Peter Thiel is obviously correct that democracy is incompatible with libertarianism, and tends to be bad for growth given the increased redistribution such implies1. Western democracies are generally plagued with the curse of populism, which often gets treated by liberals as a mystery, rather than a problem that could just be solved by disenfranchising them and excluding them from political power. Democracies vote against open borders, so trap billions unnecessarily in poverty. Voters may not be irrational nor “low information”, yet their preferences impose externalities on others via elections, with the tribalist rent-seeking2 this implies. Arrow shows that elections fail to perfectly demonstrate the “will of the people” anyhow, so Hayekian arguments for democracy on information aggregation are invalid.
In other words, democracy is the sort of mob rule that liberals and libertarians should be horrified by. Clearly, democracy is a failed experiment that is generating looming fiscal crises in the West as we speak. Yet alternatives have proven throughout history to be more tyrannical. The institutions that democracies operate under to constrain rulers: rule of law, free speech, free press, etc are necessary conditions for individual liberty and the property rights that free markets rely upon. A libertarian autocracy might erode many of these checks and balances, and fail to constrain tyrannical rulers. Succession of rulers is also an existential threat to the libertarian principles of this model. Although democracies rely on intangible “norms” that cannot be credibly enforced, defenders of democracy are correct in highlighting these issues.
Many libertarians back absolute monarchy on the basis that hereditary dynastic succession preserves the incentives for longtermist approaches to governance, which implies convergence3 to minarchism over time. Couple this with “voting with your feet”, and you get what Hoppe (and today's neoreactionaries) espouse. I reject this approach. The Deutscher Bund followed this model, and Frederick the Great is probably the closest historical example to the enlightened absolutism propagated here. Yet he was idolised by the Nazis, and they portrayed themselves as successors to this outlook to gain political legitimacy. Hoppe's view is far too similar to fascism, and can easily be appropriated by such (hence why many leftists often argue that libertarians are covert fascists).
Liechtenstein is a great counterexample, but what happens once Hans Adam II dies? For most of history, monarchs were either tyrants or cowards not exercising their full powers (as in UK) as Hans Adam II does. Liechtenstein, and Gulf states (not libertarian but still well-governed) are exceptions to the rule.
However it does not follow that elective democracy is second-best. I think the Chinese whole-process democratic system, with a libertarian party governing, is promising. What most Westerners get wrong about China is that opposition parties play a prominent role in policymaking, with proposals heavily debated and consulted amongst these before being adopted. Indeed, I hear from some Chinese friends that these lead to substantive policy changes and influence, and so is not merely symbolic.
To the extent that suboptimal policy outcomes, such as zero-Covid lockdowns or slow vaccine rollouts, arise from this, it is down to the more liberal and market-oriented elements in the CCP not having enough influence, as opposed to democratisation being superior. One-party states bring with them a set of (ideological) elites that can provide checks and balances to tyranny, and factions for internal debate too. Throughout history, one party states have pretty much always been fascist, communist, or arise via sham elections. It is surprising that no country has attempted to codify a one-party system operating on other ideological frameworks.
Nonetheless, all governments require some discipline and accountability to function effectively to its citizens benefit. Hans Adam II is obviously right that the role of government is to provide a service. Monopolies are never great at this. Yet democracies impose political monopoly; just with changes to who rules. We need competition and innovation in governance for a good service.
This is why I think these goals, and in general the goals of democracy, are probably better achieved by just allowing communities to peacefully secede. So if leftists oppose libertarian one-party rule, they can establish a charter city and compete directly with the libertarian one-party. So political competition is facilitated.
A hypothesis I am currently entertaining is that much of the problems that arise via preference aggregation (mechanism design) in governance can be resolved simply via ending political monopoly. Almost all polities in history imposed such, whether democratic or autocratic. People are hence deprived of their right to challenge leviathans on an equal footing, and there lacks a market process to discover which governance models are efficient. If libertarians are serious about Schumpeterian creative destruction and spontaneous order, then the right to peaceful secession must be codified.
More redistribution might be desirable if AI alters our relationship to work. There are left-libertarian frameworks compatible with this that adopt a property-rights approach. Georgism is consistent with libertarian governance, and there is an argument that much of the wealth of capital owners is from reaping the gains from unearned and unjustified claims to land. The details are a work in progress however, and such debates are what the following proposal could resolve.
If we accept a nonzero probability that an increase in immigration will reduce wages for some workers (given labour-market heterogeneity), then it could be rational to vote for immigration restrictions, at a substantial cost to others. Similar logic applies to the poor voting for welfare, farmers lobbying for subsidies, and so on.
Many dynastic states are far from minarchies, as North Korea shows. Yet these libertarian monarchists believe they will converge to minarchy over time, as they experiment whilst profit-maximising and discover that markets are superior here.