriesrequireinspections,thezonewouldpayfortheextratroubletherebyimposedontheEPA.Again,thatsimplymirrorscurrentFTZpractices.

UnlikeFTZs,whichtypicallyariseonprivateormunicipalproperty,USSEZswouldariseonlands,typicallyvacant,ownedbythefederalgovernment.Thegovernmentwouldleaseorselltheselands,theirboundsdefinedbystatute,toprivatepartiespayingvaluableconsiderationfortherighttocreateandrunUSSEZsonthelands.UnlikeFTZs,therefore,USSEZswouldgeneratemuch-neededrevenueforpubliccoffers.

FTZsbenefitgovernmentfinancesonlyindirectly.By foregoingcustomsdutiesandexcise taxes, the theorygoes,FTZsstimulateeconomicactivity, suchasemploymentortrade, that the government does tax. In contrast, USSEZs would benefit governmentfinancesdirectly.Prospectivedeveloperswouldhavetopayup-frontandonacontinuingbasis for the sale or lease of federal lands, togetherwith the licenses, concessions, andcovenants necessary to exempt the zone from select taxes, laws, and regulations. ThisrevenuestructurewouldwintheUSSEZprogramalliesamongbothnationalandregionalpoliticians.

Thoughenjoyingexemptionsfromagreatmanyfederallaws,regulations,andtaxes,USSEZswouldprobablydobetterwithoutthesameexemptionfromcustomsdutiesandexcise taxes that FTZs already enjoy. Why? For three reasons: reducing regulatoryoverhead, steering clear of extant special interests, and securing a more solid legalfoundation.Thenextparagraphoffersdetails.

First,foregoingthatprivilegewouldallowUSSEZstoalsoforegotheburdenofclosesupervision byU.S.Customs andBorderProtection (CBP) officials.6BecauseFTZs lieoutsidethecustomsterritoryoftheUnitedStates,legallyspeaking,theycannotadmitthefree entry and exit of people or merchandise, but insteadmust qualify as secure areasunderCustomscontrol.7USSEZScouldavoidtheregulatoryoverheadcostsofCustomsoversightandlinkthemselvesmorecloselytoneighboringcommunitiesbyacceptingthesame customs and excise tax obligations that apply generally in theUnited States. If aUSSEZ wanted a customs-and-excise-tax-free area, as might hold true if the zone’sinternationalairportqualifiedasaCBPportofentry,itcouldpresumablyhostanFTZjustlikeanyotherplaceintheUnitedStates.Second,subjectingUSSEZstocustomdutiesandexcise taxes would avoid turning the FTZ lobby, which logicallymight regard anothersuchzoneasacompetitor,intoapotentialfoeoftheprogram.8Third,thoughadmittedlyasomewhatacademicpoint,byaccepting theburdensofcustomsdutiesandexcise taxes,USSEZswouldavoid theclaim thatazoneexempt from thosedutieswouldviolate theplainlanguageoftheUniformityClause.

Amongotherexemptionstheyenjoy,USSEZswouldideallyenjoyexemptionsfromfederal income taxes,which bymost accounts impose considerable regulatory costs onthose forced to calculate and pay them.9 On the face of it, that should pose no legalproblem.TheUniformityClause,whichintheorythreatenstheexemptionfromcustomsdutiesandexcisesenjoyedbyFTZs,doesnotevenmentiontaxes(suchasthoseimposedoncorporateandindividualincome).10Granted,somecommentatorsreadthe1916caseofBrushhaber v. Union Pacific Railroad Co. to have classified income taxes asconstitutionally equivalent to excises, thusmaking income taxes subject to the clause.11

Thatclaimlookssuspectontwogrounds,however.First,acarefulreadingofBrushhabershows that it could not have held that geographically nonuniform income taxes areconstitutionallyforbiddenbecauseitconcededthatthetaxundertheCourt’sconsiderationwasnotofthattype,leavingtheissueoutsidethebindingscopeoftheopinion.12Second,

the national government has already rendered federal income taxes geographicallynonuniformaspartofapolicyofspeedingeconomicrecoveryinareasstruckbynaturaldisasters,13 a practice that evidently qualifies as constitutional under both commonpractice and Supreme Court precedents.14 USSEZs could thus constitutionally enjoyexemptionsfromfederalincometaxes.

Without the full panoply of federal and state laws, regulations, and taxes in force,would not theUSSEZs devolve into anarchy?Not likely. In the first place, itwill costmoneytowintherighttodevelopandadministerazone,andinvestorsdonotmuchcareforanarchy.Inthesecondplace,everyUSSEZwouldremainsubjecttofederaloversightviaaboardoperatingmuchliketheFTZboarddoesnow.

USSEZswouldlargelyproducetheirownlaws,regulations,and,ifnottaxes,variousmeans of paying for the governing services. These theymight provide in-house, or bycontractwithotherprivate firmsor localsovereigns.Theexact formof thesegoverningsystemswilldependon federal constraints,developercreativity, andmarketdemand. Inlarge part, though, and by deliberate design, the USSEZ program would clear ajurisdictionalspacewhereentrepreneurscancompetetooffer–withinspecifiedlimitsandsubjecttocontinuingoversightbyfederalauthorities,ofcourse–thesortsofstreamlinedlegalandadministrativeservicesmostlikelytoattractresidentsandinvestorstothezones.Theselocalpocketsoffreedomwouldspureconomicandculturalgrowth,drivingnotjusttechnicalinnovationbutinnovationinformsofself-government,too.

3WheretoLocateUSSEZsUSSEZswould arise on federal lands. In theory, that includes quite a lot of theUnitedStates.The federal government owns andmanages roughly 640million acres of land –about28percentof thecountry’s totalacreage.15 It tends toownmore land in thewestthanintheeast; theextremesoffederalownershiprangefrom84.9percentofNevada’sterritoryto0.3percentofNewYork’sandConnecticut’s.16

Not all federal lands would provide suitable environments for USSEZs. Nobodywants to see factories built in Yosemite National Park. The federal government ownsconsiderableacreagethatliesfallowmostlyforeconomicreasons,however.Considerthelandsadministeredby theBureauofLandManagement (BLM),which italreadymakesavailableforvariousproductiveuses;itadministers247.3millionacres,about11percentoftheUnitedStates–far,farmorethananyprivatepartyandmuchmorethananyotherfederalagency.17LandadministeredbytheNationalForestService(NFS),whichlikewisepermits certain productive uses, opens the prospect of another 192.9 million acres toUSSEZs.18Recentbaseclosureshavealsomadesomerelativelysmallerareas,formerlyusedformilitarypurposes,availableforsaleorleasetothepublic.19

Extantlawslimittovariousdegreestheauthorityoffederalagenciestosellorleasepublic lands. Federal law generally limits all agencies in the sale of public lands;promisingly forUSSEZs, however, it allows for the sale of select lands if “disposal ofsuchtractwillserveimportantpublicobjectives,includingbutnotlimitedto,expansionofcommunities and economic development.”20 Also, although congressional approval isrequired for sales of public land in excess of 2,500 acres, no such limitation applies toleases.21

TheBLMhas relativelybroadauthority todisposeof itspropertybysaleor lease,whereas the NFS faces tighter constraints.22 Even in the case of the BLM, however,statutoryamendmentswouldprobablybenecessarytomakeUSSEZspossible,asexistinglawslimitthetermsbywhichtheDepartmentoftheInterior,whichmanagessuchlands,can dispose of them, aswell as towhom they can be sold or leased.23 Sales of closedmilitary facilitiesmust jump through various legal and administrative hoops. So far as

leasinggoes,however,theDepartmentofDefenseappearstoenjoyconsiderablelatitudeinsettingthetermsbywhichitmakesclosedfacilitiesavailabletoprivateparties.24

TheseobservationsgomostlytoshowthatUSSEZswouldrequireonlyincrementalchangestoexistinglaws–notthatstatutoryamendmentswouldbeentirelyunnecessary.TheUnitedStateshasalonghistorybothofmakingpubliclandavailableforleaseorrentandofcreatingspecial jurisdictionsexempt fromthefull forceof itsauthority.USSEZsmerelycombinethosetwopractices.

3.1AdministrationoftheUSSEZSystem

TheadministrationoftheFTZsystemoffersarough-and-readymodelforUSSEZs.Howis the FTZ system run? By statute, the Foreign-Trade Zones Board is made up of theSecretaryofCommerceandtheSecretaryoftheTreasury–theformalchairs.25Inactualpractice,theCommissionerofU.S.CustomsandBorderProtectionplaysanadvisoryroleandtheBoarddelegatesmuchauthority toaCommitteeofAlternates“composedof theAssistant Secretary of Commerce for Enforcement and Compliance and the DeputyAssistantSecretaryoftheTreasuryforTax,Trade,andTariffPolicy.”26

ThisFTZmodelcouldperhapsworkwellforUSSEZs,withafewtweaks.Insteadofadvisement by the Commissioner of U.S. Customs and Border Protection, it wouldprobably work better, assuming as suggested above that USSEZs do not enjoy anexemption from federal customs duties and excise taxes, and that they arise on BLMlands, to have not Customs but the Department of the Interior play an advisory role.TakingonlytheFTZsystemasthemodelandmakingthoserelativelyminoreditsgivesthisresultfortheadministrationofUSSEZs:aUSSEZboardmadeupoftheSecretaryofCommerce,whochairs,andtheSecretaryoftheTreasury,withaCommitteeofAlternatesexercisingbroaddelegatedpowersandarepresentativeofSecretaryoftheDepartmentoftheInterioradvising.

FTZsdifferfromUSSEZsinsignificantways,however–waysthatmightmaketheFTZboard less thanaperfectadministrativemodel forUSSEZs.Consider, for instance,thatFTZsprovideexemptionsfromlittlemorethancustomsobligations,excisetaxes,andstateorlocaladvaloremtaxes,27whereasUSSEZswouldofferexemptionsfromawideswath of laws, regulations, and taxes (though not, in the suggested formulation, fromfederalcustomsdutiesorexcisetaxes).Consider,too,thatFTZsareforbiddentohaveanyresidents beyond crucial on-site officials,28 whereas USSEZs expressly aim at fillingentire cities with residents. Also, whereas FTZs perform few delegated governingfunctionsbeyondauditedself-monitoringinsubstitutionofdirectoversightbyacustomsofficer,29USSEZswouldperformor contract out for theprovisionofmost governmentservices,suchashealthandsafetyregulations,policeprotection,courts,andsoforth.

USSEZs would thus enjoy broader exemptions, performmore functions, and hostlarger populations than FTZs. Rather than United States Foreign-Trade Zones, these

features make USSEZs somewhat resemble Honduran ZEDEs.30 As discussed in moredetail in Chapter 1.4, the ZEDEs enjoywide-ranging autonomy to pass and administertheirownlaws,regulations,andtaxes.WhatcantheZEDEteachUSSEZs?

TheZEDE system includes a political firewall in the formof aCommittee for theAdoptionofBestPractices(CAMPfromitsSpanishname,“ComitéparalaAdopcióndeMejoresPrácticas”).31FilledwithnotablesfromHondurasandtherestoftheworld,mosthailingfromtheprivatesector,theCAMPshieldsthezonesundertheircarefrompoliticalinterference. Itdoesnot run thezones; thatpower is reservedforeachzone’sTechnicalSecretary.32Instead,theCAMPwieldsthepowertodisapprovetheactionsorappointmentofaTechnicalSecretary.33Thissortofnegativecontrol,akintothecorrectivedemocracyadvocatedinChapter3.5,mightsuittheadministrationofUSSEZs,too.

4RevenueFlowandPoliticalEconomyofUSSEZsUSSEZswouldgeneraterevenueforthefederalgovernment,whichitwouldinturnsharewithstatesborderingthezones.HowwouldtheUSSEZprogramraisemoney?Bythesaleorleaseofselectpubliclandstozonedevelopers,togetherwithcovenantsexemptingthezone fromcertain laws, regulations,and taxes.The landsandcovenantsassociatedwitheachUSSEZwouldgotothehighestqualifyingbidderatapublicauction.Inadditiontoalargeup-frontpayment,azoneoperatorwouldmakeperiodicpaymentsintheformofalease or concession.34 This financial structure would incentivize current and futurepoliticalactorsatnationalandlocallevelstosupportthelaunchandsuccessofUSSEZs.

WhyprovideforsharingUSSEZrevenuesbetweenfederalandstategovernments?Inthefirstplace:simplefairness.Bothlevelsofgovernmentwouldhavetobearcostsifthezones succeed; the federal governmentwould have to cede both its property rights andsome of the privileges of authority to the zones, whereas state and local governmentswouldhavetodealwithpeopleandgoodspassingthroughtheirterritorieswhileintransittoorfromadjoiningzones.IfbothfederalandstategovernmentshavetobearthecostsofhostingUSSEZs,bothshouldalsoenjoythebenefits.

In the second place, by sharing USSEZ revenues, the national government couldcalmalong-smolderingconflictoverstateclaimstofederallands.35Especiallyinwesternstates, this conflict has engendered a great deal of passion, and even broken out inviolence.36Likeanyworkablepoliticalcompromise,theUSSEZprogramwoulddemandsacrifices from all parties: the stateswould not get title to the lands they crave but thefederalgovernmentwouldfinallyopensomeofitsvastholdingstousesbeneficialtolocalandregionaleconomies.

AthirdargumentforfederalsharingofUSSEZrevenues:purepolitics.Publicchoiceconsiderationscounselgettingbuy-insfromboththefederalandstategovernments,eitherof whichmight otherwise have considerable power to stymie USSEZs. To belabor theobvious,stateswillmorelikelysupportzones if theybenefit fromthemfinancially.Therevenue-sharing plan described here thus satisfies principles of fairness, concern forpeacefulfederal-staterelations,andthepragmaticcounselsofpoliticalexpediency.

NotethattheUSSEZdevelopers’comparativelylargeup-frontpaymentsmightmeanalottotheprogram’ssuccess.Politiciansoftenhaveshorttimehorizons,notlookingveryfarbeyondthenextelection.Manyofthemostpowerfulpoliticalagentsrationallyexpecttoenjoylongtenures,ofcourse,buttheUSSEZswillmorelikelywinpoliticalsupportiftheycangeneraterevenuesoonandinabundance.Theserevenueswillmoreoverhavethevirtue of appearing out of thin air, as it were, liquidating the value of assets that havehitherto been locked out of circulation (fallow federal lands) or not even considered aspotentially subject to market valuation (exemptions from select laws, regulations, andtaxes).

Withregard to raisingrevenue,USSEZs less resembleUnitedStatesForeign-TradeZonesthantheyresembleHonduranZEDEs.Whatevertheirotherbenefits,FTZsdonotcontributedirectlytopubliccoffersinanymeaningfulway.Applicationscostinthemerethousandsofdollars,37andFTZsdonotevidentlypaycontinuingconcessionfeesfortheprivileges they enjoy. Perhaps as a consequence, the Foreign-Trade Board is not self-funding.HonduranZEDEs,incontrast,willcontributemoneytopubliccoffersbyexpressdesign; each zone must pay the national government 12 percent of all tax revenuescollected in the zone.38 Each zone must by statute distribute these revenues evenlybetweenfivetrusts,eachcreatedforoneoffiveconstituencies:thejudiciary,departmentalgovernments,theexecutivebranch,municipalities,andthearmedforces.39

Sofaraspaying theirownwaygoes,USSEZswould take inspirationnot fromUSFTZs,butfromHonduranZEDEs.EventheHonduranapproachrisksencouraging legalquibblesandmicromanagement,however.Azone’sTechnicalSecretarymightforinstancedisagreewith the national government aboutwhether a port fee qualifies as a tax or aservicecharge,leadingthegovernmenttochallengethezone’smanagement.

The USSEZ system proposed here, because it asks only that zone developers andmanagerspay the agreed-toprice for federal lands andconcessions,wouldnotgive theparties similar grounds for dispute. In addition to encouraging comity, this hands-offapproachwouldleaveampleroomforinnovativenewapproachestotheage-oldproblemoffundingpublicgoods.Perhaps,USSEZswilldiscoverthattaxesarenotasinevitableasdeath,afterall.

5ProtectionofCivilLibertiesinUSSEZsUnlike federal FTZs,USSEZswill admit residents.With those residentswill come theobligationtorespectcivilliberties.ItwillnotmatterexactlyhowresidentsofUSSEZsgetclassified by federal authorities; whether natural-born citizens, permanent residents, orundocumented immigrants; all people within the territory of the United States enjoyconstitutional protections of their fundamental rights.40 Ample experience, for better orworse, already demonstrates how state and federal governments fulfill that mandate.Historyofferslessevidenceabouttheperformanceofprivategoverningservices,though.WouldUSSEZ’srespectcivilliberties?

Theywouldhaveto.

LawmakerswoulddoubtlessrequirethatanyUSSEZstatutemakeexpressprovisionsforthecontinuedeffectoftheBillofRightsandotherConstitutionalrightswithinzones.Otherwise,itmightlooktoomuchasifthefederalgovernmentweresellingfundamentallibertiesforcashinhand.USSEZswoulddoubtlessalsofaceagreatdealofcontinuedandclosescrutinybythemanyvariousconstituencies–perhapscomparativelysmallbutstillforceful–withstrongincentivestoexposerightsviolations.Somemayseekwell-earnedaccoladesforpromotingjustice.OthersmayhavevestedinterestsinseeingUSSEZsfail.Together,theywillhelpprotectcivillibertiesinthezones.

Theseconsiderationsdonotendtheinquiry.Thereremainsomeratherdetailedlegalmatters, addressed in the rest of this section, concerning application of the doctrines ofstate action and waiver to USSEZs. This analysis concludes that a zone could obtainenforceablewaiversofmanyifnotallconstitutionalrights.Thatmaysoundtroubling,butitdoesnotmarkUSSEZsasmarkedlyworsethantraditionalpolities.

EventhoughaprivatelygovernedUSSEZmightperformmanyofthesameservicesas a conventional political community, it does not automatically follow that the zonewouldfacethesamelegalconstraintsagainstinfringingthefundamentalcivillibertiesofits residents that a conventional political communitywould. The problem does not andcouldnotarisebystatute;federallawmakershavenojustpowertonegateconstitutionalrights.Theprobleminsteadarisesbecauseprivatecommunitiesgenerallydonotengagein

stateactionsubject toconstitutional limitsand,even if theydo, theycan inmanycasesobtainwaiversofthoselimits.

TheFourteenthAmendmentmakes(mostof)theBillofRightsapplicabletostates,and through them tomunicipalities, because, like the federal government, those entitiesengage in state action.41Under prevailing law, however, homeowners’ associations andother private communities, despite offering many governing services, do not generallyqualifyasstateactors.42ThisalonesuggeststhatUSSEZsmightposeuniqueriskstocivilliberties.

Itwouldnotremovethatrisktosimplytreatthezonesasstateactors,aslawmakersmightdobystipulation in theUSSEZs’enabling statute.Whynot?Because thatwouldleavethedoctrineofwaiverstillinplace,asitisinotherprivatecommunities.

Those who lay just claim to constitutional rights – criminal suspects in policecustody,forinstance–alsogenerallyhavethepowertowaivethoserights.43Becausetheygive the public largely unfettered access to streets and other government-owned areas,political communities cannot credibly attribute waiver to their residents and guests.Privatecommunities,incontrast,canadmitmembersofthepublicmoreselectively.Thisallowsthemtorequireenforceablewaiversofconstitutionalrightsfromthosewhoentertheir property, as when a homeowners’ association limits First Amendment rights byregulatingthedisplayofsignsonsubjectproperties.44

The willingness of courts to uphold waivers of constitutional rights in privatecommunitiesvariesacrossjurisdictionsandaccordingtoparticularcircumstances.45Mostcases toaddress the issue,however,haveheld thatprivatecommunities,notbeingstateactors, cannot violate the First Amendment.46 Moreover, the doctrine of Shelley v.Kraemer,47underwhichjudicialenforcementofaprivatecovenantmightqualifyasstateaction, evidently does not reach beyond restrictions that aim to effectuate racialdiscrimination.48Onthatreasoning,ahomeowner’sassociationwouldnotviolatetheFirstAmendmentifitbarredanunwelcomeparadeonitsprivatethoroughfare.

This prevailing deference to the sanctity of private covenants has its limits. If aprivatecommunitytoocloselyresemblesaconventionalpoliticalcommunityintermsofscopeandaccess,thevenerablecaseofMarshv.Alabamasuggeststhatitmightalsogettreated like a conventional political community in terms of constitutional rights.49 The

Court in Marsh overturned the trespass conviction of a woman caught passing outreligious pamphlets in defiance of the notices that Gulf Shipbuilding Corporation hadpostedinitscompanytown–asuburbofMobile,Alabama,knownasChickasaw.AstheCourtdescribedit,Chickasawlookedverymuchlikeanytown.

Thepropertyconsistsofresidentialbuildings,streets,asystemofsewers,asewagedisposalplantanda‘businessblock’onwhichbusinessplacesaresituated.AdeputyoftheMobileCountySheriff,paidbythecompany,servesasthetown’spoliceman.MerchantsandserviceestablishmentshaverentedthestoresandbusinessplacesonthebusinessblockandtheUnitedStatesusesoneoftheplacesasapostoffice.50

ItwasnotjustthesizeorfunctionsofChickasaw’sgovernmentthatconvincedtheCourtto treat it like a political institution, however; the Court took special note that nothingclearlymarkedoffthecityasprivate.

Thereisnothingtostophighwaytrafficfromcomingontothebusinessblockanduponarrival,atravelermaymakefreeuseofthefacilitiesavailablethere.Inshortthetownanditsshoppingdistrictareaccessibletoandfreelyusedbythepublicingeneralandthereisnothingtodistinguishthemfromanyothertownandshoppingcenterexceptthefactthatthetitletothepropertybelongstoaprivatecorporation.51

Ingeneral,theCourtheld,“[t]hemoreanowner,forhisadvantage,opensuphispropertyfor use by the public in general, the more do his rights become circumscribed by thestatutoryandconstitutionalrightsofthosewhouseit.”52

Taken as awhole, therefore, extant case law suggests that a privately runUSSEZmight obtain legally enforceable waivers of constitutional rights from its residents orguests.ZoneoperatorscouldavoidthemistakemadebyChickasaw,thecompanytowninMarsh, by clearlymarking the borders between their territories and neighboring areas.Onlybygivingclearnoticetovisitorsthattheyhaveenteredanareawheredifferentrulesapplycouldazonejustifyimposingthoserules.53Inthatcase,enteringandremaininginthezonewouldshowthevisitor’simpliedconsenttoitsrules.Stillbetter,thezonemightobtainfrominviteestheirexpressconsenttoitsrules,aswhenanamusementparkguestbuysa ticketwithattached termsora toll roadusersignsupforelectronicbilling.Thatapproach might not have been feasible for Chickasaw to implement in the 1940s, buttechnologicaladvanceshavesincebroughtgreatefficiencies toaccesscontrols for largenumbersofpeopleandlarge,conditionallyboundedareas.54

It thus seems likely that a USSEZ, as a community developed and managed byprivate parties, might have not just the legal power but the practical ability to requireguests and residents to waive certain of their constitutional rights. Not all of them, ofcourse. The Thirteenth Amendment flatly forbids slavery, after all (except as criminalpunishment).55 But as the existing case law demonstrates, private communities likeUSSEZsusuallyenjoythepowertomakelegallyenforceableagreementsconcerningthewaiver of certain constitutional rights. Does that make them more of a threat to civillibertiesthanconventionalpoliticalcommunities?

Before you rush to an answer, note that the enforcement of legally enforceableagreements, such as those embodied in a private community’s servitudes, leases, orlicenses, itself qualifies as the defense of vital civil liberties, including the freedomsofproperty,contract,privacy,andassociation.Nooneshouldsuggestviolatingthoseprivaterightsindefenseofconstitutionallibertieswithoutcontemplatingtheperilsofparadoxandhypocrisy.Notealsothatconventionalpoliticalcommunities,notwithstandingtheirpapercommitments, have a decidedly mixed record of respecting fundamental constitutionalrights.56

Free people should surely have the right to decide for themselveswhether to trustgenerousbut insincerepoliticalpromisesover lessgenerous,buthonest,privateones. Ifcitizen-customerschooseprivateUSSEZsovercompetingpoliticalgovernments,whoarewe to second-guess them? As noted earlier, USSEZs will doubtless have to respectconstitutional rights by statute. Furthermore, as discussed next, the market will alsoconstrainUSSEZs.

6LegalandMarketProtectionsofCivilLibertiesinUSSEZS

Torecap:privatecommunitiesgenerallyescapetheburdensthatfollowfromengaginginstateaction,andcan likelyobtainenforceablewaiversof thoseconstitutional rights thatstillapplyagainstaUSSEZgovernment.ThatraisestheconcernthatUSSEZsmightposeaperiltocivilliberties.And,indeed,ifthatwerethewholeofthepicture,itmight.Butasthissubsectiondiscusses,otherlegalandeconomicforceslooklikelytoforceUSSEZstorespectindividualrights.Why?First, likeotherprivatecommunities,butunlikepoliticalones, USSEZs would not claim the privilege of governmental immunity. Second,competitionfromothercommunities,bothpoliticalandprivate,wouldforceUSSEZs torespondtothedemandsofcitizen-customersthattheirrightsreceivetheutmostrespect.

Anyonewho thinks it somehow unfair that private communities do not engage instateactionunderprevailinglawshouldconsiderthatprivatecommunitieshavetoforegooneof themainperquisites claimedbypolitical communities at all levels in theUnitedStates:governmental immunity.Like itor (asper theopinionexpressed inChapter3.2)not,governmentalimmunityaffordspoliticalgovernmentserviceprovidersanadvantageovertheirprivatecompetitors.

USSEZswouldalsofacetheultimatecheckonanygovernment’spower:competitionfromothergovernments.Arisingonvacantland,azonewouldinthefirstinstancehavetolure its residentsawayfromtraditionalpoliticalcommunities.Zoneswouldalsohave tocompetewitheachothertoattractthesortsofworkers,creators,andmanagerswhomakean economy hum. Exactly how zoneswould supply those and other attributes of goodgovernment remainsaquestionofentrepreneurship, innovation,and luck.Perhapssomewhoendeavor toenter thosemarketswill find the ideasof thisbookuseful inattractingcitizen-customers,creatingsafehavensforeconomicgrowthandindividualrights.

7Conclusion:FromIdeationtoActionChapter1.2revealedhowspecialjurisdictionshavespreadthroughouttheworldrecently.Chapter1.3showedhowtheyhavehadanespeciallypowerfuleffectontheUnitedStates.This chapter has pushed thoseworldwide and historical trends forward, imaging a newandcharacteristicallyAmericankindofspecialeconomiczone:theUSSEZ.

To recap,USSEZswouldariseon fallow federal landsmadeexempt fromall stateand many federal laws, regulations, and taxes. For the most part self-governing andprivatelyrun,USSEZswouldpermitinnovationingovernment,attractinginvestmentandcreatingjobs.Theprogramwouldalsoraisemoneyforpubliccoffersthroughtheauctionofzonelandsandconcessions.Thefederalgovernmentwouldsharetheserevenueswithstates both because zones would impose costs on the infrastructure and services ofadjoiningstatesandbecauserevenuesharingwouldwinUSSEZsnationalandlocalallies.Another beneficial side effect ofUSSEZs: By finally putting neglected public lands toproductiveuse, itmight finallybringpeace to a conflict long simmeringbetween somewesternstatesandthefederalgovernment.

UnlikeFTZs, but like special jurisdictions elsewhere in theworld,USSEZswouldhaveresidents.Unlikepoliticalgovernments,butlikeotherprivatecommunities,USSEZswouldpresumptivelybearfullliabilityforallcivilwrongs.Thischeckonabusewould,ifenforced by truly independent courts, give the zones powerful incentives to respectresidents’ rights. Furthermore, each USSEZ would face competition from traditionalpolitiesandotherzones,makingfairtreatmentofcitizen-customersaparamountconcern.Fortheseandotherreasons,USSEZswouldlikelyprotectresidents’civillibertiesatleastaswellasfederalandstategovernmentsdo.

Peace,prosperity,andfreedom.Itallsoundsprettygood.ButwouldU.S.politicianseverapprove thecreationof theUSSEZs?Noonecansay,ofcourse. Itcertainlyseemssafetosay,though,thatUSSEZswillneverhappenifnobodythinksaboutthem,describesthem,andarguesforthem.Considerallthatdone.

*ThischapterderivesinpartfromTomW.Bell,SpecialEconomicZonesintheUnitedStates:FromColonialCharters,toForeign-TradeZones,towardUSSEZs,64BUFF. L .

REV. (forthcoming2016).

1SeeChapter1.2.

2See,e.g.,RODNEY LOCKWOOD , B E LLE I S L E : D E TRO I T’ S GAME CHANGER(2013)(proposingtoprivatizegovernanceinonepartofDetroit);SenatorRandPaul,EconomicFreedomZones,www.paul.senate.gov/files/documents/EconomicFreedomZones.pdf(proposing“EconomicFreedomZones”)(lastvisitedJan.5,2017).

3SeeChapter1.3.

4ThefederalgovernmentenjoysthepowertopreempttheeffectofstatelawonfederallandsthankstotheSupremacyClause.U . S . CON S T.art.VI,cl.2.

5See19U.S.C.§81n.

6SeeU.S.FORE IGN - TRADE ZONE S B D . ,Prefaceto7 7 TH ANNUAL R E PORT O F THE

FORE IGN - TRADE ZONE S BOARD TO THE CONGRE S S O F THE UN I T ED S TATE S(2016),http://ia.ita.doc.gov/ftzpage/annualreport/ar-2015.pdf.

7See,e.g.,MemorandumfromElizabethG.Durant,Exec.Dir.,TradeProgramsOfficeofFieldOperations,U.S.CustomsServ.,toForeign-TradeZoneOperators(undated),http://enforcement.trade.gov/ftzpage/security.html(lastvisitedOct.2,2016).

8Indeed,theprospectthatUSSEZsmightcometohostFTZs,assuggestedabove,mightturnthelobbyintoanally.

9See,e.g.,J A SON J . F I CHTNER & J ACOB M . F E LDMAN , MERCATU S C TR . , T HE H I DDEN

COST S O F TAX COMPL I ANCE8,10tbl.2(2013),http://mercatus.org/sites/default/files/Fichtner_TaxCompliance_v3.pdf(estimatingaccountingandcompliancecostsofInternalRevenueCodetorangebetween$215billionto$987billioneachyear).

10RecallthecontextoftheUniformityClause:“TheCongressshallhavePowerTolayandcollectTaxes,Duties,ImpostsandExcises,…butallDuties,ImpostsandExcisesshallbeuniformthroughouttheUnitedStates.”U . S . CON S T.art.I,§8,cl.1.TheinterpretativeprincipleofexpressiouniusestexcluisoalteriuscompelstheconclusionthattaxesneednotbeuniformthroughouttheUnitedStates.

11Brushaberv.UnionPac.R.R.Co.,240U.S.1,18–19(1916);ER IK M . J E N S EN , T HE

TAX I NG POWER : A R E F ERENCE GU I DE TO THE UN I T ED S TATE S CON ST I TUT ION88(2005).

12Brushaber,240U.S.at24.

13SeeI N T ERNAL R EVENUE S ERV. , F S - 2 0 0 9 – 8 , TAX L AW CHANGE S R ELATED TO NAT IONAL

D I S A S TER R EL I E F(2009),www.irs.gov/pub/irs-news/fs-09-08.pdf;I N T ERNAL R EVENUE

S ERV. , FS-2008–27,TAX LAW CHANGE S R ELATED TO M I DWESTERN D I S A S TER AREA S

(2008),www.irs.gov/uac/tax-law-changes-related-to-midwestern-disaster-areas.

14SeeEllenP.Aprill&RichardSchmalbeck,Post-DisasterTaxLegislation:ASeriesofUnfortunateEvents,56DUKE L . J .51,79–84(2006).

15CAROL HARDY V I NCENT E T A L . , C ONG . R E S EARCH S ERV. , R 4 2 3 4 6 , F E DERAL L AND

OWNER SH I P : O VERV I EW AND DATA 3(2014).

16Id.at4–5tbl.1.

17Id.at8.

18Id.at9.

19SeegenerallyR . CHUCK MA SON , CONG . R E S EARCH S ERV. ,R40476,BA S E

REAL IGNMENT AND C LO SURE ( B RAC ) : T RAN S F ER AND D I S PO SAL O F M I L I TARY

PROPERTY (2013).

2043U.S.C.§1713(a)(3)(2012).Seealso43C.F.R§2710.0–3(a)(2)(2015)(adoptingsamestandardforsalesbytheDepartmentoftheInterior).

2143U.S.C.§1713(c)(2012).

22CAROL HARDY V I NCENT E T A L . , C ONG . R E S EARCH S ERV. ,RL34273,F EDERAL L AND

OWNER SH I P : A CQU I S I T I ON AND D I S PO SAL AUTHOR I T I E S1(2015).

23See43U.S.C.§869(a)(2012);id.§869–1.

24SeeMASON ,supranote20,at11–12.

2519U.S.C.§81a(b)(2016)(defining“Board”).

26WhoIsontheForeign-TradeZonesBoard?ENFORCEMENT & COMPL I ANCE , I N T’ L

TRADE ADM IN .,http://enforcement.trade.gov/ftzpage/info/board.html(lastvisitedOct.2,2016).

27InformationSummary,ENFORCEMENT & COMPL I ANCE , I N T’ L T RADE ADM IN . ,

http://enforcement.trade.gov/ftzpage/info/summary.html(lastvisitedAug.29,2016)(summarizingbenefitsofFTZs).

2819U.S.C.§81o(a)(2012).

2919C.F.R.§146.3(2016).

30DecretoNo.120–2013,LeyOrgánicadelasZonasdeEmpleoyDesarrolloEconómico(ZEDE)[OrganicActforZonesforEmploymentandEconomicDevelopment(ZEDE)]LA GACETA , D I AR IO O F I C I A L D E L A R E PUBL I CA D E HONDURA S ,

Sept.6,2013,http://zede.gob.hn/english/gaceta/Gaceta%206%20de%20septiembre%202013.pdf[hereinafterZEDEAct].Foranunofficialtranslationofthestatute,seehttps://goo.gl/zyU8uj(lastvisitedOct.2,2016).

31SeeAppointmentofMembersofCAMP,REPUBL I C O F HONDURA S,https://web.archive.org/web/20160313233811/http://zede.gob.hn/?p=502(pagesavedMar.13,2016).

32ZEDEAct,supranote31,art.12.

33ZEDEAct,supranote31,art.11.

34Thefederalgovernmentalreadyhasexperienceinsimilartransactions.See,e.g.,Leasing,BUREAU O F OCEAN ENERGY, D E P’ T O F THE I N T ER IOR,www.boem.gov/Leasing/(lastvisitedAug.29,2016).

35CompareRobertB.Keiter&JohnC.Ruple,ALegalAnalysisoftheTransferofPublicLandsMovement1–2(WallaceStegnerCtr.forLand,ResourcesandtheEnvironment,WhitePaperNo.2014-2,2014),withDonaldJ.Kochan,PublicLandsandtheFederalGovernment’sCompact-Based“DutytoDispose”:ACaseStudyofUtah’sH.B.148–TheTransferofPublicLandsAct,2013B YU L . R E V.1133,1133(2014).

36See,e.g.,OccupationofMalheurNationalWildlifeRefuge,WIK I P ED I A ,

https://en.wikipedia.org/wiki/Occupation_of_the_Malheur_National_Wildlife_Refuge(lastvisitedMar.2,2016).

37FAQ:Isthereafeetoapply?,ENFORCEMENT & COMPL I ANCE , I N T’ L T RADE ADM IN .,http://enforcement.trade.gov/ftzpage/info/fees.html(lastvisitedAug.29,2016).

38ZEDEAct,supranote31,art.44.

39Id.

40Plylerv.Doe,457U.S.202,210(1982);YickWov.Hopkins,118U.S.356,369(1886).

41U . S . CON S T.amend.XIV,§1.

42SeeFearingv.CityofLakeSt.CroixBeach,No.Civ.04–5127,2006WL695548,at*8(D.Minn.2006),aff’donothergrounds,253F.App’x621(8thCir.2007);Barrv.CamelotForestConservationAss’n.,Inc.,153F.App’x860,862(3dCir.2005);Comm.foraBetterTwinRiversv.TwinRiversHomeowners’Ass’n,929A.2d1060,1063(N.J.2007).

43SeeD.H.OvermyerCo.v.FrickCo.,405U.S.174,185(1972)(dueprocessnoticerights);Illinoisv.Allen,397U.S.337,342–43(1970)(righttobepresentattrial);Mirandav.Arizona,384U.S.436,444(1966)(rightstocounselandagainstcompulsoryself-incrimination);Fayv.Noia,372U.S.391,439(1963)overruledinpartbyWainwrightv.Sykes,433U.S.72(1977)(habeascorpus);Rogersv.UnitedStates,340U.S.367,371(1951)(rightagainstcompulsoryself-incrimination).

44SeeComm.foraBetterTwinRivers,192N.J.at367.

45RobinMiller,Annotation,RestrictiveCovenantsorHomeowners’AssociationRegulationsRestrictingorProhibitingFlags,Signage,ortheLikeonHomeownersPropertyasRestraintonFreeSpeech,51A.L.R.6th533(2010).

46See,e.g.,Barr,153F.App’xat862;Fearing,2006WL695548,at*8,aff’donothergrounds,253F.App’x621(8thCir.2007).

47Shelleyv.Kraemer,334U.S.1,7–8,17–18(1948).

48Lorenv.Sasser,309F.3d1296,1303(11thCir.2002).

49Marshv.Alabama,326U.S.501,58(1946).

50Id.at502–03.

51Id.at503.

52Id.at506.

53Residents,owners,leaseholders,andthelikedonotpresentthesamechallenge,asthezonewouldpresumablywintheirconsenttoitsrulesbyexpressandwrittenagreement.

54See,e.g.,D IGN I A S Y S TEMS LTD .,www.dignia.com/(lastvisitedMar.1,2016);THALE S T RAN S PORTAT ION S Y S TEMS , CONTACTLE S S FARE COLLECT ION I N AN

I N TEROPERABLE , MULT I - O P ERATOR AGE5(2006),www.thalesgroup.com/sites/default/files/asset/document/lb_farecollection_va_web.pdf.

55U . S . CON S T.amend.XIII,§1.

56See,e.g.,Korematsuv.UnitedStates,323U.S.214,217–19(1944)(holdingconstitutionaltheforcedinternmentofAmericansofJapaneseancestryduringWorldWarII).

3.7

Ulex:AnOpen-SourceLegalSystem◈

1TwoRevolutionsof1969Elsewhere,peoplemarchedagainsttheVietnamWar,burnedtheirdraftcards,andgentlyplaced flowers in the rifles of riot police.But not in suburbanNew Jersey; not atBellLabs.There,in1969,anentirelydifferentkindofrevolutionstartedspinning.Thiskindofrevolutiontookplacenotinpoliticsorculture,butinlinesofcomputercode.Despiteitsunassumingorigins,itwouldremaketheworld.

Thecomputerprogrammingrevolutionof1969didnothappenwhenKenThompsonand Dennis Ritchie, two Bell researchers and longtime collaborators, launched whateventuallybecameUnix,averyearlyandultimatelyverysuccessfulcomputeroperatingsystem.1Thatrankedasmerelyatechnical innovation(albeitabigone).ThompsonandRitchie rankamonghistory’sgreat revolutionaries for something evenmore significant:writinganoperatingsystemcapableofrunningondifferentcomputers.2

What was so revolutionary about that? Prior to Unix, developers wrote a newoperating system for every new computer.3 That was not a terrible burden so long ascomputersremainedrelativelysimple,handcraftedmachines.Ascomputersbecamemorecomplexandstandardized,however,oldwaysofwritingsoftwaregrewobsolete.

With Unix, for the first time, the same operating system could run on differentcomputingplatforms.Thisnotonlysavedprogrammersa lotofwork; itopenedupvastnewenvironmentsforsoftwaretocolonize.Whereanoperatingsystemgoes,afterall,theapplications that run on it can follow. By making Unix interoperable across differentcomputing platforms, Thompson and Ritchie liberated software from hardware. Withallowanceforpoeticlicense,onemightfairlysaythatwhattheFoundersdidforAmerica,ThompsonandRitchiedidforapplications.

For launching a revolution in programming, Thompson and Ritchie have wonaccoladesfromcomputerscientists,softwareengineers,and…almostnooneelse.Thisisnot because their work had scant practical impact. Quite the contrary. Consider forinstancethemillionsofpeoplerunningAndroid–adirectdescendentofUnix–ontheirsmartphones.4 They and countless others benefit from Thompson and Ritchie’s efforts

everyday,inmyriadways,toimmensecumulativeeffect.Cantheotherrevolutionariesof1969–theoneswhoburnedtheirdraftcardsandbras–sayasmuch?

ThompsonandRitchiearehardlyaloneintheirundeservedobscurity;manynotablescientistsandengineerssufferthesamefate.Itcouldhardlybeotherwise.Wesimplyowetoomanythankstotoomanypeopletodojusticetothemall.Nonetheless,ThompsonandRitchiemeritmore than just twomore lines in the long, dusty ledger of theHeroes ofTechnology. They foretold the future, in their way, and they cast its fortunes in thelanguageofcode.Thischapterexplains.

Itbeginsbyrevisitingthehistoryofcomputerscience,andfindstherethefutureoflaw. The chapter then introduces its main theme, Ulex, an open-source legal system.Section 4 gives a brisk tour of Ulex, reserving the detailed treatment of the rulesthemselvesfortheappendix.Section5offerssomeprogrammer’snotes,sotospeak.Thechapter concludes with a summary and some speculations about what theinterconnectednessofcomputeroperatingsystemssuggestsabout theevolutionofsocialinstitutions. Perhaps unsurprisingly, given the nature of evolution, this account suggeststhatopen-sourcelegalsystemswillprovebetteradaptedtohumanneedsthannationstatesandthat,consequently,statelessassociationswilllikelythriveintheirstead.

2IntheHistoryofComputerScience:TheFutureofLaw

Thompson and Ritchie wrote Unix to change how computers run, whereas otherrevolutionariesaimtochangehowgovernmentsrun.Thesamegeneralprinciplesapplyinbothcases,though.Itallboilsdowntoaverysimpleequation:code=code.Atroot,bothcomputers and governments run on code – formal algorithms that make their subjectsperformspecificfunctions.Computersrunonsoftwareandgovernmentsrunonlaw,butthefundamentaldynamicsremainthesame.5

Despite the similarities between software and law, computers have evolved muchmorerapidlythangovernmentshave.Asaconsequence,thepastofcomputersciencecantellusaboutthefutureofpoliticalscience.Mostpolities,forexample,remainmiredinaproductionmodel that computer scientists abandoned back in the days of shag carpets,witheachgovernmentwriting,implementing,and(sometimes)debuggingitsowncustomlaws from scratch.TheUnitedStates, in contrast, “received”English common law at averyearlypoint.6Morerecently,manystateshaveadopteduniformlawsandmodelactspromulgatedbyindependent,nongovernmentalsources.Suchinnovationremainsvirtuallyunknownelsewhere.Only recentlyhave a few innovativenation states begun to importselectlawsfromothergovernments.

When the government of Dubai created an International Financial Centre, forexample,itmadethecommonlawofEnglandandWalesanoptionforcivilorcommercialmattersarisingwithinthatspecialjurisdiction.ThemovereassuredforeigninvestorsthattheywouldnotfallunderSharialaw,whichisnotfriendlytodebtfinancing.7 ImportingthecommonlawprovedsosuccessfulinDubaithatSriLankarecentlyannouncedthatitplans to launch a new Financial andBusinessDistrict governed along the same lines.8

Morerecently,theZEDEprogramlaunchedinHondurashasopenedthedoortoimportinglaws from private sources, such as restatements of the common law, uniform codes, ormodelacts.9

To judge from those examples, government code-writing practices have reached apoint roughlyonparwith computer code-writingpractices circa1969,whenThompsonandRitchielaunchedtherevolutionthatresultedinUnixandotherplatform-independent

software programs.TheirUnix operating systemdirectly inspired the open-source legalsystem described in these pages, Ulex.What at first glance might seem like a radicalproposal thus appears, in the light of the “code = code” theory of history, like a near-inevitability.

Despite its theoretical significance,Unixdidnot at first have anydirect impactonordinary people’s day-to-day lives. It ran on large, expensive,mainframe computers inback offices, tended by specialists capable of dealingwith its distinctly user-unfriendlyinterface.Onlywiththeadventofpersonalcomputers,whichmadeitpossibleformillionsof consumers to choose their favorite operating systems, did Unix and other softwareprograms begin to affect the wider world. From that burst of competition-driveninnovationcameproprietaryoperatingsystemssuchasMicrosoftWindowsandApple’sOSXandopen-sourceoperatingsystemssuchasGNU/Linux.

The recent boom in the number, size, and capabilities of special jurisdictions hasbegun to create conditions for governments akin to those introduced by the personalcomputerrevolution.Tojudgefromtheprecedentsetinthecomputercontext,wherethesuccess of Unix inspired new types of code, we should expect competition betweenspecial jurisdictions to drive innovation in legal operating systems. How far does theparallel carry? In particular,will any of these new communities adopt proprietary legalsystems–governmentsownedthewaythatMicrosoftownsWindowsorAppleownsOSX?

Probablynot.Theruleoflawrequiresajustgovernmenttofullydisclosethecodeonwhichitruns.Thosewithintheswingoflaw’sgavelmusthavefairwarningofwheretheblowmightland,sotospeak.Morepragmatically,copyrightcannotdoforlegaloperatingsystems what it has done for computer operating systems: restrict their unauthorizedreproduction. (Not incidentally, thatexplainswhytheAmericanLawInstitute(ALI)hasnojustcopyrightclaimtotheblack-letterrulesofitsRestatementsofLaw,whichfiguresoprominentlyinUlexv.1.1.)

InsteadofMicrosoftorApple,legaloperatingsystemscanfindmoreaptdistributionmodel in Linux, themost famous open-source computer operating system.GNU/Linux(oftenshortenedto“Linux”)originatedasagiftfromRichardStallmanandLinusTorvaldto theworld.10AnybodycandownloadLinux to runon their computer andanyonecanaccessthesourcecodeandalterittosuittheirparticularneeds.ButnoonecontrolsLinux;

instead,acommunityoflike-mindedusersshapesitinaflexible,organic,andconsensualprocess.Anysuccessfullegaloperatingwilllikelyfollowthesamemodel;Ulex,describedmorefullyinthefollowingsection,certainlydoes.

3OverviewofUlexWhat GNU/Linux has done for computers, Ulex aims to do for special jurisdictions,ZEDEs,andotherstart-upcommunities:provideanopen-sourceoperatingsystemfreeforalltodownload,run,modify,andshare.

Inverygeneral terms,Ulexprotectspersonalandpropertyrightswithefficientandfairdisputeresolutionprocessesandrules,encouragingeconomicgrowthandpromotingthe rule of law.Ulex applies not by sovereign command but by themutual consent ofcontractingparties,andissuesfromnosinglecountry,butinsteaddrawsonlegaltraditionsfromacrosstheglobe.InthesewaysUlexdiffersfromthelegalsystemsrunbytraditionalnationstates.

WheredotherulesofUlexcomefrom?Ittakesasitsbuildingblockstime-testedandtrustedrulesetsliketheRestatementsoftheCommonLaw,publishedbytheALI,variousmodel acts and uniform codes published by the ALI and Uniform Law Commission(ULC), theUnitedNationsCommissiononInternationalTradingLaw’s(UNCITRAL’s)ArbitrationRules,andsimilarnongovernmentalsources.Inborrowingfromtheseprivatesources,UlexfollowstheexamplessetbyU.S.statesandinsularareasthathaveadoptedvariousRestatements,modelacts,anduniformcodesaslocallybindinglaw,aswellasaprescient suggestion by Randy E. Barnett that proprietary communities might dolikewise.11

NotethatUlexdoesnotemployrulesetspublishedbynationstates.InthatitdiffersfromHongKong,which long subsisted underEnglish common law by dint of a treatywithChina;andfromDubai,whicheffectivelyimportedthecommonlawofEnglandandWales to its International Financial Centre. Both jurisdictions evidently succeeded inreassuring international investors nervous about the otherwise applicable local law –communistChineseorSharia,respectively.Thosespecialjurisdictionsdidwelltoofferanalternativetothedefaultsystemsofgovernment,buttheyarguablywenttoofarinrelyingonforeignlaw.Whyrelyonadistantstateforyourlegalsystemwhennongovernmentalinstitutionsofferbetteralternatives?

A rule set borrowed from a foreign state bears themark of its unique history andcustoms,shapingitinwaysthatmightnotsuitothervenueswell.Consider,forinstance,how English feudal practices bequeathed the common lawwith such quirks as the feesimple determinable subject to a condition subsequent.12 A different country might dobetterwithfresherrules.

Importingthelawsofadistantsovereigntoruleyourlandshasotherdisadvantages.Mostobviously,andquiteunderstandably,itraisesconcernsaboutneocolonialism.GiventheU.S.government’spastactionsintheregion,forinstance,Honduransmightjustifiablyworry if a ZEDE began importing, say, Delaware or Texas law.13 Rules fromnongovernmentalsourcesofferamorediplomaticallyneutralalternative.

You don’t have to be a diehard patriot to balk at raising a foreign flag over yourhomeland.Nationstatesarenotverygoodatsettingandmaintainingstandards.Therulesthey promulgate often reflect the influence of lobbyists rather than the interests of thepublic.14Furthermore,politicianschangetheirgovernments’legalsystemsastheyseefit,fortheirownconvenience,andwhentheydosotheyarenotlikelytocareovermuchabouthow it affects copycat jurisdictions abroad.A legal system that binds itself to a foreignsovereignmusteitherfollowit throughstrangewaysandswampypoliticsorendupleftbehind, entirely alone, with outdated laws. Nongovernmental institutions offer a morewidelyshared,objective,andstablesourceofrules.

Ulex thusdoesnotsomuchcreate the lawascurate it, combining specialized rulesetsfromtrustedsourcesintoasimplebutcomprehensivelegalsystem.Itcoverscivillawinthesenseofprivatelaw–notinthesenseofRomanlawandnotincontrasttocommonlaw.15(Ulex1.1thusbydefaultdoesnotincludecriminallaw,whichconcernsnotpurelyprivatemattersbutoffensesagainstthepublicatlarge.Version1.1insteadofferscriminallawasanoptionalmodule.)

Withregardtoallareasoflaw,Ulexoffersbothproceduralrules,whichdefinehowparties resolve their disputes, and substantive rules, which describe legal rights andremedies.Afewmeta-rulesprotect thesystemagainst thefunctionalequivalentofwhatcomputer programmers beware as “run-time” errors. Ulex merely sets default rules inmostcases,leavingusersfreetorunotherlegalsystems“ontopof”it.16

IsUlexenoughtorunagovernment?Notquite.Itofferssomethinglikeakernel–acore part of a computer’s operating system. Ulex does not include the functionalequivalentofanapplicationprograminterface,throughwhichdiscreteprograms,suchasMicrosoftWord or Google Chrome, communicate with a larger operating system. Thechoiceoflawandchoiceoflawclausesofferedbelow,insubsection5.3,fillthatgap.NordoesUlexincludeauserinterface–softwarelikeWindowsorMacOS,oraninstitutionlikesmallclaimscourtortheDepartmentofMotorVehicles.TheuserinterfaceforUlexwilldependonfeaturesofthegovernancesystemsthatrunit(hopefullyundercompetitivepressures that result in something more user-friendly than legacy governing servicestypicallyprovide).Ulexdoesnotincludeanythingakintoadriver–thepartofacomputersystemthatchangesdigitalsignalsintophysicalresultssuchasvideoimages,sounds,orprintedpages.Forthat,ajurisdictionimplementingUlexwouldneedalocalcounterparttotheFederalArbitrationAct,throughwhichprivateadjudicationswintheforceoflaw,aswell as the capability to bring lawbreakers to justice, whether through persuasion,financialpressure,orcontrolledviolence.17Lastly,ofcourse,andlikeallsoftware,Ulexneedshardwaretorunon.

Note,however,thatUlexdoesnotnecessarilywantfromlackofdetailedrulesabouthowtoactsociably.Ithasnoenvironmentalregulations,laborcode,ortrafficordinances.Some such red tape governments simply do not need.Much of the rest can be left toprivatearrangementsbetweenprivateparties.Whetherawell-managedcommunityneedsany rules beyond the already considerable ones included in Ulex remains an openquestion,andonethatonlyactualexperiencecansettle.Certainly,though,nobodyshouldtake theabsenceofanything likeconventional regulationsasa fatal flaw.Ulexmaynotoffer top-down and detailed directives, but those are not necessary for a well-orderedsociety. Instead, thanks to its common law roots and efficient procedures, Ulex offersdistributed regulation.Orderdoesnotcomeonlyfromorderingpeoplearound,afterall.Ideally,itcomesfromthepeoplethemselves.

Sofarasitsbasicproceduralandsubstantiverulesgo,andspeakinginanengineeringratherthanpoliticalsense,Ulextakesaveryconservativeapproachtoitstask.Itcombinestrustedbasicbuildingblocksintoacomprehensiveandscalablelegalsystem.Thedefaultproceduresensurethefast,efficient,andfairresolutionofdisputes.Overlappinglayersofrulescovermostsubjectareas,ensuringthatifaspecializedprovisiondoesnotapplytoa

particularissue,amoregeneralprovisionwill.ThenextsectionillustratestheapplicationoftheseprinciplesbyofferingaquicktourofUlex1.1.

4AQuickTourofUlex1.1ThissectiontakesaquicktourthroughUlex1.1,fromstarttofinish,pointingoutitsmajorfeaturesandexplainingabitabouttheirorigins.(Fortherulesthemselves–oratleastfullcites to the incorporated rule sets – please see AppendixB) The discussion here thusclosely follows the legal system’s structure. Subsections 4.1, 4.2, and 4.3 cover theprocedural rules, substantive rules, andmeta-rules ofUlex 1.1, respectively. Subsection4.4concludeswithafewwordsaboutcriminallaw,whichinthisversionofUlexcomesonlyasanoptionalmodule.

4.1ProceduralRulesofUlex1.1

The basic default procedure for resolving disputes inUlex 1.1 has three rules. Each ofthesemerelyrestatesarulethathasseenwidespreadandextensiveuseinothercontexts.Ulexdoeslittlemorethancombinethemintoasturdytripod,creatingastablefoundationfor deliberations about more substantive rules. They appear here in their entirety,numberedasinthelegalsystem’sindex:18

1.2.1.Judges:Eachpartychoosesajudgeandthosetwojudgeschooseathird.

1.2.2.Remedies:Thejudgeschooseoneparty’sproposedremedy.

1.2.3.Costs:Thelosingpartypaysthewinningparty’slegalcosts.

This three-element procedure provides the basic default mechanism for resolving alldisputes within the scope of Ulex. As such, it provides a crucial part of a larger legalsystem,onethatincludesagreatmanydetailedsubstantiverules.Thosesubstantiverulesmatterofcourse;theydefinewhocansuewhom,whytheycan,andwhattheymightwinfor their trouble.But a legal system’s basic procedural rules have such a powerful andpervasiveinfluenceonitsoveralloperationthat,iftheyhavebeenchosenwell,anyofawiderangeofsubstantiverulesmightgenerateequallysatisfactoryresults.19These threetriedand tested rules,which togetherconstitute thebasicprocedural tripodofUlex1.1,thusgivethelegalsystemastablefoundation.

Thefirstofthesethreebasicproceduralelementsoffersafairandefficientwayforcontestingpartiestochoosearelativelyimpartialpanel.RespectedinstitutionssuchastheUnitedNationsCommissiononInternationalTradeLaw(UNCITRAL)andtheAmericanArbitration Association have embraced the same rule.20 Why set the default at threejudgeswhenhiringonewouldcostless?Becausenobodyshouldassumethatpartiesinthethroesofalegaldisputewillbeabletocooperateevenenoughtoagreeonasinglejudge.Iftheycangetalongwellenoughtodoso,moreover,theycanalwaysagreetoforegothedefault three-judge panel. Here as elsewhere, Ulex’s default rules limit the risk ofcatastrophicfailure,leavingpartiestooptforalternativedesignsastheyseefit.

NotethatimplementingthismechanismforformingadjudicativebodiesallowsUlexto forego theneed fora“standing judiciary”–a termalluding to the “standingarmies”thatoncesoworriedtheFoundersoftheUnitedStates.21Instead,partiesrunningtheUlex

legalsystemformtheircourtsonthefly,onanas-neededbasis.Thejudgesarenotsimplyhiredguns,butmakepromisesof impartiality tobothparties,even(onemightevensayespecially,giventhecountervailingincentives)tothepartywhohadnohandinchoosingthejudge.

ThesecondlegofUlex’sbasicproceduraltripodadoptspendulumarbitration–alsoknown as Last Best Offer (LBO) arbitration – as the default rule for remedies.22 Intraditional arbitration, awards too often end up as a simple compromise somewherebetween the remediesdemandedby eachparty. In that kindof “split the baby” system,partieshaveanincentivetoexaggeratetheirclaims.That,inturn,discouragessettlement.

Pendulum arbitration offers a simple but elegant fix to that problem. Originallypopularizedinbaseballprofessionalfreeagentnegotiationsandnowusedinagreatmanyothercontexts,pendulumarbitrationforbidsarbitratorsfrom“splittingthebaby,” insteadrequiring them to choose one of the remedies proposed by the parties.23 An efficientsystemofjusticeshouldinsteadencouragepartiestofindtheirownsolutionstotheirownconflicts. Though the dynamics of litigation remain less than fully understood, thereappearstobegoodreasontothinkthatpendulumarbitration,togetherwithmediationandsettlement negotiations, do a better job of fostering social harmony than alternatives inwhichjudgeshavemorediscretiontofashionremediesastheyseefit.24

The third leg of the Ulex basic procedural tripod is nothing special; most legalsystemsmakethelosingpartypaythewinningparty’slegalcosts.25Thealternativerule,underwhicheachpartygenerallycoversallofitsownattorneys’feesandlitigationcosts,findsanotablebutlonelyadherentintheUnitedStates.26TheALIandtheInternationalInstitutefortheUnificationofLawagreeincallingtheapproachtakeninUlexrule1.2.3.“theruleprevailinginmostlegalsystems.”27

This basic procedural tripod, though necessary, would not suffice to govern theresolutionofactualdisputes.Litigantsandjudgesmusthavefairlydetailedrulesabouttheconductofproceedings.Ulex1.1provides these, thedefault rulesofcivilprocedure,byborrowingfromrespectednongovernmental sources.Ulex1.1offersmoredetailed rulesofprocedureviatheAmericanLawInstitute&InternationalInstitutefortheUnificationofLaw’sPrinciplesofTransnationalCivilProcedure.28Thoughthework’snamereferstocross-borderdisputes,thePrinciplesbytheirownaccount“maybeequallyappropriatefor

the resolution of most other kinds of civil disputes and may be the basis for futureinitiativesinreformingcivilprocedure.”29

Together, theserulesallowUlextoresolveawidevarietyofcivilclaimsfairlyandefficiently. Parties running Ulex remain free to agree to alternative procedures forresolvingtheirdisputes,however.Theycouldagreetohaveasingle,trustedjudgeresolvetheirdispute,forexample.Theycouldalsoagreetomoreformalproceedings,withwrittenopinionsandappellatereview,orformoresimpleones,suchasamerecoinflip.30Solongas their mutual agreement satisfies the usual standards for an enforceable contract anddoesnotdisturb thepeace,Ulex leavesusers at liberty to resolve their disputes as theyaloneseefit.

4.2SubstantiveRulesofUlex1.1

SubstantiverulesmakeupthebulkofUlex1.1.Thecatalogbeginswiththefundamentalbuildingblocksof thecommonlaw– torts,property,andcontracts. It thenmoveson tomany and various judicial and legislative substantive legal rules, including coverage ofunfair competition, letters of credit, adoption, limited partnerships, and electronicsignatures.TheserulescomefromtheALI’sRestatementsoftheCommonLaw, theALIandULC’sUniformCommercialCode,variousULCmodelacts,andselectothersources.

Together,therulesoftorts,property,andcontractsmakeupthethick,strongcoreofthe common law.31 For private, uniform, and comprehensive bodies of rules in theseimportant areas of law, Ulex 1.1 adopts several ALI Restatements, published underdifferent titles and at various times. For torts, Ulex 1.1 imports the comprehensiveRestatement of Torts, Second, and the three specialized Restatements of Torts, Thirdcovering product liability, apportionment of liability, and liability for physical andemotionalharm.32

Ulex 1.1 handles property in a similarly straightforward way, starting with theRestatementofProperty and adding subsequently published specialized provisions fromthesecondandthirdRestatementsofProperty.33Note,however,thatdespiteitsseeminglybroadname, theRestatement ofProperty concernsonly real property– land, buildings,andother interestsassociatedwithrealestate.TheALIhasnotpublishedaRestatementforpersonalproperty–movablessuchascarsorclothesandintangiblessuchasstocksorbonds.ItinsteadsetsforthpersonalpropertyrulesinotherRestatements,suchasthoseforcontractandtortlaw.Ulexfollowssuit.

Anyonelookingforauniform,comprehensive,andflag-freesourceofcontract lawhas two good options.TheAmericanLaw Institute’sRestatement of Contracts, SecondsummarizesandcodifiesthegeneralprinciplesofcontractlawthathavearisingfromthedeliberationsofcourtsmostlyintheUnitedStatesbutalsoothercommonlawcountries.34

UNIDROIT’sPrinciplesof InternationalCommercialContractsofferssimilarcoverage,and very often substantively identical rules, but drawn from trade practices, nationallegislation,andthebestavailable theory.35Ulex1.1opts for theformer, inpartbecausestickingwithALI rulesmight reduce the riskofconflictsand inpartbecauseexamples

fromDubaiandHonduras suggest that host governmentsprefer common lawover civillawsourcesforimportedrulesets.

Torts,property,andcontractsprotectthe“ThreeBigPs”essential totheflourishingofsociallife:Persons,Property,andPromises.Butthecommonlawextendsbeyondthosethree fundamentals intomany specialized branches. Ulex 1.1 incorporates a number ofthoserulesets,includingRestatementsofthecommonlawofagency,unfaircompetition,trusts,employmentlaw,andothersareas,undertheheadingof“AdditionalRestatementsoftheCommonLaw.”36

Ulex1.1also incorporatesselectArticlesof theUniformCommercialCode,a jointcreation of the ALI and the ULC.37 These UCC Articles have been enacted by statesthroughout the United States, for good reasons and to evident good effect. Ulex 1.1followssuitbyadoptingmostoftheArticles,wholesaleandwithoutreservation.

Ulex1.1drawsontheUCC’sspecializedrulesetsfornegotiableinstruments,lettersofcredit,securedtransactions,andothermatterscrucialtomoderncommercialsocieties.38

Ulex1.1doesnotincorporateUCCArticle2,however,whichregulatesthesaleofgoods.That Article largely duplicates the coverage of the Restatement of Contracts, Second,which Ulex 1.1 adopts separately, rendering Article 2 largely redundant.39 Insofar asArticle2straysfromthecommonlaw,moreover,ittendstogetintotrouble.ThisprovesespeciallyevidentwiththeunfortunateinnovationssetforthinUCC2–207,“arguablythegreateststatutorymessofalltime.”40Ulex1.1alsopassesoverUCCArticle6ongroundsthatithasprovensounpopularastolackadequatetestinginthefield.41Hereasgenerally,Ulexeschewsinnovationinthesubstanceofitsrules.

Ulex1.1comesfittedoutforjurisdictionsthathaveresidents,withmanyprovisionsaddressingchildren,families,andpersonalrelations.Inadditiontosuchnaturalpersons,Ulex also provides formany kinds of legal persons, including trusts, partnerships, andcorporations.42

Itstreatmentofcorporationsmeritsspecialnote.Toencourageentrepreneurshipandconformwithrecognizedbestpractices,Ulex1.1incorporatestheABA’sModelBusinessCorporation Act, which has been adopted by thirty-one states and the District ofColumbia.43 Though largely congruentwithDelaware law, another influential source inthisarea,theMBCAhastheadvantageofnotissuingfromanyparticularsovereign.

The substantive rules of Ulex 1.1 end with coverage of various administrativematters.AcoupleofrulesetsfromtheULCcoverelectronicsignaturesandrecordation.Ulexadoptsbespokeversions,cutconservatively,ofwidelyacceptedrulesforpriorityoftitletorealproperty,theageofadulthood,andtimelimitsforcausesofactionandclaimstoproperty.Sincetheselatterrulescannotsimplyrelyontheauthorityoftheirauthor,afewmorewordsaboutthemmightprovefitting.

Foraruledecidingwhoshouldhavepriorityoftitletocontestedrealproperty,Ulexcould not simply follow the Restatements, which refer to recording statutes withoutspecifyingtheircontent.44TheRestatementsleavethatasamatterforlocallawtodecide.Ulex1.1settles thequestionbyadoptingthemajorityrule in theUnitedStates, theracenotice rule. Insteadofquoting anyparticular state’s statute,Ulex1.1opts for agenericversion:“Anyconveyanceofaninterestinrealpropertythathasnotbeenrecordedintherelevant landrecordsoffice, ifany,shallbevoidasagainstanysubsequent transferofaconflictinginterestforvaluepaidingoodfaith,recordedearlier.”45

Asthe“ifany”clauseinthatracenoticerulesuggests,Ulex1.1doesnotmandatetheuseofpropertyrecordingsystem.AjurisdictioncouldrunUlexjustaswellwithaTorrensor tract real property registration system.Note too that the rule’s reference to “relevantland recordsoffice” avoids appointing a single particular body to perform the requisiterecordation functions.Ulex 1.1’s race notice rule speaks broadly enough to encompassinstitutionsthatlooknothingliketherecordsroomatthelocalcountyclerk.AsUlex1.1separately makes clear, jurisdictions can decide for themselves whether they want anofficialLandRecordsOffice,ablockchain-basedpublicregistry,orsomethingelse.46

Ulexalsohadtodrawagelimitsonitsown.TheRestatementsusuallyrefertoage-basedlegalclassificationswithoutspecifyingaparticularnumber,leavingthatasamatterof local law.47 TheRestatement of Contracts, Second, in contrast, specifically providesthat children younger than eighteen can incur only voidable contractual duties.48 Rule2.8.4ofUlex1.1 follows thatguidebysettingeighteenas theageofconsentgenerally.Happily,thisalsoconstitutesthemajorityruleintheUnitedStates.49Ifthatageprovestoorestrictive to particular precocious individuals, they can seek emancipation under Ulex1.1,Rule2.6.2,whichincorporatesbyreferencetheUniformGuardianshipandProtectiveProceedingsAct,whichinturndealswiththeissueofemancipationofminors.50

Whatabouttimelimitsinthelaw?SeveralRestatementsmakereferencetotheeffectof a statuteof limitations,butnone specify its length, leaving that as amatter for locallaw.51TheRestatementstakeasimilarlyaccommodatingapproachtootherstatutorytimelimits, such as those relating to adverse possession and prescription.52 Practices varyacross states and subjects.Ulex opts for a popular span – seven years – and applies itacrosstheboard.53

BeforeclosingoutthisdiscussionofUlex’ssubstantiverules,itbearsnotingonethatit does not provide for separately: a so-called Statute of Frauds that denies theenforceabilityofselectinstrumentsabsentsatisfactionofcertainformalities,mostnotablyawriting signed by the party allegedly bound.Ulex 1.1 instead leaves suchmatters toprovisions scattered throughout theRestatements it incorporates by reference.54Here aselsewhere, jurisdictions that prefer another approach to the statute of frauds can makeexpressprovisiontosupplanttherulesofUlex1.1withsomethingmorefitting.

4.3Meta-RulesofUlex1.1

Ulex’sproceduralandsubstantiverulescomefromprivate,nongovernmentalsourcesthatembodytheworld’sbestpractices.Together,theyaddresseverytopicnecessaryforalegalsystemtoadministercivil justiceefficientlyandequitably.Eventhebestproceduralandsubstantiverulesarenotenough,though.Afunctioninglegalsystemhastocombinethosebuildingblocksintoanintegratedandsmoothlyfunctioningwhole.Ulexhasthreemeta-rulestoaccomplishthoseends.

The rule sets thatUlex incorporates by reference do not always specify their finalform. Article 4 of the Uniform Commercial Code, for instance, which Ulex 1.1incorporates by reference at rule 2.5.4, offers two alternative provisions for handlinginstruments payable at a bank, one of which a jurisdiction adopting the Code mustchoose.55Article9oftheUniformCommercialCode,madepartofUlex1.1atrule2.5.9,requiresasimilarchoicewithregardtothesufficiencyofadebtor’snameonafinancingstatement.56 A similar dodge appears in the Restatement of Property, Third, Wills andOtherDonativeTransfers,whichdescribesseveralapproaches tocalculatingasurvivingspouse’sshareofadecedent’sestate.57Ulexhandlessuchcaseswiththefirstofitsthreemeta-rules:

3.1.AlternativeRules:Ifaruleoffersalternativeprovisions,thealternativeofferedfirstprevailsoveranylaterone.58

Itislessimportantinsuchcasestochooseperfectlythanitistochooseclearly.IftheALIandUCCconsideraruleaworthyalternative,nottomentionthefirstlisted,itdoubtlesshasconsiderablevirtues.SothedefaultsetbyUlex1.1rule3.1willprobablyworknicely.And if that default does not suit a particular jurisdiction, or the parties to a particularagreement, it is not difficult to expressly stipulate to something else.Here as generally,Ulexprovesadaptable.

Before closing this discussion of rule 3.1, another kind of indecisive rule bearsnoting. On rare occasions, the Restatement rules invoked by Ulex 1.1 go beyonddescribing the common law to venture bland observations about various legislativeenactments.Section3.2oftheRestatementofProperty,Thirdsays,forinstance,“Statutesinmanystatesprovidethatawill,thoughunwitnessed,isvalidlyexecutedifitiswritten

inthetestator’shandwritingandsignedbythetestator,and,undersomestatutes,datedinthe testator’s handwriting.”59 This so-called rule observes rather than commands.Similarlylimpphrasingappearsin§3.9ofthesameRestatement.60

With regard to those particular descriptions of possible statutory enactments,Ulex1.1 settles the issue by incorporating the Uniform Probate Code.61 In other cases, ajurisdictionmighthavetosupplementUlex1.1withadditionalrulesifitwantstomimicthestatutesreferencedbytheseRestatements.62Becausetheyplainlyspeakindescriptiveratherthanprescriptiveterms,theseprovisionsmakenoclaimtotheforceoflaw.Whileperhapsworthyofstudyascuriousanomaliesfromtheusualrule(sotospeak),theyneednotconcernUlex.

Ulex draws on rule sets written with a particular set of institutions in mind –typically, thoseofstateandfederalgovernments in theUnitedStates.Ulexthusneedsatranslation function to ensure that the rule sets it borrows will “port over to” (as aprogrammer might say) other institutional frameworks, such as Honduran ZEDEs,seasteads,orotherstart-upjurisdictions.OnlythencanUlexofferlegalsystemsthesamesortofinterconnectivitythatRitchieandThompsonintroducedtocomputerprogramswaybackin1969.

Ulexprovidesforcross-platformcompatibilitywiththismeta-rule:

3.2.AlternativeMeanings: If a rule refers to an institution, office, power, or privilegethat does not exist in a jurisdiction runningUlex, the rule instead refers to the closestfunctionallyequivalent institution,office,power,orprivilege thatdoesorcouldexist inone.

Foranexampleofwhenthatprovisionmightcomeinhandy,considertheRestatementofConflictofLaws,Second (madepartofUlex1.1atrule2.4.1) layingdownaruleabouthowtoapplythestatuteoflimitationsin“aStateoftheUnitedStates”toclaimsarisingunderthelawsof“asisterState.”63AjurisdictionrunningUlexoutsideofaStateoftheUnitedStatesmightfinditdifficulttoapplythatprovisionliterally;rule3.2allowsforamore flexible interpretation. It would remain for the parties to argue and for theadjudicatingbody todecidewhatconstitutes“theclosest functionally equivalent” to the“institution,office,power,orprivilege”missinglocally,ofcourse,butsogoestheworkofthelaw.

Eugene Volokh once observed that we have good reason to doubt a theory ofconstitutional interpretation if it generates only results that align with its proponent’ssubstantive preferences.64 Such interpretive theories smack more of convenience thanobjectivity. The same doubtless holds true of the theory behind Ulex’s rules. It thusperhaps bears noting that, notwithstanding its merits, meta-rule 3.2 strongly risksgenerating a result that I have elsewhere argued against at length and with force:governmentalimmunity.65

Rule2.1.1.ofUlex1.1incorporatestheRestatementofTorts,Second,whichinturnrecognizes governmental immunity for federal and state governments and agencies, aswell as some local entities.66 It also includes provisions providing qualified good faithimmunitytopublicofficersofthesame.67Meta-rule3.2mightencourageajurisdictiontoextendlikeprivilegestoitsowngoverninginstitutionsandagents.Ulex1.1leavesthosewho prefer stronger protections for individual rights to adopt a version amended toexclude§§895A-DoftheRestatementofTorts,Second.Iadvisethatcourse.

Any large body of rules runs the risk of including a contradiction – the legalequivalent of the sort of bug that canmake computer programs spin out of control orfreezeup.Contradictionsbecomestillmorelikelywhen,aswithUlex,asystemcombinesrules fromdifferent sources.Theoverall riskof contradiction likely remains low, giventhateachofthevariousrulesetsmakingupUlexcoversdistincttopics.Nonetheless,thepotentiallycatastrophicconsequencesofa“runtimeerror”make itprudent tobuild inasafeguard.Ulexthusincludesthismeta-rule:

3.3.ConflictingRules: If different rules give conflicting results, the rule listed later inthisindexprevailsoveranyearlierone,butnorulecanprevailoverthisone.

If it were not already apparent to the discerning reader, rule 3.3 makes clear thesignificance of the numbers attached to the rules of Ulex. They effectivelymark off ahierarchy,withindexnumberscorrelatingtorelativestrength.Thebiggerarule’snumber,themore authority it commands. The structure ofUlex thus recapitulates the historicaldevelopmenttypicaloftraditionallegalsystems,whereinearlyandgeneralinstitutions–the common law or a constitution, say – change over time thanks to refinements,exceptions,andamendments.ThegenericcontractlawsetforthinUlexrule2.3thusgiveswaytothemoredetailedprovisionsofrule2.6.4,whichconcernspremaritalandmarital

agreements.Puttingthismeta-ruleattheendoftheindexeffectivelyensuresthatitcannotbeoverruled,thusbarringcontradictionsfromUlex.

4.4OptionalCriminalLawModule

Relatively few special jurisdictions have the power to specify their own criminal laws;most exercise delegated authority over only commercial laws, if that. Even HonduranZEDEs, arguably the most advanced special jurisdictions in the world, have to submittheirproposedcriminal laws to theNationalCongress for approval.68Furthermore, it isnot evident that even a community thatcould enact criminal laws should enact them.69

Scholarshaveponderedthequestionofwhetheracivilizedsocietyneedspenalsanctionswithout reaching a firm conclusion.70 Ulex 1.1 thus offers criminal law as an optionalmodule.

Forsubstantivecriminallaw,thisoptionalmoduleusestheALI’sModelPenalCode(2009).71ThoughtheModelPenalCodeisnotlawinanyjurisdiction,ithasservedasthebasis for amending the criminal law inmore than two-thirdsof the states in theUnitedStates.72TheModelPenalCodefocusesoncrimeswithvictims,leavingittojurisdictionsthat insist on punishing victimless crimes to “insert additional Articles dealing withspecial topics such as narcotics, alcoholic beverages, gambling andoffenses against taxand trade laws.”73Notably, themost recentversionof theModelPenalCodemakesnoprovisions for the death sentence, “in light of the current intractable institutional andstructural obstacles to ensuring a minimally adequate system for administering capitalpunishment.”74

ThosefeaturesmightmarktheModelPenalCodeasinsufficientlypunitiveforsomejurisdictions. Indeed, it was the absence of prohibitions on sodomy, adultery, andfornication that convinced Idaho to abandon its brief flirtationwithadopting theModalPenalCode.75Hereasgenerally,Ulexleavesitsusersfreetooptoutof itsdefaultrulesforothersoftheirchoosing.

For procedure, Ulex’s optional module invokes the Uniform Law Commission’sModelRulesofCriminalProcedure(1987),whichcodifiesboththepretrialandjudgmentstagesofcriminalprosecution.76 Italsorevisits theModelPenalCode todrawforth theproceduralruleswovenamongtheModelPenalCode’smanysubstantiveones.

Combining these two sources gives Ulex a comprehensive code of criminalprocedure,andoneespeciallylikelytoharmonizewiththesubstantiverulesoftheModel

Penal Code. The ULC makes available a number of additional specialized rules ofcriminalprocedure that any jurisdiction adopting thisoptionalmodulemightdowell toconsider.Givenitstentativeapproachtocriminallawgenerally,however,Ulex1.1isnoplaceforsuchdetails.

5ProgrammerNotesforUlexThissectionoffersnotesofthesortthattypicallyaccompanyoperatingsystemsandothersoftware packages. Subsection 5.1 analyzes the copyright status of Ulex. Contrary toclaims by the ALI, Ulex most likely belongs not within the confines of any privatecopyright, but instead in the public domain, free for anyone to copy, modify, andredistribute. Subsection 5.2 discusses how the blockchain-based Proof of Existenceservice allows Ulex users to ensure that they have valid copies of the legal operatingsystem.Bywayofexample,itretracestheprocessesbywhichtheexistenceofversion1.1wasestablished.Subsection5.3explainshowtorunUlex,providingasamplechoiceoflawandchoiceof forumclauseandbrieflysurveyingongoingefforts to find real-worldhardware on which to run the legal operating system. Looking toward the future,subsection5.4forecastsfutureversionsofUlex,alternativelegaloperatingsystems,andatheriseofacommunityofopensourceprogrammers-cum-lawgiversgivingtheworldanopt-in,distributedformofgovernment.

5.1CopyrightStatusofUlex

Despite drawing on Unix, Linux, and other open-source computer programs forinspiration,Ulexdiffers from them termsofcopyright law.Open-source software isnotcopyright-free software; it is not in the public domain. Instead, it relies crucially oncopyright toprevent theunauthorizedreuseof licensedworks.77ThecopyrightstatusofUlex,incontrast,remainscloudy.Despiteoneclaimanttothecontrary,however,thebestargumentssupport theviewthatUlex,asasystemofoperationbuiltoutofpublic laws,fallsoutsidetheproperscopeofcopyright.Thissubsectionexplainswhy.

Theauthorsofopen-sourcesoftwaregenerallyclaimcopyrightsintheirworks.Andwhynot?Asoriginalfixedexpressions that reflectmanyvariousandnontrivialchoices,suchashowtocodeaparticularoperatingsystemkernel,open-sourcesoftwaregenerallyqualifiesascopyrightablesubjectmatter.Thiscertainlyholds trueunder the lawsof theUnited States; thanks to the widely accepted Berne Convention, it also holds truethroughoutmostoftherestoftheworld.78

Proponentsofopen-sourcesoftwareusecopyrightinwhattheydescribeassomethinglike a judo move against censorship-by-copyright. This they do by licensing theirsoftware’s use on liberal terms but subject to this crucial condition:Anywork derivedfromthesoftwaremustitselfbereleasedunderthesameterms.79Successfulopen-sourcesoftwarecan thusspread throughoutan informationnetwork, reproducing likeaprolificspeciesspreadingthroughanewhabitat.Thisstrategyhasrealbite,too;courtshavehelditactionablecopyrightinfringementtomisuseopen-sourcesoftwareforprivateprofit,inviolationoftheapplicablelicense.80

Ulex has a different relationship to copyright than Unix, Linux, and other open-source computer programs. So far as theories behindUlex or its overall structure – thearrangement of the various rule sets, for instance – it probably qualifies asuncopyrightableundersection102(b)oftheUnitedStatesCopyrightAct,whichdeniesitsprotection to “any idea, procedure, process, system, [or] method of operation.”81 Thecopyright status of Ulex looks suspect under copyright’smerger doctrine, too, becausetherearerelativelyfewwaystostructurerulesetstocreateafunctioninglegaloperatingsystem.82

Similar arguments against copyrightability apply toUlex’s fewhandcrafted rules –thoseaddressingpriorityof title,adulthood,andstatutorydeadlines,andall threeof themeta-rules.83 Like the animating ideas behind Ulex or its basic structure, those rulesqualify as uncopyrightable procedures, processes, systems, or methods of operation.Insofar as those mere summaries of time-honored precedents admit of individuatedexpression, moreover, the merger doctrine denies them copyrightability. Take it fromsomeone who has tried: There simply are not that many good ways to express thefundamentalrulesofamodernhumansociety.Lastly,toresolveanylingeringdoubts,asthe author, I hereby put into the public domain Ulex’s means, structure, and originalrules.84

WhataboutthecomponentrulesetsthattogethermakeupUlex?Herethebordersofcopyright grow muddy. Copyright does not threaten to limit use of many of the rulesincorporated into Ulex by reference. Consider the various rule sets that make up theUniform Commercial Code (UCC), for instance, jointly authored by the ALI and theULC.85TheALIandULCpublished theUCCwith theaim,expectation,andhope thatstateswouldadopt it.Whenstatesstarteddoing just that,enacting theUCCinto locallybinding law, its authors lost whatever copyright claims they had in it. Binding andpersuasiveauthoritiesholdthatlaws,regulations,andotherbindingrulesofgovernmentsatalllevelsintheUnitedStates,fromfederaldownward,falloutsidetheproperscopeofcopyright.86Totheircredit,theALIandULCdonotpretendotherwise,evidentlyleavingtheUniformCommercialCodefreeforUlexandotherstoreuse.87

Itcouldscarcelybeotherwise.Howcouldagovernmentsupposedlyof,by,andforthepeoplejustlyusecopyrighttokeepthemignorantoftheirowngovernment?Iftheruleof law means anything, it cannot mean that. The prospect of a government suing itscitizensformakingunauthorizedcopiesorpublicdisplaysofitscopyrightedlawsdoesnotmerelyraiseFirstAmendmentissues;itrocketsthemintoloworbit.

ButthatisnotenoughtoputUlexintotheclear,copyright-wise.Version1.1drawsheavilyontheRestatementsoftheCommonLaw,publishedbytheALI.IncontrasttoitsapproachtotheUCC,whichtheALIjointlyauthoredwiththeULC,andasevidencedbyitsCopyrightOfficefilings,theALIclaimscopyrightsitsRestatements.88 IfyouasktheALIforonlytheblack-letterrulesoftheRestatements–thepithysummationsinwhichitnotonlyadmittedlybutavowedlycopiespubliclaw–itwilltellyoutobuythem,borrow

themfromalibrary,orgetaccesstoacommercialelectronicdatabase.89Thatisnotjustidle talk, either.Against thosewho have tried to give the public too-free access to theRestatements,suchasbypostingthemonline,theALIhaslaunchedlegalproceedings.90

To give full credit to the ALI, it probably has fair claim to copyrights in thecommentaries that sometimes follow the black-letter rules of the Restatements. Thoseresemble interpretations and explanations of the law more than they do the law itself.Furthermore, nobody can fault theALI’s officers and legal counsel fromdefending theinstitution’sassets–includingitspresumptivecopyrights–totheutmost.OnlytheALI’sgoverningCouncil ormembers, or in their stead a court of law, couldmove theALI’slawyers to proclaim the black-letter rules of the Restatements in the public domain.AnyoneassessingtheargumentsthatfollowabouttheALI’scopyrightsshouldalsoknowthat,onbehalfofclientshopingtointroducethecommonlawtothedevelopingworld,IhaveattemptedbutfailedtosecuretheALI’spermissiontouse,freeorsubjecttolicense,theblack-letter rulesof theRestatements.91Readersmust judge for themselveswhethercopyright can justly limit public access to the black-letter rules of the Restatements.Considerthefollowingpoints.

First, each black-letter rule of the Restatements constitutes a “procedure, process,system, [or]method of operation.”92 The rules condense into themost spare and exactwords possible how the common law works. They are not arguments, opinions, orpredictions.Theyareprogrammingstatements,whichtogethercreateacommonlawlegalsystem.Assuch, theblack-letter rulesof theRestatements cannotbe copyrighted in theUnitedStates.

Second,becausetheblack-letterrulesoftheRestatementsfallwithinthescopeofthemergerdoctrine,theyfalloutsidethescopeofcopyright.Forexample,theRestatementofContracts (2nd) defines “offer” as “the manifestation of willingness to enter into abargain, so made as to justify another person in understanding that his assent to thatbargain is invitedandwillconclude it.”93TheALIgot thedefinitionright,doubtless. Itcannotgetacopyrightinthatdefinitiontoo,though.Why?Therearenotverymanywaystodefinewhat“offer”meansinthecommonlawcourts.Sothatwecanalltalkaboutsuchimportantmatters, themergerdoctrinemakesit impossiblefor theALItowinexclusiverights over legal definitions and other descriptions of the common law. The merger

doctrine thus guarantees the public free access to the black-letter rules of theRestatements.

Third, insofar as they constitute facts, the black-letter rules of the common lawcannotbecopyrightedintheRestatements.TheALImadeitsaimclearintheverynameitchose for its series of commentaries about the common law: the Restatements. Nodocumentwiththatkindoftitlecanboastgreatoriginality,norshouldit.Originalityisthelast thing anybody wants in a Restatement. But without originality, there can be nocopyright.94Rather thanoriginality, theRestatements aimfirstand foremostat factuallyconveyingthenatureofthecommonlaw.95Bravoforthat!Butcopyrightdoesnotcoverfacts.96

IncreatingtheRestatementstheALI’sexpertssometimeshavetogobeyondsimplyrecording obvious majority rules, granted. Facts never interpret themselves. Whenprecedents vary, or have fallen behind the times, or otherwise merit critical scrutiny,therefore, the ALI naturally aims for the most well reasoned and forward lookingformulations of the common law possible to informed and objective observers. ThoseworthypracticesshowtheALI true to itsmission,“toencourageandcarryonscholarlyandscientificlegalwork.”97Butbythesamelights,theALIshouldnotethatscholarsandscientistsinotherdisciplinesdonotclaimcopyrightsintherulestheywriteabout.

ThelastandmosttellingreasonwhytheALIcannotcopyrighttheblack-letterrulesoftheRestatements:TheyconstitutebindingpubliclawwithintheUnitedStates.Assuch,asnotedearlierwithregardtotheUniformCommercialCodeandotherprivatelyauthoredrulesetsthatbecomelocallybindinglawinoneormorestates,theblack-letterrulesoftheRestatementsfalloutsidetheproperscopeofcopyright.

HowdidtheRestatementsbecomepubliclawwithintheUnitedStates?IthappenedwhentheVirginIslandsandtheNorthernMarianaIslands, two insularareasof theU.S.federalgovernment,passedlegislationstipulatingthat“therestatementsoflawapprovedby theAmericanLaw Institute… shall be the rules of decision in the courts of” thosejurisdictions.98(TheNorthernMarianaIslandscopiednotonlytheRestatementsbuteventhewaythattheVirginIslandshadcopiedtheRestatements.)

In effect, the Virgin Islands and the Northern Mariana Islands downloaded theRestatements and installed themas local law.Who canblame them?Both insular areas

came into thepower topass theirown legislationonly relatively recently.At launch,ofcourse,neitherhadanyextantbodyofjudicialprecedentstodrawupon.Tofillthatgap,bothdrewontheRestatements–themostcredible,polished,andobjectivesourcefortherules of the common law. Helpfully for a legal system just finding its legs, theRestatements organize their subject rules into logical parts and subparts, all labeled andnumbered. It seems a perfect match between problem and solution. So, at least, theseinsularIslandsevidentlydecided.

One might say that the Virgin Islands and Northern Mariana Islands adopted theRestatementswholesale.TheALImightsaythattheystoletheRestatements,accusingtheupstart jurisdictions of borrowing without permission and recklessly exposing theircopyrightedworkstothepublicdomain.Thankstolocallegislation,afterall,acitizenoftheVirginIslandsorNorthernMarianaIslandscanknowthelawonlybyconsultingtheRestatements; those publications alone constitute the bulk of the common law in theIslands.Itwilldoubtlessremainsoformanylongyears.Asnotedearlier,copyrightcannotstand between the people and their laws. In effect, therefore, the Virgin Islands andNorthernMarianaIslandsstrippedtheALIofanycrediblecopyrightclaimtotheblack-letterrulesoftheRestatements.99

Itshouldnotchangethatconclusion–indeed,itmightstrengthenit–toarguethat,asinsular areas administered by the U.S. federal government, the Virgin Islands andNorthernMarianaIslandsarenotstates.Copyrightlawisfederallaw.BoththeAct100andtheConstitutionsee to that.101TheRestatementsconstitutebinding law inareas subjectsolelytofederalcontrol,havingbeenbodilyappropriatedbylegislativebodiesoperatingunderfederaloversightandprotection.Youcouldhardlyaskforaquestionmorepurelyamatteroffederallaw.

5.2ProofofExistenceforUlex1.1

Isitbettertodriveontheright-handsideoftheroadortheleft?Regardlessofwhichsideyou choose, you risk awreck if other drivers disagree.Here, the substance of the rulematterslessthanitsroleasasocialcoordinationdevice.Ifsucharuleisnotmadepublicinatrustworthyway,itcannotserveitsintendedpurpose.102

Thesameholdstrueofsubstantiverules.Consider,forinstance,howtheRestatementofTorts,Second,madepartofUlex1.1atRule2.1.1,definesbatterytoincludenotjustphysically harmful touching, such as a punch or a cut, but also emotionally offensivetouching,suchasagrope.103Thisisnotassimpleamatteraschoosingwhichsideoftheroad to drive on.Wewould be about aswell off driving on the left as on the right, asEnglandandJapandemonstrate.Wewouldnotallbejustaswelloffifbatteryexcludedunwanted caresses or included insulting words. We need to get the definition right.Secrecyorconfusionabout therulewouldthwart itspurpose.Howcantort lawpreventandremedybattery,afterall,ifnobodyknowswhatbatterymeans?

Rules cannot coordinate or guide social behavior if they are not made readilyavailable to the public in a trustworthy way. The United States, for instance, puts theoriginalConstitutiononpublicdisplayand,moreimportantly,encouragesthewidespreaddissemination of reputable copies.104 A despot could not rewrite the Constitution byforging the original; its copies exist in a kind of distributed database containing books,pamphlets,webpages,andothermedia,copiedallovertheworldandhostedbyavarietyof institutions.Americans read theConstitution confident that its literalwordshavenotchanged since their ratification. And if any doubt remains about the contents of theConstitution, the U.S. government stands ready to clarify with its opinion, backed byawesome force. People can and do argue about how to interpret the words of theConstitution.Theydonotargueaboutthewordsthemselves.105

Othernationstatespublicizetheirrulesusingthesamesortsofmechanismsthatworkfor the U.S. Constitution: iconic originals backed by distributed copies and officialproclamation.Thosemechanismsdonotworksowellforanewopen-sourcelegalsystemlikeUlex,though.

Beingnew,Ulexhasnotyet seenwidespreaddistribution.Beingopen source, freeforusers toadoptor ignoreas they see fit,Ulexcannotestablish its authorityby force.Making matters worse, the open-source framework invites legal “coders” to createderivative versions of Ulex, raising the risk of confusion. How can parties who haveadoptedaparticularversionofUlexknowforcertainwhichrulesbindthem?WhatiftwodifferentrulesetseachclaimstoconstitutetheauthoritativeversionofUlex1.1?

UlexsolvesthisproblemwithbyusingtheProofofExistence(POE)service.Forasmallfee,paidinBitcoin,thePOEservicetimestampsafilechosenbythepayor.106POEthenrecordsthetimestamp–acryptographicdigest,initstechnicaljargon–intheBitcoinblockchain.107Itdoesnotstorethefileitself;usershavetoseetothat.POEinsteadgivesthepublicareliablewaytochecktheprovenanceofanyfileofferedupasatruecopy.

CreatingaPOEisnotespeciallydifficult,butdoingitrightdoesinvolvetakingsomecare.Fortherecord,andtoguidetheregistrationoffutureversionsofUlex,herearethestepsItooktocreateaPOEforUlex1.1:

1.MadeanalmostfinalversionofUlex1.1inMicrosoftWordformat,leavingablankforthewebaddressofthefinalversion.

2.MadeaPDFcopyofthatpenultimateversion.

3.UploadedthatfiletoGoogledrive.

4.Generatedacompactwebaddress–https://goo.gl/YByFti–fortheuploadedfileusingGoogle’sURLShortener.108

5.PluggedthatshortenedURLintotheblankleftforthatpurposeinthepenultimateversionofUlex1.1,therebycreatingthefinalversioninaWordformat.

6.MadeaPDFcopyofthatfinalversion.

7.RanthatfilethroughthePOEservice,thusputtingitshashmarkintotheBitcoinblockchain.

8.Uploadedacopyofthatfinal.PDFtothesameURLusedforthepenultimateversionuploadedearlierbyusingthe“newversion”functioninGoogleDrive.109

Howcan thePOEservicehelpUlexusersverify that theyhavevalid copiesofversion1.1?TheyneedonlygototheProofofExistencewebsite,selectthe“Prove”option,andfollow the directions to test a given file against those registered by the service in the

Bitcoin blockchain.A true copy of the original PDF ofUlex 1.1will generate a reportsaying,“Registeredinthebitcoinblockchainsince:2017-06-0914:50:59.”110

Notably, thePOE is sensitive to file format.AMicrosoftWorddocumentwith theexact same meaning as the registered PDF would not appear as registered in theblockchain.ButthatdoesnotmeanpeoplecanonlyuseortrustPDFversionsofUlex1.1.Indeed,mostuserswillprobablyaccessitinsomeother,moreconvenientformat.ButjustasthewidespreaddistributionofreputablecopiesoftheU.S.Constitutionallowsyoutotrusttheoneinyourlocalpubliclibrary,POErootsUlex1.1insomethinguserscancounton:math.

Registering a POE for Ulex may seem like a needless precaution. If nobody isrunningUlex 1.1, after all, whyworry about proving its veracity? In part, because theprecautioncomesatlittlecost.Forthoseofacertaincastofmind–somemightcallthemgeeks,fondly–itevenaffordsalittlefun.Then,too,atsomemargin,someonechoosingbetween legal systems might take favorable note of Ulex’s cryptographically solidfoundations.Thedaymay comewhen, like theU.S.Constitution,Ulex1.1 exists in somanycopies, in somanymedia, thatnobodyneeddoubt its substance.Until then,UlexcancountonPOEtoreassureusersthattheycantrusttherulesofversion1.1.

5.3RunningUlexintheRealWorld

HowcanyourunUlex?Eithermovetoajurisdictionthathasadoptedthelegalsystemor,inwhatamountstomuchthesamething,mutuallyagreewithotherstohaveUlexgovernyourlegalrelations.Thefirstoptionremainsfornowonlyatheoreticalpossibility,thoughnotoneoutofthequestion.ThesecondoptionforrunningUlexcallsforlittlemorethanahandshake.

Tomake itmoreformal,parties thatwant togovern their relationsviaUlexshouldagreetoachoiceoflawandforumclausealongtheselines:”OnlyUlex1.1governsanyclaimorquestionarisingunderorrelatedtothisagreement,includingtheproperforumforresolvingdisputes,allrulesappliedtherein,andtheformandeffectofanyjudgment.”111

TheactualversionofUlexcitedinsuchachoiceoflawandchoiceofforumclausemightvary, of course, depending onwhat versions have been published andwhat the partieswant.112

The parties might also opt for a tailor-made version of Ulex, defined in theiragreement. If theywanted something a bit closer to the law generally prevailing in theUnited States, for instance, their contract might choose Ulex “plus an additional rule2.5.10thatincorporatesbyreferenceUCCArticle2:SaleofGoods(2002).”Inthatevent,Ulex1.1rule3.1wouldensurethatthespecializedprovisionsofArticle2wouldprevailoveranyconflictingprovisionsfromthegenericcommonlawofcontracts,asexpressedinUlex1.1 rule 2.3,which incorporates by reference theALI’sRestatement ofContracts,Second.Ifinsteadthepartieswantedsomethingclosertothelawthatprevailselsewhereinthe world, their contract might choose Ulex “plus an additional rule 2.5.10 thatincorporates by referenceUNCITRAL, International Convention for the Sale ofGoods(1980).”113

Far from frowning on alternative versions, Ulex freely admits them. If partiesrunningUlexroutinelycontractaroundoneormoreofitsdefaults,thatserversasignalforthedesirabilityofanentirelynewversion.IfasizeablepercentageofUlex1.1usersaddanewrule2.5.10,incorporatingbyreferenceUCCArticle2,itmaymakesensetocreateaversionofUlexthatdoesthatforthem–version1.2,forexample.Inthatway,Ulexcanlearnfromitsusershowbesttoservetheirlegalneeds.

5.4FutureVersions,AlternativeSystems,andOpenSourceDevelopment

ThischapterhasfocusedonUlex1.1forgoodreason:fornow,itremainsthebestversionavailable. The best version has already changed once, however, from 1.0, and judgingfromtheevolutionofcomputeroperatingsystemsitmightchangeagain.Indeed,italmostcertainlywouldchangeifUlexbeganseeingactualuse.

SupposethatUlexescapeditsgenesisintheoryandbegantorangeaboutintherealworld.Intherealworld,livingthingsmustadapttosurvive.So,too,withreal-worldlegalsystems. Even if Ulex version 1.1 serves well enough to get things started, changingconditions might make new versions better adapted to users’ needs. As with softwareupdates,sowithUlex.

ExamplesfromthesoftwareworldalsoilluminatehowUlexmightfacecompetitionfromotherlegalsystems.114Totheextentitallowsitsuserstooptoutofthelegalsystemsprovidedbynation states,Ulexwill of necessity competewith them.Onemight by thesametokensaythatearlycomputerscompetedwithsliderulers.Moreinterestingly,Ulexmightstimulatethecreationofalternativeopen-sourceandflag-freelegalsystems.

Ulexreliesheavilyonthecommonlawforgoodreason.Empiricalevidencesuggeststhat common law legal systems outperform civil law ones in terms of efficiency, asreflectedintheircomparativeeconomicgrowth.115ThesuccessofHongKong’seconomycompared toMaoistChina’sprovidesa signal instanceof thephenomenon.Perhaps forthat reason, the most modern and comprehensive special jurisdictions, in Dubai andHonduras, import thecommon law to thosecountries.Thecommon law isnot theonlyoption,though;thecivillaw,whichoriginatedincontinentalEuropeandspreadfromtheretothefarcornersoftheworld,offersafundamentallydifferentbasisforalegalsystem.

The prospect of a civil law–based counterpart to Ulex will have to wait forpublicationofsomethinglikeaRestatementoftheCivilLaw.116Thatdoesnotlooklikelytohappensoon.Thoughthe“StudyGrouponaEuropeanCivilCode,”anetworkoflegalscholars,onceaspiredtoprovideanobjective,private,anduniversalstatementofthecivillaw,thatefforthasoflateevidentlylapsedintoquiescence.117Inthemeantime,Europeansand others unfamiliar with the common law can take comfort in the thought that theRestatements used inUlex 1.1, because they summarize, order, and index the common

law’s rules, have much the flavor of a civil code.118 Nobody needs to sift throughinnumerablejudicialauthoritiestofindthelawinUlex.

WhatsortofcongressorparliamentwouldwriteandadoptnewversionsofUlexorcompetingopen-source legalsystems?Toagain judgefromsoftwarecounterparts:none.The software example instead suggests that Ulex would develop through the sort oflooselyorganized, polycentric process that characterize thedevelopmentof open-sourceprogramming. As explained by OpenSource.com, that process encourages the freeexchangeofideas,widespreadparticipation,lotsofexperimentation(andthussometimesfailure),andastrongsenseofcommunity.119

Thoughthosemaysoundlikelittlemorethanbeautifulideals,thehardconstraintsoftechnologymakethemreal.Theopt-innatureofsoftwaredevelopmentensuresthatopen-sourcecodingeffortsdrawinonlythosewillingtoparticipateonliketerms,andthattheirjointeffortsaffectonlythosewhochoosetodownloadandusethepublishedcode.CouldUlexhelpbringsimilarlyopenprocesstothedevelopmentoflegalcodes?Giventhewaythatextantpoliticalinstitutionshandlethejob,itseemsworthatry.

6Conclusion:FromNationstatetoStatelessAssociation?

Ulex brings lessons from the history of computer science to bear on the challenge ofcreatingthenextgenerationofgovernments.Itoffersanopen-sourcelegalsystemsuitablefor use byZEDEs, seasteads, and other consent-rich, opt-in, start-up jurisdictions.Ulexusesasitsbuildingblocksaselectionoffield-testedandlong-trustedrulesets,includingthe American Law Institute’s Restatements of the Common Law, the United NationsCommissionon InternationalTradingLaw’sArbitrationRules, and variousmodel rulesanduniformacts.Ulexusesonlyrulespublishedbynongovernmentalinstitutions;itfliesnocountry’s flag.Aswith the open-source computer operating systems that inspired it,anyone can download, customize, and runUlex. In that, Ulex echoes the revolution of1969 – not the one started by hippies, draft-dodgers, and Black Panthers, but the onestartedbyKenThompson,DennisRitchie,andthecomputerprogramtheycreated,Unix.

This chapter has described the basic features of the first version of Ulex 1.1. Fortechnical details, see Appendix B, which directly or by reference specifies eachcomponent rule or rule set. Over time, a community of like-minded coders mightcongregatearoundUlex,supportingit,improvingit,andadaptingitforparticularuses.Atthat point, the development of legal operating systems will have reached a point thatcomputer operating systems reached decades ago. Despite the lag, that would mark asignalachievementinthedevelopmentofgoverninginstitutions.

Open-sourcesoftwaremakesdigitaldevicesusefulevenin isolation;askanyboredflyerplayinggamesonherisolatedsmartphone.Buttheutilityofourdevicesreallykicksinoncewehit thegroundand they interconnect.Only thencanwecalleachother, texteachother,andotherwisekeepeachothercompany.

Would interconnection have a similar effect on Ulex and other open-source legalsystems? In other words, would a network of independent jurisdictions running on ashared set of rules prove even better than a jurisdiction running the same set of rulesalone?Thequestionfairlywellanswersitself.Winningalargershareofthemarketwouldaffordalegaloperatingsystemeconomiesofscale,spreadingthefixedcostsofdesigning,publishing,andsupportingthesystemoverawiderarea.Thatwouldlowerthecostsborne

byeachindividualuser,makingthesystemcorrespondinglymoreattractivetoconsumersoflegalsystems.

More than that, though, jurisdictions running a shared version of Ulex or anotheropen-sourcelegaloperatingsystemwouldlikelyenjoynetworkexternalities–economicboonsnotaccountedforbymereefficiencygains.Thesamekindofeffectmakeslargersocial networks more valued than tiny ones. All gain and gain again from peacefulcooperation.

If that parallel from the world of computer technology holds, open-source legaloperatingsystemsmightcometosupportanewkindofinternationalorganization–notanationstate,butastatelessassociation.Itsmembers?Opt-injurisdictionslikeHonduranZEDEs, seasteads, and institutions as yet unrealized. This chapter can only raise thepossibility thatopen-source legalsystemsmightreshapegovernments thewayUnixandits progeny reshaped computers. Here, it suffices to introduceUlex andmake the firstworkingversionreadyforuse.

1HistoryofUnix,WIK I P ED I A ,https://en.wikipedia.org/wiki/History_of_Unix#1969(lastvisitedOct.25,2016).

2ThompsongetscreditforwritingthefirstversionofUnix;Ritchieforportingittodifferentmachinesandplatforms.ThompsongetscreditforwritingthefirstversionofUnix;Ritchieforportingittodifferentmachinesandplatforms.SeeDennisRitchie,WIK I P ED I A ,https://en.wikipedia.org/wiki/Dennis_Ritchie(lastvisitedOct.25,2016).

3ThayerWatkins,NatureandHistoryofOperatingSystemsforComputers,S AN J O S E

S T .U.,www.sjsu.edu/faculty/watkins/opsys.htm(lastvisitedOct.25,2016).

4KlintFinley,LinuxTookOvertheWeb.Now,It’sTakingOvertheWorld,WIRED (Aug.25,2016),www.wired.com/2016/08/linux-took-web-now-taking-world/(creditingAndroidwith84percentofthemarketshareforsmartphones).

5Worriedthatprivatesoftwaredevelopersmightthreatenlibertyasmuchasarmedagentsofthestate,LarryLessigfamouslypronounced,“codeislaw.”LAWRENCE

LE S S I G , CODE , V ER S I ON2.0at1,5,79(2006),http://codev2.cc/download+remix/Lessig-Codev2.pdf.

Thepresentargumenttakestheoppositetack:Lawisoratleastshouldbeakindofcode,followingpredictableformalalgorithmsratherthanmerechanceorthearbitrary

willofanother.

6SeeFordW.Hall,TheCommonLaw:AnAccountofItsReceptionintheUnitedStates,4VAND . L . R E V.791(1951).

7DIFCLawNo.3of2004(LawontheApplicationofCivilandCommercialLawsintheDubaiInternationalFinanceCenter(DIFC)),art.8(2)(e)(U.A.E.),www.difc.ae/files/9214/5448/9184/Law_on_the_Application_of_Civil_and_Commercial_Laws_in_the_DIFC_DIFC_Law_No._3_oF_2004.pdf.

8AnthonyDavid,LankatoOfferDubai-StyleOff-ShoreBankinginPortCity,S UNDAY

T IME S (SriLanka)(June26,2016),www.sundaytimes.lk/160626/news/lanka-to-offer-dubai-style-offshore-banking-in-port-city-198908.html.

9DecretoNo.120–2013,LeyOrgánicadelasZonasdeEmpleoyDesarrolloEconómico(ZEDE)[OrganicActforZonesforEmploymentandEconomicDevelopment(ZEDE)]LA GACETA , D I AR IO O F I C I A L D E L A R E PUBL I CA D E HONDURA S ,

Sept.6,2013,

http://zede.gob.hn/english/gaceta/Gaceta%206%20de%20septiembre%202013.pdf.

10RichardStallman,TheGNUOperatingSystemandtheFreeSoftwareMovement,inOPEN SOURCE S : VO I CE S O F THE O P EN S OURCE R EVOLUT ION53(ChrisDiBonaetal.eds.,1999);LinusTorvalds,TheLinuxEdge,inOPEN SOURCE S,101.

11RANDY E . B ARNETT, T HE S TRUCTURE O F L I B ERTY289(1998).

12See,e.g.,J ERRY L . A NDER SON & DAN I E L B . B OGART, P ROPERTY LAW: P RACT I CE ,

P ROBLEMS , A ND P ER S P ECT I VE S258–87(2014)(reviewingtypesofcommonlawestatesandtheirorigins).

13See,e.g.,DAR ÍO A . E URAǪUE , R E I N TERPRET I NG THE B ANANA R E PUBL I C : R EG ION

AND S TATE I N HONDURA S,1870–1972(1996).

14See,e.g.,J AME S M . B UCHANAN & GORDON TULLOCK , THE CALCULU S O F CON SENT:

LOG I CAL FOUNDAT ION S O F CON ST I TUT IONAL D EMOCRACY(1962);BruceYandle,BootleggersandBaptists:TheEducationofaRegulatoryEconomist,REG .,May–June1983,at12.

15Infact,scholarlysummationsofcommonlawrules–thevariousRestatements–constitutethegreatestpartofUlex’ssubstantiverules.

16SeeRE S TATEMENT ( S ECOND ) O F CONFL I CT O F L AWS§187(AM . L AW I N S T.1971),availableatwww.kentlaw.edu/perritt/conflicts/rest187.html(allowingpartiestospecifywhatlawwillcontrolmatterswithinthescopeoftheiragreement,andwhichULEX 1.1incorporatesbyreferenceatrule2.4.1).

179U.S.C.§§1–16(2012).

18Arule’sordinalrankinginUlexprovessignificantundermeta-rule3.3,which,asdescribedmorefullylaterinthechapter,givesprecedencetoruleswithhigherranks.

19R.H.Coase,TheProblemofSocialCost,3J.L.ECON .1(1960).

20SeeU.N.COMM ’N ON I N T’ L T RADE L AW,UNCITRALMODEL LAW ON

I NTERNAT IONAL COMMERC I AL ARB I TRAT ION,1985,WITH AMENDMENT S A S A DOPTED

I N 2 0 0 6,art.10(2),U.N.SalesNo.E.08.V4(2008),www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07–86998_Ebook.pdf(settingdefaultnumberofarbitratorsatthree);id.,art.11(3)(a)(describingmethodbywhichpanelofthreearbitratorschosen).SeealsoAM . A RB I TRAT ION A S S’ N , COMMERC I AL

ARB I TRAT ION RULE S AND MED I AT ION P ROCEDURE SR-12(b),R-13(2013),www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTG_004103(settingforthsimilarprocedure).

21LeonFriedman,ConscriptionandtheConstitution:TheOriginalUnderstanding,67M ICH . L . R E V.1514-15(1969)(notingthat“theConventionencountereditsfirstrealdifficultieswiththeGovernment’spowertoraiseandsupportarmies;thekeyissuewasagainthehistoryfearofstandingarmies.Madisonhadalreadywarned,‘Astandingmilitaryforce,withanovergrownExecutivewillnotlongbesafecompanionstoliberty.’”)(quotingMAX FARRAND , E D . , R ECORD S O F THE F EDERAL CONVENT ION O F

1 7 8 7 ,at465(1911)).

22ChristianBorris,FinalOfferArbitrationfromaCivilLawPerspective–HowtoPlayBaseballinaSoccerCountry,24J . I N T’ L A R B.307(2007);MichaelCarrell&RichardBales,ConsideringFinalOfferArbitrationtoResolvePublicSectorImpasseinTimesofConcessionBargaining,28OH IO S T. J . D I S P. R E S O L.1,16–17(2013).

23See,e.g.,MAJOR L EAGUE BA S EBALL AND 3 0 MA JOR L EAGUE C LUB S , 2 0 1 2– 2 0 1 6 B A S I C

AGREEMENT (2011),art.VI,§E(13),http://mlb.mlb.com/pa/pdf/cba_english.pdf(“Thearbitrationpanelshallbelimitedtoawardingonlyoneortheotherofthetwo[remedies]submitted.”).

24See,e.g.,Carrell&Bales,supranote24,at31(“[I]tcreatesanatmosphereforvoluntaryresolution.”)(footnoteomitted).

25SeeAm.LawInst.&Int’lInst.fortheUnificationofLaw,PrinciplesofTransnationalCivilProcedure,9UN I FORM L . R EV.758,802(2004),www.unidroit.org/english/principles/civilprocedure/ali-unidroitprinciples-e.pdf.Principle25codifiestherule.

26SeeSungYoonCoed.,Attorneys’FeesandLitigationExpensesinSelectedForeignNations,inAWARDS O F AT TORNEY S F E E S B Y F EDERAL COURT S , F EDERALAGENC I E S

AND S E LECTED FORE IGN F I ND I NG S137(MaryV.Capisioed.,2002)(surveying15leadinglegalsystemstofindthatallbuttheUnitedStatesandMexicorequirelitiganttopayatleastthelitigationcostsofthewinningparty,andusuallyalsoattorneys’fees).

27Am.LawInst.&Int’lInst.fortheUnificationofLaw,supranote27,at802,cmt.P-25A.

28Id.

29Id.at758.

30Privateprovidersofalternativedisputeresolutionservicesalreadyofferappellateproceduresasanoption.BrentO.E.Clinkscale,MichaelS.Cashman,&ThomasM.Cull,NonjudicialAppealsofArbitralAwards:AnUnderutilizedToolinAlternativeDisputeResolution,F ED . L AW.,Oct.–Nov.2016,at36,39–40(describingtheAmericanArbitrationAssociation’sOptionalAppellateArbitrationRules,effectivein2013,andJAMS’OptionalArbitrationAppealProcedure,effectivein2003).

31RichardEpsteinrightlyincludestheseamongthefewbasicrulesofafreeandprosperousliberalsociety.R I CHARD E P S T E I N , S IMPLE RULE S FOR A COMPLEX WORLD

(1995).

32RE S TATEMENT ( S ECOND ) O F TORT S ( AM . L AW I N S T. 1 9 6 5 ) , R E S TATEMENT ( TH I RD ) O F

TORT S : P RODUCT S L I A B I L I TY ( AM . L AW I N S T. 1 9 9 8 ) , R E S TATEMENT ( TH I RD ) O F TORT S :A P PORT IONMENT O F L I A B I L I TY ( AM . L AW I N S T. 2 0 0 0 ) , R E S TATEMENT ( TH I RD ) O FTORT S : L I A B I L I TY FOR PHY S I CAL AND EMOT IONAL HARM ( AM . L AW I N S T. 2 0 11 ) .

33Despiteitsname,theRE S TATEMENT ( TH I RD ) O F P ROPERTY: S E RV I TUDE S ( AM . L AW.

I N S T. 2000)straysveryfarfromthecommonlawinanefforttodoawaywithancientclutter.Thatprobablyresultsinabettersetofrules,alltold.Still,theALImightdo

bettertocallthepublicationaWestatement,inrecognitionofitsauthors’innovativeapproachtothelawofservitudes.

34RE S TATEMENT ( S ECOND ) O F CONTRACT S ( AM . L AW I N S T.1981).

35I N T ’ L I N S T. F OR THE UN I F I CAT ION O F P R I VATE L AW ( UN I DRO I T ) , U N I DRO I T

PR I NC I P L E S O F I N T ERNAT IONAL COMMERC I AL CONTRACT S(2010),www.unidroit.org/english/principles/contracts/principles2010/integralversionprinciples2010-e.pdf.

36SeeULEX : O P EN S OURCE L EGAL O P ERAT I NG S Y S TEM ,version1.1(2017),https://goo.gl/YByFti[hereinafterULEX 1.1]atrules2.4.1–2.4.7.

37UniformLawComm’n,Acts,www.uniformlaws.org/Acts.aspx(lastvisitedOct.28,2016)(listingvariouscategoriesofmodelacts).

38Ingeneral,ULEX 1.1followstheguideoftheLegalInformationInstituteatCornellUniversityLawSchool,whichaimstoshowtheUCCArticles“mostwidelyadoptedbystates.ThatmeanswewillnotalwaysdisplaythemostcurrentrevisionifthatrevisionhasnotachievedwidespreadadoptionamongAmericanlegislatures.”UniformCommercialCode,LEGAL I N FO . I N S T. ,www.law.cornell.edu/ucc(lastvisitedOct.28,2016).

39Andalsobecause§2–207ofUCCArticle2hasprovenabravebutunfortunateinnovation.See,e.g.,CorneillA.Stephens,EscapefromtheBattleoftheForms:KeepItSimple,Stupid,11L EW I S & C L A RK L . R E V.233(2007).IfinpracticeUlexuserswantedaspecializedsetofrulesforthesaleofgoods,theymightconsideradoptingtheU.N.Comm’nonInt’lTradeLaw,U.N.ConventiononContractsfortheInternationalSaleofGoods(Vienna,1980),www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html(lastvisitedOct.28,2016),whichcoversroughlythesamegroundasArticle2coversandtosimilareffect.

40GrantGilmoretoRobertSummers,September10,1980,inR I CHARD E . S P E I D EL ,

T EACH I NG MATER I AL S ON COMMERC I AL AND CON SUMER LAW54–55,(3ded.1981).

41UCCArticle2,§2–207demonstratestheimportanceofpracticaltesting.Itlookedgoodindraftandintheory,butrealworlduseshowedpartiesandcourtsgrapplingtoapplytherule.

42SeeULEX 1.1rules2.7.1–2.7.10.Ineffect,UlexincorporatestherulesetsoftheULC’sHarmonizationofBusinessEntityActsProject.SeeHarryJ.Haynsworth,OurMini-Theme:TheUniformBusinessOrganizationsCodeandItsConstituentActs,BU S .

L . TODAY,Apr.2015,at1,www.americanbar.org/content/dam/aba/publications/blt/2015/04/full-issue-201504.authcheckdam.pdf.

43SeeStephenBainbridge,AMapofModelBusinessCorporationActStates,PROFE S SORBA I NBR I DGE . COM (Nov.4,2013),www.professorbainbridge.com/professorbainbridgecom/2013/11/a-map-of-model-business-corporation-act-states.html.NineteenstatesshowonthemapasnothavingadoptedallorsubstantiallyalloftheMBCA.

44See,e.g.,RE S TATEMENT ( S ECOND ) O F P ROP. : L ANDLORD & T ENANT § 4 . 1 ( AM . L AW

IN S T. 1 9 7 7 ) ; R E S TATEMENT ( TH I RD ) O F P ROP. : S E RV I TUDE S § § 7 . 1 4 , 7 . 1 5 ( AM . L AW I N S T.

2000).

45ULEX 1.1rule2.8.3.

46SeeULEX 1.1rule3.2(ensuringthatrulesextendtofunctionallyequivalentinstitutions).

47See,e.g.,RE S TATEMENT ( S ECOND ) O F TORT S§701(AM . L AW I N S T.1936–1940)(definingscopeofliabilityforsexualintercoursewithminorfemalechild);RE S TATEMENT ( TH I RD ) O F P ROP. : W I L L S AND OTHER DONAT I VE T RAN S F ER S § 8 . 2 ( AM .

LAW I N S T.2003)(denyingminorspowertomakewillsorgifts).

48RE S TATEMENT ( TH I RD ) O F P ROP. : W I L L S AND OTHER DONAT I VE T RAN S F ER S § 1 4 ( AM .

LAW I N S T.2003).Moreprecisely,thedeadlinefallsatthebeginningofthedaybeforeone’seighteenthbirthday.Id.

49Id.,§8.2cmt.b.

50TheUniformGuardianshipandProtectiveProceedingsAct(1997)defines“Minor”in§102(8)andoutlinesterminationofguardianshipbyemancipationin§210(a).UN I F.

GUARD I AN SH I P AND P ROTECT I VE P ROCEED I NG S ACT§§102(8),210(a)(UN I F. L AW

COMM ’N 1997),www.uniformlaws.org/shared/docs/guardianship%20and%20protective%20proceedings/UGPPA_2011_Final%20Act_2014sep9.pdf.

51SeeRE S TATEMENT ( S ECOND ) O F TORT S § 8 9 9 ( AM . L AW I N S T.1936–1940)(providingthattortcauseofactionmaylapse);RE S TATEMENT O F P ROPERTY § 2 2 0 ( AM . L AW I N S T.

1936–1940)(definingeffectofstatuteoflimitationsinpropertylaw);RE S TATEMENT

( S ECOND ) O F CONTRACT S § 8 2 ( AM . L AW I N S T.1981)(timelimitsonenforceabilityofpromisetopayindebtedness);RE S TATEMENT ( S ECOND ) O F CONFL I CT O F L AWS , § 1 4 2

( AM . L AW I N S T.1971)(specifyingthatlocalstatuteoflimitationsappliestomostclaims);RE S TATEMENT ( TH I RD ) O F T RU S T S § 9 8 ( AM . L AW I N S T.2003)(same,beneficiary’sbreachoftrustclaim);RE S TATEMENT ( TH I RD ) O F R E S T I TUT ION AND

UN JU S T E NR I CHMENT § 7 0 ( AM . L AW I N S T.2011)(same,restitutionclaim).

52SeeRE S TATEMENT O F P ROP. § 2 2 1 ( 1 ) ( AM . L AW I N S T.1936–1940)(defining“statutoryperiod”byreferencetolocallaw);§221(2)(same,“prescription”);RE S TATEMENT

( TH I RD ) O F P ROP. : S E RV I TUDE S § § 2 . 1 7 , 7 . 7 ( AM . L AW I N S T.2000)(defining“prescription”byreferencetolocallaw).

53SeeULEX 1.1rule2.8.5.

54TheRE S TATEMENT ( S ECOND ) O F CONTRACT S ( AM . L AW I N S T. 1 9 8 1 )devotessections110–150,anentirechapter,totheStatuteofFrauds.SeealsoRE S TATEMENT ( S ECOND )

O F P ROP. : L ANDLORD AND T ENANT § 2 . 2 ( AM . L AW I N S T. 1 9 7 7)(listingdefaultformalitiesrequiredforleasewithinStatuteofFrauds);RE S TATEMENT ( TH I RD ) O F P ROP. :

S ERV I TUDE S , § 2 . 7 ( AM . L AW I N S T.2000)(makingservitudessubjecttosameStatuteofFraudsasestatesofsimilarduration);RE S TATEMENT ( S ECOND ) O F CONFL I CT O F L AWS §

1 4 1 ( AM . L AW I N S T.1971)(describingtreatmentofStatuteofFraudsincasesofconflictinglaws);RE S TATEMENT ( TH I RD ) O F S URETY SH I P AND GUARANTY § 11 ( AM .

LAW I N S T. 1 9 9 6 )(specifyingthatStatuteappliestosecondaryobligations);RE S TATEMENT ( TH I RD ) O F T RU S T S § 2 2 ( AM . L AW I N S T. 2 0 0 3 )(definingwritingrequiredbyStatuteforintervivostrust).

55U.C.C.§4-106(b)(AM . L AW I N S T. & UN I F. L AW COMM’N 1977).

56Id.,§9-503(a).

57RE S TATEMENT ( TH I RD ) O F P ROP. : W I L L S AND OTHER DONAT I VE T RAN S F ER S § 2 . 2

( AM . L AW I N S T.1999–2003)(describingvariousapproachestoquestionofsurvivingspouse’sshareofintestatedecedent’sestate);id.,§9.1(describingvariousapproachestosettingtheelectiveshareofadecedent’ssurvivingspouse).Inthisparticularareaoflaw,however,thequestionissettlednotbyapplicationofthemeta-rulehereunderconsideration,butbytheapplicationofULEX 1.1rules2.6.5andmeta-rule3.3,resulting

inanelectiveshareassetforthinUN I F. P ROBATE CODE§2–202(UN I F. L AW COMM’N

2014).

58NotethatwhileUniformCommercialCode§2–318alsooffersalternativeprovisions,inthiscaseregardingtotheapplicabilityofwarrantiestopartiesnotinprivity,UlexdoesnotincorporateUniformCommercialCodearticle2.

59RE S TATEMENT ( TH I RD ) O F P ROP. : W I L L S AND OTHER DONAT I VE T RAN S F ER S § 3 . 2

( AM . L AW I N S T.1999–2003).

60Id.§3.9(“Statutesinsomestatesprovidethatawillmaydevisepropertyasprovidedinaseparateunattestedwriting”).

61SeeUN I F. P ROBATE CODE§§2–502(b)–(c)and2–513(UN I F. L AW COMM’N , 2014),respectively,whichULEX 1.1incorporatesbyreferenceviarule2.6.5.

62SeeRE S TATEMENT ( S ECOND ) O F P ROP. : L ANDLORD AND T ENANT § 3 . 1 ( AM . L AW I N S T.

1977)(notingfederalandstatelegislationlimitingalandlord’sfreedom);RE S TATEMENT

OF P ROP. § 1 9 9 ( AM . L AW I N S T.1936–40)(notingstatestatutesprovidingforforfeitureoflifeestates).

63RE S TATEMENT ( S ECOND ) O F CONFL I CT O F L AWS § 11 8 ( AM . L AW I N S T.1971).

64EugeneVolokh,TheCommonplaceSecondAmendment,73N.Y.U.L.REV .793,813(1998).

65SeeTomW.Bell,UnconstitutionalQuartering,GovernmentalImmunity,andVanHalen’sBrownM&MTest,82T ENN . L . R E V.497–536(2015).

66RE S TATEMENT ( S ECOND ) O F TORT S§§895A,B,andC(AM . L AW I N S T.1965–1979)(respectively).

67Id.,§895D.Note,however,thatbecauseULEX 1.1doesnotincorporatebyreferencetheRE S TATEMENT ( TH I RD ) O F THE FORE IGN R ELAT ION S L AW O F THE UN I T ED S TATE S

( AM . L AW I N S T.1987),itdoesnotincludethatruleset’sprovisions,atsections63–93,extendingsimilarprivilegestoforeignstates,theUnitedNations,andtheirvariousagents.

68DecretoNo.120–2013,supranote9,art.41(3).Inotherinstancesofself-legislation,aZEDEneedonlytowintheapproval–or,rather,notincurthedisapproval–ofthe

CommitteeforAdoptionofBestPractices.Id.art.12(6).

69Neitherisitevidentthatonlypublicofficialsshouldenforcecriminallaws;privateenforcementhasahistoryofsuccessfuluse.DAV I D D . F R I EDMAN , L AW’ S ORDER : WHAT

ECONOM IC S HA S TO DO W I TH LAW AND WHY I T MATTER S263–96(2000).

70Seeid.at223–43,263–96;RichardA.Posner,AnEconomicTheoryoftheCriminalLaw,85COLUM . L . R E V.1193(1985).

71MODEL P ENAL CODE ( AM . L AW I N S T. 2 0 0 9 ) ,www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=92.

72ModelPenalCode,WIK I P ED I A ,http://en.wikipedia.org/wiki/Model_Penal_Code(lastvisitedOct.25,2016).

73PaulH.Robinson&MarkusDirkDubber,AnIntroductiontotheModelPenalCode8(1999),www.law.upenn.edu/fac/phrobins/intromodpencode.pdf.

74ModelPenalCode,A . L . I . , www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=92(lastvisitedNov.21,2016).

75ModelPenalCode,WIK I P ED I A ,http://en.wikipedia.org/wiki/Model_Penal_Code#Use(lastvisitedNov.21,2016).

76MODEL RULE S O F CR IM I NAL P ROCEDURE ( U N I F. L AW COMM’N 1987),www.uniformlaws.org/Act.aspx?title=Rules%20of%20Criminal%20Procedure,%20Model.

77MichaelW.Carroll,OneforAll:TheProblemofUniformityCostinIntellectualPropertyLaw,55AM . U . L . R E V.845,856(2006).

78BerneConventionfortheProtectionofLiteraryandArtisticWorks,Sept.9,1886,revised,July24,1971,25U.S.T.1341,828U.N.T.S.221.

79GregR.Vetter,TheCollaborativeIntegrityofOpen-SourceSoftware,2004UTAH L .

R EV .563,570–71(2004).

80See,e.g.,Jacobsenv.Katzer,535F.3d1373(Fed.Cir.2008).

8117U.S.C.§102(b)(2012).

82See,e.g.,Bakerv.Selden,101U.S.99(1879).

83ULEX 1.1rules2.8.3–2.8.5,3.1–3.3.

84Concerningtheenforceabilityofgrantstothepublicdomain,seeTOM W. B E LL ,

I N T ELLECTUAL P R I V I L EGE : CO PYR IGHT, COMMON LAW, A ND THE COMMON GOOD137(2014).

85SeeUCCFinalActInformation,UN I FORM LAW COMM I S S I ON,www.uniformlaws.org/Narrative.aspx?title=UCC%20Final%20Act%20Information(lastvisitedNov.28,2016).

86TheActitselfmakesclearthatcopyrightcannotrestrictpublicaccesstofederallaws,regulations,orotherworks.17U.S.C.§105(2012).Courtshaveheldthatthesamelimitsapplytotheworksoflessergovernments.See,e.g.,Veeckv.S.Bldg.CodeCong.Int’l,Inc.,293F.3d791,796(5thCir.2002)(holdingthatacity’sbuildingcode,whichwasbasedonamodellaw,couldnotbecopyrighted);Nashv.Lathrop,6N.E.559,560–61(Mass.1886)(holdingthattheopinionsoftheSupremeJudicialCourtofMassachusetts“belongtothepublic”).

87Granted,theULCandALIsometimesvoicelesspermissivesentiments,aswhentheyadvisethoseseekingreprintpermissionofofficialfinalversionsoftheUCCtoobtainalicense.SeeUniformLawCommission,UCCFinalActInformation,supranote89.Inpractice,though,theUCCiswidelyavailableviathestatesthathaveenacteditandotherpublicsources.See,e.g.,UniformCommercialCode,LEGAL I N FO . I N S T. ,

www.law.cornell.edu/ucc(lastvisitedOct.28,2016).

88See,e.g.,CopyrightTX0007422317,registeredbytheALIin2011,forRestatementoftheLawThird.RestitutionandUnjustEnrichment.Volume1and2,availableviatheCopyrightOffice,PublicCatalog(1978topresent),http://cocatalog.loc.gov/(lastvisitedNov.21,2016).

89AccesstotheRestatementscanbepurchasedinavarietyofwaysandformats:fromALI,forboundversionsofitspublications,atwww.ali.org/publications/#publication-type-restatements;fromThompsonReuters,forpurchaseorleaseofboundore-books,athttp://legalsolutions.thomsonreuters.com/law-products/Publication-Types/Restatements-of-the-Law/c/20194;orviaonlinedatabasesofferedbyWestlaw,www.westlaw.com/,Lexiswww.lexis.com/,orHeinOnline,home.heinonline.org/(lastvisitedApr.30,2016).

90DMCA(Copyright)ComplaintfromTheAmericanLawInstitute,toGoogleInc.(Aug.30,2016),LUMEN ,www.lumendatabase.org/notices/12943542#(lastvisitedNov.21,2016).

91Fordetailsaboutthoseandotheradventuresinthelaw,seeChapter3.8.

9217U.S.C.§102(b)(2012).

93RE S TATEMENT ( TH I RD ) O F CONTRACT S § 2 4 ( AM . L AW I N S T.1981).

94U . S . CON S T. ,art.I,§8,cl.8;FeistPublications,Inc.v.RuralTel.Serv.Co.,499U.S.340(1991)(interpretingthescopeofauthorshipincopyrightlaw).

95SeeAMER I CAN LAW I N S T I TUTE , C A P TUR I NG THE VO I CE O F THE AMER I CAN LAW

IN S T I TUTE : A HANDBOOK FOR A L I R E PORTER S AND THO SE WHO R EV I EW THE I R WORK5(2015),www.ali.org/publications/style-manual/(describingfirstprincipleasto“ascertainthenatureofthemajorityrule.”).

9617U.S.C.§101(2012)(definingscopeofcopyright).

97Creation,A.L.I.,www.ali.org/about-ali/creation/(lastvisitedMay23,2016).

987N.MAR . I . C ODE§3401(Supplement1992);V.I.CODE ANN.tit.I,§4(2012).

99QuerywhetherVIandNMItherebyeffectuatedanunconstitutionalTaking.Probablynot.Theblack-letterrulesoftheRestatementsnotcopyrightableundertheanalysisaboveandcopyrightsarenotaptsubjectsforTakingsclaims.SeeBELL ,supranote87,at96.

10017U.S.C.§301(a)(2012)(preemptingstatecopyrightlaws).

101U . S . CON S T. ,art.I,§8,cl.8;id.,art.6,cl.2.

102See,e.g.,F. A . H AYEK , THE ROAD TO S ER FDOM72(1944)(“Strippedofallitstechnicalities,[theruleoflaw]meansthatgovernmentinallitsactionsisboundbyrulesfixedandannouncedbeforehand”).

103RE S TATEMENT ( S ECOND ) O F TORT S § 1 8 ( AM . L AW I N S T.1965).

104RotundafortheChartersofFreedom,NAT ’ L ARCH I VE S MU SEUM,www.archives.gov/museum/visit/rotunda.html(lastvisitedNov.4,2016)(providingapermanentandpublichomefornationaldocuments);America’sFoundingDocuments,NAT ’ L ARCH I VE S,www.archives.gov/founding-docs(lastvisitedNov.4,2016)(providinghighresolutiondownloadsfortheChartersofFreedom);seealso44U.S.C.§2109(2012)(statingtheNationalArchivist,“[S]hallprovideforthepreservation,arrangement,repairandrehabilitation,duplicationandreproduction(includingmicrocopypublications),description,andexhibitionofrecordsorotherdocumentarymaterialtransferredtohimasmaybeneedfulorappropriate.”).

105Butcf.AkhilReedAmar,OurForgottenConstitution:ABicentennialComment,97YA LE L.J.281andapp.at296–97(1987)(notingminordifferencesbetweentheoriginalparchmentandfirstprintedversionsoftheConstitutionbutarguingthatthelatter,becausesubmittedforratification,controls).

106WhatIsProofofExistence,PROOF O F E X I S T ENCE,https://proofofexistence.com/about(lastvisitedNov.4,2016).

107TomW.Bell,Copyrights,Privacy,andtheBlockchain,42OH IO N.U.L.REV .438,465(2016)(explainingPOE).

108GOOGLE URLSHORTENER ,https://goo.gl/(lastvisitedNov.4,2016).

109NottobeconfusedwithanewversionoftheDriveprogramitself,thisfunctionappearsunderthe“Moreactions”menu,whichGooglehashiddenunderneaththethreeverticaldotsontherightendofDrive’sheadercommandbar.Fromthere,choosethe“Manageversions”and“Uploadnewversion”optionstocreatesaveanewversionofaPDFatanoldURL.

110Author’sexperiment,June8,2017.

111Forconvenience,thelanguageinvokingUlex1.1canusetheshortenedURLforthePOE-stampedofficialversion:https://goo.gl/YByFti.

112Seesubsection5.4foradiscussionofissuanceofnewversionsofUlex.

113Thesuggestedlanguageusesashorthandcitationto:U.N.Comm’nonInt’lTradeLaw,UNConventiononContractsfortheInternationalSaleofGoods(1980),

www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html(lastvisitedOct.15,2016).

114Forreasonsdiscussedinsubsection5.1,thesewilllikelybeopensourceratherthanproprietarysystems.Onthatcount,theparallelwithsoftwaredoesnothold.

115RafaelLaPorta,FlorencioLopez-de-Silanes,&AndreiShleifer,TheEconomicConsequencesofLegalOrigins,46J.ECON .L I T E RATURE 285(2008);PaulG.Mahoney,TheCommonLawandEconomicGrowth:HayekMightBeRight,30J.L EGA L S T UD.503(2001).

116SeeEricVanHooydonk,TowardsaWorldwideRestatementoftheGeneralPrinciplesof6MaritimeLaw,20J.I N T ’ L MAR.L.170(2014),www.law.nyu.edu/sites/default/files/upload_documents/(2014)-20-Journal-of-International-Maritime-Law-170.pdf(alludingtoprospectofgeneralized“EuropeanCivilCode”).

117StudyGrouponaEuropeanCivilCode,Introduction,www.sgecc.net/pages/en/introduction/index.introduction.htm(lastvisitedNov.21,2016).

118PhilippePradal,LeRestatement:LesEtats-UnisEntreTraditionCivilisteEtTraditionDeCommonLaw,LE S CAH I ER S D E L A J U S T I C E ,Aug.2010,at81,www.dalloz-revues.fr/revues/Les_cahiers_de_la_justice-47.htm.

119TheOpenSourceWay,OPEN SOURCE . COM , https://opensource.com/open-source-way(lastvisitedOct.20,2016).

3.8

StoriesoftheSortOrdinarilyRecountedoverDrinks

◈

1Introduction:“PullUpaChair!”What happens when bookish theories meet the hard corners of the real world? Stuffhappens.Storieshappen.Thischapterrecountsafew.

Ordinarily,I’dsavethesekindsofwarstoriesforyou,me,aquiet table,andafewdrinks.Wewould tapglasses, leanback, and Iwould tell you about lookingup fromacomputer keyboard to findmyself bouncing through the backstreets of an edgyCentralAmerican capitalwith an armeddriver at thewheel, or conspiringwithLiberlanders toshakeoffDanuberiverpolice,ordivingwithblack-tippedreefsharksinsearchofasafeharborforseasteaders.

But time runs short, and these sorts of stories – the sort ordinarily recounted overdrinks–tendtorunalittlelong.Thischapterputsafewonice,sotospeak,foryoutotapasyoulike.Thatway,whenandifwefinallygetaroundtoactuallysittingdowntogether,wecanfocusonfresherstories.

2“So,HowDidYouGetStartedIn…?”Ibeganresearchingandwritingaboutpolycentriclawevenbeforegoingtolawschool.1

Astherestof thisbookattests, Icontinuedstudying it thereafter.Getting traction in thereal world took longer, though. Paying gigs, longer still. Still greater adventures inpolycentriclawawait.

Only relatively recently has the governing services industry matured enough tosupportexperts in the lawofspecial jurisdictions.Forsomeyears,a fewattorneyshavemade at least a part-time practice out of drafting agreements for zones and otherwisehandlingthepaperworkofwhatamounts,inmanyplaces,tolittlemorethanjustanothergovernmentprogram–usefulstufffortherightclients,butnotveryennoblingordaring.A much smaller cadre of attorneys has lobbied governments to enact much granderschemes,anddraftedpagesofproposedstatutesandtreatiesinsupportoftheircampaigns,thoughsofartonoevidenteffect.Theseclientlesslawyersdriftlikeghoststhroughtheirmerely imagined schemes, awarning to anyonewhodreamsof selling governments onself-reform.

Myadventuresinthepracticeofpolycentriclaw(forlackofabetterterm)beganin2011,whennewsemergedthataSiliconValleystart-up,FutureCitiesDevelopment,Inc.,hadsecuredaMemorandumofUnderstandingfromthegovernmentofHondurastocreateaspecialjurisdictioninitsnewREDprogram(precursortothepresentZEDEprogram).2Icontacted Future Cities’ president, Patri Friedman, to inquire about their legal advisor.Aftermoretalkinthatline,“You,”cametheeventualanswer.

FriedmandescribedgovernmentasaserviceindustryandcalledforgivingitaskeenafocusonuserneedsasAppleshowsforitscustomers.Governmentcouldbeeasy,evenfun,ifdoneright.Friedmanshowedacoder’sappreciationofhowgovernmentprogramswork – or more often do not work – and a vision about how to debug them. Hisprescription:jurisdictionalcompetition.Itisavisionhepursuestodayinassociationwithseasteading.Butmoreonthatanon.

ThoughthatparticularjobendedwiththecollapseoftheREDprogram(seeChapter1.5),itopenedthedoortonewchallengeswithnewclients.Atfirsttheworkdidnotdiffer

muchfromtheusualfareofalegalacademic–wigglingyourfingersinfrontofcomputerscreen for hours on end. Eventually, though, the work escaped the office and fled tovenuesnearandfar,famousandobscure.WhatelsecouldIdo?Igavechase.

The stories started racking up in Honduras, a tough country trying bold reforms.Thoughworththeeffort,Hondurasisnotaneasyplacetovisit.ItisevenhardertovisitLiberland, a country that at best exists only in a small and remote swampunder heavyCroatian guard – and that arguably exists not at all. Volunteer service in the Liberlandcauseledtosomecuriousincidents,throwingtheCroatianjudicialsystemintoaparadoxtangledevenbyBalkanstandards.

And the seasteaders? Ah, the seasteaders. Their quest to create sovereigncommunities at seahas led them to seekavery special kindof jurisdiction.Their storyleadstothePalaisPrésidentieldePape’ete,ontheIslandofTahiti,deepinthemiddleoftheSouthPacificOcean.

3Honduras,fromaFanAskanyforeignaidworker,warreporter,orprofessionalabroad:Onceyouspendsometimestudyingacountry,travelingtoit,andmeetingitspeople,youcannothelpbutfallalittlebit inlove.Everyplacehasitsscarsandwarts,ofcourse;thatiswhatmakestheminteresting.Andeveryplace–especiallyplaceslikeHonduras–hasitscharms,beauties,anddelights.

Hondurans exemplify patience, grit, and vision. Despite having suffered far morethantheirfairshareofworldlytrouble,theystilldaretodreambig.TheirZEDEprogramoffersthemostinnovativeandcomprehensivespecialjurisdictionsintheworldtoday.

So yes, you can call me a fan. And no, I will not pretend to have a completelyobjective view ofHonduras. But once you learn about the country and its people, youmightfindyourselfcheeringforthem,too.

Judging from the facts and figures laid out in Chapter 1.5, taken as a whole,Hondurasisnotahappyplace.ButnobodyshouldjudgeHondurassolelybythenumbers.WantingtoexperienceHondurasintheflesh,Itraveledthereinthelatespringof2016,tovisitthearchitectsoftheZEDEsystem,tourprospectiveZEDEsites,andmeetthelocalstheZEDEsmightaffect.

3.1Tegus

ThecapitalofHonduras,Tegucigalpa, shouldcomewithawarning label: “Not safe forfoolsor the faint-of-heart.”Setdeep in themountains that fill the interiorofHonduras,Tegus (as localscall thecity)hardly invitesacasual, carefreevisit. International flightsarriveviaToncontín,“theSecondMostExtremeAirportintheWorld.”3

Ifyoucannot stomachToncontín,youmight aswell stayhome.Youcannotget toTegus by train; alone among all the world’s national capitals, no rail line serves it.4

(Mountainswilldothattoacountry.)WanttodrivetoTegus?Itisnotimpossible,butforthe same reasons that tourists generally eschew remote roads through impoverished,looselygoverned,andviolentcountries,isitnotanattractiveoption.

Withnobetterwaytogetthere,IflewintoTegusviaToncontín.Asairtravelgoes,itprovedgoodfun.Asanamusementride?Ratherdull.Moreexcitingthingsawaited;Iwasscheduled to interviewOctavioRubénSánchezBarrientos, aman thatmore than a fewpeoplehadcastasthesomewhatmysteriousarchitectoftheZEDEsystem.

Once the plane had threaded the gaps in the hills and abruptly dropped to solidground, and in spite of the fearsome reputation that preceded it, I found Tegus quitewelcoming. It doubtless helped that my old friend Massimo Mazzone, an Italian-bornentrepreneur with concerns throughout Central America, and founder of the Honduranthinktank,FundaciónEléutera,hostedmyvisit.5Mazzoneputmeupathislocalredoubt–asecurelyguarded,marble-cladpillar that towersover thesurroundingneighborhoods(manyofthemprivategatedresidentialcolonias).HisTegushomeofferedaparticularlyniceviewdownontothepresident’shelicopterlandingpad,connectedtohisquarterswithacolonnadeoftrees.

Forventuringoutintothestreets,Mazzoneofferedtheservicesofhisarmeddriver.MySpanishisnotgood.Itis,infact,mostlynot.Butwithhandgestures,grimaces,andsmartphone-mediatedtranslations,wemanagedwellenough.

ThestreetsofTegus–usuallypaved,thoughroughlyso–careenupanddownandin-betweentheever-presenthills.Regardlessofhowwellitworkspolitically,intermsofterrain thecapitalcityrepresentsthelargernationquiteaccurately.MiniaturemountainsfillTegus.Thesemakedrivingtricky,buttheeffortrepayswithstunningviewsthatflash

upandslipawaymorequicklythantherightword.Bonita?Lindo?Whateveryoucallit,Hondurasoffersitinplenty.

Tegus looks especially good from a distance. Buildings sprinkle across the lowerelevationsofthesurroundingmountains,dottingthemwithpastelmosaics.Roadsweavethrough and around the hills, tying them together in a web of flashing traffic. Rainshowerssweepacrossdistant,highvalleys,watchedfromthesunnycitybelow.

Up close, the view is not always so bonita, or linda, or even bueno. Weeds andgarbage sneak along the feet of cinderblock walls crowned with coils of razor wire.Brightlycoloredshopsandgarish,giantads,whichatleastoffertheprospectofasmilingdeal,comeasawelcomerespiteinacitythatmoreoften,whenyougetclose,growls,“Goaway.”

Tegusearneditstoughattitudethetoughway.Itsstreetsbearthescarsofarecentandviolentpast. Itspresent isnotall thatsafe,either.Securityguardsflank theentrances tostores,apartments,andprivatestreets.Mostguardswearsomethingatleastinspiredbytheideaofauniform–adarkshirtandbaseballcap, for instance,emblazonedwithabold,sternlogo.Asamoreconvincingmarkofauthority,almostallofthembearshotguns.

Mazzone helped me land an interview with Sánchez, former chief of staff toPresident Lobo and now, under the Hernandez administration, in charge of the ZEDEprogram, and suchother government officials asmight provewilling and able to speakabout the ZEDE program. As fate would have it, and thankfully so, I ended upinterviewing not only Sánchez but alsoCarlosAlejandro Pineda Pínel, co-Chair of theActing Committee of the Committee for Adoption of Best Practices (CAMP from theSpanish acronym) and head regulator of Public-Private Partnership contracts atCOALIANZA,agovernmentagency,andMarcKlugmann,whoseadvisedtheHonduransontheZEDEs.

ThoughourconversationshelpedclarifythemotivesandmeansoftheZEDEsystem,it would tax the reader’s patience to enumerate all the details here. Rest assured, theyprovideasolidbuthiddenfoundationfortheanalysistheZEDEsystemofferedinChapter1.5.Beyondthat,sufficeittosaythateveryintervieweeseemedsincerelymotivated,firstand foremost, tomake everyday life better for everydayHondurans. If intentions alone

settled the matter, the ZEDEs could not fail. History alone, however, must judge theeffortsofSánchezandotherstohelpHondurashealitself.

3.2Roatan

Youknowhowwhen,asyouapproachitbyairandseeitsprawledacrossthesparklingwaterssurroundedbyahaloofgold,turquoise,anddeepestblue,youjustfallinlovewithan island?Yeah, Roatan can do that to you.6 I landed there after a fast flight over therugged, mostly empty mountains that crumple Honduras from Tegus to the Caribbeancoast.Afterthatlonelystretchofland,andanevenemptierstretchofsea,Roatancomeslikeadeepdrinkoflifeitself.Justmakesuretotakeoutthatlittleumbrellabeforeyoutipbackyourglass.Thatthingcouldpokeyoureyeout.

JonPeters,anentrepreneurfromBritishColumbia,Canada,withprojectsthroughoutCentralAmerica,spentthenextfewdaysintroducingmetotheisland’scharmingpeople,scenery,andwayof life.IhadworkedwithJonandhisassociates,Guatemalantelecommagnate,Gabrial Delgado Ayau, and the Texas thinker, builder, and educator,MichaelStrong,duringatwo-yearefforttogetaZEDEupandrunning.Mycontractendedbeforethe government was ready to launch, though, so they put the project on a slow, lowsimmer.

Roatanisnotjustatropicalparadise.Yes,ithaspalmtrees,finesandybeaches,andsome of the world’s most accessible and flourishing coral reefs. Friendly, English-speaking locals, too.7Thoseyoucanfind ina fewotherplaces.Butnoneof thosehaveRoatan’s legendary – no, wait; make that actual – history. The island has served as acastaway’slonelyrefuge,aportofcallfordreadpirates,asanctuaryforrunawayslaves,aretreat for failed Confederates, and a trophy traded time and again between warringempires.8RoatanmayfallwithintheofficialbordersofHonduras,butitremainsitsown,veryspecialkindofparadise.

Roatanremainsaverywildkindofparadise,too.Petersdroveusdownjungleroadsso rough that they knocked the oil cap off the 4x4’s engine block. (It made for animpressivelyblackandsmokymessbutdid littleharm.)Roatansharesat least thiswithHonduras:mountains.Whatisanislandbutamountainrisingfromthesea,afterall?InRoatan’s case, themountain forms awinding ridge of steep hills, surrounded by lowerlandsandmarshes,lagoons,reefs,andaflotillaofsmallerislands.Roatanstretcheseast-by-northeast,shapedlikeavanillabeanabout48miles(65kilometers)long.Apavedroad

weavesfromthewestendalongtheisland’sridgeformuchoftheislandbeforeturningtogravel,thentopath,then…aprivatedriveway.

Roatanremainswildinotherways,too.ThewaterfrontcommunityofWestEndstillletspeoplewalkdownthemiddleofthesandymaindragunderthemoonlight,drinksintheirhands,swayingtothemusicthatpoursfromtheopen-airrestaurantsandbars.Youcanstandintheshallowwaterandshoothoops;anoverwaterbarservesasthebackdrop.Itstillfeelsverymuchlikethesortofplacewhereapiratemightrelaxafterasuccessfulraid,drinkinggoodrum,listeningtothelandlubbersjawbone,andflashinghisgoldteethattheprettygirls.

Roatan also feels like the sort of place where a guy who never bothered gettingcertified foropen-waterdivingmight somehowscore someSCUBAgear, aboat ride, ahike,andafulltank’sworthofunderwaterwonder.Roatanfeelsverymuchlikethatkindofplace,infact.Andthankgoodnessforit.Theworldstillneedsplaceswhereaguycangetasdeepintroubleashelikes.

I leftHondurasoptimisticaboutprospectsfortheZEDEs,anassessmentconfirmedin later meetings with government officials and private developers. As of this writing,however,nobodyconnectedwiththeZEDEprogramwillsaymorethan,“We’remakingprogress.”Forwhat it isworth, theyalwayssmilewhen theysay it.Andwhynot?TheZEDE program offers the prospect of real and lasting reform for the Hondurangovernmentand,thus,theHonduranpeople.Thatsoundslikethekindofprogressworthsmilingabout.

4LiberlandLiberland,intheoryifnotpractice,wasfoundedonApril13,2015,byVítJedlička,a31-year-oldCzechpoliticianandmemberof thatcountry’sPartyofFreeCitizens.Jedlička,searching for the freestplacesonearth,discovereda fewsmallpocketsofmarshy landalongtheDanubeclaimedbyneitherCroatia,tothewest,norSerbia,totheeast.9

Why do neither Croatia nor Serbia claim these bits of soggy land? In very brief:Croatia wants its border with Serbia to follow the old riverbed of the Danube, whichgenerallygivesCroatiamoreterritory,whileSerbiaprefersthepresentriverbed.LeftinasortofinternationallegallimbowereafewareaseastofCroatia’sclaimedborder,theoldriverbed,andwestofSerbia’s,thecurrentDanube.10Jedličkapickedthelargestof theselowlands,otherwiseknownasGornjaSiga,andproclaimeditLiberland.

Heandotherwould-besettlersvisitedtheareaafewtimes,neverevidentlystayingvery long, before the arrests began. These happened over several weeks, in scatteredlocations.ItwasaroundthenthatIgotdrawninasavolunteer,mostlyworkingwiththeLiberlandSettlementAssociation,ledbytheentrepreneurialSwissBitcoinbroker,NiklasNikolajsen, but also sometimes in cooperation with Jedlička’s Liberlanders (who hadelectedhimpresidentinatwo-to-zerovotenotlongafterthecountry’sfounding).11

Yes,thereweretwomajorgroupstryingtosettlethecontestedarea,inamoreorlessfriendly way. One had money, grit, and organization; the other had people, press, andpizazz. Yes, it was complicated. The Balkans seem to encourage that sort of thing. Itwouldonlygetmoreso.

Togetherwithafluid(whennottotallydriedup)teamofvolunteers,allconnectedviaSlack (the online collaboration platform) and torrents of e-mail, all dedicated to theLiberlandcause,Iprepared“legalarmor”forsettlers–documentsdesignedtogivenoticeoftheircarriers’rightsunderinternationallawtoenterintoandoccupytheareaknownasLiberland,tousetheDanubeintransit,andsoforth.12Theyworetheseinplasticpouchesundertheirnecksandusedthemtoguidetheirclaimstothepress.Inpractice,though,allthefineargumentsintheworldcouldnotstopCroatianaggression.

Croatian police first arrested Jason Dorsett, a forty-one-year-old would-beLiberlander,afterhe leftCroatia’sproclaimed territoryandentered thewoodedpathsofwhatheviewedashisnewhomeland.ChaseddownbyCroatianpolice,heandfiveotherLiberlanderswereforciblyremovedto the local townofBeliMansirandthereconfinedonchargesofexitingCroatiaillegally,fromotherthananapprovedborderstation.DozensofotherofthewanderingtribeofLiberlandersmetsimilarfatesinthefollowingweeks.

TheLiberlandSettlementAssociationandRepublicofLiberlandsharedthecostsofthese defendants’ fines and their defense by local counsel, Sonja Prstec. Despite theseefforts,thelocalcourtfoundallthecapturedLiberlandersguiltyascharged.13Onemightbeexcusedforthinkingitwasaforegoneconclusion.Onemightberight.

OppositethewoodedpathsleadingfromCroatiaintoLiberland,onthehypotheticalcountry’s eastern border, flows the Danube. There, Croatian police next arrested JasonDorsett–specifically,whenheandelevenothersettlerslefttheDanube,aninternationalwaterwayopentosuchpeacefulusesundertheDanubeConvention,assignedbyCroatia,intheirattempttoenterLiberlandviaitsriverinebeaches,andwithoutoffendingCroatia’sclaimedborders.ButCroatianpolice,prowlingtheriver,wouldnothaveit.14

Accordingtothecountry’sownproclaimedbordersandtheDanubeConvention,theCroatianpoliceshouldnothavebeenintheareaatall.Croatiaclaimsnolandborderingtheriverinthatarea,puttingitoutsideitsrightfulpatrollingareaunderthatConvention.15

Asitwas,aspartofanongoingcampaignofharassment,intimidation,andbruteforce,theCroatianriverpoliceenteredLiberlandfromtheDanubeandthere,inthewaterandonthesandofitsbeaches,tackled,bound,andcarriedawayDorsettandtheothersettlers.16

The charge? Entering Croatia illegally. TheMisdemeanor Court in Beli Manastir,Croatia,foundDorsettandhisco-defendantsguilty.17

Considertheparadox:Oneandthesamecourttherebyfoundoneandthesamemanguiltyoftwologicallyincompatiblecharges.JasonDorsett illegallyexitedCroatiawhenheenteredLiberland.JasonDorsettillegallyenteredCroatiawhenheenteredLiberland.

Whichwasit?

Both,apparently.

Ormaybeneither.

Againwith thesupportofLSAandLiberland’spresident-in-exile,Prstecappealed theseand other decisions of the aptly namedMisdemeanor Court in the case of Dorsett andother similarly situatedLiberlanders, presenting cases fromboth thewater and the landside.Finally, in theHighMisdemeanorCourt inZagreb, sheprevailedonbehalfofherclientsandtheLiberlandcause.18

Sortof.

The High Misdemeanor Court in Zagreb could not deny the paradox created by theMisdemeanorCourtinBeliManastir.Itchastisedthelowercourtforafundamentalbreachofjudicialprocedure,incorrectapplicationofthefacts,andanincomprehensiblywordeddecision.19 Neither, though, would the superior court resolve the question of Croatia’sproperborder.TheHighMisdemeanorCourtinsteadorderedthelowercourttoretrythecaseswithinstructionstoclarifywhat,ifanything,thedefendantsdidwrong.

Perhaps theHighMisdemeanorCourt thereby saved theCroatian systemof justicefromanembarrassingparadox.Italso,however,taskedtheMisdemeanorCourttoresolvea border scar that has festered as long as, and risked causing as much grief as, anyterritorial dispute that the Balkans have seen in modern times; deadly ethnic conflictswrackedtheareafrom1991to2001.AndyetnowitfelltothelocalcourtinBeliManstir–acourtoflatetrippedupinitsowncontradictions–tosolveaproblemunknownintheannalsofinternationallaw:Iftheonlynationstateswithanyplausibleclaimtogovernitexpresslydisclaimsovereigntyoveranarea,canothersenterandclaimitastheirown?

The judges tasked with making this momentous decision did not show mucheagerness for the job,delaying the inevitableuntilcoldweathermadefurthersettlementattempts,andarrests,unlikely.Only then theirdecision issued:TheMisdemeanorCourtconfirmed their prior opinions in the Liberland matter and held that it was withoutcompetencetosettletheborderdispute.Indeed,BeliManastir’slocalcourtdoubtedeventhe competence ofZagreb’sHighMisdemeanorCourt to decide thematter. Thatmightstrike outsiders as a bit presumptuous, but the preponderance of the evidence wouldappear to confirm this assessment of the competence of theCroatian system of justice,suchasitis.Whichisnotverymuch.

TheMisdemeanorCourt’sactionsonremandwouldappeartocontravenethehighercourt’sorders,thuscryingoutforanotherreview,buttheLiberlandersdonotseemlikely

tofighton.Whybotherlitigatinginacourtsystemthatembracesimpossibilities?Perhapstakingthefight totheEuropeanCourtofJusticewouldmakemoresense. Itwouldalsotakealotmoremoney,though.

TheLiberlandcausestumbleson,bruisedbutnotbeaten.NotinLiberland,ofcourse.No, that seems given over to marshy forests, wild boar, and extra-territorial Croatianpoliceaction.PresidentJedličkaoperatesoutofPrague,cultivatingdiplomatic relations,hosting investment conferences, and scheming for the day he will finally occupy hishomeland.20 He had better hurry. As the Misdemeanor Court in Beli Manstir noted –perhapsprayedwouldsuitbetter–CroatiaandSerbiawillmostlikelysoonworkoutanamicableresolutiontotheirfesteringborderdispute,therebyclosingtheloopholethroughwhichtheLiberlandershavedesperatelytriedtowriggle.

Even then, despite his ultimate failure, history will probably have a smile forJedlička.Hegaveusa jollygoodadventureand leftnobodybleeding.Howmanyotherpresidentscansayasmuch?

5TheSeasteadingInstitute’sFloatingIslandProject

What did you want to be when you were a kid? A firefighter, maybe? The president?Something thatprobablyseemskindofsillyandcute in retrospect.Childrendreambig,bless their little hearts.Many adults lose that limitless view of life’s possibilities. Notseasteaders.Theyraisehightheflagofoptimismandsetsailforboundlesspossibilities.21

Ilovethatkindofstuff.SowhenTheSeasteadingInstituteaskedforhelpwiththeirlegalproblems,howcouldIsayno?

TheSeasteadingInstitutemakesnosecretofwantingtobuildinnovativesustainablefloatingcommunities–andnot just for theoceanviewsandbackdoor fishing.Theyare“dedicated to thegoalofobtainingpoliticalautonomyforgovernmentalexperiments.”22

Youmight call that revolutionary, but you cannot call it treasonous. Seasteaders do notwanttooverthrowterrestrialnationstates;theyjustwanttosailawayfromthem.

Youcannotevencallseasteaderscultish.Theyhavenoorthodoxybeyondwantingtobuildfloatingcommunitiesforpeaceful,productive,andfreepeople.Theydonotpretendtoknowwhatkindofgovernmentwillworkbest in thebig,wide,wetworld.They justwantachancetofindout.

TheSeasteadingInstitutealsorecognizes,however,thattheopenoceanmightnotbethebestplacetojumpin.Henceitspursuitofastrategy,describedmorefullyinChapter1.5,ofcreatingatwo-stage,land-and-waterspecialjurisdiction.HencealsoitssearchforacountrytohostthatSeaZone.

Afteralotofwhatyouwouldexpect–research,workingcontacts,hoursonGoogleEarth,mullingoverpoliticaland legal factors,etc.–FrenchPolynesia leapt to the fore.Muchof thecredit for thatmustgo toTheSeasteadingInstitute’s localsupporter,MarcCollins.Throughhim,andotherlocalsintriguedbytheprospectoffloatingcommunities,TSI secured an invitation to visit French Polynesia and present their proposal, alreadycirculating in the form of a pitch deck, to President Édouard Fritch and select of hisministersandofficials.

Youknowhowwhenitfirstfloatsintoview,mistveilingitslushmountains,askirtof patterned blue wrapped around her tawny beaches, you fall in love with FrenchPolynesia?Yeah,ithappens.23And,yet,inacombinationfoundtooseldomintheflesh,thestunningphysicalattractionsofFrenchPolynesiaconcealasoulofequalbeauty,oneimbuedwithbothgentlecomityandavastpowerofplace–mana.FrenchPolynesiahasacomplicated relationshipwithapowerfulbenefactor,however:France.Yetagain, thingsgetcomplicated.

In September 2016, together with The Seasteading Institute’s officers, RandyHenckenandJoeQuirk,othervolunteers,andacrewofdocumentaryfilmmakersfromtheJapanesenationalbroadcaster,NHK(longstory),ItraveledtoFrenchPolynesia.Ourten-daymission:getanMOUfortheworld’sfirstspecialeconomiczoneforseasteading–atwo-part,land-and-waterSeaZone.Inpursuitofthatgoal,wemetwithmanyandvariousofficials, business leaders, and locals, learning about the needs and prospects, from aseasteading point of view, of several islands and communities. Our presentation to thepresidentandotherdignitariesevidentlywentwellenough;wethereafterhammeredoutaMemorandumofUnderstanding,whichshouldbesigned,soon.24

If youwere an attorney bored with document review and discovery requests, thatmight sound like adventure enough, and seasteaders never fail to pose fascinating legalchallenges. But this gig offered plenty of the grittier stuff, too: collecting coconuts onmountaintrails;bouncingfromparadisetoparadiseonplanes,ferries,andfishingboats;watching the sun set over Moorea and the Southern Cross rise above Tahiti; goingoverboardinRaiateatoinspectthecoral.(Yes,withsharks.Justblack-tippedreefsharks,though.Coyotesoftheatoll.Noproblem–untilthechumballgotgoing.)

Inthelagoon,thecoralshowedextensivebleaching,probablycausedbyheatstrain.Idove down to retrieve a piece of trash – a pair of sunglasses it turned out – beforeobservingthatithadbecomehometotinyspongesandmatsofalgae.Hesitating,upsidedownandunderwater,Ifinallydecidedtoputthelittleislandoflifebackdown.Whenweclimbedbackontheboat,theteamcontinuedourlongdiscussionsabouthowbesttohelpthehurtingreefs.

Ourmarinearchitect,BartRoefen,sharedanideafromhisteamatDeltaSync:Ifweanchoredtheplatformsinthedeepwatersofthelagoon,abovethesandybarrensbetweenthe reef and the shore, their shadows,moving in the course of the sun’s daily passage,

mightcoolthelocalwaterswithoutcastingadeadly,permanentpallonanyonespot.Weallagreedthattheideameritedfurtherresearch.Howcouldyounotwanttofindsomewaytoturnthecolorbackuponthosesadlybleachedreefs?

The legal puzzles made for yet another adventure. To recall the analogy betweencomputer systems and legal systems, the steading job presents very far from a cleaninstall. The prospective host country does not enjoy complete independence. It insteadremainssomewhatinthethrallofFrance,which,havinglongagoconqueredtheislands,remains both a consistently generous benefactor and, when push comes to shove, anoccupyingpower.FrenchPolynesiaenjoysexclusiveauthorityinsomeareasofinteresttoseasteaders(suchastaxation,laborlaws,andshipregistration),noauthorityinothersuchareas (suchasdefense, currency, andcorrections), anduncertainauthority in stillothers(suchasresidentvisas,civilaviation,andcustoms).

Even thatoversimplifiesmatters.TheFrenchPolynesiansdonotsubmissivelycashFrench checks and take French orders. Born of adventurers, they grow restless whenundulyconstrained.Franceputdownan independencemovement in1958and in recentyearshasfacedresurgingdemandsbyFrenchPolynesiansforgreaterself-government.25

PerhapsseasteadscouldofferFranceandFrenchPolynesiaabetterwaytoworkoutthe kinks in their complicated relationship. The SeaZone proposed by The SeasteadingInstitute offer French Polynesia a way to take onmore of the governing services nowprovidedbyFranceatconsiderableFrenchexpense.Injustafewsmallplaces,throughtheSeaZone, localscouldtrynewonresponsibilities,suchasmedicalcareormarine trafficcontrol,withoutputtingthepublicatriskofanyfailures.Ifthearrangementdoesnotworkout, at leastFrancewill havegivenFrenchPolynesia a try at thebig leagues.And if itdoesworkout,FrancecannotonlytakeprideinitstutelagebutperhapsevenlearnathingortwofromFrenchPolynesiaaboutthenextgenerationofgovernments.

6Conclusion:NotPracticing;ProgrammingWhenyousitdownwithafriendandadrink,youalonecanjudgethemeritsofhistales.Heramblesonaboutchasingpolycentriclawthroughairports,downalleys,acrossislands,throughwires–towhatend?Itallgoesdowneasyenoughwhenyouhaveadrinkinyourhand.Butwhenyoupayupthetabandwalkoutintothefreshnightair,youwonder:Willthe Honduran ZEDE get up and running? Will Liberlanders win a homeland on theDanube?WillseasteadersfindasafeanchorageinFrenchPolynesia?

Goodquestions,all.Iwonderaboutthem,too.Thiswholepracticeoflaw(ifyoucancallitthat)makesmewonder.Howdidanegg-headedlawprofessorendupslow-ridingthrough a Roatan street party at island o’clock in the morning, or searching videos ofCroatianpoliceactionforproofthatLiberlandershadmadelandfallontheirhomeland,oradmiringthechickensthatstrut thegroundsofthePalaisPrésidentiel inPapae’ete?It isnotthesortofworkthatanybodywouldhavepredicted(exceptperhapsRobertNozick,26

DavidFriedman,27orNealStephenson28).

HowcouldIhaveknown,whenheadingofftotheUniversityofChicagointhefallof 1990, that earning a JurisDoctorate would lead to, say, getting paid in Bitcoin forassessing a plan to create special jurisdictions in theUnitedStates?29 Practicing law inSiliconValleyandWashington,DC,Ilookedaheadandsawnothingbutyearsofworkinginthesameoldinstitutionsoperatingunderthesameoldlaws.Despitesomehighpoints–likehelpingshutdowntheInterstateCommerceCommission–itwasnottheprofessionallifeforme.Subsequentjobsatathinktankandinacademiaslowlybroughtmecloserandclosertothelegalissuesthatchallenge,frustrate,anddelightmetoday.30Itwouldmakefor good work regardless of the pay.More than once, I have chuckled and replied, inresponsetoaclient,“Notonlydoesnobodyknowtheanswertothatquestion;nobodyhasevenaskeditbefore.”

Thedownsidetoworkingonthefrontiersof the law?Risk.Negligentadvicecouldenduphurtingalotofpeople.Imaginethedamagesthatanaggrievedcommunitymightclaimfromabadlydesigned legalsystem– imagineandshudder.True,nobodycansaywith confidencewhat constitutesmalpractice in suchmatters.Thatonly compounds the

uncertainty,though.Tomitigatethosepotentiallylargeyetunpredictablerisks,InowserveclientsthroughArchimediate,aCalifornialimitedliabilitycompany.

AlthoughIremainamemberoftheCaliforniaBar,Idonotpracticethatkindoflawthrough Archimediate.31 To even describe it as the practice of law – of internationalrelations,orprivatecommunities,orUlex–isnotquiteright.32AsArchimediate’staglinereads, it servesclientsbyproviding“LegalSystemDesign, Installation,andSupport.”33

(At thispoint, ifweactually facedeachotheroverdrinks, Iwould fumblearound foracardandthen,unlessI’dforgottenthemagain,produceonewithaflourish.)

That is certainly not practicing California law.Nor is it practicing the law of anystate.Youmightsayitisnotpracticinglawatall.YoumightsaythatIjustwriteacertainkindofcode–orderedsequencesofwordsthat,whenrunaspartofagoverningsystem,helpclientsorganizelargeandcomplexsocialinstitutions.

Thatsoundsaboutright,actually:notpracticinglaw,butprogrammingit.

Yeah,I’lldrinktothat.

1TomW.Bell,PolycentricLaw,7HUMANE S T UD . R E V.1(1991/92),http://osf1.gmu.edu/~ihs/w91issues.html.

2HondurasShrugged,ECONOM I S T (Dec.10,2011),www.economist.com/node/21541391.

3MostExtremeAirports(BrushFireFilms,HistorychanneltelevisionbroadcastJuly20,2010)(at57:38athttps://vimeo.com/76554239).

4JohnPerry,WeeklyReview:LetterfromHonduras:SlowTraintoManateeCountry,GUARD I AN WKLY.,Jan.30,2009,at29.

5ELÉUTERA HONDURA S,www.eleutera.org/(lastvisitedJan.11,2017).

6WhichtakesnothingawayfromthebreathtakingbeautyofFrenchPolynesia.Seeinfra.

7Infact,Spanishsometimesdrawssidelonglooksfromthestubbornlyindependentlocals,manyofwhomconsiderthemselvesmoreEnglishthanSpanishandallofwhomconsiderthemselvesmoreRoatanthananythingelse.

8Roatán,WIK I P ED I A ,https://en.wikipedia.org/wiki/Roat%C3%A1n(lastvisitedJan.11,2017).

9GideonLewis-Kraus,WelcometoLiberland,theWorld’sNewestCountry(Maybe),N . Y. T IME S MAG .(Aug.11,2015),www.nytimes.com/2015/08/16/magazine/the-making-of-a-president.html.

10GabrielRossman,Comment,ExtremelyLoudandIncrediblyClose(ButStillSoFar):AssessingLiberland’sClaimofStatehood,17CH I .J.I N T ’LL.306(2016).

11Lewis-Krause,supranote9.

12L I B ERLAND S E TTLEMENT A S S’ N , L EGAL F I E LD K I T V. 2 0 1 5 . 0 7 . 1 3(2015),https://goo.gl/grSXVO.

13See,e.g.,PrekršajnisuduBelomManastirupresuda17.5.2015[JudgmentofMisdemeanorCourtinBeliManastirofMay17,2015],Pp3.J-176/15-5(Croat.),https://goo.gl/UAUfmP(unofficialEnglishtranslation,https://goo.gl/DaqG0F)(findingdefendantDorsettandothersguilty).

14TheLiberlandersmadetheforaysfromSerbia,wherethelocalsseemedhappytodobusinesswiththeforeignersandtoenjoyCroatia’sembarrassment.

15L I B ERLAND S E TTLEMENT A S S’ N ,supranote12,at2.

16KariPaul,12PeopleWereArrestedTryingtoEnterTheirSelf-ProclaimedCountry,MOTHERBOARD (May20,2015),http://motherboard.vice.com/read/12-people-were-arrested-trying-to-enter-their-self-proclaimed-country.

17PrekršajnisuduBelomManastirupresuda11.5.2015[JudgmentofMisdemeanorCourtinBeliManastirofMay11,2015],Pp3.J-170/15-5(Croat.),https://goo.gl/UAUfmP(unofficialEnglishtranslation,https://goo.gl/DaqG0F)(findingdefendantDorsettandothersguilty).

18Seeid..

19TranslationofAppealofDanielGomesdeLima,HighMagistrateCourt,Zagreb,July28,2015(SonjaPrstec),https://goo.gl/VpBvNr.

20News,L I B ERLAND ,https://liberland.org/en/news/(lastvisitedJan.8,2017).

21J OE QU I RK AND PATR I F R I EDMAN , S E A S TEAD I NG : HOW F LOAT I NG NAT ION S W I L L

RE S TORE THE E NV I RONMENT, E NR I CH THE POOR , C URE THE S I CK , A ND L I B ERATE

HUMAN I TY F ROM POL I T I C I AN S(2017).

22Vision/Strategy,S EA S TEAD I NG I N S T.,www.seasteading.org/about/vision-strategy/(lastvisitedJan.12,2017).

23NoneofwhichtakesanythingawayfromthegorgeousandstoriedislandofRoatan,Honduras.Seesupra.

24Conseildesministresdu30novembre2016,Signatured’unprotocoled’ententeentrelaPolynésiefrançaiseetTheSeasteadingInstitute[SignatureofaMemorandumofUnderstandingbetweenFrenchPolynesiaandTheSeasteadingInstitute],LA

PRÉ S I D ENCE D E L A POLYNÉ S I E F RANCA I S E(Nov.30,2016),www.presidence.pf/index.php/cm/3265-conseil-des-ministres-du-30-novembre-2016.

25FrenchPolynesia:History,ENCYC . B R I TANN I CA,www.britannica.com/place/French-Polynesia/History(lastvisitedJan.8,2017);RachelReeves&LukeHunt,FrenchPolynesiaBattlesforIndependence,D I P LOMAT (Oct.10,2012),http://thediplomat.com/2012/10/french-polynesia-last-vestiges-of-frances-empire/.

26ROBERT NOZ I CK , A NARCHY, S TATE , A ND U TOP I A(1974).

27DAV I D D . F R I EDMAN , THE MACH INERY O F F REEDOM(2ded.1989).

28NEAL S T E PHEN SON , S NOWCRASH(1992);NEAL S T E PHEN SON , THE D I AMOND AGE : OR

AYOUNG LADY’ S I L LU S TRATED P R IMER(1995).

29Not,bytheway,byanyofthepartieshithertomentionedinthischapter.

30See,e.g.,PolycentricLaw,WIK I P ED I A ,https://en.wikipedia.org/wiki/Polycentric_law(lastvisitedJan.12,2017).

31ActiveMemberoftheCaliforniaBarNumber167,639.

32ThatiswhyArchimediateadoptsanLLCstructureratherthantheLLPformrequiredforthepracticeofCalifornialaw.FormoreonwhyArchimediatedoesnotofferlegalservicessubjecttothejurisdictionoftheBarofCaliforniaoranyotherpoliticalentity,seeMemorandumfromTomW.BelltoFile(May13,2015),www.archimediate.com/Archimediate_and_Practice_of_Law.pdf.

33ARCH IMED I ATE L LC,www.archimediate.com/(lastvisitedJan.12,2017).

Conclusion◈

FromSmartGovernments,GoldSwans

1TheStart(IfYouReadBackwards)Ifyouhavereachedthispointbyreadingfromthebook’sbeginning:Welcome!Ifinsteadyoupickedup thebookand,perusing itspages,decided to skipahead to seehow itallends:Youalsoreadthatway?Welcometoyou,too.

Regardlessofwhetheritcomesasarevieworpreview,thischaptersummarizesthebook’sargument.Italsoputsthebook’soverallthemeincontext,explainingwhyconsent-richsocietiesthrive.Andfinally,afterpagesthatincludedtheMostValuableThingintheWorld and the center of the law;SEZs,FTZs,USSEZs, andSeaZones;REDS,ZEDEs,andseasteads;dinosaurs,chickens,narwhals,rhinos,andunicorns;laddersanddegreesofconsent;citizencourtsanddoubledemocracies;andastiffshotofadventureinthefield,thebookcloseswithonelastadditiontothetaxonomyofwonders:thegoldswan.1

2TheBook,inMiniatureWrit large, this book about special jurisdictions has addressed its subject in three parts:firstcollectingfacts, thendevelopingexplanatorytheory,andfinallyapplyingthetheorytonewfactstoobtainpredictedeffects.Notaveryoriginalapproachtosolvingproblems,granted,butonethatseemstoworkwellenoughforscientists.

Theparton factsdisclosed thevital importanceof the ruleof lawandhowspecialjurisdictions have been transforming governments from the bottom up, inside out,worldwide.Casestudiesgaveparticularexamplesoffallen,surviving,andrisingspecialjurisdictions (aswell as a rollicking tale of jungle rioting).The next part, about theory,establishedconsentasa foundationalelementof legal,moral,andeconomic thinking. Italsoexplainedthegraduatednatureofconsentanditsrelationtothejustificationofsocialinstitutions. (Hint: the more, the better.) That respect for consent resulted in acontractarianapproachtoconstitutionallaw–anapproachdifferentfrombothoriginalismandlivingconstitutionalism.(And,frankly,better.)

Thelastpartendeduprunningabitlongbecauseithadabigjob:applyingthatfact-backedtheorytotheproblemsoftherealworld.Itmaynothavefinishedthejob,butitatleastgot theball rolling.Here, thebookdefinedbestpractices ingoverning services; itcalledforabolishinggovernmentalimmunityandcreatingcitizencourts,ownedcities,anddoubledemocracy;and it laidoutaprogramforUnitedStatesSpecialEconomicZonesand programmedUlex, an open-source legal system.Whew. It closed with you, me, acoupleofdrinks,andafewstoriessuitablefortheoccasion.(Again:rollicking.)

3BiggerBrains;MoreConsent-RichCommunitiesWheredoesthebook’sfar-rangingjourneygetreaders,besidesheretoitsclosingwords?It gets them to a perspective from which the day’s political tempests appear as merebubbleson thegreater tidesofhistory.From this, aviewpointwononly thanks to longresearchandstep-by-stepreasoning,nationstatesbloomandwither,growandshrink.Andnow,as if revealedbyanewkindofobservational instrument– apoliscope, say–yousuddenly see special jurisdictions everywhere. They bubble up in the gaps between themonolithic giants. They bubble upwithin them, too. They spread and grow, sometimesnearlytakingovertheirhosts.Theytaketothewater.Theybegintoconnect….

Whatthoseevocativeimageswillmeanintherealworldremainsasunknownastherestofthefuture.Historyhasnotended,though.Thelastcenturyhasseenwidespreadandfundamental changes in the structure and relations of nation states, from the OttomanEmpiretotheEuropeanUnion,fromvastAfricancoloniestomanifoldAfricanrepublics,andfromjustahandfuloffreeportstothousandsuponthousandsofspecialjurisdictions,scattered far across the globe. Smaller governments have been evolving rapidly, too, asprivate communities lure increasing numbers of residents away from conventional,political municipalities. Special jurisdictions have proven especially popular in recentdecades,growinginnumber,size,andsophistication.

Like them or not, special jurisdictions have become a force to reckon with. Andshouldyoulikethem?Thatdependsonhowyoufeelaboutconsent,becausethesenext,newer,bettergovernmentswillshareonefeatureincommon:Theywillenjoymoreoftheconsentofthosetheygovernthanexisting,older,politicalgovernmentscanclaim.

Consent has many virtues, as Chapter 2.2 detailed. Among them: Consensualtransactionsmaximizetheamountofinformationavailabletoacommunity,allowingittoallocate resources with optimal efficiency. Whether expressed in the form of market-clearing prices or heartfelt kisses, consent reliably directs resources where they cangenerate thegreatestnetgood. Incoercive transactions– theft, fraud,battery, andothertorts–oneparty’spreferencesdrownoutanother’s,chokingofftheflowofinformation.Consentmakescommunitiessmart;coercionmakesthemstupid.

Nation states thus not only deliberately impose conventional financial taxes onprivate parties; they also unwittingly impose a more generalized information tax oneveryone, private and public alike. How does this happen? Under the threat of over-governance, the subjects of a coercive regime learn to hide their preferences. Thegovernment’s abusive ways isolate it from the people and their truths. A pall of dullignorancesettlesovertheafflictedland.

Butdoesthatmeannationstateswillpassintohistory?Notnecessarily.NorthKoreapersists,tociteoneofseveralnationstatesthatarguablyqualifymorenearlyasnationalprisons.Statistsocietiesmayslogalongwhilethroughaswampofself-imposedstupiditywithoutbecominganotherlayerinthehistoricalmuck.Didnotthedinosaursrulelongandwell,evenafterproto-mammalsbegantoeattheirlunch?

Thinkof it thisway:Consent is to a communitywhat intelligence is to ananimal.Different kinds of communities, like different animals, exhibit different levels ofintelligence.Prisoncampsarenotasgoodatprocessing informationasstockexchangesare.Slugsarenotasgoodatitaschimpanzeesare.

Theworldevidentlyhasroomforallofthoseandothervariationsonanorganism’sabilitytoprocessinformation.Natureatitsfarthestremove,includingnotjustwildplacesbuthumansocieties,doesnotcareabout intelligence.Fromanevolutionaryperspective,onlysurvivalmatters.

Butsometimesnature,despite itsgloriousindifferencehowsurvivalhappens,givesrise to mutants like humans, hard-wired to process information fast and hot. Andsometimes, evidently, conditions grow ripe for the rise of fantastically intelligentcommunities.Thenextgenerationofgovernmentsstandstooutsmartthemall.

4TheGoldSwanTakesFlightNassimTalebfamouslyobservedthathumansseemtohaveamentalblindspotforcertainkindsofrisks–blackswanevents.Bythese,Talebmeantnotsimplyextra-largeservingsof run-of-the-milldisasters.Hemeant things likemeteor strikes, pandemic fatal flus, or(hisownspecialty) financialmeltdowns.Talebmakesaconvincing (andengaging)casethathumansarenotverygoodatpreparingfortheveryworst.2

Perhapsthereverseholdstrue,too.Perhapshumansarenotverygoodatdigesting,oreven recognizing, radically goodnews.Ablack swanmight spookus if it appeared (asblack swans both metaphorical and literal have), but gold swans? Few people wouldbelieveitpossible.Seeingoneinthefeather,sotospeak,theywouldregardagoldswanasaprank–a trickof the lightorapaint job, likeapurplecow.Perhapspeoplewouldreacttoagoldswaneventthesameway:withutterdisbelief.

Thisbookgivesreasontothinkthatgovernmentshavebeenchangingforthebetterinrecentdecades.Specialjurisdictionshavebothdrivenandbenefitedfromthattrend,ina virtuous cycle that gives every sign of continuing.Nobody is promising gold swans,much less glowing sparkly ones. But things could go surprisingly – even shockingly –well. It does not takemuch imagination to foresee humankindgenerally enjoyingmorewealth,peace,andhappinessincomingyears.Youdonothavetobeveryoldorrichtohavewitnessednotableprogress inmedical technology inyourown life–often inyourownperson’shealing.Thingsthatwouldhavecountedasmiraclesamongtheancientsweorderonline.

Additupandyougetmoregoodstuff,sure.Anybodycanpicturethatkindofswan–pretty, but still quite conventionallywhite (actually, upon close examination, a little bitdirty). The larger view – one afforded by this perspective of this book – shows thepotentialforvastlygreatergains.Greatercompetitionbetweengovernments,driveninpartbyspecialjurisdictions,willtendtoincreasetheruleoflaw.AsChapter1.1documented,the rule of law represents by far the single greatest source of wealth and a powerfulcontributortohumanwell-being.Makingournextgovernmentsbettergovernmentsstandstomakeournextlivesbetterlives.

Even people who already feel good about the future may find that this bookintroduces them to brighter vistas. Imagine a world where a variety of sovereigncommunities,rangingfromnationstatestoseasteadsandbeyond,cooperatetoexpandthescopeofhumancivilization,onearth,atsea,andbeyond.Theseconsent-richcommunitiesofferidealconditionsripeforexplosivegrowthinhumanwealth,health,andwell-being.Itcastsagoldenglowunprecedentedamongwaterfowl.

Notsold?Noproblem.Yournext,bestgovernmentcanremainyoursame,old,onlyso-sogovernmentforaslongasyoulike.SowhatifyoumissopeningnightinUtopia?Thatpartywillnotstopjustbecausethesuncomesup.3

***Regardless of the backwardsway I sometimes read them,when it came towriting thisbook, the last words came at the end. Regardless of how you got here, thank you forsharingintheseobservations,thoughts,andaspirations.Mayreadingthemhelpyoumakeyournextgovernmentyourbestgovernment.

1Also,apurplecow.

2Moretechnically,humanssufferacognitivebiasintheformof“blindnesswithrespecttorandomness,particularlylargedeviations.”NA S S IM N I CHOLA S TALEB , T HE

BLACK SWAN : THE IMPACT O F THE H I GHLY IMPROBABLExix(2007).

3Speakingofwhich,itturnsoutthatseasteaders,manyofwhomalsobelongtotheBurningMancommunity,havealreadybeguntalkingabouthostingaFloatingWomanfestivalinFrenchPolynesia.

AppendixAEconomicsofMonopoliesinGoverningServices*

Thisbrieftechnicalappendixreliesongraphsmorethanwordstoconveyitsthesis:Whengoverningserviceshavethepowertoexpandfromnaturalmonopoliesbasedonexpressconsent to coercivemonopolies based on implied or hypothetical consent, they tend tosupplymoregovernmentthanconsumersexpresslydemand.Theresultingoversupplyofgoverningservicescanevengeneratedissent.Theseeffectsbecomeclearer–orat leastappearinanewlight–whenseenfromthevantageofthesortsofsupply/demandgraphsusedbyeconomists.

This appendix also shows by force of example how tools of economic analysisordinarily applied to expressly consensual transactions can describe non-markettransactions. This extension of trustedmethods to new phenomena seems fitting, giventhat economics derives from the Greek oikos (household).1 Most economic analysisfocuses on expressly consensual transactions; inmost households, expressly consensualtransactionsalsoprevail.Butas thisappendixdemonstrates,economicanalysiscanalsohelp us understand the sorts of less-than-expressly consensual transactions thatcharacterizethegovernmentsofpoliticalcommunities,suchasnationstates.

Fair enough; some unhappy households suffer from a poverty of consent, too.Economicscanhelpusunderstandthesetopics,sofamiliartothosewhospecializeinthelaw.Andinunderstandingwemayfindremediesforthewoesofconsent-poorinstitutions.

Government qualifies as a sort of service industry, albeit one marked by peculiarfeatures.Foronething,thankstoeconomiesofscale,governmentscanoftenlayplausibleclaimtoqualifyingasnaturalmonopolies.2Agivencommunity,uptoaverylargesize(intermsof internalgovernancecosts,notnecessarilygeographyorpopulation,alone),canget by quite nicely with just one system of government. Indeed, having two systemscoveringoneareaof lifemightunduly increase transactioncostswithin thecommunity,causingittofragment.Youdonotneedtwobridgestogetonerailroadacrossariver;youdonotneedtwopoliceforcestoarrestathief.

Assume for purposes of argument, therefore, that systems of government enjoyeconomies of scale, and as such constitute natural monopolies. FigureA1.1 shows theconventionaleconomicpictureofsuchsuppliers,drawninlinesofsupplyanddemand.3

FigureA1.1thusoffersaneconomicportraitofagovernmentquanaturalmonopoly.

KeytoabbreviationsinFigureA1.1

AR

=AverageRevenue(perunitsold)

ATC

=AverageTotalCost

c

=competitive(e.g.,Qc=competitiveQuantity)

D

=Demand

m

=monopoly(e.g.,Qm=monopolyQuantity)

MC

=MarginalCost

MR

=MarginalRevenue

P

=Price

r

=regulated(e.g.,Pr=regulatedPrice)

Q

=Quantity

FigureA1.1.GovernmentQuaNaturalMonopolyAssumingOnlyExpresslyConsensualTransactions

Notethatas“D=AR”inFigureA1.1indicates,andbecausetheGovernmenthasamonopoly,AggregateDemandhere equates toAverageRevenue. Inotherwords, underthesemonopolyconditions,thedemandoftheentiremarketequalsthesupplier’saveragerevenue.Therearenoothersupplierstosatisfyconsumerdemand,afterall.Also,hereastypically in idealized scenarios, demand satisfied by non-express exchanges – theft, forexample–isnotpartofthepicture.

Though less thana thousandwords cannotdo thepicture inFigureA1.1 justice, averycondensednarrativefollows.Likeanysellerofservices,theGovernmentwouldliketosupply themarket justup topointwhere itsMarginalCosts,MC,begin toexceed itsMarginalRevenue,MR.Whyworkharderifthecostswilloutweighthegains?

AmonopolistliketheGovernmentprefersthatlevelofoutput,aQuantitydesignatedQm.At that levelofoutput, theGovernmentearnsamonopolyprice,Pm.Goodfor theGovernment. Not so good for consumers. They prefer that the Government, like anysupplier, produce up the point where Marginal Costs, MC, start to exceed AverageRevenue,AR. Theywant theGovernment, as theywant the farmer, the bookseller, andeven thepreacher, to justbarelyscrapeby,earningonly justenoughon the latestsale–

here, the latest unit exchange of governing services for fees – to cover the latestproductioncosts.

In a competitive market, this conflict between the consumer-friendly competitivepriceandthemonopolist’spreferredpricewouldnotarise.Competitionwould,underthetypicallyidealizedassumptions,driveeveryproducer’spricedowntothepointwhereMCmeetsAR(=D).Consumerswininthatscenario,aswitnessedinthickmarketsforthingslikebreadorhousingorhaircuts.But themarket forgoverningservices isnot like that.Natural monopoly, remember? As a consequence, a Government might, if leftunconstrained,price(i.e.,tax)itsservicesatthemonopolylevel.

How to resolve that conflict between the interests of citizen-customers and theGovernment thatserves them?FigureA1.1shows thesolutionsuggestedbyhowpolicymakershavetriedtotameanother,analogoussortofnaturalmonopoly:regulatedutilities.There, economists have advocated, and governments have often adopted, a system thatallowsthesupplier–electricityornaturalgasinthetraditionalcase,governingservicesinthis application – to produce services at a quantity and price sufficient to allow thesupplier to recover itsAverageTotalCosts,ATC.4 TheGovernment does notwring thepublic ashard as itmight like to in this scenario, but in the long run, it at least breakseven. Add in the psychic income leaders enjoy from providing governing services –lookinggoodinauniformandallthat–andthesystemmightstabilizeatadecentlevelofdecentgovernment.

So, at least, goes a straightforward application of the orthodox natural monopolyanalysis togovernmentservices.Note,however, that thismodel involvesonlyexpresslyconsensual transactions. Most economic analyses assume away force, fraud, mutualmistake,andotherfactors that, in law,wouldsuffice topreventorreversea transaction.But,asitdoesnottakeastudyingthelawtoknow,thosesortsofnon-expresstransactionshappenquiteabitintherealworld.Theyareespeciallycommoninthecontextofpolitics.Supply-demandchartsjustneedtocatchupwiththefacts.

Agovernmentmonopolytypicallyclaimstherighttotaketaxesandotherresourcesfromthepartiesitservesonthebasisnotofexpressconsentbutofimpliedorhypotheticalconsent. This it does both because it cannot claim express consent and because,conveniently,ithasready-at-handthepowertoenforceitsowndefinitionofconsent–onepeculiar to theGovernmentalone, andpeculiarlybeneficial to its interests.Whatwould

the naturalmonopoly pictured inFigureA1.1 look likewith those other, non-expresslyconsensualtransactionsaddedin?FigureA1.2illustrates.

FigureA1.2.GovernmentQuaNaturalMonopolywithExpressandNon-ExpresslyConsensualTransactions

FigureA1.2retainssomeofthecurvesfromthepriorfigure.Here,though,theycarrythesubscript,(e),forexpressconsent.FigureA1.2alsoshows:thenon-expressDemand,D(n), that the Government supposes; the Marginal Revenue from non-expresstransactions, such as taxes, that the Government earns,MR(n); theMonopoly Price ofthosetransactions,P(n);andMonopolySupplyofservicesthattheGovernmentprovides,M(e).

Figure A1.2 has other features specially adapted to capture the non-expresslyconsensual transactions throughwhichgovernments fatten their coffers– taxes, takings,conscription,andsoforth.AsChapter2.2noted,expresslyconsensualtransactionsrevealpreferences,bringingotherwiselocalorprivateinformationintowideruseandformutualgain. Nonconsensual transactions do not convey information as efficiently; coercivedomination favors some preferences over others, obscuring the conditions, needs, anddemands of entire populations. The demand supposedly revealed by a non-expresslyconsensualtransactionisthusnotveryclearlydefined.Figure2.2thusshowstheDemandcurvefornon-expresslyconsensualtransactions,D(n),asarelativelyimpreciseblob.The

correspondingMarginalRevenuecurve,MR(n),followssuitasamatterofcourse,attwicetheslopeofD(n).

TheblobbycurvetracedbyD(n)inFigureA1.2hasanotherfeatureofnote:Itliesfarto the rightof its expressly consensual counterpart,D(e).Why?Because aGovernmentnot limited toexpresslyconsensual transactionshasboth thepowerand the incentive topresumemoredemandforitsservicesthanitinfactenjoys.

SuchaGovernmenthasthepowertomakethispresumptionbecauseitcanforciblyreshapetheeffectivedefinitionofconsent.Forexample,theGovernmentmightexcuseitscoercivetakingsaspartofanimpliedorhypotheticalbargainbetweenitandtheprotestingsubject,asdescribedinChapters2.3and2.4.Equivalently,themonopolizingGovernmentmightrefusetoaffordlegalremediesforactsthatwouldotherwiseconstitutecivilwrongs,astrategydiscussedinChapter3.2.

ThatexplainsthepowerofaGovernmenttopresumetheconsentofthoseitservices.Whence comes its incentive to oversupply and overcharge them? Simple. Doing somaximizes the Government’s profits. Like any institution shaped by the selectionpressures of the politicalworld, theGovernmentwill try to squeeze asmuch out of itsenvironment as possible. Less ambitious governments tend to pass from history,outstrippedintheracetoacquireresources.

Likeanymonopolist,theGovernmentportrayedinFigureA1.2wantstosupplythemarketuptothepointwhereitsmarginalcostsstarttoexceeditsmarginalrevenues.Thismonopolist, though, claims a Demand curve,D(n), far to the right of what consumersexpressly ask for,D(e). Unconstrained by what consumers say, the Government givesthem as much as it can plausibly press upon them. In Figure A1.2, that leads theGovernment to the pointwhereMC crossesMR(n). At that level of output,Qm(n), theGovernmentcollectstheitsfavoredprice,Pm(n).Thispriceappearsfarupthey-axisfromwhataGovernmentconstrainedtoexpresslyconsensualtransactionswouldevendreamtoask for, memorialized at Pm(e). Thus does a natural monopoly in governing servicesbecomeanunnatural,coerciveone.

Though the prospect of paying extraordinarily high prices (e.g., taxes) forgovernmentservicesmightseembadenough,itgetsworse.Innormalmarkets,suppliersoutput goods or services somewhat parsimoniously. Why oversupply what it costs to

create?Similarly,consumersgenerallyfindthattheywouldbehappytoreceivemoreofthe things theywillinglybuy, albeit at a lowercost than the sellerwill allow, in simplereflectionofthegeneralprincipleofdecliningmarginalutility.Ifoneappleisgood,twowouldbebetter,thoughperhapsnotquitetwiceasmuch.

Those expectations get strained and twisted in the freakishworld of non-expresslyconsensualtransactions,however.There,aGovernmentmighthaveanincentivetogrosslyoversupply its services. The “cost-plus” nature of its pricing model encourages anunnatural government (i.e., one not constrained to expressly consensual transactions) totakeonworkthatreallydoesnotneedtobedone, thatshouldnotbedone,andthat toooftenmust laterbeundone.Buyoneapple for adollar andyoumight call it abargain.Havea truckloadofapplesdumpedonyouryard, andacorrespondinglygiantpaymentdemandleftatthedoor,andyoumightcallitatort.FigureA1.3followsthislogictoitsinevitable conclusion:A governmentmonopoly satisfying non-express demand tends toprovidemoreservices,atahigherprice,thanconsumersexpresslydemand.

FigureA1.3.NegativeDemandforOversupplyofGoverningServices

FigureA1.3 illustrates that governments based on non-express consent threaten tosupplyservicesatsuchahighlevelthatcitizen-customersexpresslyvaluethetransactionatlessthanzero.Thisresultfollowsquitedirectlyfromthesimple,ifsomewhatunusual,

expedient of following the express demand curve,D(e), as it plunges below the x-axis.There, in the depths of non-consent, it finally meets the line tracking the quantity ofservicessuppliedbytheunnaturalmonopolistGovernment,atQm(n).

All told,FigureA1.3doesnotmake for a pretty picture.To recur to themetaphorused earlier, the apples,which having issued from amonopolist intent onworking justenoughtomaximizeitsgainsalreadypossesssomewhatdubiousqualities,nowfloodtheland, crushing homes, people, and lives. What in lesser amounts would give life andpleasure now, in gross excess, kills. Too much of a good thing, whether apples orgovernment,isnotgoodatall.

Thisappendixhasbroughtthediagnostictoolsofeconomicstobearonthetroubledcase of government. The analysis suggests a cause of the excessive growth so oftenobservedinpoliticalinstitutions.Evenwhenlimitedtoexpresslyconsensualtransactions,agoverningservicetypicallyenjoysanaturalmonopoly.Thiscangiveittoo-readyaccesstothepowertochangethescopeoflegallypermissibletransactions.Thatself-governmentcan initiate a feedback loop of coercion upon coercion, leading to an oversupply ofgoverningservices–toomuchredtape,toomanybossypeoplewithbadges,andsoforth.In extreme cases, the supposed beneficiaries of a governmentmight come to assign itsservicesanegativevalue,expresslyobjectingtowhattheysupposedlydemand.Thusariserevolutions;thusfallgovernments.

*ThisappendixderivesinpartfromTomW.Bell,SupplyandDemandofGovernmentquaNaturalMonopoly,AGORAPH I L I A (May29,2007,10:28AM),http://agoraphilia.blogspot.com/2007/05/supply-and-demand-of-government-qua.html.

1AR I S TOTLE ,ECONOM IC S bkI,reprintedin2THE COMPLETE WORKS O F AR I S TOTLE

2130(JonathanBarnesed.,E.S.Forstertrans.,1984)(c.335–323B.C.E.).

2Perhapsthatisnotsopeculiar;DavidFriedmanconvincinglyarguesthatnaturalmonopoliespervadesufficientlysmallmarkets.DAV I D D . F R I EDMAN , P R I C E THEORY: A N

I N TERMED I ATE T EXT231–33(1986).

3See,e.g.,id.at231.

4SeeR I CHARD A . P O SNER , N ATURALMONOPOLY AND I T S R EGULAT ION(1999).

AppendixBUlexOpen-SourceLegalOperatingSystemVersion1.1(2017)

ThisappendixreproducesUlex1.1fromtheauthoritativeversion,POE-stampedonJune9,2017,andpublishedonlineatgoo.gl/YByFti.ItdoesnotreproduceeachandeveryoneoftherulesthattogethermakeupUlex1.1becausetodosowouldtaxreaders’patience,takemanypages,andraisecopyrightissues.Instead,thisappendixwritesoutinfullonlythose few ruleswritten specifically forUlex 1.1, offering citations to theRestatements,modelacts,anduniformcodesthatmakeuptherestoftherules.FormoreaboutUlex,seeChapter3.6.

1.ProceduralRules

1.1.ProceduralPrinciples:ALI&InternationalInstitutefortheUnificationofPrivateLaw,PrinciplesofTransnationalCivilProcedure(2004).1

1.2.DefaultProceduralRules

1.2.1.Judges:Eachpartychoosesajudgeandthosetwojudgeschooseathird.2

1.2.2.Remedies:Thejudgeschooseoneparty’sproposedremedy.3

1.2.3.Costs:Thelosingpartypaysthewinningparty’slegalcosts.4

2.SubstantiveRules

2.1.TortLaw

2.1.1.Generally:ALI,RestatementofTorts,Second(1965–79).5

2.1.2.DefectiveProducts:ALI,RestatementofTorts,Third,ProductLiability(1998).6

2.1.3.SharedBlame:ALI,RestatementofTorts,Third,ApportionmentofLiability(2000).7

2.1.4.PersonalHarm:ALI,RestatementofTorts,Third,LiabilityforPhysicalandEmotionalHarm(2009-12).8

2.2.PropertyLaw

2.2.1.Generally:ALI,RestatementofProperty(1936–40).9

2.2.2.Leases:ALI,RestatementofProperty,Second,LandlordandTenant(1977).10

2.2.3.Mortgages:ALI,RestatementofProperty,Third,Mortgages(1997).11

2.2.4.Servitudes:ALI,RestatementofProperty,Third,Servitudes(2000).12

2.2.5.Gifts:ALI,RestatementofProperty,Third,WillsandOtherDonativeTransfers(1999−2003).13

2.3.ContractLaw:ALI,RestatementofContracts,Second(1981).14

2.4AdditionalRestatementsoftheCommonLaw

2.4.1.ConflictofLaws:ALI,RestatementofConflictofLaws,Second(1971).15

2.4.2.UnfairCompetition:ALI,RestatementofUnfairCompetition,Third(1995).16

2.4.3.SuretyshipandGuaranty:ALI,RestatementofSuretyshipandGuaranty,Third(1996).17

2.4.4.Agency:ALI,RestatementoftheLawofAgency,Third(2006).18

2.4.5.Trusts:ALI,RestatementofTrusts,Third(2003−12).19

2.4.6.RestitutionandUnjustEnrichment:ALI,RestatementofRestitutionandUnjustEnrichment,Third(2011).20

2.4.7.Employment:ALI,RestatementofEmploymentLaw,Third(2014).21

2.5.UniformCommercialCodes

2.5.1.GeneralProvisions:ALI&andUniformLawCommission(ULC),UniformCommercialCode(UCC),Article1:GeneralProvisions(2001).22

2.5.2.LeasesofGoods:ALI&ULC,UCCArticle2A:Leases(2002).23

2.5.3.NegotiableInstruments:ALI&ULC,UCCArticle3:NegotiableInstruments(2002).24

2.5.4.Banking:ALI&ULC,UCCArticle4:BankDepositsandCollections(2002).25

2.5.5.FundsTransfers:ALI&ULC,UCCArticle4A:FundsTransfer(2012).26

2.5.6.LettersofCredit:ALI&ULC,UCCArticle5:LettersofCredit(1995).27

2.5.7.DocumentsofTitle:ALI&ULC,UCCArticle7:DocumentsofTitle(2003).28

2.5.8.InvestmentSecurities:ALI&ULC,UCCArticle8:InvestmentSecurities(1994).29

2.5.9.SecuredTransactions:ALI&ULC,UCCArticle9:SecuredTransactions(2010).30

2.6.NaturalPersons

2.6.1.Adoption:ULC,UniformAdoptionAct(1994).31

2.6.2.WardsandProtectedPersons:ULC,UniformGuardianshipandProtectiveProceedingsAct(1997).32

2.6.3.Parentage:ULC,UniformParentageAct(2002).33

2.6.4.Marriage:ULC,UniformPremaritalandMaritalAgreementsAct(2012).34

2.6.5.Probate:ULC,UniformProbateCode(2014).35

2.7.LegalPersons

2.7.1.NonprofitCorporations:ABA,ModelNonprofitCorporationAct(2008).36

2.7.2.Corporations:ABA,ModelBusinessCorporationAct(2013)37

2.7.3.BusinessOrganizations:ULC,UniformBusinessOrganizationsCode(UBOC),Article1:TheHub(2013)38

2.7.4.ConversionsandMergers:ULC,UBOC,Article2:ModelEntityTransactionsAct(2013).39

2.7.5.Partnerships:ULC,UBOC,Article3:UniformPartnershipAct(2013).40

2.7.6.LimitedPartnerships:ULC,UBOC,Article4:UniformLimitedPartnershipAct(2013)41

2.7.7.LimitedLiabilityCompanies:ULC,UBOC,Article5:UniformLimitedLiabilityCompanyAct(2013).42

2.7.8.CooperativeAssociations:ULC,UBOC,Article6:UniformLimitedCooperativeAssociationAct(2013).43

2.7.9.UnincorporatedNonprofits:ULC,UBOC,Article7:UniformUnincorporatedNonprofitAssociationAct(2011)44

2.7.10.BusinessTrusts:ULC,UBOC,Article8:UniformStatutoryTrustEntityAct(2013).45

2.8.SubstantiveAdministrativeRules

2.8.1.ElectronicSignatures:ULC,UniformElectronicTransactionsAct(1999).46

2.8.2.ElectronicRecording:ULC,UniformRealPropertyElectronicRecordingAct(2005).47

2.8.3.PriorityofTitletoRealProperty:Anyconveyanceofaninterestinrealpropertythathasnotbeenrecordedintherelevantlandrecordsoffice,ifany,shallbevoidasagainstanysubsequenttransferofaconflictinginterestforvaluepaidingoodfaith,recordedearlier.48

2.8.4.Adulthood:Adulthood,ageofconsent,majority,andcapacitytocontractbegin18yearsafteraperson’sbirth.49

2.8.5.TimeLimits:Acauseofactionsubjecttothestatuteoflimitationsoraclaimagainstadversepossessionorprescriptionexpiressevenyearsafteritsaccrual.

2.9.SubstantiveCatchallRule:Nocontroversyleftunresolvedbyapplicationoftheserulesmaybedecidedcontrarytocommonpractice,thegeneraltenoroftheserules,oradecentrespectforhumandignity.

3.Meta-Rules

3.1.AlternativeRules:Ifaruleoffersalternativeprovisions,thealternativeofferedfirstprevailsoveranylaterone.

3.2.AlternativeMeanings:Ifarulereferstoaninstitution,office,power,orprivilegethatdoesnotexistinajurisdictionrunningUlex,theruleinsteadreferstotheclosestfunctionallyequivalentinstitution,office,power,orprivilegethatdoesorcouldexistinone.

3.3.ConflictingRules:Ifdifferentrulesgiveconflictingresults,therulelistedlaterinthisindexprevails,butnorulecanprevailoverthisone.

4.OptionalCriminalLawModule

4.1.CriminalProceduralRules:

4.1.1.ULC,ModelRulesofCriminalProcedure(1987.)50

4.1.2.ALI,ModelPenalCode(2009)(proceduralprovisions).51

4.2CriminalSubstantiveRules:ALI,ModelPenalCode(2009)(substantiveprovisions).52

5.OptionalIntegrationModule(foradoptionbyhostsovereign)

5.1.SoleGroundsforRevokingAgreementtoResolveDisputeUnderUlex.AwrittenagreementtoresolveadisputeunderUlexshallbevalid,irrevocable,andenforceableexceptuponsuchgroundsasexistatthetimeofitsforminginlaworequityforrevocationofacontract.53

5.2.SoleGroundsforModifyingorCorrectingJudgmentRenderedUnderUlex.AcourtmaymodifyorcorrectajudgmentrenderedunderUlexonlyuponapplicationbyapartysubjecttoitanduponproofthat:1)Thejudgmentincludesanevidentandmaterialnumericalerrorormisidentificationofapersonorthingnamedtherein;2)Thejudgesdecidedaquestionoutsideoftheirauthorityinamannerthatsubstantivelyalteredtheirdecisionuponmattersproperlyaddressed;or3)Thejudgmentbearsanimperfectioninformnotaffectingitssubstance.Thecourtmaythenonlymodifyorcorrectthejudgment,andthenonlysofarasnecessarytoeffectuatetheevidentintentofthejudgmentandpromotejusticebetweentheparties.54

5.3.ForceandEffectofCourtConfirmation.ApartymovingforacourtorderconfirmingajudgmentrenderedunderUlexshallfileproofthatthepartiesagreedtosubmittothatjudgment,thatitwasrenderedinaccordwiththereferencedrules,

andthatthejudgmentissuedasdescribed.AbsentapplicationofRules5.1and5.2,above,thecourtreceivingthemotionshallgiveitthesameforceandeffectinallrespectsasanyjudgmentissuedbythecourt,andthejudgmentshallbesotreatedbyallpersons,institutions,officers,oragentspresentedwiththesame.55

1Id.

2SeeU . N . COMM’N ON I N T’ L T RADE L AW, U NC I TRALMODEL L AW ON I N T ERNAT IONAL

COMMERC I AL ARB I TRAT ION,1985,withAMENDMENT S A S A DOPTED I N2006,art.10(2),U.N.SalesNo.E.08.V4(2008),www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf(settingdefaultnumberofarbitratorsatthree);id.,art.11(3)(a)(describingmethodbywhichpanelofthreearbitratorschosen).SeealsoAM .

ARB I TRAT ION A S S’ N ,COMMERC I AL ARB I TRAT ION RULE S AND MED I AT ION P ROCEDURE S

R-12(b),R-13(2013),www.adr.org/aaa/ShowProperty?nodeId=/UCM/ADRSTG_004103(settingforthsimilarprocedure).

3See,e.g.,MAJOR L EAGUE BA S EBALL AND 3 0 MA JOR L EAGUE C LUB S , 2 0 1 2 - 2 0 1 6 B A S I C

AGREEMENT (2011),art.VI,§E(13),http://mlb.mlb.com/pa/pdf/cba_english.pdf(“Thearbitrationpanelshallbelimitedtoawardingonlyoneortheotherofthetwo[remedies]submitted.”).

4SeeAm.LawInst.&Int’lInst.fortheUnificationofPrivateLaw,PrinciplesofTransnationalCivilProcedure,9UN I FORM L . R EV.758,802(2004),www.unidroit.org/english/principles/civilprocedure/ali-unidroitprinciples-e.pdf.Principle25codifiestherule.

5RE S TATEMENT ( S ECOND ) O F TORT S ( AM . L AW I N S T.1965–79),www.ali.org/publications/show/torts/.

6RE S TATEMENT ( TH I RD ) O F TORT S : P RODUCT S L I A B I L I TY ( AM . L AW I N S T.1998),www.ali.org/publications/show/torts-third/.

7RE S TATEMENT ( TH I RD ) O F TORT S : A P PORT IONMENT O F L I A B . ( AM . L AW I N S T.2000),www.ali.org/publications/show/torts-apportionment-liability/.

8RE S TATEMENT ( TH I RD ) O F TORT S : L I A B . F OR PHY S I CAL AND EMOT IONAL HARM ( AM .

LAW I N S T.2011),www.ali.org/publications/show/torts-liability-physical-and-emotional-harm/.

9RE S TATEMENT O F P ROP. § 2 2 1 ( 1 ) ( AM . L AW I N S T.1936–40).ThoughtheALInolongeroffersboundversionsofthisRestatementforsale,itremainsavailableviaonlinesubscriptiondatabasesofferedbyWestlaw,www.westlaw.com,Lexis,www.lexis.com,orHeinOnline,http://home.heinonline.org.Itprovidesafewcrucialrules,thoughmuchofitscoveragehasbeensupersededbylater-publishedRestatementscoveringspecificareasofpropertylaw.

10RE S TATEMENT ( S ECOND ) O F P ROP. : L ANDLORD & T ENANT ( AM . L AW I N S T.1977).www.ali.org/publications/show/property-landlord-and-tenant/.

11RE S TATEMENT ( TH I RD ) O F P ROP. : MORTG . ( AM . L AW I N S T.1997),www.ali.org/publications/show/property-mortgages/.

12RE S TATEMENT ( TH I RD ) O F P ROP. : S E RV I TUDE S ( AM . L AW I N S T.2000),www.ali.org/publications/show/property-servitudes/.

13RE S TATEMENT ( TH I RD ) O F P ROP. : W I L L S AND OTHER DONAT I VE T RAN S F ER S ( AM .

LAW I N S T.1999-2003),www.ali.org/publications/show/property-wills-and-other-donative-transfers/.

14RE S TATEMENT ( S ECOND ) O F CONTRACT S ( AM . L AW I N S T.1981),www.ali.org/publications/show/contracts/.

15RE S TATEMENT ( S ECOND ) O F CONFL I CT O F L AWS ( AM . L AW I N S T.1971),www.ali.org/publications/show/conflict-laws/.

16RE S TATEMENT ( TH I RD ) O F UN FA I R COMPET I T I ON ( AM . L AW I N S T.1995),www.ali.org/publications/show/unfair-competition/.

17RE S TATEMENT ( TH I RD ) O F S URETY SH I P AND GUARANTY ( AM . L AW I N S T.1996),www.ali.org/publications/show/suretyship-and-guaranty/.

18RE S TATEMENT ( TH I RD ) O F AGENCY ( AM . L AW I N S T.2006),www.ali.org/publications/show/agency/.

19RE S TATEMENT ( TH I RD ) O F T RU S T S § ( AM . L AW I N S T.2003),www.ali.org/publications/show/trusts/.

20RE S TATEMENT ( TH I RD ) O F R E S T I TUT ION AND UN JU S T E NR I CHMENT ( AM . L AW I N S T.

2011),www.ali.org/publications/show/restatement-law/.

21Restatement(Third)ofEmp’tLaw(Am.LawInst.2014),www.ali.org/publications/show/employment-law/.

22U.C.C.art.1( AM . L AW I N S T. & UN I F. L AW COMM’N 2001),availableatwww.law.cornell.edu/ucc/1.

23U.C.C.art.2A(AM . L AW I N S T. & UN I F. L AW COMM’N 2002),availableatwww.law.cornell.edu/ucc/2A.

24U.C.C.art.3(AM . L AW I N S T. & UN I F. L AW COMM’N 2002),availableatwww.law.cornell.edu/ucc/3.

25U.C.C.art.4(AM . L AW I N S T. & UN I F. L AW COMM’N 2002),availableatwww.law.cornell.edu/ucc/4.

26U.C.C.art.4A(AM . L AW I N S T. & UN I F. L AW COMM’N 2012),availableatwww.law.cornell.edu/ucc/4A.

27U.C.C.art.5(AM . L AW I N S T. & UN I F. L AW COMM’N 1995),availableatwww.law.cornell.edu/ucc/5.

28U.C.C.art.7(AM . L AW I N S T. & UN I F. L AW COMM’N 2003),availableatwww.law.cornell.edu/ucc/7.

29U.C.C.art.8(AM . L AW I N S T. & UN I F. L AW COMM’N 1994),availableatwww.law.cornell.edu/ucc/8.

30U.C.C.art.9(AM . L AW I N S T. & UN I F. L AW COMM’N 2010),availableatwww.law.cornell.edu/ucc/9.

31UN I F. A DOPT ION ACT ( U N I F. L AW COMM’N 1994),www.uniformlaws.org/Act.aspx?title=Adoption%20Act%20(1994).

32UN I F. G UARD I AN SH I P AND P ROTECT I VE P ROCEED I NG S ACT ( U N I F. L AW COMM’N

1997),www.uniformlaws.org/Act.aspx?title=Guardianship%20and%20Protective%20Proceedings%20Act%20(1997).

33UN I F. PARENTAGE ACT ( U N I F. L AW COMM’N 2002),www.uniformlaws.org/Act.aspx?title=Parentage%20Act.

34UN I F. P R EMAR I TAL AND MAR I TAL AGREEMENT S ACT ( U N I F. L AW COMM’N 2012),www.uniformlaws.org/Act.aspx?title=Premarital%20and%20Marital%20Agreements%20Act.

35UN I F. P ROBATE CODE ( U N I F. L AW COMM’N 2014),www.uniformlaws.org/Act.aspx?title=Probate%20Code.

36MODEL NONPROF I T CORP. A CT ( AM . B AR A S S’ N 2008),www.americanbar.org/content/dam/aba/events/real_property_trust_estate/joint_fall/2008/black_letter.authcheckdam.pdf.

37MODEL BU S . CORP. A CT ( AM . B AR A S S’ N 2013),https://apps.americanbar.org/dch/committee.cfm?com=CL270000.

38UN I F. B U S . O RG . CODE ART. 1 ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Article%201%20of%20the%20Uniform%20Business%20Organizations%20Code%20(UBOC%20Hub)%20(2011)%20(Last%20Amended%202013).

39MODEL ENT I TY T RAN SACT ION S ACT ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Entity%20Transactions%20Act,%20Model%20(2007)%20(Last%20Amended%202013).

40UN I F. P’ S H I P A CT ( U N I F. L AW COMM’N 2 0 1 3),www.uniformlaws.org/Act.aspx?title=Partnership%20Act%20(1997)%20(Last%20Amended%202013).

41UN I F. LTD . P’ S H I P A CT ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Limited%20Partnership%20Act%20(2001)%20(Last%20Amended%202013).

42UN I F. LTD . L I A B . CO . A CT ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Limited%20Liability%20Company%20(2006)%20(Last%20Amended%202013).

43UN I F. LTD . COOP. A S S’ N ACT ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Limited%20Cooperative%20Association%20Act%20(2007)%20(Last%20Amended%202013).

44UN I F. U N I NCORPORATED NONPROF I T A S S’ N ACT ( U N I F. L AW COMM’N 2011),www.uniformlaws.org/Act.aspx?title=Unincorporated%20Nonprofit%20Association%20Act%20(2008)%20(Last%20Amended%202011).

45UN I F. S TATUTORY TRU S T E NT I TY ACT ( U N I F. L AW COMM’N 2013),www.uniformlaws.org/Act.aspx?title=Statutory%20Trust%20Entity%20Act%20(2009)%20(Last%20Amended%202013).

46UN I F. E L EC . T RAN SACT ION S ACT ( U N I F. L AW COMM’N 1999),www.uniformlaws.org/Act.aspx?title=Electronic%20Transactions%20Act.

47UN I F. R EAL P ROP. E L EC . R ECORD I NG ACT ( U N I F. L AW COMM’N 2 0 0 5),www.uniformlaws.org/Act.aspx?title=Real%20Property%20Electronic%20Recording%20Act.

48Here,ULEX adoptstherace-noticeformofrecordingstatutemostcommonintheUnitedStates.SeeRayE.Sweat,Race,Race-NoticeandNoticeStatutes:TheAmericanRecordingSystem,PROB . & P ROP. ,May/June1989,at27(catalogingpopularityofvariousrecordingstatutesandprovidingmodelrace-noticestatute).ThisrulewouldapplyonlyiftheadoptingjurisdictionhadcreatedalandrecordsofficeasenvisionedbytheUN I F. R EAL P ROP. E L EC . R ECORD I NG ACT ( U N I F. L AW COMM’N 2005).

49ManyoftherulesetsusedinUlexinvokeage-relatedclassifications,makingauniformdefinitionofadulthooduseful.Elsewhere,age-relatedclassificationsvaryacrossandevenwithinlegalsystems.ULEX 1.1setsthedefaultatarelativelycommonage–eighteenyearsold–leavingprecociouschildrentobringsuitforemancipation,asinUN I F. G UARD I AN SH I P AND P ROTECT I VE P ROCEED I NG S ACT§210( U N I F. L AW

COMM ’N 1997),orleavingadoptingcommunitiesfreetosetadifferentdefaultageforadulthood.

50MODEL RULE S O F CR IM I NAL P ROCEDURE ( U N I F. L AW COMM’N 1987),www.uniformlaws.org/Act.aspx?title=Rules%20of%20Criminal%20Procedure,%20Model.

51MODEL P ENAL CODE ( AM . L AW I N S T.2009),www.ali.org/publications/show/model-penal-code/.

52Id.

53Compare,FederalArbitrationAct(FAA),9U.S.C.§2.

54Compare,id.§13.

55Compare,id.§13.

Index

AdaandCanyonCounties,Idaho,36

Afghanistan,12

Africa,235

Amar,AkhilReed,138

AmericanSamoa,29

Archimediate,LLC,233

AssociationofPoincianaVillages,Florida,18

autocentriclaw,69,73

Barnett,RandyE.,40,88–89,98,121,189

Benson,BruceL.,71

Borchard,EdwinM.,133

Boston,30–31

Chile,12

China,2,19,21–22,90,122,189,216

citizencourts,128,131,141–147,234–235

citizen-customers,2,73,96,111–116,118–127,182–184,242,245

Collins,Marc,229

ColumbiaAssociation,Maryland,18

commoninterestcommunities.Seecommoninterestdevelopments

commoninterestdevelopments,15,17,19,72,113,130,140,148,155–156

condominiums,17,56,58,64,93,125,152

homeownerassociation(HOA),xi,15,17–19,93,113,125–126,179–180

residentialco-op,15,17,19,58,93,125,148,152–154,158

consent,75

andjustification,69,74,78,81,83–96,105,110,112–113,121–122,126,235

aretaicargumentsfor,77

communities,consent-rich,xi,90–93,95,117,121,125,217,234,236–237

consequentialistargumentsfor,77

deontologicalargumentsfor,77

economicargumentsfor,80,236

express,76,79,81,83–88,90–93,110,112–114,121–122,126,181,239,242–244,246

hypothetical,76,82,84–85,87,89,92,110,112,114,122,239,242,244

implied,76,81–89,91,112,114,122,126,181,239,242,244

ladderof,81–94

legalsignificanceof,75–76,83–85

transcendentalargumentfor,77–79

Constitution,U.S.,28,37–38,70,90–105,110,114,116,118–119,130–131,133–135,138,141–147,161–162,170,172,178–182,211–214

contractarianconstitutionaltheory,74,91,95–105,235

Co-OpCity,Brooklyn,18

Croatia,225–228

Cyberjaya,Malaysia,25

DelgadoAyau,Gabriel,223

Delios,20–21

Dicey,A.V.,10

Doernberg,DonaldL.,135,138

Dorsett,Jason,227

doubledemocracy,124,128,155,157–168,234–235

Dubai,39,187,189,196,216

DutchWestIndiesCompany,30–31

Europe,21,29,42,157,216,228

EuropeanUnion,235

evolutionofgoverninginstitutions,2–3,20,26–27,33,41,64,70,118,186–187,215,217

Fordlandia,28,40–44

Franklin,Benjamin,103

FreeStateofWinston,28

FrenchPolynesia,40,55,64,229–232

Friedman,David,232

Friedman,Patri,220

Fritch,Édouard,229

Fuller,LonL.,10,72

FutureCitiesDevelopment,Inc.,220

Ghana,12

GornjaSiga,225

governingservices,xi,2,12,26–27,53,73,89,93–94,96,109–128,173,178–179,191,219,231,235,239–246

governmentalimmunity,129–141,143,182,194,202–203,235

graduatedconsenttheory,74,81–94,126,235

HanseaticLeague,20,119

Hayek,FriedrichA.,10,70

Hencken,Randy,230

HighlandRanch,Colorado,18,152

Hobbes,Thomas,86

HolyRomanEmpire,21

Honduras,39–40,45–50,119,122,126,176,187,190,196,216,220–225

REDs,50–51

Roatan,223–225

Tegucigalpa,222–223

ToncontínAirport,221–222

ZEDEs,51–54

HongKong,18,21,45,52,115,119,121,126,189,216

Hume,David,87–88

IskandarMalaysia,Malaysia,25

Jamestown,21,29

JazanEconomicCity,SaudiArabia,25

Jedlička,Vit,225,228

Jefferson,Thomas,103

KingAbdullahEconomicCity(KAEC),25,152

Klugmann,Marc,223

KonzaTechnologyCity(KTC),Kenya,25

Leib,EthanJ.,97

Liberland,219–220,225–228,232

LiberlandSettlementAssociation,225–226

Locke,John,86,116,143

LosAngeles,36

Macau,21

MacCallum,Spencer,115,121

Madison,James,103,142,144

Marshall,John,95,104,135

MasdarCity,AbuDhabi,25

MassachusettsBayColony,21

MassachusettsBayCompany,30–31

Mazzone,Massimo,222–223

McGinnis,JohnO.,101

monocentriclaw,69–70,72–74

nationstates,xi–xii,2–3,16,20–28,56,58–61,71–74,81,86–94,109–128,144,147,167,186–187,189–190,212,215,218,228–229,235–237

NewAmsterdam,21,29–30

NewEngland,30

NewYorkCity,31,36

NewZealand,12

Nigeria,12

Nikolajsen,Niklas,225

nonconsent,83,85

unconsent,compared,85

NorthernMarianaIslands,29,210–211

Norway,12

Nozick,Robert,40,89,232

orphanedcities,148–152

comparedtoownedcities,155–156

OttomanEmpire,235

ownedcities.Seeprivatecities

comparedtoorphanedcities,156

Paine,Thomas,127

Paraguay,12

Peters,Jon,223

PinedaPinel,CarlosAlejandro,223

Plymouth,30

polycentriclaw,40,69,73–74,125,219,231

Portugal,12

privatecities.Seeprivatecommunities

privatecommunities,xi,1–2,17–18,26,113,141,150,152,156,179–180,182–183,233,235

privatecites,xi,148,152–154,156,235

Prstec,Sonja,226–227

PuertoRico,22,29,36

Quirk,Joe,230

Rand,Ayn,40

Rappaport,MichaelB.,101

revolution,xi,14–28,47,142,188,217,246

bottom-up,17–19

inside-out,14–16

worldwide,19–26

Roanoke,30

Roefen,Bart,230

Romer,Paul,50–51

ruleoflaw,7–13

ruleoflaw,2,45,100,115–116,130–131,138,140,155,188–189,207,234,237

definitionof,9–11

impactof,12

likehealth,9,155

measurementof,11

SánchezBarrientosOctavioRubén,222

SandySprings,Georgia,127

Scalia,Antonin,100

seasteading,55–65,113,220,229–231

governanceonseasteads,58

SeaZone,62–64,229

standingininternationallaw,62

SedgwickCounty,Kansas,36

Serbia,225

Shannon,Ireland,22

SiliconValley,31,154,220,232

Somalia,113,126

Somin,Ilya,92

SongdoIBD,SouthKorea,25

specialeconomiczones(SEZs),1–2,15,18–27,62

definitionof,20

exportprocessingzones(EPZs)

singleunitEPZs,38

exportprocessingzones(EPZs),20,38,45

foreigntradezones(FTZs),33–39

alternativesites,38

freetradezones,compared,38

foreigntradezones(FTZs),2,21,29,38,169,174,177

freetradezones

foreigntradezones,compared,38

freetradezones,20

growthandspreadof,22–25

historyof,20–22

increasingsizeandsophisticationof,25–26

proto-SEZs,27,29–31,39,169

types,20

UnitedStatesspecialeconomiczones(USSEZs),29,39,92,169–184,234

specialjurisdictions,1–3,26–27,39–41,45–46,53–55,62–64,72,93,155,169,174,183,187–189,204,216,219,221,229,232,234–237

freeport,2,20–21,113,115,121,235

proto-SEZs,27,29–31,39,169

Spooner,Lysander,88,90–91

standingjudicary,147

standingjudiciary,142–143,193

statelessassociations,xi,125,186,218

Stephenson,Neal,232

Strong,Michael,223

Tabarrok,Alex,93

Texas,190

Turkey,12

Ulex,116–117,128,146,233,235,247–254

unconsent,76,79,81–86

nonconsent,compared,85

UnitedStates,2,14,18,20–21,28–39,46,48,59–60,71–72,88,91–93,104,122,127,130–143,147,154,156–157,160–163,169–184,187,190,193–194,196–199,202,204,206–207,209–212,214,232

UnitedStatesspecialeconomiczones(USSEZs).Seeunderspecialeconomiczones(SEZs)

vanNotten,Michael,115,121

VirginIslands,U.S.,29,210–211

Virginia,30,135

VirginiaCompanyofLondon,30–31

VirginiaCompanyofPlymouth,30

Washington,DC,232

WestVirginia,28

WorldBank,7–12

YachayKnowledgeCity,Ecuador,25

Zimbabwe,12

zoologicalreferences

birds,70

chickens,3,232

coyotes,230

dinosaurs,3,31,236

dog,70,131,140

eagles,3

falcons,3

HomoSapiens,12

HomoEligens,13

horse,55,59

insects,biting,44

mammals,3

narwhals,55–56

parakeets,3

proto-mammals,236

purplecow,237

rhinos,55

Saurianreptiles,3

scorpions,44

sharks,219,230

snakes,poisonous,44

sponges,230

swan

black,236

glowingsparkly,237

gold,234,236–238

white,237

unicorns,55–56,58,65