Over the last few years, Iceland has provided a bit of counter-narrative to the anarchist critique of political government.

Most western democracies declared their pieces of the international finance sector “too big to fail” and bailed them out at taxpayer expense after the 2008 bank collapse. Iceland took the opposite tack.

Voters in Reykjavik, Iceland’s capital, elected an anarchist mayor, and six members of that mayor’s “Best Party,” to the city’s 15-member municipal council in 2010.

Voters in Iceland’s South, Southwest, Reykjavik North and Reykjavik South districts sent members of “The Movement” to the Althing (Iceland’s parliament, the oldest on Earth). Of particular interest is Reykjavik South representative Birgitta Jonsdottir, a Wikileaks volunteer and press freedom activist whose Twitter records were subpoenaed by the US Federal Bureau of Investigation (Iceland’s Interior Minister courageously refused to cooperate with the FBI’s harassment of Wikileaks).

Not bad, I have to admit, as states go.

Alas, something is rotten in Denmar … er, Iceland. That same Interior Minister, Ogmundur Jonasson, is pushing an Internet censorship agenda in the name of protecting children.

Halla Gunnarsdottir, one of Jonasson’s advisors, is out front with the usual bait-and-switch: “This move is not anti-sex,” she says. “It is anti-violence because young children are seeing porn and acting it out.” In fact, the initiative is neither anti-sex nor anti-violence: It’s just anti-freedom.

Thankfully, some heroes can be counted upon to remain heroic: Birgitta Jonsdottir opposes the scheme. She assesses its chances of passage as “near zero” and its chances of working if it did pass as even lower. Her only sign of weakness in the matter is that she sympathizes with Jonasson, musing that maybe he just doesn’t know any better.

Be all that as it may, Jonsdottir puts her finger on the big problem with political government, even in such an enlightened nation as Iceland: “The fact is that this bill has already made many companies think twice before hosting their business in Iceland — not because they support porn, but because they fear the country’s laws could transit into the kind of full-blown censorship commonly attributed to countries like China and Saudi Arabia.”

Jonasson’s scheme, in other words, produces regime uncertainty (per Robert Higgs, “a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns”).

Regime uncertainty is the state’s version of herpes: Its eruptions are unpredictable, it makes people think twice about intimate contact with the carrier, and yes, it sometimes literally kills babies. Among states — even Iceland, as this episode establishes — the infection rate is 100%.

The only issue I take with Higgs’s definition is that he defines it in solely economic terms and with respect to investors. I see no reason why it would not apply just as well to — for example — same-sex couples considering vacations in Uganda.

As Gideon J. Tucker put it in 1866, “no man’s life, liberty or property are safe while the Legislature is in session.” Not even in Iceland.