Paul Romer, one of America’s most prominent economists has proposed a novel solution to reducing global poverty and providing safer environments to people living in under-developed regions of the world.  His concept is one he calls Charter Cities, new urban environments that, despite being located in poorer regions of the world, would be managed by an advanced economy or group of nations.  These cities would be subject to the foreign law of say Switzerland or Canada rather than that of Cuba or Indonesia.  Professor Romer’s idea was inspired by his cleaning lady.  A Hispanic migrant, she would safely hide-away her earnings in her socks before returning from Romer’s home to one of Chicago’s poverty ridden suburbs.  Romer began thinking about ways to improve the security of his cleaner, a mother with two children.  Further, how could the billions of people worldwide be helped that despite being employed, were living on barely a subsistence wage?  The economic theorist believed the problem was the lack of adequate laws and the failure to enforce them.  Not an easy problem to solve even in Chicago which is well known for corruption and crime.  He believed it would be far easier to introduce better laws and enforce them in new cities where millions, like his cleaning lady, could move to for a better future.

Romer’s Charter Cities would simply require a developing nation provide a piece of unoccupied land sizeable enough for a new city and a city charter to be assumed by a developed nation.  These new cities, he suggests, would have the potential to enjoy the same prosperity that Hong Kong did when it was a colony administered by the British.  As hypothetical examples, Romer notes on his website the possibility of Canada developing a new Hong Kong in Guantanamo Bay, Cuba or a city in northern Australia, under Australian jurisdiction, for Indonesians.  Some, like the new Guantanamo metropolis, would eventually return to Cuban jurisdiction, as Hong Kong returned to China, once the rule of effective law was firmly in place.

So convinced of his idea’s potential, Romer has begun a global speaking tour to promote his Charter City concept.  In doing so he has come up against resistance from those labeling his vision neo-colonial or unrealistic.  Others point to failed experiments in South Africa and Mauritius which have also tried to established special zones.  

Learning of his concept, Professor Romer’s concerns about the disadvantaged could just as easily have been inspired by witnessing events in Southern Africa.  In Zimbabwe, tens of thousands of refugees from Mugabe’s destructive regime have made often perilous journeys to escape abject misery, violence, and poverty.  But also in South Africa, law and order and economic opportunity are effectively denied to millions through the corruption and ineffectiveness of the African National Congress government ruling the country.  The notion that a nation like Switzerland could start a Charter City somewhere in South Africa would undoubtedly appeal to many, perhaps millions.   The prospect of living in a city with vastly reduced crime through effective law enforcement and increases in living standards through improved public services would enable citizens to find better employment, send their children to better schools, access to hospitals, sanitation and courts of law.  A new city free of the ANC’s often suffocating grip, where someone’s employment would no longer be determined by their chumminess with the political elite and where public servants would be appointed on ability rather than the colour of their skin or political party membership would create an environment far more conductive to economic prosperity and the necessary prerequisite of the rule of law and order.

Although sounding wonderful in theory, the reality is that such a concept would be very difficult to realize.  Currently Cuba, like all socialist countries, severely restricts the movement of its citizens.  The notion that it would enable its citizens to cross its borders to live in a city under Canadian jurisdiction seems very unlikely.  Similarly, the ANC, quite apart from its hang-ups on South Africa’s colonial past, would be loathe to grant a Charter City to Switzerland within South Africa.  To do so would be a clear recognition that its leadership and administrative ability is defective even if, in doing so, it would release millions from their day-to-day misery.  Further, by relinquishing control, there would doubtless be a stampede of South African economic capacity to this new region and thus the ANC would forfeit its ability to engage in the appropriation of the property of private individuals and enterprise through their jurisdictional monopoly.

Further, even if there was willingness on the part of under-developed corners of the world to grant Charter Cities, it isn’t clear if Western nations would be willing to assume such a responsibility.  Building a new city from scratch and providing Western levels of public services would be very costly and far beyond the means of those cities themselves to sustain – at least initially.  Would the Swiss taxpayer need to be burdened or would such a project be somehow self-financing?  Presumably Professor Romer expects international organizations like the United Nations, the International Monetary Fund and the World Bank to provide financial assistance.   But if the billions in funds currently provided to developing nations were suddenly shifted to Charter Cities instead, the vastly reduced opportunities for economic gain through corruption and theft would be a very large disincentive for current leaders to grant charters.  However even then, what is likely to prevent these new cities from resembling those parts of Chicago, lacking law and order that inspired Paul Romer in the first place?  Would new Charter Cities attract enterprising and law-abiding citizens or would they too soon resemble the ghettos that, despite the existence of what Romer considers good law, exist within major U.S. cities?  

The novelty of the Charter Cities concept has provoked his colleague, William Easterly, to pronounce Romer to be on the border between revolutionary and crazy.  However, looking deeper, the idea isn’t altogether without precedent.  South Africa’s constitution was forged after borrowing heavily from those of New Zealand and Germany.  Nevertheless, those constitutional protections haven’t succeeded in delivering similar standards of living for the majority.  Thus, clearly effective enforcement of appropriate laws is the key.  Granting foreign powers jurisdictional and thus enforcement responsibility is Romer’s solution.  But what if a better alternative was available?  Why not let citizens within countries establish themselves new towns and cities free of centralized political control?  If the citizens of smaller towns or portions of larger towns or indeed new towns in South Africa were able to free themselves from the control of the central authorities, would they not be able to provide better environments for themselves?  Instead of being subject to current political authorities they could, in effect, secede jurisdictionally, create laws, enforce them, engage freely in trade internally or internationally without restriction, and otherwise create an environment conductive towards economic opportunity and social wellbeing?  By shifting political control closer to the communities subject to it, there would be greater responsibility on behalf of citizens towards improving their society rather than the current situation where individuals feel powerless to overcome the incompetence of a national government responsible for tens of millions.  Effectively, smaller communities at the town or city level would become small sovereigns like the independent city states of medieval Europe.  Individuals would be free to leave and move to other jurisdictions accepting them and by doing so placing pressure on political leaders to create desirable living environments for its citizens.  Like those small city-states, it is likely that they will fare better than the surrounding regions ruled by centralized and often despotic political regimes.

Such a proposal would be genuinely revolutionary but like Romer’s concept of Charter Cities very difficult to achieve.  After all why would regimes across the under-developed world sacrifice their political and economic privileges to help the millions of regular citizens?  This is the point at which good spirited idealism hits the wall of political reality.