This post may seem off-topic, but from my point of view it’s relevant because I think of charter cities as part of the “master plan” for open borders. My master plan has four parts:

1. Advocacy and moral suasion
2. International migration deals, which would what the WTO has done for trade
3. Undocumented immigration and civil disobedience
4. Passport-free, or at least much less restrictionist, charter cities

See here, here, and here for more.

Anyway. The falling out between Paul Romer and Michael Strong/MGK Group seems to have been over a constitutional issue. What should the constitution of the new charter cities be like? Just what the two sides of the constitutional disagreement were is hard to discern and describe. It’s partly the lack of transparency by all parties, but more than that I think we’re hobbled by a lack of good theory. Theory gives us the vocabulary, the mental categories and the words to express them, with which to perceive what’s going on.

Let me start from the Concept page at the Charter Cities website:

The concept is very flexible, but all charter cities should share these four elements:

1. A vacant piece of land, large enough for an entire city.
2. A charter that specifies in advance the broad rules that will apply there.
3. A commitment to choice, backed by voluntary entry and free exit for all residents.
4. A commitment to the equal application of all rules to all residents.

The broad commitment to choice means that no person, employer, investor, or country can be coerced into participating. Only a country that wants to create a new charter city will contribute the land to build one. Only people who make an affirmative decision to move to the new city will live under its rules. They will stay only if its rules are as good as those offered by competing cities.

A charter should describe the process whereby the detailed rules and regulations will be established and enforced in a city. It should provide a foundation for a legal system that will let the city grow and prosper. This legal system, possibly backed by the credibility of a partner country, will be particularly important in the early years of the cityʼs development, when private investors finance most of the required urban infrastructure.

There are three distinct roles for participating nations: host, source, and guarantor. The host country provides the land. A source country supplies the people who move to the new city. A guarantor country ensures that the charter will be respected and enforced for decades into the future.

Because these roles can be played by a single nation or by several countries working together as partners, there are many potential arrangements.

This is admirably lucid as far as it goes, but I am struck by (1) the way it leaves the constitution of the charter city as fill-in-the-blank, and (2) the assumption that the crucial guarantor role must be played by a country.

Why would a country want to play the guarantor role? Presumably not for territorial aggrandizement. Possibly out of altruism, the presumptive (not always the real) motive for foreign aid. Wise constitutions don’t rely too much on altruism, however. Could a country profit by serving as the guarantor of a charter city? In one sense, that could make sense, because if better rules raise productivity, the guarantor could cream off some of the surplus value created while leaving everyone involved better off. But a crucial feature of the rules in developed countries is the distinction between private sector actors such as businessmen, who can sell their services to the highest bidder but cannot use force, and public sector actors such as judges, who cannot sell their services to the highest bidder but can use force.

The problem with relying on altruism is not just that altruism is rare, but that it doesn’t give specific instructions. Live for others? How? A stylized characterization of the constitutions of the wealthy West is that the #1 rule is that the rulers don’t make the rules, the ruled do. Suppose you tell Western bureaucrats to set up shop in a vacant plot of land in a developing country. They ask, “What are we supposed to do there?” We answer, the same thing you do at home. You guys run things well in the West, do the same thing here. But in the West, they are accustomed to serving the people. So the first thing the bureaucrats might want to do is hold an election, so they’ll have political bosses to obey and mandates from the people to carry out. But if the city’s just been founded, there’s no one to vote. So you have a chicken-and-egg problem. Later, when people move in, they’ll likely vote for different rules than the West has. And that seems to be the end of your experiment with exporting good rules to poor places.

Alternatively, the Western bureaucrats could obey their home governments. But those governments are democracies and obey their home electors, who will not have the interests of the charter city at heart. That the policies of a charter city should depend on the domestic politics, as distinct from the technocratic expertise, of another country, seems to be an unwelcome feature of a charter city whose staff are the servants of a foreign country. Is it possible to give Western bureaucrats, likely to have knowledge and integrity but not accustomed to taking initiative or setting policy, specific instructions to carry out, without letting good rules be overridden by local democratic politics or tied to irrelevant democratic politics abroad?

The following constitution is my attempt to resolve the question.

Continue reading Charter city constitutions: filling in the blank →