Allowing citizens to sell their citizenships have certain benefits. Notice I presume that citizenship=right to live + right to vote + citizenship dividend. Many benefits can be done by simply having the state selling residency visa to live and give visa money to its citizen dividend. I've heard some states like Dubai did it and they're quite prosperous.
However, true benefits of private citizenship market is that it gives citizens some market value. This market value will allow citizens to see whether their states perform well or not. It's like how most stockholders of tech company see whether their CEO is doing well or not. They simply check the market value of their stocks.
Of course, residency visa can have it's own market too.
There are several ways to see this
Corporate government model
As we know the best of the best government system is in corporations. Corporate governments are the best government. What kind of other government can improve profit like Apple, Google, and Microsoft.
I don't see any stockholders in Microsoft commit suicide bombing to change Microsoft's policy. I don't see employee of Google and Yahoo wage war against each other?
Why? If I own a stock of microsoft, and microsoft appoints a luddite as CEO, I don't need to get mad. I just sell my Microsoft stocks. Of course, Microsoft won't do that.
Or imagine if Microsoft declare that they plan to tax black stockholders to pay white stockholders? Simple. Black stockholders can simply sell their stocks. In fact, any sense of rent seeking from one stockholders against another stock holders will make the whole stock go tumbling down.
This option to sell stocks protect minority and eventually majority stock holders from most rent seeking. All stockholders are united in making the pie bigger rather than trying to rip off other stockholders.
I have never heard any corporations wage civil wars over the direction of the company. Even acquisition by one corporation of another is done peacefully with one corporation buying the stock of another.
So any thing that makes states government like corporate government have a high probability of improvements.
Actually democratic states behave differently from most corporations. Normally, customers do not bother voting for how a company should be run. Customers simply choose to buy some products from such companies. Most companies, however, care about what their customers want. Customers are kings of corporations.
The stockholders, and the CEO and the board of directors, go the extra mile trying to figure out what the customers want. They then choose what to produce and what the price.
In democracy, the population are mostly citizens. That is like the customers are the share holders. Having citizenship market will make this check and balance system unnecessary. A newly found state can have a king, for example. That king will still care about the well being of the population. Otherwise, nobody would come to his state and pay his tax.
This citizenship market or residency markets would work well whether the state is democracy or not. It's simply another check and balance mechanism. Don't like the way a state is managed? Just leave.
The fact that corporations, jobs, and businesses can easily move from states to states make states treat the businesses well too.
Many IT business have no idea how seyschelles work. I barely know how to spell the country name. However, it looks like a good place to incorporate with 0% tax rate. All we need to run a business is privacy.
There are many states with low taxes. Many digital nomad like to live there. Those nomads do not even bother modifying their country. They just move from places to places.
However, while businesses and corporations can move easily from states to states, actual people have a hard time doing the same thing.
Most countries do not easily accept immigrants for many good reasons. And this is why states treat their population badly, even their citizens. Tax is high in many states. The mere act of making honest money is punishable by taxes. All these are done because hard working population, and citizens, can't easily get the hell out of the state and move to another state.
Citizenship market will solve this.
In general, just like in corporation, it's best to let the state be run by those most capable to do it. Also shareholders of the state should be those seeing values of the state well being instead of just people living there. If you don't know or care whether a state will prosper or not, it's best to just sell your shareholdership, or citizenship of the state and use the capital to buy the stocks you want or bitcoin.
Selling Citizenship is a Moderate Immigration Policy
Which companies have the best product? Let the customer choose. Companies with better products will sell more product and even raise price. What about if what constitute good differs from customer to customer? No problem. Each customer pick what they want.
Which government is the best government? Let the population choose. Well, we have a problem here. Just like only heretics and apostates choose their religions, only immigrants choose their country. So the logic don't work as well for states.
This is the main complain of anarcho capitalists. I never agree to obey the law of the state. Other people, albeit majority, decides what the law is, and I am supposed to obey. With the exception of Dubai, where most of the population consent to be there because they are immigrants, or US, where majority of people are descendants of immigrants, most people don't choose their religions.
And yes this is open to a very big abuse. People are "forced" to agree to laws they never agree. Democracy is fine. It's at best a compromise. A very unstable compromise that's better than other ways. When citizens can sell their citizenship, those who disagree is effectively paid to leave. This reduces the non consensual nature of the transaction.
Unlike anarcho capitalists, I realized that some non consensual aspect of government will always be there. Some acts are inherently, or at least more efficiently collective. We can't always eliminate non con-sensuality, but at least we can reduce it. That's what I think a true, albeit moderate, libertarian idea is.
Not that we have minimum government. It's that we have less and less and less and less till the market itself says, well, no country is more free than your current one so let's just be happy with what you have now till better states show up.
If I own a microsoft stocks and microsoft decide to build airplanes instead of software, I'll just sell my microsoft stock and buy google stocks instead. In fact, that thing should be easier.
Those who buy microsoft stock are different than those who uses microsoft product. Customers' interests to get good product at reasonable price are protected not by customers' capability to vote to change for the company, but by customers' ability to switch to google sheets instead of Microsoft excel.
Let those interested in the raise of microsoft stock and the direction the company choose to buy microsoft stocks. Those who simply enjoy microsoft product can just buy microsoft product without buying it's stocks.
Also what's good for one population is bad for another. The result? We have Sunni and Syiah killing each other. We have different voting blocs lying to each other.
One solution to that is totally free immigration. This is what happens in most provinces within state. This is some libertarian position. This is like letting each corporation to govern as they wish, but once they do well, the corporation must give free stocks to everyone or must allow their products enjoyed free by all customers that wish. Kind of silly right?
However, this causes some problem. Imagine if some states are well governed and richer. Imagine if another state is poorer. Soon, people want to move from poor state to rich state.
The rich state may have better infrastructure, better education, better "facilities", and better freedom. And yet, under totally free immigration, when all the people come from the poorer state, all those benefit are enjoyed equally with the immigrant.
Moreover, people from poorer state have the mentality that makes their state poor in the first place. They try to change the rich state to what they think is good. Then rich state becomes poor. This reduces incentives for citizens in that state to make their state well governed.
The most obvious sample is muslim refugees coming to Europe. With the exception of Dubai and Qatar, typical European countries are, arguably, better governed than most islamic countries. That is true for at least very large percentage of world population. They value freedom of speech. They have democracy. They value individual freedom. Most importantly, they are more capitalistic.
Even the muslims agree. That's why many muslims want to move to Europe.
Then? The muslims from poor country simply move to Europe. There the muslims benefit from european welfare. They also demand that europes eliminate freedom of speech. Also there are terrorism. If that's what happen, why bother having good government?
It seems that any country with good population growth will have it's population inherit the earth. They just have children, and then they immigrate to europe as refugee.
In fact, really really messed up country have an edge. If your country is in civil war, then you got refugee status. Huraay.... Now you can just immigrate to europe, get free welfare, get free education, and your children will have as much chance as any european children. This reduces incentives for citizens to vote for good leader.
Another solution is to prevent immigration. The Donald Trump ways. It's the status quo. But this is also problematic. Just like customers choosing product is the only objective way to motivate corporations to make some product that's good for at least some customers, immigration is the best objective predictor of whether living in a country is awesome or not.
Good products have many buyers. Well managed countries have tons of immigrants, tourists, investors, and digital nomads wanting to come in. Currently the choice is to either say no or say yes. Why not do what most corporate do. You wanna come? Pay up.
Many jobs can be done more cheaply by immigrants from poor countries. Yet, those jobs are done by expensive americans. Providing jobs for certain voting bloc is a form of rent seeking by one voting bloc from another. And it won't last anyway. Jobs simply move to China because Americans refuses to hire mexican immigrants.
Here, selling citizenship, or residency, is a middle way. Say I can't find job in US. Rather than demanding my country to provide jobs for me, I may be better of moving to poorer country and sell my valuable citizenship/residency. In the new country, with that capital, I can build factory and start a business. Win win.
Selling Citizenship is a form of property right
Property right is one of the most important concept we develop. I own my company. My fellow poor citizen have nothing. So, what? Let them starve to death? Well, the thing is he own something. He owns a piece of a country. He is a citizen anyway.
Normally he exercise his voting right to benefit him in some ways. Usually it's done in economically inefficient ways. The poor citizen demand welfare, the gives incentives to be poor. It can also demand jobs, which makes my business uncompetitive compared to those who build factories in other countries.
In stocks, my fellow stockholders don't starve. How? He gets dividend. Also he can just sell some of his stocks. Why not just use the same property right concept that works so well on corporation and pretty much anything, and extend that to states.
Selling citizenship and bigger immigration complements democracy
Some issues are inherently collectives. A country can't be both secular and religious. And all the people in the states are affected by it.
Imagine all people have to wear shirts of the same color.
Democracy works. Say half the population like red shirt. Another half like blue shirt. In democracy, everyone ends up wearing red blue shirt. In non democracy, people kill each other so their shirt "win"
Okay, this shirt thingy may not be a good analogy. We know that in most democracy, the moderate, that decides that customers can pick the color of their shirt usually won election.
But replace shirt colors with secularism. Soon we see where the problem is.
Democracy minimize the amount of unhappiness. The moderate win in democracy. So everyone wear half red half blue shirt. The red is only half unhappy. The blue is also half unhappy. They both realize that it's better than war. I mean say the red wage war. Say they win. And then everyone wear red shirt. The blue will be very unhappy. The blue will realize, oh, if I wage war too, I will be happier, then everyone will wear blue. And what would the blue do? They wage war too.
So the choice is to be half happy and accept the vote or wage war and we'll have a really failed state.
But say the blue and the red leave in 2 states. Then the blue people can immigrate to the blue state and the red people can immigrate to the red state. They are both happier.
The blue state become more and more blue. The red state becomes more and more red as voters with the same color move them. They all get the collor they want.
https://en.wikipedia.org/wiki/Thomas_Schelling
Everyone is happier.
But say some states are more successful than the other. We often see secular states outperform religious states. Then surely people want to move from poorer states to richer states. Citizenship valuation will ease immigration and make this happens.
Summary:
If citizens can sell citizenship then citizenship will have market value. This idea is actually tried in UAE. While citizenship it self is not sellable, the visa to work in UAE is sell-able at market price. Citizens collect dividend from every workers working in UAE. Being capitalistic, UAE has good government. UAE leverage the value of those good government to more population. The workers from India are paid more in UAE than in India. So they're willing to work in UAE. UAE citizens simply collect visa fee. Not all muslim governments are bad I guess.
If citizenship have market value then citizens can see how well the government is run via the market value of citizenship. If governments are run well, the value of their citizenship go up. If governments are not run well then the value of their citizenship will drop. This is like how stock holders can see how well their CEO is doing.
Some states and their citizens are simply not a match. Many states would love to get rid their undesired citizens. Why not just pay them to leave? This will allow, Israel, for example, to be more jewish, which is what many Israelites want.
If citizenship have market value, certain social problems can be seen more clearly. For example, US government give away citizenship to anyone born in US. That means US government will have tons and tons of cradle to grave welfare recipients. Those welfare recipients can vote for bigger and bigger welfare. If citizenship have market value, it's easy to measure how much would that cost. Every time a welfare recipient have children we effectively give say, $200k worth of citizenship. Then people can think that perhaps, it's cheaper, to just pay welfare recipients to stop having children rather than giving free citizenship to them. Should government create jobs or allow immigrants to work and pay citizenship some citizen dividend? Instead of giving jobs, should some citizen simply move to another state? All those can be more easily computed if citizenship have market value. The market will take care of it.
Currently many citizens are free to move to another country. However, most countries won't accept them. The reason is obvious. Citizens want to move to richer countries. Richer countries want to protect jobs for it's citizens and don't want the poor to come. If citizenship have market value, citizens from poor countries can move to rich country and pay the value difference. This will make the deal sweeter for the destination states. The destination states will accept more immigrants (that are paying anyway). This makes immigration process simpler.
Currently, the majority of people in the world are not immigrant. There is, very little reason for the states to make their state "attractive" to those who live there. Yes, people can vote, but what's awesome for some voting blocs will be bad for another voting bloc. What's often happen is politicians pit one voting bloc against another and collect heavy rent. If majority of people are immigrants, the state have strong incentive to make their states comfortable for some "voting bloc". Doing so improves citizenship market value. A success of a state can be indirectly measured by how many people want to immigrate there. The more people want to immigrate, the higher the citizenship or permanent residence' market value.
The biggest problem of the state is that what count as "good" state differs from citizens to citizens and from person to person. Some think that porn is bad. Some think that porn is good. Under democracy, you got to settle with what your other citizen think is good. If immigration is more free due to people being free to buy and sell citizenship, then everyone would be happier. Everyone would simply move to state they think is good like customers picking shirts whose color they like.
In corporate world, when a corp is failing, they can get help from investors. Investors are willing to help because the failing corp stocks is cheap. By helping, the investor can have much bigger share of the failing corp. With better management, the investor can make the failing corp live again. The same technique can be used to help failing countries. Rich investors can buy citizenship in poor countries, use the voting power to vote for better government, and sell at profit. Both will be profited.
All in all, it makes things that work with corporate government works with the states. We simply extend the concept of property right that have worked so well with corporations to states.
Just like stockholders can buy, keep, vote, and sell their stocks, citizens can do the same thing too.
In corporation, customers don't vote what the corporation can do. They vote by buying from another corporation. The stock holders then balance the need to earn profit with the need to keep their customers loyal. This seems to properly align everyone's interests to what makes customers' happier. Price too high and customers leave, hurting stockholders. Price too low and stockholders don't maximize it's profit.
In states, it sort of work this way, but only to immigrants. We can think of customers as tourists, or investors, or immigrants. States lower tax so corporations immigrate there. Tax too high, such as anything higher than 0%, and IT companies would rarely incorporate there.
However, for the majority of the population, it doesn't work based on competition. Under current system, the Syariah and Secular in Indonesia pretty much do everything to win the election. Both resort to lies, intimidation, and force, to get the state to move toward the direction they want.
Allowing citizenship to have market value match people with their states more. Currently the secular in religious proponent are not happy with each other. If citizenship have market value and immigration is more easily available because of it, then each can move to their own states.
If citizenship is sell able then the secular, the socialist, the syariah supporters, and the capitalists can move to their own state. We can then see which one is more prosperous.