Billionaires like Peter Thiel get citizenship abroad so they can run from the problems they create

Always have a backup country.
Always have a backup country.
Image: AP Photo/Carolyn Kaster
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Silicon Valley power broker Peter Thiel plays the all-American patriot when he’s schmoozing with his good friend Donald Trump. But it turns out that even a member of Trump’s inner circle needs an escape plan.

Last week, the New Yorker reported that Thiel was among the clients of a New Zealand real estate agent catering to the rich. Further investigation revealed that Thiel had acquired a New Zealand estate on scenic Lake Wanaka, worth an estimated $10 million, in 2015. Local journalists started to wonder: How did an American citizen bypass rules requiring foreigners to gain special permission to buy protected land?

It turned out that Thiel didn’t need permission at all: the Pay Pal co-founder became a citizen of New Zealand in 2011.

We don’t know the exact details of Thiel’s naturalization yet, but it’s hard to imagine that his exorbitant wealth didn’t help. New Zealand offers residence permits to rich investors—the hacker Kim Dotcom, who’s facing extradition to the United States, bought his way there by investing millions of dollars—and grants citizenship in special circumstances to people who don’t meet the five-year residence requirements.

In these discretionary cases, New Zealand’s immigration minister has to personally approve the petition and deem it “in the public interest because of exceptional circumstances of a humanitarian or other nature.” (Thiel does not appear to have won any prizes for his humanitarian efforts.)

More and more countries are adopting special citizenship laws to let in extraordinarily rich or talented people, whether it’s athletes, experts, or entrepreneurs. As I note in my book, The Cosmopolites, for your average billionaire, having a Plan B country has become practically de rigueur. Citizenship-by-investment is estimated to be a $2 billion a year business. A half-dozen countries, from tiny specks in the Caribbean like Antigua to EU member states like Malta, openly sell their passport to wealthy individuals so long as they are not known criminals. Even the US effectively sells green cards through its EB-5 investor program.

It’s one thing for a wealthy private citizen to buy herself options to make traveling, living, and working abroad easier. Hypocrisy among Trump’s inner circle—and indeed, in all contemporary American politics—is hardly breaking news. And the irony of a Trump confidante revealing himself to be a rootless globalist is admittedly delectable. It’s also not all that surprising: Trump’s pick for trade secretary, Robert Lighthizer, has attended the Davos World Economic Forum 15 times.

The fact that Thiel can easily run away from the very rules and regulations he’ll be helping Trump shape, however, is not funny in the least. Thiel is in a position of immense power as Trump’s advisor. His opinions will affect some 300 million Americans, most of whom who do not have a backup passport—or indeed, even the funds for a plane ticket abroad. The ease with which Thiel can opt out of American society speaks to the very concerns that conservatives themselves have voiced about the denationalized “Davos man” for decades. When Samuel Huntington worried in 2004 that America’s elites were “seceding,” he could have easily been talking about Thiel—or any number of Trump’s cabinet appointees, for that matter.

On the surface, there seem to be immense contradictions between the nationalist, populist, protectionist rhetoric that Trump spouts and the acquisitive globalism of a Peter Thiel type. But these twin ideologies coalesce in a mutually supportive way. Trump said in a December speech that there is no world currency, no world flag, and no world passport. That’s true. But the continued primacy of the nation-state is precisely why the practice of “sovereignty hacking” or “jurisdiction shopping,” as exemplified by citizenship-by-investment programs and offshore tax registries, has become so prevalent among those who can afford it. Picking and choosing residencies, citizenships, and tax regimes helps the wealthy exist as though the world had no borders at all, which means they can throw their support behind nationalist policies that will close off options to everyone else. It is the current system of passports and nations and states, along with moralistic attitudes about patriotism, that enables the rich to opt out.

Thiel knows this world very, very well. In fact, Thiel apparently found the concept of hacking sovereignty so compelling that in 2008, he gave his personal and financial support to the Seasteading Institute, a nonprofit organization based in San Francisco that promotes the creation of artificial floating nations in international waters. The political philosophy behind seasteading can be summed up as follows:

  1. Governments are bad
  2. Governments have a monopoly on sovereignty
  3. Governments would be less bad if they had to compete on the open market with each other for capital, companies, citizens, and ideas
  4. No one can compete with governments because governments control the world’s land
  5. The only spaces that aren’t controlled by existing governments are in international waters
  6. Creating lots of new countries in international waters will increase competition and make all governments better

Or, to quote a forthcoming book on the subject by the institute’s founders: “a market of competing governments, a Silicon Valley of the sea, would allow the best ideas for governance to emerge peacefully” (they call it Seavilization.) Thiel’s friends the seasteaders, then, are literally in the business of creating flags and passports to compete with existing flags and passports. An early slogan of the movement was “let a thousand nations bloom.” That doesn’t sound much like “America First.”

Thiel’s libertarianism is crucial to understanding his involvement in this world, the appeal of opting out, and the trendiness of second passports. At the time of his investment, the institute was run by Patri Friedman, the son of libertarian writer David Friedman and the grandson of the free-market guru Milton Friedman.

I interviewed the youngest Friedman in 2012. He talked about his interest in buying a second citizenship, and he told me he’d considered sinking $100,000 on a Dominican passport some time ago. (He didn’t go through with it; he preferred the sound of Singapore, or Switzerland.) At the Seasteading Institute’s conference that same week, I met several other techies who had thought about or were in the process of buying another citizenship. The notion that sovereignty was something that could be bought and sold seemed like a perfectly normal element of free-market capitalism. In Thiel’s world, if you can buy another passport, you do it. Patriotism is no issue.

Friedman and I also talked about Blueseed, a project that then aspired to put up foreign entrepreneurs on a cruise ship off the Californian coast, outside the boundaries of U.S immigration law. (It has yet to launch.) The goal was to allow these engineers to work for and found US tech companies without submitting to the onerous process of applying for a visa: an immigration hack. Perhaps Trump should consider a wall there, too.

The Seasteading Institute has tried hard to shake off its associations with hardcore libertarian ideologies, and it would be unfair to accuse them of being solely political. The group is actively researching aquaculture, floating hospitals, and how to use the oceans as sources of sustainable energy, among other things. Whatever they end up doing is up to them, not Trump or Thiel. But the foundational principles of their project—the principle that Thiel presumably bought into—is how important it is to “vote with your feet.” And Thiel seems to have taken that to heart. He’s already got one foot in New Zealand.