In an article on charter cities in The Atlantic, Sebastian Mallaby has a good summary of how the Hanseatic League of cities emerged in the Middle Ages from what was arguably the first charter city.
When Henry the Lion founded Lübeck, he wrote a charter that specified “a set of ‘most honorable civic rights,’ calculating that a city with light regulation and fair laws would attract investment easily.” The city itself was a dramatic success. It also spawned clone cities that copied its charter. See the article for the details in this remarkable historical episode. (It even has pirates!)
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The New Enterprise blog on America.gov facilitates discussions between entrepreneurs from the United States and the rest of the world. Ikuemonisan Banabas Ayobami, co-founder of the Glimmer of Hope Foundation in Nigeria, recently discussed the importance of role models with Paul. Role models like Ayobami can instill in young people the productive and pro-social norms that greatly enhance the prospects for individual and economy-wide prosperity.
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The Jamaican government, led by Prime Minister Bruce Golding, recently announced that it would extradite Christopher Dudus Coke to the United States on charges of trafficking drugs and guns. Shortly after the announcement, violent clashes broke out between the Jamaican security forces attempting to apprehend Coke and the armed gangs in his stronghold of Tivoli Gardens in west Kingston. As of May 26, The New York Times reported a death toll of 44 in the clash.
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The Center for the Study of African Economies (CSAE), a research center in the Oxford Economics Department, held its annual conference in March. CSAE Communications Officer Karin Loudon took some time during the conference to talk to Paul about charter cities. You can listen to the resulting podcast here.
Paul recently spoke at the Konrad Adenauer Foundation in Berlin where he had a chance to speak with the editor of Germany’s Development and Cooperation Journal editor Hans Dembowski. You can read the full interview here.
HD: Isn’t the idea of starting a new city and deliberately defining new rules undemocratic and authoritarian?
PR: Rules may be legitimate to people because they voted for officials who made the rules. The same rules may be legitimate to others because they opted to move to a place where they apply. Many migrants respect the rules in destination countries. Nobody should be forced to come to what I’ve called a charter city, but more poor people should have the choice of moving somewhere with more opportunities. Charter cities would eventually develop systems of full democratic participation. Right now, the world needs more healthy new cities to accept the millions who want a change.
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Since the fall of 2009, Gallup has been releasing results from a worldwide survey conducted between 2007 and 2009. The survey suggests that roughly 700 million people worldwide would move permanently to another country if given the chance.
Gallup estimates that 38% of adults from sub-Saharan African countries would make a permanent move if they could. The desire to move tended to be stronger among people in countries with medium to low Human Development Index (HDI) scores compared to people from countries with high HDI scores. Of the residents in the developing world who would like to move permanently to another country, 80% would like to move to developed countries like the United States, Canada, France, and Spain.
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Paul answers questions about charter cities from Center for Global Development vice president Lawrence MacDonald.
Q: To some people, this is going to sound like a new version of colonialism or imperialism. Is it?
A: Let me pose a related question: Suppose a family from Haiti is granted the right to live in Vancouver as permanent residents but not as Canadian citizens. Is it colonialism or imperialism to offer this option to them? Or for them to accept? Because the family would be free to make the choice about whether to live in Canada, the answer is plainly no.
In the same way, charter cities are based entirely on voluntary actions. Only a country that wants to establish a charter city will do so. Only people who want to live and work under the rules specified in the city’s charter will move there. Free choice is essential for the legitimacy of the rules in a charter city. It is also what makes a charter city very different from colonial occupation.
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Robin Young, host of WBUR’s Here & Now, recently interviewed Paul about charter cities, specifically the notion that charter cities could create more choices for Haitians.
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Lawrence MacDonald of the Center for Global Development interviews Paul about charter cities in the latest Global Prosperity Wonkcast (link preview). The discussion ranges from desalination, to formal sector employment opportunities, to the Regional Assistance Mission to the Solomon Islands, to urban density, to storm surge, to the great state of Pennsylvania.
“…just because something is unfamiliar that doesn’t mean it’s inconceivable or it can’t happen…[T]hink more broadly [about] challenges that look intractable — poverty, the environment, green globalization, an urbanization wave of 3 billion people. If we open up our notion of what’s possible then these intractable problems look like real opportunities that could reshape the globe and change history.”
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Paul talks to Cafe Hayek blogger, and George Mason University professor Russ Roberts about charter cities on the latest EconTalk podcast. Topics include Haiti, social norms, congestion pricing in Stockholm, tradable fishing quotas, jaywalking in Zurich, Base Relocation and Closure, Jane Jacobs, Baron Haussmann, and casual Friday.
Edward Glaeser writes about the economic advantages of agglomeration for The New York Times Economix Blog. He notes that wages and productivity rise with population density. The correlation between productivity and density partly reflects the tendency for higher-skilled people to choose to live in denser areas. But Glaeser also believes that high-density cities are more productive because they allow people to connect and learn from one another.
For Glaeser, productivity is higher in cities not only because higher-skilled people choose to live in urban areas but also because higher density facilitates a more rapid exchange of ideas, allowing people to acquire productivity enhancing skills at a faster rate.
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At the cinema – called Hemak Cheat – rows of shacks line the floor and stage of a former single-screen auditorium. One of its high walls is dramatically corroding from the steady flow of tik s’oeuy – literally, “dirty water”, or raw sewage – cascading down from another settlement on the roof. Hundreds of bats squeal constantly overhead, and the residents share the space with a large pile of their own garbage.
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Rules are ideas about how people interact with each other. They are the formal laws and social norms that govern daily life. The legitimacy of formal laws often depends on their compatibility with social norms. Social norms can complement formal laws and, in some cases, stand in when formal legal enforcement is absent or inefficient. In a guest post for the Freakonomics blog, Kal Raustiala and Chris Sprigman write about social norms among stand-up comedians.
Comics that steal jokes rarely face formal legal action. But comedians often enforce an informal rule against joke theft by sanctioning the offending comic. A joke thief can expect to be bad mouthed and ostracized by comedians who are willing to incur a cost to punish unacceptable behavior. Raustiala and Sprigman argue that informal enforcement allows comedians to “assert ownership of jokes, regulate their use and transfer, impose sanctions on joke-thieves, and maintain substantial incentives to invest in new material.”
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Charter Cities recently ran an oped in an online German publication called The European. Here is the English language translation:
In too many places, weak or misguided rules hold people back. If people could migrate to better rules, they could improve their lives and, by their own actions, do much to reduce global poverty.
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This post examines how a country can use a charter city to overcome the challenge of commitment in economic development. This challenge arises when governments cannot reliably commit to the long term security of investors and residents. In order to overcome this challenge, a country can charter a new city that leverages the institutional credibility of partner governments.
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