name: sovereign-individual
description: Apply Davidson & Rees-Mogg's Sovereign Individual framework for understanding the transition from industrial nation-states to digital autonomy. Use when analyzing geopolitical shifts, planning location/jurisdiction strategy, understanding crypto/decentralization implications, evaluating government/regulatory risk, or positioning for the decline of traditional institutions. Also use when building products for a borderless, decentralized future.
tags: [macro, leverage]

The Sovereign Individual

How the digital age undermines nation-states and empowers individuals.

The Core Thesis

Technology determines power structures.

• Agricultural age → Feudal lords (controlled land)
• Industrial age → Nation-states (controlled factories, armies)
• Information age → Sovereign individuals (control knowledge, can exit)

Key insight: When the means of production fit in your laptop and wealth moves at light speed, nation-states lose their monopoly on coercion.

The Megapolitical Shift

Megapolitics = The underlying technological/geographic factors that determine power.

Industrial megapolitics (20th century):
- Mass production requires large capital, fixed location
- Warfare favors large armies with expensive equipment
- Citizens can't easily leave
- Governments tax and conscript with impunity

Information megapolitics (21st century):
- Production is knowledge-based, portable
- Cyberwarfare and asymmetric threats
- Capital and talent are mobile
- Exit becomes viable; voice loses leverage

Consequence: The "customer" (citizen) can now shop for governments.

The Logic of Violence

Who can deploy violence determines political structure.

Agricultural era: Local lords with mounted knights
Industrial era: Nation-states with mass armies
Information era: Dispersed, asymmetric, cyber

Nation-state advantage eroding:
- Nuclear deterrence made large wars irrational
- Conventional armies can't stop terrorism/insurgency
- Cyber attacks don't require territory
- Drones and tech democratize violence

Result: The protection racket (pay taxes, receive security) becomes less compelling.

The Virtual Economy

Wealth increasingly exists in cyberspace, beyond physical jurisdiction.

Characteristics:
- Intangible (code, IP, reputation, networks)
- Portable (move in milliseconds)
- Encrypted (can be hidden)
- Borderless (where does a website "live"?)

Implications:
- Taxation depends on voluntary compliance
- Capital controls become unenforceable
- Regulatory arbitrage is trivial
- The productive can exit

Prediction realized: Cryptocurrency, remote work, digital nomadism.

Citizenship as Product

When exit is possible, governments must compete.

From: Captive citizens who must accept whatever government provides
To: Mobile individuals choosing jurisdictions like products

Jurisdictions will compete on:
- Tax rates and structures
- Regulatory environment
- Rule of law and property rights
- Quality of life
- Services provided

Already happening: Singapore, Dubai, Estonia (e-residency), Portugal (crypto tax), El Salvador (Bitcoin).

The Cognitive Elite

Those with rare, portable skills capture disproportionate value.

Industrial era: Value from labor (replaceable, location-dependent)
Information era: Value from knowledge (rare, portable)

The split:
- Cognitive elite: Software, finance, creative, entrepreneurship—mobile, high-leverage
- Localized workers: Service, physical labor, bureaucracy—immobile, taxable

Prediction: Inequality between mobile/immobile increases. Brain drain accelerates.

The Decline of the Nation-State

Not immediate collapse, but gradual loss of relevance and legitimacy.

Signs of decline:
- Inability to control borders (people, capital, information)
- Fiscal crises (promises exceed ability to tax)
- Loss of trust in institutions
- Rise of parallel systems (crypto, private security, arbitration)
- Nationalism as reaction to loss of control

Timeline: Generations, not years. But the direction is set.

The Sovereign Individual

Definition: Someone with the resources and positioning to choose their jurisdiction and reduce dependence on any single nation-state.

Characteristics:
- Portable income (not location-dependent)
- Global mobility (passports, residencies)
- Asset diversification (across jurisdictions)
- Minimal dependence on government services
- Privacy and security competence

Not: Tax evasion or lawlessness. Rather, choosing among legal options.

Preparing for the Transition

Personal Strategy

Build portable value:
- Skills that work globally (tech, finance, creative)
- Reputation and network that transcends borders
- Income not dependent on one location

Diversify jurisdiction exposure:
- Banking in multiple countries
- Second passport or residency
- Real estate in favorable jurisdictions
- Asset structures with flexibility

Reduce single-point-of-failure risks:
- Not 100% dependent on one government
- Self-custody of assets where possible
- Plan B for major disruptions

Business Strategy

Build for borderless:
- Remote-first organization
- Customers in multiple jurisdictions
- Structure for regulatory flexibility
- Payment rails that work globally

Anticipate state reaction:
- Compliance optionality (can comply with different regimes)
- Regulatory arbitrage capability
- Exit strategies from hostile jurisdictions

What to Build

Products for sovereign individuals:
- Portable identity and credentials
- Cross-border financial services
- Privacy and security tools
- Remote work infrastructure
- Jurisdiction comparison and optimization

Risks and Counterforces

Nation-states will resist:
- Capital controls
- Exit taxes
- Surveillance and reporting requirements
- International coordination against tax havens
- CBDC with programmable restrictions

Societal risks:
- Extreme inequality if only elite can exit
- Breakdown of social cohesion
- Race to bottom on regulation
- Vacuum filled by worse actors

Not inevitable utopia: Transition will be messy. Position accordingly.

Application Checklist

When making location, career, or business decisions:

1. [ ] How portable is my income/value?
2. [ ] How dependent am I on one jurisdiction?
3. [ ] Could I relocate if needed? What would it take?
4. [ ] Am I building skills that work globally?
5. [ ] What's my exposure to a single government's decisions?
6. [ ] Am I building for a borderless future or a bordered past?
7. [ ] What jurisdiction risks affect my business/assets?
8. [ ] Do I have optionality (Plan B, diversification)?

Anti-Patterns

• "My country will always be stable" → All empires decline; plan accordingly
• "Borders are fixed" → They're enforced at the pleasure of declining states
• "Remote work is a fad" → It's the beginning of location independence
• "Crypto is just speculation" → It's infrastructure for borderless value transfer
• "Regulation will stop this" → Regulation follows technology, with lag
• "I don't need a Plan B" → Optionality is cheap insurance
• "Only criminals care about jurisdiction" → Optimization is rational, not criminal