The Great Unbundling, As Tech Capital Goes Nomad, Can the Modern State Keep Up?

The dawn of 2024 was met with the usual flurry of resolutions and forecasts. Yet, amid the noise, a quieter, more seismic shift was being etched into corporate registries and legal filings. As reported by John Xavier, the founders of Google, Larry Page and Sergey Brin, have begun the meticulous process of moving parts of their vast business and investment empires out of California. This is not a corporate relocation of factories or headquarters in the traditional sense. It is a migration of capital, intellectual property, and legal identity—a process as silent as it is significant. This movement, echoed by other tech luminaries, coincides with California’s political discourse around implementing a one-time wealth tax on its billionaires. Together, these trends expose a fundamental rupture in the 21st-century social contract: the accelerating detachment of hyper-mobile capital from the fixed geography of the nation-state, and the profound crisis of governance and community that follows.

The narrative is deceptively simple: wealthy individuals, facing potential tax increases or regulatory discomfort, are voting with their feet—or rather, with their filings. But to reduce this to a story of tax avoidance is to miss the deeper, more disruptive truth. We are witnessing the “Great Unbundling” of wealth from place, a phenomenon enabled by digital technology that challenges the very foundations of how societies are funded and governed.

The New Nomads: Wealth in the Age of Dematerialization

Historically, wealth was tangible and territorially bound. Industrial fortunes were tied to steel mills in Pittsburgh, automobile plants in Detroit, or shipping ports in Rotterdam. This physicality created a mutual dependency. The capitalist needed the local workforce, infrastructure, and political stability. The community, in turn, relied on the jobs and taxes the enterprise provided. Moving was a monumental, disruptive undertaking.

The fortunes of the digital age are different. They are largely dematerialized. As the analysis notes, “Code doesn’t care about borders. Intellectual property fits neatly into legal entities.” The core assets of a Sergey Brin or a Larry Page are algorithms, patents, trademarks, and equity holdings—all existing as data and legal constructs. These can be re-domiciled to Nevada, Texas, Singapore, or Malta with comparative ease, often without the individual ever needing to change their primary residence. The “factory” is a global network of servers and a distributed workforce; the “product” is delivered instantaneously across the internet.

This grants capital an unprecedented flexibility. It also, as the article starkly observes, “weakens the idea of obligation.” When your economic existence is no longer moored to a specific plot of land or a local community, the moral and practical impetus to contribute to that community’s upkeep—through taxes funding schools, roads, and social safety nets—diminishes. The relationship becomes transactional, not symbiotic. You are a user of California’s ecosystem, not necessarily a stakeholder in its future.

California’s Conundrum: Taxing Phantoms

California’s contemplative wealth tax is the spark illuminating this powder keg. The state, home to Silicon Valley’s explosive wealth creation, faces a paradox. It has been the incubator for these world-changing companies, providing a unique ecosystem of talent, universities, venture capital, and a (once) permissive regulatory environment. Yet, the very wealth this ecosystem generated is now exhibiting the capacity to exit, just as the state considers asking for a greater share to address housing crises, homelessness, and infrastructure decay.

The state’s problem, therefore, “isn’t simply whether a wealth tax is good policy. It’s whether states can still shape outcomes when the people they’re trying to govern can be easily replaced.” This is the core dilemma of governance in a digital age. The traditional tools of fiscal policy—taxation and regulation—assume a captive audience. When your most valuable “residents” are, in economic terms, phantoms with portable assets, those tools become blunt, even counterproductive. Aggressive taxation may simply accelerate the capital flight, leaving the state with a smaller pie to divide.

This creates a dangerous race to the bottom. Other states and countries, eager to attract this fluid capital, offer ever-more generous tax holidays, regulatory waivers, and secrecy. The result is a global erosion of the tax base needed to fund the public goods—education, research, infrastructure, social stability—that ironically make innovative economies possible in the first place. It’s a self-cannibalizing cycle.

The Quiet Exodus and the Crisis of Public Goods

The movement of Page and Brin’s assets is notable for its “quietness.” There are no press conferences, no angry op-eds—just the clinical work of lawyers and accountants. This is how power operates in the information age: not through loud pronouncements but through subtle, decisive actions in the background. It is a form of silent, collective bargaining by exit.

This exodus poses an existential question for societies worldwide: “How do you fund public goods when the most mobile people benefit the most from systems they no longer feel tied to?”

The modern tech billionaire is arguably the greatest beneficiary of public investment in history. Their success rests on the foundation of the state-sponsored internet (DARPA), publicly funded universities (Stanford, MIT) that produce talent and research, a legal system that enforces intellectual property rights, and physical infrastructure that keeps society functioning. Yet, the dematerialized nature of their wealth allows them to psychologically and legally distance themselves from these origins. The system is seen as a platform to be leveraged, not a community to be sustained.

The funding crisis for public goods is therefore not just a budgetary issue; it is a philosophical one. It strikes at the heart of the social contract. If the wealthiest can opt out of contributing proportionally, the burden falls increasingly on the less mobile: the middle class, small business owners, and wage workers. This exacerbates inequality and erodes social cohesion, fueling the very political instability that the mobile capital seeks to avoid.

The Global Ripple: AI and the Concentration of Capital

California’s tension is a bellwether, not an anomaly. As the article predicts, “As AI and automation concentrate wealth further, more governments will face the same dilemma.” The next wave of technological transformation, driven by artificial intelligence, is poised to create even more staggering concentrations of wealth, potentially in even fewer hands. The capital generated by AI will be the ultimate dematerialized asset—pure intelligence and automation, untethered from any specific location.

Governments from the European Union to India will grapple with how to tax and regulate entities whose economic presence is a server cluster in one country, legal headquarters in another, and user base everywhere. The fight over digital services taxes is just the opening skirmish in this larger war.

Navigating the Trade-Offs: Possible Paths Forward

There are no simple solutions, only complex trade-offs, as the article concludes. However, several potential paths are emerging from the discourse:

Global Coordination: The only effective answer to mobile capital is coordinated action. Initiatives like the OECD’s global minimum corporate tax represent a fledgling attempt to prevent the race to the bottom. Expanding this logic to wealth taxes and transparent registries of asset ownership (like beneficial ownership registers) is necessary but politically fraught.
Taxing What Can’t Move: Governments may shift fiscal focus to taxing less mobile bases: land, real estate, consumption (VAT/GST), and data/local network effects. A land-value tax, for instance, targets the un-movable value derived from location within a thriving community—value that even a billionaire’s primary home captures.
The “Beneficiary Pays” Principle: Developing more sophisticated mechanisms to tie tax liability to the derivation of benefit. This could mean formulary apportionment of corporate profits based on where sales, users, and data are generated, not where IP is legally held.
Reinventing Civic Obligation: Beyond taxation, there needs to be a renewed cultural and political narrative about the obligation of wealth to place. This involves celebrating and demanding philanthropic investment in local infrastructure (as with some billionaire-funded charter schools or housing projects), but also recognizing that philanthropy is no substitute for democratically determined taxation.
The “Exit vs. Voice” Dynamic: Political scientist Albert Hirschman described responses to dissatisfaction as “exit” (leaving) or “voice” (trying to fix the system). The ease of exit for capital undermines the incentive to use voice. Policies that gently raise the cost of pure financial exit—while improving governance and transparency to make “voice” more attractive—could help rebalance the relationship.

The quiet changing of addresses by Silicon Valley’s pioneers is more than a financial maneuver. It is a signal flare, illuminating the precarious new world of the 21st century. It asks us whether we can build societies that are more than just temporary platforms for extracting value, and whether the idea of a shared civic fate can survive in an era where the most powerful among us can, with a few legal documents, float above it all. The future of equitable governance depends on our answer.

Q&A: Delving Deeper into the Unbundling of Wealth and Place

Q1: The article mentions the move is partly due to concerns over “data privacy, security, and intellectual property rights.” Is this a legitimate operational reason or a convenient pretext for financial migration?

A1: It is likely a confluence of both, representing the complex motivations behind such decisions. Legitimate Operational Reasons: States like Nevada, Wyoming, or Delaware offer specific legal advantages. They have more flexible corporate laws, stronger asset protection trusts, and courts seen as more predictable for business disputes. For individuals managing vast, complex asset portfolios and sensitive IP, optimizing the legal architecture is a rational business decision. Different jurisdictions also have varying data localization laws; restructuring can be a way to navigate the patchwork of global regulations (like GDPR vs. US law). Convenient Pretext: However, these operational benefits are inextricably linked to financial outcomes. Stronger asset protection shields wealth from creditors and, potentially, future tax claims. Choosing a state with no income or capital gains tax (like Florida or Texas) for holding entities has a direct and massive financial impact. The discourse of “operational efficiency” and “regulatory optimization” often serves as a professionally acceptable language for what is, at its core, also a strategy of wealth preservation and tax minimization. The two motivations are mutually reinforcing, not mutually exclusive.

Q2: If physical presence matters less, what does keep billionaires and their companies tied to places like California or New York? What are the “stickiness” factors that might slow this unbundling?

A2: Despite digital mobility, powerful “stickiness” factors remain:

The Human Ecosystem: Silicon Valley’s greatest asset is its dense network of talent, investors, and innovators. The serendipitous collisions that drive innovation still happen in physical spaces—at coffee shops, conferences, and university labs. This ecosystem cannot be replicated overnight elsewhere.
Brand & Prestige: Being headquartered in Palo Alto or Menlo Park carries significant brand equity and signals being at the epicenter of tech. This matters for recruiting top talent who want to be “where the action is.”
Personal Ties: Many founders have deep personal, familial, and social roots in the Bay Area. Their lives, friends, children’s schools, and preferred lifestyles are there. Moving one’s legal entities is easier than moving one’s life.
Remaining Physical Assets: While IP is mobile, billionaires still own immense physical assets—corporate campuses, R&D labs, and lavish personal real estate. These are illiquid and costly to abandon.
However, these sticky factors are under pressure. Remote work technology (accelerated by COVID-19) has diluted the necessity of physical presence. Other regions are actively building rival ecosystems (e.g., Austin, Miami, Zurich). The stickiness is real, but it is no longer an immovable anchor.

Q3: The article suggests governments might respond by making it “harder for wealthy people to buy land or businesses.” Would such policies be effective, or would they simply be punitive and distort markets?

A3: Such policies are a double-edged sword and likely more symbolic than comprehensively effective.

Potential Effectiveness: They could target a specific vulnerability—the desire for trophy assets, agricultural land, or critical infrastructure. Limiting foreign or absentee ownership of residential real estate (as seen in Canada and New Zealand) aims to address housing affordability and prevent communities from becoming enclaves for the global rich. It could make pure financial “exit” less comfortable if one cannot easily establish a physical foothold elsewhere.
Drawbacks and Distortions: These policies can be easily circumvented (purchases through trusts or shell companies), punish legitimate investment, and smack of populist resentment rather than thoughtful policy. They could distort property markets and deter the beneficial foreign direct investment that communities need. Most importantly, they fail to address the core issue: the mobility of financial and intellectual capital. A billionaire can still move their $10 billion trust to Reno while keeping their $50 million Palo Alto mansion; the wealth has still fled. The policy feels like closing the garden gate after the most valuable birds have already flown.

Q4: Could this trend lead to the rise of “private cities” or charter cities funded and governed by tech billionaires, essentially allowing them to build their own jurisdictions with tailored rules?

A4: This is not just a possibility; it is an active ambition in some circles. The concept of “charter cities” or “startup cities”—zones with special economic and legal governance—is promoted by thinkers like Paul Romer and libertarian tech elites. Projects like Telosa (proposed by Marc Lore) or earlier efforts in Honduras (Próspera) envision cities built from scratch with optimized regulations, private infrastructure, and innovative governance models. For a mobile billionaire, this represents the ultimate solution: if you can’t find a jurisdiction that suits you, create your own. These models promise efficiency and innovation but raise profound democratic questions. They risk creating neo-feudal enclaves where citizenship is contingent on economic contribution, and rights are determined by private contract rather than constitutional guarantee. They represent the logical extreme of the unbundling trend: the secession of the wealthy not just from tax obligations, but from the civic body itself.

Q5: What is the role and responsibility of the tech billionaires themselves in this dynamic? Is there a ethical argument for them to remain engaged fiscal citizens of the places that enabled their success?

A5: This is the central ethical question. Beyond legal obligations, there is a powerful moral argument grounded in the concept of justice as fair play and reciprocity. Their fortunes were not created in a vacuum. They leveraged a system built by collective, generational investment:

The Infrastructure: The internet, the electrical grid, the transportation networks.
The Knowledge Commons: Publicly funded research that underpins everything from algorithms to battery technology.
The Social Stability: The rule of law, educated workforces, and relative social peace that allow businesses to flourish.
To benefit enormously from this system and then structure one’s affairs to minimize contributing back to its maintenance is seen by many as a form of free-riding. The ethical argument is that with great wealth and power comes a proportional responsibility to sustain the commons that made that wealth possible. This doesn’t mean writing a blank check to inefficient government, but it does argue for engaged “voice”—participating in the democratic process to improve governance—and accepting a robust tax burden as the price of citizenship in a society one has profited from so handsomely. Their legacy may ultimately be judged not by their net worth, but by whether they chose to be architects of inclusive communities or passengers on a lifeboat they helped themselves to first.

The Great Unbundling, As Tech Capital Goes Nomad, Can the Modern State Keep Up?