Implications and Strategies for the Information Age

***Note*** 

This is advice/perspective from 1997

 

"Of all 36 ways to get out of trouble, the best way is - leave."

CHINESE PROVERB

The argument of this book (The Sovereign Individual) has many unorthodox implications for achieving financial independence in the Information Age. Among the more important:

 

1. Citizenship is obsolete. To optimize your lifetime earnings and become a Sovereign Individual, you will need to become a customer of a government or protection service rather than a citizen. Instead of paying whatever tax burden is imposed upon you by grasping politicians, you must place yourself in a position to negotiate a private tax treaty that obliges you to pay no more for services of government than they are actually worth to you.

2. Of all the nationalities on the globe, U.S. citizenship conveys the greatest liabilities and places the most hindrances in the way of becoming a Sovereign Individual. The American seeking financial independence will therefore obtain other passports as a necessary step toward privatizing or denationalizing himself. If you are not an American, it is economically irrational to become a resident of the United States and thus expose yourself to predatory U.S. taxes, including exit taxes.

3. Based upon the history of other dominant systems facing collapse, those who opt for the ultimum refugium and get out early will be better off in the end. The dangers of a nationalist reaction to the crisis of the nation state make it important not to underestimate the scope for tyranny and mischief. You should never leave your money in any jurisdiction that claims the right to conscript you, your children, or grandchildren.

4. Whatever your current residence or nationality, to optimize your wealth you should primarily reside in a country other than that from which you hold your first passport, while keeping the bulk of your money in yet a third jurisdiction, preferably a tax haven.

5. You should travel widely to select alternative residences in attractive locales where you will have right of entry in an emergency.

6. Violence will become more random and localized; organized crime will grow in scope. It will therefore be more important to locate in secure physical spaces than in the twentieth century. Protection will be more technological than juridical. Walling out troublemakers is an effective as well as traditional way of minimizing criminal violence in times of weak central authority.

7. If you are financially successful, you should probably hire your own retainers to guarantee your protection against criminals, protection rackets, and the covert mischief of governments. Police functions will increasingly be filled by private guards linked to merchant and community associations.

 

8. Areas of opportunity and security will shift. Economies that have been rich during the Industrial Era may well be subject to deflation of living standards and social unrest as governments prove incapable of guaranteeing prosperity and entitlement programs collapse.

9. The forty-eight least-developed countries, comprising some 550 million persons with per capita income of less than $500 per head, will have widely divergent fates in the information Age. Most will become even more marginalized and desperate, providing a venue for only the most intrepid investors. But those that can overcome structural problems to preserve public health and order stand to benefit from rapid income growth.

10. Jurisdictions of choice in which to enjoy high living standards with economic opportunity include reform areas in the Southern hemisphere, such as New Zealand, Chile, and Argentina, which boast adequate to superior infrastructure and many beautiful landscapes and are unlikely to be targets of terrorists wielding nuclear, chemical, or biological weapons.

11. The fastest-growing and most important new economy of the next century will not be China but the cybereconomy. To take full advantage of it, you will need to place your business or profession on the World Wide Web.

12. Encryption will be an important feature of commerce on the Web and the realization of individual autonomy. You should acquire and begin using strong encryption immediately. Just as the church attempted to ban printing at the twilight of the Middle Ages, so the United States and other aggressive governments bent on control will seek to bar effective encryption. As happened five centuries ago, this may merely drive the taboo technology into areas where the writ of established authority is weakest, assuring that it will be put to its most subversive use in undermining state control everywhere.

13. Where possible, all businesses should be domiciled offshore in a tax-haven jurisdiction. This is particularly important for Websites and Internet addresses, where there is virtually no advantage in locating in an on-shore, high-tax jurisdiction.

14. Corporations in the Information Age will increasingly become "virtual corporations" - bundles of contracting relations without any material reality, and perhaps without physical assets. The virtual corporation should be domiciled with an offshore trust to minimize tax liabilities.

15. Incomes will become more unequal within jurisdictions but more equal between them. Countries with a tradition of a very unequal distribution of incomes may be relatively more stable under these conditions than those jurisdictions where strong expectations of income equality have developed in the Industrial period.

16. As a relative performance becomes more important than absolute output in determining compensation, an ever more important occupation will be that of the agent, not merely for the highly paid performer, like a football star or an opera singer, but also for persons of modest skills, who may welcome help in landing a paying position.

17. "Jobs" will increasingly become tasks or "piece work" rather than positions within an organization.

 

18. Many members of regulated professions will be displaced by digital servants employing interactive information-retrieval systems.

19. Control over resources will shift away from the state to persons of superior skills and intelligence, as more wealth will be created by adding knowledge to products.

20. As Professor Guy Bois observed in his history, The Transformation of the Year One Thousand, "in a period of increasing difficulties, the weaker elements in the social body tend to polarize around a rising star."' In the transformation of the year two thousand, the rising star will be the Sovereign Individual. As the nation-state system breaks down, risk-averse persons who formerly would have sought employment with government may find an alternative in affiliating as retainers to the very rich.

21. You should expect a slowdown or decline in per capita consumption in countries such as the United States, which have been the leading consumers of the world's products in the late stages of industrialism. 22. Debt deflation may accompany the transition to the new millennium.

23. The death of politics will mean the end of central bank regulation and manipulation of money. Cybermoney will become the new money of the Information Age, replacing the paper money of Industrialism. This means not only a change in the fortunes of banknote printers, it implies the death of inflation as an effective means by which nation-states can commandeer resources. Real interest rates will tend to rise.

24. While the experience of the nineteenth century proves that long-term growth can proceed apace even while deflation raises the value of money, business and investment strategies must be adjusted to the unfamiliar realities of deflation-that is, debt should be avoided; savings and cost reductions should be pursued with greater urgency; long-term contracts and compensation packages should probably be drawn with flexible nominal terms.

25. Taxing capacity in the leading nation-states will fall away by 50 to 70 percent, while it will prove far more difficult to reduce spending in an orderly way. The result to be expected is a continuation of deficits that plague most OECD countries, accompanied by high real-interest rates.

26. Technical innovations that displace employment should probably be introduced in jurisdictions that have no tradition of producing whatever product or service is in question.

27. Cognitive skills will be rewarded as never before. It will be more important to think clearly, as ideas will become a form of wealth.

28. Thinking about the end of the current system is taboo. To understand the great transformation to the Information Age, you must transcend conventional thinking and conventional information sources.

29. Because incomes for the very rich will rise faster than for others in advanced economies, an area of growing demand will be services and products that cater to the needs of the very rich.

30. The growing danger of crime, particularly embezzlement and undetectable theft, will make morality and honor among associates more crucial and highly valued than it was during the Industrial Era, particularly in its waning years.

Inspiration