Charter Cities, incentives, and colonialism.

I’ve been aware for a while now of Paul Romer and his ideas about charter cities. Saw the TED talk, read the Atlantic article. The gist of it is, from the Atlantic:

poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate.

Naturally, it’s more complex than that, involving (at the very least) a poor nation (Country A) ceding sovereignty over an area of land to a richer nation (Country A) in order to import the laws and practices that made Country B so successful in the first place. I ought to back up. Romer has a very high opinion of the role of law and customs in economic development, which is not necessarily a bad thing. Stability and civil society are massively important in creating societies where economic growth happens, and more importantly happens to people other than the local elite.

I have to pick out a few problems with Romer’s ideas, though.  First, I have to point out that generating wealth and distributing it in a manner that could be described as remotely equitable are not the same thing, as I mentioned above. I’d further suggest that the relatively equitable distribution of wealth in most developed countries is the result of things that would not necessarily find their way into a civic charter. The unique position of unions in the industrialized West, for one. The role of the defense industry and the Cold War (especially in the United States). And, most importantly for our purposes, the leg up a nation gets by being the metropole of a substantial colonial empire.

I mention this because of the frankly neo-colonialist nature of Romer’s project. The idea that Country A cedes sovereignty to a rich nation or non-profit or consortium of economic interests is redolent of the history of the East India Companies – which, while the introduced cricked to India and curry to England, are not necessarily considered examples to be followed in economic planning.  Is the money from a Romer-style charter city going to the metropole, whatever that ends up being, or will it stay in Country A? Romer uses Hong Kong as his example, and points to China’s development of special economic zones around Hong Kong and subsequent staggering economic growth.  I’d question the extent to which recreating the Great Powers’ 19th Century heyday in the name of economic development is a good idea, and the extent to which the history of China, which saw an extensive set of what are, in many ways, charter zones during the 19th and early 20th centuries, is a model for, say, Madagascar or Haiti.

My final concern is with Romer’s insistence that people will vote with their feet, moving from areas of bad rules/low development to areas of good rules/high development. I’d raise to example of illegal imigration and visa violations in the United States. This economic migration is, I’d argue, in large part due to bad rules/incentives on the pull side, and in spite of bad rules/incentives on the push side. Bad rules provide little disincentive to the consumers/exploiters of illegal immigrant labor, while there is a major risk for the providers of that labor. Romer would, I’d guess, argue that the rules are good enough and the rewards for moving to a country with those rules are high enough, but I’d contend that that’s an overly optimistic way of interpreting the situation. The laws and customs may be less bad in one place, but that’s not an argument for exporting them, in an explicitly colonialist manner, to a place where the laws are more bad. If the goal is really to promote sustained development of the poorer nation-states of the world, I’m skeptical as to how they’re going to accomplish that by creating little Hong Kongs, with all the sordid history of colonialism and unrest that entails.

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  1. I like that the quote you chose uses the term “enlightened” to describe those who would manage these leases on sovereignty. Enlightenment in the Kantian sense is the recognition by leaders that people can develop on their own (but still must ultimately “obey”) in an essentially pluralistic manner. What you have described here, in actually, is less enlightened pluralism than another wave of Western paternalism. Such an approach doesn’t address the main problem of helping such countries develop, but instead only attempts to prove that Romer, et al’s version of development is “true.”

    There may be a future for this concept of charter cities, but hopefully in a more cooperative rather than competitive fashion.

    • mattstrong
    • June 16th, 2010

    As it becomes easier to to develop maintain networks of choice, I tend to believe that political forms other than typical nation-states will become the norm. This may be the result of reading Neal Stephenson’s Diamond Age at a formative time in my political development.

    I’d also point out that the quote I took was from the standard “this is me exercising journalistic skepticism” part of the article, so enlightened was meant to be ironic.

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