The voluntary nature of consenting to a particular pirate ship’s constitution facilitated what economists call “Tiebout competition” between pirate crews. Tiebout competition is the process whereby governments compete for citizens, so-named for the economist who first articulated this process, Charles Tiebout. The idea is a simple one. If citizens can “vote with their feet,” governments must be more responsive to what citizens want. They must offer lower tax rates, better public services, and refrain from preying on citizens, or citizens will move to another jurisdiction that does. Governments care about this because their ability to raise tax revenues requires a tax base. And if citizens move out of one jurisdiction to another, in the jurisdiction citizens are fleeing from the tax base shrivels up. Pirates’ voluntary governance structure means they didn’t in have governments. But the principle of Tiebout competition applies as much to their floating societies as it does to competition between governments.
The Invisible Hook, The Invisible Economics of Pirates by Peter T. Leeson
Home Economics 