Post by Michelangelo Landgrave (occasional blogger for the site, joined February 2014). See:

• all posts by Michelangelo Landgrave
• blog post introducing Michelangelo Landgrave

This post is a response to Nathan Smith’s recent post Make More Singapores! where he makes a call for the creation of more city-states like Singapore. I have two small quibbles with Smith. Firstly, I believe that we need start-up cities as well as charter cities. Secondly, I disagree with Smith when he remarks that current international relations make it unlikely that we will see the birth of new city-states.

I have discussed start-up cities previously here, but allow me to refresh readers on the topic nonetheless. City-states are some of the earliest forms of political organizations, but the concept of charter cities is much younger and can be attributed as Stanford Economist Paul Romer’s thought child. Under Romer’s charter city arrangement a host government would cede administration of a region of their land to a 3rd party. The 3rd party would administer the region under its laws this would hopefully allow for 1st world institutions to be imported abroad. One major concern about Romer’s charter city proposal would be that it could quickly become a form of colonization under a new label.

An alternative proposal to Romer’s charter city has been the start-up city. I previously described the start-up city as being different in that it remains under the administration of the host government. By avoiding using a 3rd party as an administrator a start-up city avoids the potential for neo-colonialism. As I have written previously, those nations with a significant emigrant population living in the global north have a comparative advantage in forming start up cities since they can draw on the expertise of their emigrant population. In retrospect this description undersells the start-up city concept, as a start-up city does not content itself with trying to emulate the existing institutions of 3rd parties, but also seeks to create entirely new forms of institutions.

The world needs both charter and start-up cities. The former have a comparative advantage in importing institutions that have proven useful and the latter may have the comparative advantage in experimenting with new institutions to see if improvements can be made. Most city-states today exist somewhere in between ‘charter’ and ‘start up’ city.

I propose viewing city-states as being defined by two key characteristics:

(1) The level of sovereignty they have.
(2) Whether their goal is to emulate pre-existing institutions or to experiment with new institutions altogether.

Most cities fluctuate between these categories over time. Singapore began its life as a sovereign charter city content with following British institutions, but has continually moved towards acting as a start-up city willing to experiment with everything from DRITI-esque immigration policies to managed lanes.

Hong Kong meanwhile is a former non-sovereign charter city under British administration that became a constituent charter city after the transfer of its sovereignty to the People’s Republic of China. PRC China’s ‘one country, two systems’ policy has effectively created a federal system that allows Hong Kong to act as a constituent member of a larger Chinese federation. Of relevance to us in the open borders movement, Hong Kong does not currently seem willing to act as a start-up city when it comes to its immigration policies despite it otherwise sharing many characteristics with Singapore. Both Singapore and Hong Kong are populated mainly by ethnic Chinese who lived under British administration for most of the modern era and today boast some of the most market friendly regimes in the world. Both Singapore and Hong Kong have control over their migration policies, but of the two Singapore has thus far been more welcoming of migrants.

Hong Kong’s reluctance towards open borders seems to stem chiefly from a fear that Beijing would encourage mainland Chinese to move to Hong Kong in an effort to undermine Hong Kong’s political autonomy. Taiwan shares a similar fear that opening its borders with mainland China would also endanger its own autonomy. The best keyhole solution in both cases would be to allow open borders, but not open citizenship.

An example of a non-sovereign start-up city is the greater San Francisco Bay Area. San Francisco is a region in California that enjoys both a high concentration of migrants and powerful corporations. As I touched upon in the beginning of this post, I disagree with Smith that the current international system makes it unlikely for new city-states to form as I believe that San Francisco is already a city-state and is poised to gain further autonomy in the near future.

In terms of immigration policy several cities in the greater San Francisco area have adopted ID programs that provide documentation for all of their residents, regardless of their immigration status. San Francisco was instrumental in the passage of the California TRUST Act, which limits the amount of cooperation between local governments and federal authorities in the enforcement of immigration policy. Most of the major corporations based in San Francisco in turn are leading the current immigration reform movement in the United States. It is clear as such that San Francisco has radically different views on what immigration policy should be and this difference in political opinion translates over to other public policies as well.

It is granted that due to the experimental nature of start up cities they will create bad institutions as well as good institutions. San Francisco has developed better institutions than the rest of the United States with dealing with its migrant population, but has also produced bad institutions in such areas as transit or housing. This is okay and is not an argument against start up cities. Failure is an essential part of the creative destruction process.

In the past few months San Francisco has been attempting to gain greater political autonomy in the form of the ‘Six Californias’ ballot proposition. If passed by Californian voters the proposition would split the current state of California into six new states, with much of San Francisco forming the state of Silicon Valley. The proposal is being carried out by businessman Tim Draper and being sold as being for the benefit of all Californians, but it is clear that it chiefly an attempt for greater autonomy for San Francisco. It is doubtful that the Six Californias initiative will pass this year, but I would not be surprised to see San Francisco to gain greater political autonomy in my lifetime.

Many of the great city-states of history achieved sovereign status by attaining sufficient military might to fend off their neighbors, and on this point I agree with Smith that the current international system discourages secession from the major powers. Then again, has secession ever been easy when one neighbors a major power?
A city-state however needs not full sovereignty; it can exist as a constituent member of a larger federation. The Italian city-states were fully sovereign, but at the same time many city-states existed in federation with the Holy Roman Empire. The United Arab Emirates and the Swiss Confederation are both modern day city-state federations. Several cities in modern PRC China enjoy a high degree of autonomy in economic and legal affairs as ‘sub-provincial divisions’.

A necessary condition for city-statehood is for it to house an economically affluent population that has substantial political differences with the rest of the current nation. San Francisco meets this condition and as such I don’t believe it wrong to classify it a city-state. It may not have the military prowess to attain full sovereign status, but I could see it becoming a constituent city-state within the United States.

Such a city-state would be extremely beneficial to the open borders movement. San Francisco already has favorable policies towards its large migrant population. If it gained the ability to set its own immigration policy it would surely move towards even more open borders. Regardless of their exact nature, city-states are of immense importance to the open borders movement for two reasons;

(1) They bring better institutions to those who are unable to migrate and,
(2) They provide laboratories in which to create better institutions than ones currently known to us.

All in all I agree with Smith that we need more Singapores, but qualify it by adding that we also need more San Franciscos.

Michelangelo Landgrave

Michelangelo Landgrave is an economics graduate student at California State University, Long Beach.