Charter cities and the long struggle 

Via Andrew Sullivan, Laura Freschi casts a dubious eye on the notion of charter cities:

These ideas share an overly-optimistic belief in a neutral, benevolent international community and its power to peacefully oversee imposed changes. All are tone-deaf to the very real degree of nationalism that does exist in basically all countries by now, regardless of whether they were misbegotten colonial creations or not. They also violate sovereignty as conventionally defined, which may be good or bad but is sure to provoke a nationalist reaction.

Matt Yglesias is skeptical, but not necessarily against the idea.

My personal take is that charter cities represent a huge opportunity both politically and economically to increase global prosperity and to foster better political institutions in developing nations without the heavy hand of colonialism. What I think Freschi forgets is that the closest thing we’ve ever had to an actual charter city in our time has been Hong Kong. And as we all know, Hong Kong has proven to be one of the most wildly successful economies in the history of human civilization in spite of its colonial roots. Could a non-colonial charter city be just as or even more successful?

The Heritage Foundation’s 2010 Index of Economic Freedom ranks Hong Kong as the freest economy in the world, just above the city-state of Singapore. The United States ranks right below Canada at number eight. Hong Kong has been sitting pretty in the number one spot for years.

This is in stark contrast to China proper, Hong Kong’s host nation, which ranks 140th overall – not quite in last place, but close enough. The last place of ranked countries is, not surprisingly, North Korea. (Afghanistan, Iraq, Liechtenstein, and Sudan are not ranked. Liechtenstein, with its robust banking economy and high standard of living is the black sheep in this last group.)

There is a dissonance between what Freschi is describing as a likely outcome of charter cities – a violent, nationalistic reaction on the part of host nations - and the reality of Hong Kong. That prosperous city has survived its reintegration with China proper, even if China itself has not embraced liberal democracy.

Freschi invokes Haiti as a place where ‘the promise of starting from scratch is an illusion’ – but charter cities are not necessarily starting from scratch at all. Rather, charter cities give countries new opportunity to start some things from scratch, without having to throw out the government or topple the military, and so forth. Hong Kong could hardly be described as ‘starting from scratch’. However, the city did provide an economic and political model which the Chinese could have fashioned their larger political and economic institutions after.

The Chinese certainly took a few plays from the Hong Kong playbook, but they never were able to move away from what David Brooks recently described as the ‘larger struggle’ between true, liberal economic freedom and state capitalism – or basically institutionalized crony-capitalism. Charter cities are one tool in this long struggle we can use to dismantle state capitalism and replace it with a truly liberal economic order.

Furthermore, charter cities are one way to vastly increase labor mobility in a world with too many restrictions on skilled and unskilled labor mobility alike. Free trade as a philosophy has become the accepted economic end-post for most people in the developed world, but free movement of labor has a long ways to go. Charter cities would be one way to allow not only little ‘laboratories of democracy’ to flourish, but to give much of the world’s underemployed a chance to join potentially very robust economies. This would also disrupt the sway corrupt governments hold over their citizens, hopefully in the long run nudging those nations to be more open and free.

Haiti may not be ready for a charter city – as Paul Romer has suggested – but nearby countries certainly are. One or two charter cities in the gulf region, perhaps another in South America, could lead to an entirely new economic dynamism in this hemisphere. America would no longer be the last best hope for migrant workers, and new capitalist models could take root in a region where increasingly leftist sentiment is on the rise.

It may not be a panacea – nothing is – but it’s certainly worth a shot.

About The Author

E. D. Kain

E.D. Kain is an Examiner Opinion Zone contributor, freelance writer, and blogger living in Arizona. He writes at True/Slant and at League of Ordinary Gentlemen... more
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