Points I made about charter cities and free cities

I do favor experimentation in these directions, but often at Liberty Fund conferences, and indeed more generally, I play the role of contrarian.  I am not supposed to report the comments of others, but here are a few of the points I made in the discussions over the weekend:

1. It is striking that charter cities — a partial unpacking of nation-states — are proposed for a region, namely Central America, where Central American unification has been an ongoing proposal for hundreds of years.  Could it be that Central American nation-states were not optimally carved up in the first place?  Are cross-national unification and charter “unpacking” really polar opposites as proposals, or do they have more in common than it might at first appear?

2. Under what conditions would, in equilibrium, landowners capture most of the value created by a charter or free city?  Well-governed land would seem to be very scarce.

3. To what extent do charter cities require the active support or at least implicit support of a major hegemon?  Great Britain and then the U.S. backed Hong Kong and Singapore.  The U.S. took over Puerto Rico.  Yet Portuguese Goa and French Pondicherry are no longer real entities in part because no powerful government stood behind them.

4. To what extent are landlocked charter cities viable, or will their rents get swallowed up by larger and adjacent neighbors, much as India gives Nepal somewhat of a raw deal on transport?  Are successful charter and free cities more likely to be on the water?

5. Are the most likely countries to approve charter cities those which plan to use them as “special purpose vehicles” to keep offshore oil and gas revenues out of the hands of the legislature or other domestic “interest groups”?

6. More generally, what kind of selection process will rule which charter cities are approved and which wither on the vine?  How much will this selection process make the original idea worse (or better)?

7. When it comes to local land rights and the like, to what extent can the new legal authority of a charter or free city operate independently of the original legal system?  Or must the new legal authority defer to the documents, maps, and other decisions of the previous authority?  How many of the new legal decisions can in fact be disembedded from the previous legal authority?

8. Are charter and free cities likely to work better or worse with free or restricted immigration?  Which are they likely to evolve?


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