Could you choose your own legal code?: Pragmatists

The move that saved $50 million

In 2019, a tech entrepreneur worth $400 million moved his legal residence from California to Nevada. Primary motivation: not the weather. Nevada has no state income tax. Savings over five years: approximately $50 million. He kept his Palo Alto house. Continued using California roads, hospitals, and courts through his businesses. Funded the public goods of a state he had formally left, at a rate of zero.

That is jurisdictional shopping. It has been running at industrial scale for decades. The opt-in governance movement is a cleaned-up description of what already exists — dressed in the language of freedom rather than arbitrage.

Tax havens are opt-in legal codes. Medical tourism is opt-in health regulation. A patient buying insulin in Tijuana for one-tenth the U.S. price is shopping for a legal code, whether she uses that language or not.

Exit kills voice

Hirschman’s Exit, Voice, and Loyalty: exit and voice are substitutes. Maximize exit and you reduce voice. A community where the dissatisfied leave never confronts its own failures. The crypto-libertarian who moves his legal identity to a network state while his physical body uses American highways is not a pioneer. He is a free rider with a philosophy.

The honest version already exists. It is called federalism — fifty legal codes, choose by moving, bounded by a federal floor that prevents the race to the bottom. If that system is insufficient, explain why before building a replacement.

Where we concede ground: What exists is not good enough. Telling people to work within a captured system rings hollow.

What would change our mind: If competitive sub-national governance improved outcomes for the bottom quartile over fifteen years without cost-shifting.

Read the full synthesis: Could you choose your own legal code?