What will the future look like? In his most recent November appearance on the Tim Ferriss Show, entrepreneur and investor Balaji Srinivasan presents a cohesive explanation of the current world, and plausible scenarios of how things will play out. I found Balaji’s theories so mesmerizing, I listened to the four-and-a-half-hour podcast several times, then read and took notes on the transcript. Listening to this episode was like reading a book, so –like I do with my book summaries –I wanted to improve my own understanding of the content. So, here is a podcast summarizing a podcast, in my own words. Needless to say, the podcast is worth listening to, and since this is just a summary, you should absolutely listen to it –over on The Tim Ferris Show – to get the full context. The decline of the nation state One of the main forces at play in world events, according to Balaji, is the decline of nation states. He presents this idea in reference to a prescient twenty-five year-old book called The Sovereign Individual, which he cites in this podcast appearance and others. Since the nation state is declining, it is becoming increasingly difficult for countries to control their citizens. When it’s hard to control citizens, it’s hard to collect tax revenue to fund institutions. This loss of control is accelerating with the rise of remote work, catalyzed by the coronavirus pandemic. As more people have been able to work from anywhere, they’ve become increasingly aware of how local laws and taxes affect their lives. The power of “exit” The control of a nation state over its people is limited to the extent that people have the right to what Balaji summarizes as “exit.” If you’re unable to leave a place, either because the government is oppressive, or because you’re tied down because, say, you have land to tend and a flock of sheep, the government has more leeway in what policies they can enforce. Citizens as “customers” If people can exit their jurisdictions – whether that’s a country, a state, or a city –then citizens stop being “subjects” that jurisdictions can extract resources from, and start being “customers,” that jurisdictions want to appeal to. We’ve of course seen this for a long time, as cities have given tax breaks or other perks to compete over companies shopping for jurisdictions in which to place their corporate headquarters. But citizens are starting to look more like customers as smaller players have exited en masse. For example, lots of people and companies have been leaving California for Texas, in search of less state control. Balaji points out that not everyone has to exit to influence policies, but the fact that some do is tremendous leverage on any system. Crypto entrepreneurs call New York’s bluff An example Balaji cites of this struggle happened when New York state introduced the BitLicense –a series of regulations required for companies to do certain kinds of cryptocurrency transactions. Balaji characterizes New York’s posture in introducing these regulations as “We’re New York. What are you going to do? We’re the center of the world.” At least ten crypto companies then left New York, including Kraken, Bitfinex, and Poloniex. In some cases they had to pack up and move. In other cases they just stopped servicing New York customers. New York apparently overestimated their leverage, and companies left for other jurisdictions, who were more accommodating to their “customers.” Declining returns on state violence Something Balaji doesn’t talk about much but that is a major theme in The Sovereign Individual – and is relevant to the decline of state control – is declining returns on violence, at least at the state level. You can think of a nation state as a collection of people who contribute taxes in exchange for protection. Serfs used to pay, to their feudal lords, the returns of farming o...