Saturday, May 9, 2009

Somalia video

I saw a funny video, courtesy of Evan Coren who posted it to his blog. The video portrays Somalia as a libertarian paradise:

Like the Daily Show, this video is meant to be funny and not to be taken too seriously. But also like the Daily Show, there is an element of truth to the humor. I really don’t know anything about Somalia other than they have pirates, but if they are teetering on the edge of anarchy it will make for a good real world experiment. The pie will be bigger for everyone in Somalia if they cooperate economically with each other. While this is easier said than done, there is a large profit opportunity for the network of people who are able to make it happen.

Their economy is mostly agrarian, and with all agrarian societies it is a long road to industrialization- be it under the rule of government or otherwise. The first step on that road is to have security. Perhaps denser populations will invest in private security firms, which will make those places safe areas to trade. Or maybe large farmers will hire security firms (former pirates, perhaps?) to protect their fields in exchange for some of the crops. Markets will develop, people will demand a currency to facilitate trade which could certainly be provided by private corporations or perhaps they could use a commodity as a store of value. People will begin to make money and create wealth, capital will flow to non-agrarian uses like insurance companies, mediation services, factories, etc., and they will be moving down the slow road to prosperity. I don’t mean to oversimplify, there is a lot of risk involved and they very well may fail. There are lots of problems to overcome (like those of national defense, roads, etc.) that I don’t even pretend to have the answer to. But that’s what is great about the market, it is a powerful force for solving problems.

In the short term, Somalia would be better off with government, just as in the short term Revolutionary America was economically better off under the rule of the British. Some of the most quintessential Americans, like Ben Franklin for example, were not jazzed about breaking loose from the control of the British. So while there is a tremendous amount of risk involved for the people living in the borders of Somalia, there is also a large incentive for each person living there to do something that will make themselves better off. All these people working together to pursue their own self-interests will make things better for everyone.

So I would not be quick to dismiss the ability of the people living in the borders of Somalia to teach us some things about society. Even if Somalia does fail as a society without government, that is not an argument in support of the kind of moronic nonsense that our government engages in everyday (bailouts of failed companies, screwing with interest rates, stupid regulations, etc.) But regardless, it will be interesting to keep an eye on Somalia.