What Does Economic Freedom Mean in a World Citizen Society?

Why the Freedom to Move Capital Is Not the Freedom to Choose a Political Community

Money can cross a border in seconds.

A company can invest abroad without moving its employees there. An investor can purchase shares in a foreign business without becoming a member of the society in which that business operates.

But someone who wants to move, find work, establish a home, and eventually become an equal political member of another country faces very different conditions.

All these activities cross borders. They do not represent the same freedom.

In The World Citizen Revolution, I argue that economic relationships increasingly extend beyond national boundaries while political membership remains strongly shaped by inherited nationality.

What would economic freedom mean if people could meaningfully choose their political communities?

Would it mean fewer regulations, lower taxes, and greater competition among governments?

Perhaps, in some circumstances. But those outcomes do not define the political freedom proposed by the World Citizen framework.

The freedom of capital to move is not the same as the freedom of people to choose where they live and belong.

Expanding one does not necessarily expand the others.

Capital Moves. People Move with Their Lives.

The European Union offers a useful comparison.

Under Article 63 of the Treaty on the Functioning of the European Union, capital movements are generally protected between member states and between member states and countries outside the EU, subject to the treaty’s qualifications and exceptions.

People can invest abroad without living there. Businesses can own assets or raise money in several countries.

These activities can create economic opportunities. But buying shares in a foreign company does not make the investor a political member of that country.

Nor does operating internationally give a company’s employees the right to settle wherever it does business.

There may be enormous economic consequences to this difference.

In a 2011 survey of economic research, Michael Clemens examined estimates suggesting that removing barriers to international labor mobility could increase world GDP by roughly 50 to 150 percent. The estimated gains were much larger than those associated with removing remaining restrictions on trade and capital flows.

These are remarkable numbers.

They are also highly conditional.

The estimates came from economic models, often assuming very large movements of workers across borders. They were not forecasts of what a particular migration reform would achieve.

A larger world economy would not automatically mean that everyone benefited equally. Some people and communities might face adjustment costs, even if total output increased.

Still, the research raises a question worth asking.

Why do we devote so much attention to the international movement of money while treating the movement of people as a fundamentally different and often more restricted matter?

For the World Citizen framework, the research helps illustrate the potentially large economic consequences of restrictions on human mobility.

It does not prove every institutional claim made on behalf of Foot Democracy.

Economic gains matter. Political freedom cannot be reduced to them.

From Employment to Political Membership

EU freedom of movement for workers provides another comparison.

Article 45 of the Treaty on the Functioning of the European Union protects important employment-related rights for workers who are nationals of EU member states, subject to applicable conditions and exceptions.

Eligible workers may look for jobs and move to another participating country.

EU rules also help coordinate social security systems. Insurance periods completed in different countries may count toward certain benefits, and some benefits can be received across borders under specified conditions.

Not every benefit is transferable. Different rules apply to different kinds of protection.

This matters because a worker does not move as a financial asset moves.

Employment history, pension rights, qualifications, family responsibilities, and access to public services are all part of a person’s life.

Even a legal right to move can be difficult to exercise.

Consider two workers.

One has savings, recognized qualifications, and family support. The other has little money, dependent relatives, and qualifications that may not be recognized abroad.

Their legal rights may appear similar. Their practical opportunities are not.

A World Citizen Society must therefore distinguish legal mobility from effective mobility: the difference between being legally allowed to move and having a realistic opportunity to do so.

There is another distinction.

Employment rights are not the same as political membership.

EU freedom of movement does not automatically make a worker a full national political member of the country where that person settles.

Foot Democracy proposes something more: meaningful Entry, secure residence, and a credible path toward equal political membership.

Economic opportunities may help make that freedom possible.

They cannot substitute for it.

Does Competition Make Political Communities Better?

If people can meaningfully choose among political communities, governments may have stronger reasons to consider what residents need.

A community with reliable rights, effective public services, and economic opportunities may attract new residents. Another may reconsider policies that encourage people to leave.

Earlier essays on Charles Tiebout and Albert Hirschman examined the possibilities and limits of choosing among jurisdictions, Exit, and Voice.

One warning is worth repeating.

A political community is not simply a business selling services, and residents are not merely customers.

People cannot select each law separately. Nor can everyone relocate when they dislike a policy.

Competition may encourage improvement. It may also reward governments that shift costs onto less mobile residents or neighboring communities.

Greater mobility does not guarantee better government, lower taxes, or convergence toward one economic model.

Competition can serve political freedom. It should not become the purpose of political life.

When Economic Mobility Limits Democratic Choice

Suppose residents vote for extensive public services supported by relatively high taxes.

Their elected government adopts policies reflecting that choice.

But some businesses can relocate profits or economic activities more easily than ordinary residents can move their homes and families.

The government may fear losing investment or tax revenue if it maintains the policies its electorate supports.

Economic mobility may then limit democratic choice.

How strongly it does so depends on the kind of tax, the ability of businesses or individuals to relocate, and the rules governing those decisions.

An OECD study of tax competition among sub-central governments, published in 2011, found little evidence of a general race to the bottom in tax rates and revenues.

A race to the bottom occurs when competition pressures governments to weaken policies in ways that leave them collectively worse off or impose significant costs on others.

A lower tax rate alone does not prove that this has happened.

Tax competition may encourage efficiency or responsiveness in some circumstances. It may also distort taxation or put pressure on public services.

We must also distinguish the movement of capital, the shifting of corporate profits, and the migration of residents. These are different processes.

The question for the World Citizen framework is more specific.

Can residents retain meaningful control over their common institutions when important economic resources are more mobile than the people who depend on those institutions?

A democratic vote matters. So does the practical ability of a government to carry out legitimate collective decisions.

This is where economic freedom may come into tension with Hand Democracy.

Rodrik’s Trilemma — What Must Give Way?

Dani Rodrik’s political trilemma of globalization provides a way to understand this problem.

In The Globalization Paradox, Rodrik argues that three objectives cannot all be fully achieved at once: deep economic integration, national self-determination, and democratic politics.

The first means integrating economies under far-reaching international market rules.

The second means allowing each nation-state to make its own political decisions.

The third means allowing citizens to govern through democratic institutions.

The difficulty becomes clear when these objectives conflict.

Imagine a country whose voters support a particular tax or public-service policy. Deep international economic integration may restrict the government’s ability to carry it out.

It may have to limit economic integration, accept constraints on national policy choices, or move some decision-making to a wider political level.

None of these options is cost-free.

Rodrik’s argument does not mean that all international trade threatens democracy. It concerns the depth of economic integration and the political authority needed to sustain it.

The World Citizen framework does not make the trilemma disappear.

But it asks another question.

What if individuals could meaningfully choose their political communities?

And what if territorial communities retained substantial self-government while assigning limited powers to common institutions where cooperation was necessary?

Economic constraints would remain. Common rules would still sometimes restrict local decisions, and shared institutions would need democratic accountability.

Yet individuals would have greater freedom to change their political membership. Communities could cooperate on particular problems without surrendering general authority over their political lives.

As the previous essay argued, shared authority need not imply a single World Government with general supremacy.

This is not a complete solution to Rodrik’s problem. It is another way to organize the institutions through which that problem must be addressed.

The aim is not unlimited economic integration at any political cost.

It is economic cooperation compatible with democratic self-government and freedom of political membership.

Why Common Tax Rules May Protect Choice

The OECD/G20 Inclusive Framework’s global minimum tax arrangements offer an example of cooperation among governments.

The framework’s Pillar Two rules generally concern multinational business groups with annual consolidated revenue of at least €750 million.

They use a minimum effective tax rate of 15 percent. An effective tax rate measures tax relative to income under the applicable rules, rather than simply using the headline rate written in a country’s tax law.

Under specified conditions, additional tax may be charged when a group’s effective rate in a jurisdiction falls below the minimum.

The arrangements do not require every country to adopt the same headline corporate tax rate. Nor do they establish one worldwide tax authority.

In January 2026, the Inclusive Framework agreed on a Side-by-Side Package, adjusting how different minimum-tax arrangements operate together and introducing simplification measures and safe harbors.

The system depends on implementation through national and regional laws. It is not a complete solution to international tax competition.

But it illustrates an important possibility.

Governments may agree on limited common rules because acting alone leaves them exposed to pressures they cannot easily control.

Such cooperation can sometimes protect their practical ability to make fiscal decisions.

Yet there is a tension.

Common tax rules also restrict some choices that an individual government might otherwise make.

There is no reason to hide this difficulty.

The question is whether the coordination is justified, how far the common rules should extend, and how participating communities can hold the institutions responsible.

A World Citizen Society does not require every tax policy to be harmonized. Nor does it require a single world fiscal authority.

It needs ways to protect meaningful self-government when isolated decisions are insufficient, without turning limited cooperation into general rule from above.

Fiscal Responsibility Still Matters

Migration changes the distribution of public costs and benefits.

A newly arrived family may need schools, housing infrastructure, and health services immediately, while contributing taxes over many years.

The balance depends on employment, age, family circumstances, location, and time.

A migration policy may be sustainable for the wider political system while placing serious short-term pressure on a particular receiving community.

An earlier essay on fiscal risk examined these problems in greater detail.

The point here is narrower.

Economic freedom cannot rest on shifting costs to communities that lack the resources needed to meet their obligations.

Some financial coordination may be necessary. Such arrangements must also preserve accountability for local choices.

These are real institutional problems. They are not, by themselves, reasons to exclude durable residents from equal political membership indefinitely.

Political Equality Is Not Economic Attractiveness

Economic freedom and political equality do not necessarily develop together.

A wealthy investor may exercise considerable influence in a country without being a political member of it.

A full political member may possess little wealth.

Changing membership rules will not eliminate differences in income, property, or economic opportunity. Nor is that what Resident Equality promises.

Resident Sovereignty makes durable residence the primary basis of ordinary political membership.

Resident Equality concerns equal political standing among people who have become full members.

These principles do not require identical wealth or identical economic policies across communities.

But they reject the idea that economic attractiveness should determine a person’s political rank.

A wealthy investor should not obtain superior political membership merely because of financial resources.

A full member should not become politically inferior because of limited economic contribution or inherited nationality.

Political equality cannot be made conditional on continuing economic attractiveness.

This is one reason the World Citizen framework cannot be reduced to competition between governments.

Its central concern is the relationship between persons and political communities, not simply the movement of economic resources.

Economic Freedom Cannot Replace Political Freedom

Political communities will continue to make different economic choices.

Some may favor higher taxes and extensive public services. Others may prefer different combinations of public and private activity.

People will disagree about those decisions, as they do today.

Some policies may attract residents or investment. Others may encourage people to move elsewhere.

But economic mobility alone cannot determine which policies are legitimate.

Those who remain must retain a meaningful voice in their government. Basic rights cannot depend solely on the possibility of leaving.

Hand Democracy and Foot Democracy must support each other, even though their boundary cannot be fixed permanently in advance.

Nor does the World Citizen Revolution promise that greater mobility will automatically bring prosperity, efficient government, or convergence toward one economic model.

Those are empirical questions.

Its central purpose is different.

People should have meaningful opportunities to choose where they live and become political members, rather than having that choice determined overwhelmingly by inherited nationality.

Economic freedom matters because income, employment, housing, and public services shape whether that choice is genuinely possible.

But market freedom and political freedom are not interchangeable.

A World Citizen Society should expand people’s meaningful economic choices while preserving political equality and the ability of residents to govern their common affairs.

A world in which capital moves freely while people remain politically bound by birth has not completed the transformation proposed by Foot Democracy.

But a world in which people can move while democratic communities lose their capacity to make legitimate collective decisions would face another danger.

We should not exchange one form of dependence for another.

Economic freedom should support the freedom of people, not replace their political freedom with the mobility of money.

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Further Reading

Books

• The World Citizen Revolution — On globalization, inherited nationality, and political-community choice.
• The World Citizen Society — On Foot Democracy, institutional competition, fiscal sustainability, and Resident Equality.

Related Essays

• Hand Democracy and Foot Democracy: Two Dimensions of Political Freedom
• Can Political Power Be Divided Without Creating a World Government?
• Why the World Citizen Society Cannot Be Created Overnight
• The Four-Gap Audit: Why Reform Can Fail Even When the Goal Is Right
• Charles Tiebout and the Limits of Voting with Your Feet
• Albert Hirschman: Why Exit and Voice Are Not Enough
• When Mobility Creates Fiscal Risk

References

1. Clemens, Michael A. “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?” Journal of Economic Perspectives 25, no. 3 (2011): 83–106. https://doi.org/10.1257/jep.25.3.83
2. Rodrik, Dani. The Globalization Paradox: Democracy and the Future of the World Economy. W. W. Norton, 2011. https://www.hks.harvard.edu/publications/globalization-paradox
3. Rodrik, Dani. “Feasible Globalizations.” 2002. https://www.wcfia.harvard.edu/publications/feasible-globalizations
4. European Union. Treaty on the Functioning of the European Union, Articles 45, 63, and 65. https://eur-lex.europa.eu/eli/treaty/tfeu_2012/oj/eng
5. European Commission. EU Social Security Coordination. https://employment-social-affairs.ec.europa.eu/policies-and-activities/moving-working-europe/eu-social-security-coordination_en
6. Blöchliger, Hansjörg, and José Maria Pinero Campos. “Tax Competition Between Sub-Central Governments.” OECD Economics Department Working Papers, No. 872 (2011). https://doi.org/10.1787/5kgb1mfm6jnw-en
7. OECD. Global Minimum Tax. https://www.oecd.org/en/topics/global-minimum-tax.html
8. OECD. “International Community Agrees Way Forward on Global Minimum Tax Package.” January 5, 2026. https://www.oecd.org/en/about/news/press-releases/2025/12/international-community-agrees-way-forward-on-global-minimum-tax-package.html