The economy of the mind comes of age?

The exodus of China's high-end producers to countries which offer to treat them better reminded me not only of the fictional strike of the "men of the mind" in Atlas Shrugged. It also reminded me of the scenario I read several years ago in The Sovereign Individual, by James Dale Davidson and William Rees-Mogg. I suspect I still have that book buried somewhere in my storage locker, so I can't access it easily for reference. I noticed the following review on Amazon's UK affiliate, however:

15 of 15 people found the following review helpful:

5.0 out of 5 stars The best cut at future history that I have seen!,10 Mar 1999

By A Customer

This review is from: The Sovereign Individual (Hardcover)

"The Sovereign Individual" is the most insightful book on "Future History", i.e. attempted prediction of the near future, that I have seen. It describes how the advent of cyberspace will undermine the power of our current nation-states, and how wealthy people, possibly including large parts of the upper-middle class, will shun the tax-happy nation-states and live "off-shore", i.e. in any jurisdiction that suits them, typically small countries such as can be found in the Caribbean. By the same token, a lot of businesses will move their head offices and many of of its other funcions based on cost/benefit, where cost of labour and taxation will be major factors, alhough not the only ones. An increasing number of activities can truly be performed without physical presence, as the world's work becomes increasingly intellectual. My own example of an early adaptor of this method would be Science Fiction author Arthur C. Clarke, who lives and writes tax-free in Sri Lanka.

Fundamentally, this trend to the "off-shore" will capitalise on an emerging free market in sovereignty, i.e. the provision of government services such as defence, police and court system. The likely result of this market will be that large scale support of unprofitable activities, such as massive transfer payments to nominally or factually poor people, will become increasingly rare, as those govenments that focus on protection will be able to offer a lower price. Thus, businesses and wealthy individuals will simply settle in jurisdictions that have minimal or nonexistent welfare systems.

Another of the major predictions is that as business becomes globalised, wages will tend to equalise between countries, but become less equal between individuals and between types of work. A computer programmer in Estonia will earn wages not very different from one in the City of London (if not, any new hiring will be in Estonia, and they will send their product instantly to London), whereas both may well earn vastly more than any assemply-line worker in Luton or Narva.

The authors predict that the nation-states, in particular those in the industrialized West, i.e. the USA and Western Europe, will undergo severe disruptions, probably including civil unrest, panicked attempts at taxation of anything that moves (and in particular of anything that does not), governments holding as hostages wealthy individuals, and so on (cf. "The Economist", 1997-May-30, cover story "The Vanishing Taxpayer", published AFTER "The Sovereign Individual").

Notice the date of this review. Recent events make me wonder if we've started to see the fruition of the trends predicted by Davidson and Rees-Mogg.

The sovereign individual lifestyle fascinates me, and I can see why some high-earning people in the economy of the mind would want to shop around for governments which offer decent services in exchange for low taxes, while respecting their property rights. If enough of the alpha producers follow a strategy to protect their interests from countries with progressive politicians, eventually progressives will learn the hard way that they can't threaten their most productive citizens with defamation, violence and rapine, and expect to get away with it.

BTW, Arthur C. Clarke writes about his strategy of using Sri Lanka for tax avoidance in this book. FM-2030's globe-trotting lifestyle may have involved a similar strategy for minimizing taxes.