Exit: the Hidden Force that Shapes the Future
I left my job at Amazon to become a self-taught Data Scientist. Months later, I moved across the country with my wife, from Seattle to Raleigh, so she could enroll in Duke University’s Physician Assistant program. After the ICO Bubble popped in 2018, I invested nearly all of my disposable income into Bitcoin; I now hold vastly more of my personal wealth in Bitcoin than in Dollars.
The common thread that ties each of these seemingly different actions together is the concept of Exit. Exit is when we leave a familiar state or place to go somewhere new or different. More fundamentally, Exit is when we imagine how the future could be very different from the present and act to make it a reality.
This deceptively simple concept is an invisible, but powerful force that not only shapes each of our individual lives, but dominates human affairs. It spawns new ideologies and cultures, creates disruptive technologies and new civilizations, smashes the Establishment, and shatters Super Powers.
These are the books, articles, videos, and people that have taught me about the power of Exit.
1. Silicon Valley's Ultimate Exit: Balaji Srinivasan (2013) (Transcript)
Thesis: “A company or a country is in decline, you can try voice, or you can try exit. Voice is basically changing the system from within, whereas exit is leaving to create a new system, a new startup, or to join a competitor sometimes.”
Takeaways:
Reducing the barriers to Exit through technology is an Archimedean lever we can use to shape the future. We can reduce the influence of bad policies on peoples’ lives by building opt-in societies, places where individuals are free to peacefully enter and exit, run by technology. These societies need not be cities or countries in the physical world, but can exist solely on the Internet. Reducing the cost of Exit is critical not just for improving the lives of the people who leave; Exit amplifies the Voice of the people who stay, giving them the power to change bad policies without seriously disrupting their lives.
Memorable Quotes:
“What do I mean by Silicon Valley’s ultimate exit? It basically means: build an opt-in society, ultimately outside the US, run by technology.”
“Voice gains much more attention when people are leaving in droves. And I would bet that exit is a reason why half of this audience is alive. Many of us have our ancestors who came from China, Vietnam, Korea, Iran, places where there’s war or famine, economic basket cases. Exit is something that I believe we need to preserve”
“[Exit] means giving people tools to reduce the influence of bad policies on their lives without getting involved in politics, the tools to peacefully opt out.”
“It is not necessarily clear that the US government can ban something that it wants to ban anymore.”
“If you like your country, you can keep it.”
2. The Sovereign Individual: James Dale Davidson and William Rees-Mogg (1997)
Thesis: “Innovations that alter the logic of violence in unprecedented ways are transforming the boundaries within which the future must lie...You stand at the threshold of the most sweeping revolution in history. Faster than all but a few now imagine, microprocessing will subvert and destroy the nation-state, creating new forms of social organization in the process.”
Takeaways: This obscure book has become a cult classic on #cryptotwitter. The central premise of the book is that the logic of violence determines how societies change more than any other force. They predict that the technologies of the Information Age will lead to a dramatic reduction in the economic returns to employing violence stating that:
“In the new millennium, the advantage of controlling violence on a large scale will be far lower than it has been at any time since the French Revolution."
The authors build upon this theory to make unbelievable insights and shockingly prescient forecasts for a book first published in 1997, many of which have come to fruition. Balaji Srinivasan, the speaker of Silicon Valley’s Ultimate Exit, calls it the, “the book of prophecies” and says that it also is one of Peter Thiel’s favorite books.
Shockingly the authors even predict the emergence of Internet native digital currencies 12 years before the release of the Bitcoin whitepaper!
“Inflation as revenue option will be largely foreclosed by the emergence of cybermoney...In the Information Age, individuals will be able to use cybercurrencies and thus declare their monetary independence.When individuals can conduct their own monetary policies over the World Wide Web it will matter less or not at all that the state continues to control the industrial-era printing presses. Their importance for controlling the world's wealth will be transcended by mathematical algorithms that have no physical existence. In the new millennium, cybermoney controlled by private markets will supersede fiat money issued by governments."
Memorable Quotes:
"The key to understanding how societies evolve is to understand the factors that determine the costs and rewards of employing violence."
"The lamb and the lion keep a delicate balance, interacting at the margin. If lions were suddenly more swift, they would catch prey that now escape. If lambs suddenly grew wings, lions would starve. The capacity to utilize and defend against violence is the crucial variable that alters life at the margin."
"Unlike the Industrial Revolution, its impact will not be spread over centuries. The Information Revolution will happen within a lifetime."
“The collapse of Communism marked the end of a long cycle of five centuries during which magnitude of power overwhelmed efficiency in the organization of government. It was a time when the returns to violence were high and rising. They no longer are.”
"An entirely new realm of economic activity that is not hostage to physical violence will emerge in cyberspace. The most obvious benefits will flow to the 'cognitive elite', who will increasingly operate outside political boundaries...Incomes will become more unequal within jurisdictions and more equal between them."
"The cybereconomy of the Information Age will be more free than any other commercial realm in history. It is therefore reasonable to expect that the cybereconomy will become the most important new economy of the new millennium."
3. The Education of a Libertarian: Peter Thiel (2009)
Thesis: “Because there are no truly free places left in our world, I suspect that the mode for escape must involve some sort of new and hitherto untried process that leads us to some undiscovered country; and for this reason I have focused my efforts on new technologies that may create a new space for freedom.”
Takeaways:
Peter Thiel sees 3 technological frontiers that have the potential to create new spaces for freedom: Cyberspace, Outer Space, and Seasteading. The Internet is virtual, and may not offer us a real escape; humanity will not commercialize space until at least the second half of the 21st century; colonizing the oceans is in an earlier stage of development than the Internet, but will likely become feasible before space travel.
Memorable Quotes:
“We are in a deadly race between politics and technology.. We do not know exactly how close this race is, but I suspect that it may be very close, even down to the wire.”
“The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.”
4. Beyond Folk Activism: Patri Friedman (2009)
Thesis: “My new perspective is that the advocacy approach which many libertarian individuals, groups, and think tanks follow (including me sometimes, sadly) is an utter waste of time… Attempts to directly influence people or ideas without changing incentives, such as the U.S. Libertarian Party, the Ron Paul campaign, and academic research, are thus useless for achieving real-world liberty.”
Takeaways:
Influencing people or ideas in the real world through advocacy or persuasion is a complete waste of time. The best way to change the world is by building technology that alters incentives that directly lead to human action. Technology allows us to start with a blank slate where we can innovate without having to overcome entrenched power structures.
Memorable Quotes:
“When we read in the evening paper that we’re footing the bill for another bailout, we react by complaining to our friends, suggesting alternatives, and trying to build coalitions for reform. This primal behavior is as good a guide for how to effectively reform modern political systems as our instinctive taste for sugar and fat is for how to eat nutritiously.”
“To start a new government you have to beat an old one, which means winning a war, an election, or a revolution.”
“Seasteading is my proposal to open the oceans as a new frontier, where we can build new city-states to experiment with new institutions. This dramatically lowers the barrier to entry for forming a new government, because expensive though ocean platforms are, they are still cheap compared to winning a war, an election, or a revolution.”
5. Exit and Freedom: Nick Szabo (2007)
Thesis: “The best way to protect one’s rights is by living one’s life in a way that makes exit costs low...low exit costs have not only enabled liberty for the individual and the small group, but they have more than any other factor motivated the larger jurisdiction to provide the most important rights and freedoms for those who stay put."
Takeaways:
Even though the US government has changed little since the adoption of the US Constitution, taxes have risen nearly tenfold due to the disappearance of the American frontier and the flow of industrial wealth into easily audited corporations. Both events dramatically increased the cost of Exit, or the price of leaving their physical jurisdictions, leading to dramatic hikes in taxation and reduced property rights. The Internet and reductions in the cost of international travel are decreasing the cost of Exit, and have the potential to reverse the century long trend towards increased taxation and reduced property rights.
Memorable Quotes:
“Human capital is very easy to tax when it gathers in large organizations, such as modern corporations, as these organizations must be audited, and auditing provides the information needed for the income tax, by far the most lucrative form of tax ever developed.”
“Today, never in the United States have so many people had the right to vote, yet never in the United States have we had so high taxes and so few property rights.”
“With the fall of communism, for most people in the world government restrictions on exit are no longer the dominant barrier to exit. Our lack of liberty has rather to do with the fact that the vast majority of our strong social ties lie within a territory monopolized by a nation-state.”