Incentives, Not Coercion: Building a Better System of Governance
Humanity needs a fresh perspective on governance—one built on voluntary, consensual, and contractual relationships. As social beings, we rely on community, but the best communities are those that honor consent, reciprocity, and the universal desire for peace and prosperity. When individual freedom thrives, so does human flourishing and justice for all.
To organize such a society, we must accept a simple truth: humans are capable of both good and evil. The challenge isn’t to debate whether human nature is inherently virtuous or flawed, but to create systems that encourage virtue and limit the potential for harm. Central to this effort is understanding how incentives shape human behavior.
The Problem with Political Governance
We often hear that “if humans were angels, we wouldn’t need government.” But humans aren’t angels—and that’s precisely why we should resist granting any group a monopoly on violence. Centralized authority, even with the best intentions, inevitably leads to corruption and abuse.
Political governance forces one-size-fits-all decisions upon the majority, often decided by officials who bear no personal cost for their mistakes. Incentives in such systems are misaligned: government officials are rewarded not for serving people effectively but for advancing their own interests.
By contrast, voluntary governance embraces human self-interest as a force for good. In a free society, individuals act to fulfill their desires, and market discipline ensures that we reward the behavior we value. Those who want quality pay more for it; those seeking affordability have options. No one is forced to pay for services they don’t want.
When coercion is removed, incentives align naturally with human flourishing. Communities based on voluntary cooperation—not political mandates—encourage entrepreneurship, prosperity, and peace.
The Three Incentive Groups
To understand how incentives work in society, we can identify three distinct groups, each motivated by different forces:
The Productive Majority
These are individuals who serve others to provide for themselves and their families. Entrepreneurs, freelancers, investors, and employees all fall into this category. Entrepreneurs, in particular, create value by identifying unmet needs and organizing resources to fill them. The productive group’s incentive is clear: to thrive, they must serve others willingly and effectively.
This group forms the backbone of any prosperous society. Their creativity and productivity generate wealth and improve quality of life.
The Expropriators
This group thrives by taking resources without consent. It includes thieves but also extends to government officials and bureaucrats who are paid through taxation—resources taken without explicit agreement. While some rationalize their actions as “public service,” the incentives remain: extracting maximum benefit with minimal effort, often without regard for consent or morality.
Expropriation distorts incentives, rewarding inefficiency and power-seeking behavior instead of productivity.
The Dependents
Charity recipients are those who rely on the benevolence of others. A small percentage are truly in need due to circumstances beyond their control. However, in a welfare state, dependency often becomes institutionalized, encouraging non-productive behavior under the guise of entitlement.
When charity is centralized, the line blurs between those genuinely in need and those exploiting generosity. Over time, societies suffer when the productive group is stretched too thin to support the expropriators and the dependent group. Empires fall when bad governance tilts resources from productive to non-productive individuals.
Aligning Incentives for a Better World
The societies that flourish are those where incentives encourage productivity, cooperation, and service. In the 1800s, utopian collectivist experiments failed because they required people to work without personal claim to the fruits of their labor. By contrast, economies with the greatest ease of doing business consistently achieve the highest quality of life.
Why? Because when voluntary interactions replace coercion, individuals are empowered to create, trade, and innovate freely. Productivity rises, wealth grows, and justice flourishes.
For too long, we’ve thought that revolution—violent upheaval—was the only way to fix broken systems. But the solution lies not in revolution, but in evolution. A mindset shift is needed—one that embraces decentralization and voluntary cooperation as the foundation for better governance.
The architecture of this new world cannot be planned in detail or imposed by force. Instead, it must emerge organically, driven by innovative thinkers who align incentives with service. In this world, the productive majority will thrive, and justice will prevail—not through mandates or monopolistic power, but through consent and collaboration.
The opportunity before us is profound. By nurturing systems built on voluntary governance, we can create a legacy of prosperity, harmony, and freedom for generations to come.