First, there is the minimal charter city. During a cruise ship vacation, everyone lives under cruise ship law. This works fine, and is easy to start up, but it also has limited applicability. No one has to make a big cultural shift, as long as they don’t get too drunk while playing shuffleboard out on the deck.
Second, there is hegemon-backed charter city. The British empire ran Hong Kong, and the mainland United States (partially) has run Puerto Rico and earlier managed the Panama Canal Zone. By definition, a hegemon is required to enforce the law in the external jurisdiction, and of course such hegemons may be scarce, unwilling, or their rule may be oppressive or counterproductive. Portuguese rule over Goa was not a major success, nor was British rule over India more generally. European extraterritoriality in China proper was an imperialist disaster. One problem is that exporting legal systems without exporting their cultural preconditions can lead to failure.
Third, some charter cities are based on the idea of a complementary exported culture. Singapore did in fact absorb many parts of British culture and law, and some parts of Western mores; it now feels like the most Western part of Asia. The partial export of Western law and culture has been extremely successful, and the role of culture here means there is strong indigenous support, within Singapore, for Singapore being the Singapore we all know and love. These are the charter cities that work best, but they are also the hardest to pull off.
You can think of the original charter city idea as postulating law as a non-rival public good. Why not just spread the best laws to more jurisdictions? But does spreading the law without the underlying culture suffice? You can think of the three kinds of charter cities, as mentioned above, as varying responses to this problem.
And spreading culture does not seem to be a public good at all, rather it involves a lot of hard work and it often fails or backfires.
This blog post is drawn from a talk I gave in San Francisco at an inaugural conference for Mark Lutter’s new Center for Innovative Governance.