Paul Romer’s New Project: Charter Cities

Sebastian Mallaby writes in The Atlantic about Paul Romer’s new project – the creation of charter cities in low-income countries.  You can read the article here.

13 replies on “Paul Romer’s New Project: Charter Cities”

The world is a big place and many things can happen …… This has already been damned with faint praise by comparison to Hayek Liberties.

Far better to live in fantasy, than to study what we are doing to the real world.

We seem to have stumbled on a formula for beggaring tiger economies: unrestricted banking, rediscovered every 70 years or so. Enclaves for foreign ideas are better called beachheads. They enable full economic warfare for much the same reason as military beachheads, but cost nothing as they are profitable.

To “defeat” Islam, it is going to be necessary for the rich infidels to make the subject populations capitulate to secularism, by becoming wealthy, obssessed by free porn and cut-throat competitors. Establishing the idea as helpful is hardly a masterstroke!

President Ronald Reagan used to often evoke the sermon of John Winthrop, governor and leader of the Massachusetts Bay Company, A Modell of Christian Charity, written on board the Arbella on its voyage to Boston Harbour in 1630: “…that men shall say of succeeding plantacions: the lord make it like that of New England: for wee must Consider that wee shall be as a Citty upon a Hill, the eies of all people are uppon us,”  

The dream of a America as a shining white city on a hill has been a longtime underlying theme of American foreign policy and so Romer’s proposal appears to have the same naivety which propelled some ill-fated foreign adventures.

In recent years plans by foreign governments and companies to lease land in other countries for food production have raised concerns about the potential for instability, while many developing countries lareqady have enclaves where life and business replicates that in rich countries.

However, ceding control to a city would appear to require an authoritarian government.

In for example the city state of Singapore, the People’s Action Party of the majority ethnic group, the Chinese, has governed since 1959, seven years before independence.

Where there was a risk of a change of government and a change of policy, could the concept of “charter cities” work.?

But when African teenagers do their homework under streetlights, isn’t Romer right to think the unthinkable?

Asia and Africa are responding to more practical solutions and Taiwan’s Foxconn electronics manufacturer which has 300,000 workers in a city within a city in the Chinese city of Shenzhen, is now considering letting employees live beyond its controlled area.

I wonder if one of the countries he declines to mention is Ireland. Perhaps the Brians Signed off Dublin to the Canadians in a masterful debt for equity swap.

I for one welcome our new Canadian leaders and look forward to the infrastructure, services and employment their new ‘controlled area’ will bring.

“To attract that missing ingredient to his city, Henry hit on an idea that has enjoyed a sort of comeback lately. He devised a charter for Lübeck, a set of “most honorable civic rights,” calculating that a city with light regulation and fair laws would attract investment easily. The stultifying feudal hierarchy was cast aside; an autonomous council of local burgesses would govern Lübeck. Onerous taxes and trade restrictions were ruled out; merchants who settled in Lübeck would be exempt from duties and customs throughout Henry the Lion’s lands, which stretched south as far as Bavaria. The residents of Lübeck were promised fair treatment before the law and an independent mint that would shelter them from confiscatory inflation.”

Private corporation-run colonialist outposts in the Third World, likely backed up through military force, both government and mercenary. What could possibly go wrong?

I’m sure that (say) an East India Company would do great things, and be welcomed universally with open arms by the lucky new subjects. Hell, we should start a couple in China as well.

Just flying through the topics at the Irish Economy blog site this evening in a rush – saw this blog entry – for benefit of anyone here reading this, you might like to check out Paul Romer some time. I did a while back, and it really was worth the effort. Especially if you are interested in the creation of wealth through human endeavours in the 21st century world. Must dash again, but would love to engage more here in the debate. BOH.

Roemer’s theory of endogenous growth is manna to academics. It is also maddeningly perverse. A case of putting everything in its right place and knowing that everything has a right place. In this case that is ‘intelligence’. There is no contradiction between owning a Range Rover, reading some socialist-lite material and espousing the virtues of the poor. Smoked salmon capitalism and socialism all round please. Would Singapore qualify as a charter city? May be. But Singapore is not Western Europe. I like the West – warts and all.

@ Alchemist,

There is no contradiction between owning a Range Rover, reading some socialist-lite material and espousing the virtues of the poor.

I agree, Romer’s ideas do try to incorporate every extreme, and every possible approach into some kind of unified theory or model. Which at times can feel a bit too neat and tidy. BOH.

@ The Alchemist

Having experienced the filth on Dublin’s DART, the Singapore Metro rule of banning food and drink onboard, wouldn’t be an abuse of human rights, if copied in Dublin.

Singapore stands apart in Asia for its zero tolerance for corruption.

So if one is Chinese, straight, middle class and law abiding, then it’s OK.

However a single person has to be at least 35 to be able to buy an apartment which cannot be bigger than a 2-bed.

Alternatively rent in SG and buy in Kuala Lumpur.

One feature common in Singapore which would be likely replicated in a “charter city” is having English as the first language children learn with the early emphasis on “doing well” in life – – for some no doubt, ending up knowing the price of everything but the value of a lot less.

Fantastical stuff. The damage that western aid does to Africa must be recognised, money is fungible after all.

I recommend people read Jane Jacobs on the economic development of cities. and also Michael Porter on successful cities, specifically the importance of clusters.

As Jacobs says, the only way the people of Ehtiopia will ever be prosperous is if they leave that wretched place.

I’m not defending the colonisation of Africa but at least it brought order and some semblance of an economy to those places even where exploitation was involved.

Do gooders, more harm than good?

For every Free City that worked there are twenty in history that vanished. Or worse acted as the excuse to absorb the entire area under an occupying army.
And further, History defines these areas as gateways but only in the way a gateway controls the narrow choke point.

But why the heck the Republic of Madagascar needed some Yankee when all they needed was look across the strait to Republic of Mozambique to receive a Masterclass about all this via the Portuguese treatment of that area.

There are other types of enclave!

The City of London is one. The IFSC, I submit, is another. They exist as physical entities in advanced societies and require well educated workers. They can be devastating if they are profitable….. But the rentier class is supreme and very difficult to dislodge for as long as that success lasts. They prey upon other jurisdictions. They provide special services.
A euphemism for money laundering from illegal trade and corrupt practices. Pecunia non olet. But it does buy as many politicians as is necessary. The natives become ruined. But their leaders are wealthy.

I would have two concerns about this: Firstly, there may be a race to the bottom whereby poor countries compete in terms of the laxity of the regulation they are willing to allow in their chartered region or the incentives they will provide etc.

Secondly, I’m not clear on how the chartered city spreads wealth to other areas – do the taxes remain in the host country or are they repatriated, is there free movement into and out of the city? etc.
As the city grows it is likely to have disproportionate power in the country also which may or may not be desirable.
An interesting idea for sure though but requiring some caution I expect.

Stunning start by Romer on this idea, lots of work to be done on designing laws that would have the desired effect. Follows on nicely from his previous work as an academic economist. Very brilliant guy!

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