A Great Question About Charter Cities.

Charter Cities are an interesting example of how modern development might work. As pioneered by Paul Romer, the basic idea is that they would function somewhat like a special economic zone, where the rules being enforced are different from the surrounding country, and most likely imported from a country with better levels of development, such as Canada. In other words, think of somewhere like Hong Kong, but run with Canadian laws and officials.

Romer looks to be making some progress on the idea of creating one in Honduras, which I think would make an interesting experiment. It certainly can't be much worse than what else is going on in Honduras (or anywhere else in Central America), so qualifies as 'worth a shot'.

The thorny question is - if you want to just recreate Hong Kong, isn't that (*gasp, shudder, cross-yourself-thrice*)... colonialism? And we all know that that was worse than Hitler!!

Well, that's a bit tricky. Romer does have two conceptual difference that he can point to.

The first is that the city is to be built on 'uninhabited land', so nobody is (in theory) being dispossessed to make this colony. I mean, charter city! Sorry.

The second, and more interesting one, is that the rules in this city will only be enforced on those who voluntarily enter. It's like a genuine version of the social contract, because you apparently get to choose whether to join in the first place. Of course, it's not clear how things will work if the laws change while you're in there. I guess you can leave again - maybe. Who knows.

The real question is, how much difference do these distinctions really make? Are you still deep down just recreating the Racist Hitlercaust that was the British Empire?

There's two ways of answering this. In the court of progressive public opinion, Romer is doing a pretty good job of attempting to circumvent the nominal complaints of the anti-colonialism crowd. There's still the awkward aspect that if it's white Canadian officials ruling over local Hondurans it might not make for great photos, but that more of an aesthetic complaint than a concrete example of injustice. The jury is still out on this, since it's a sufficiently untried idea. Romer in his TED talks tries to get the anti-colonialist crowd on board with these musings:

Why is this not like colonialism? The thing that was bad about colonialism, and the thing that is residually bad in some of our aid programs, is that it involved elements of coercion and condescension. This model is all about choices - both for leaders and for the people who will live in these new places. And choice is the antidote to coercion and condescension.

But screw progressive public opinion. Do you buy the distinction?

The 'vacant land' thing is fine, and is a good start. But confiscating land is a one-off startup cost that may well be worth paying to set up Hong Kong. The ongoing injustice, if you think there is one, is the lack of choice by citizens as to who they're going to be ruled by. And everyone here will be free to enter or exit, so no problem! Sounds watertight, right?

Mencius Moldbug would disagree. He delivers a long and stinging rebuke of Romer - I think it's perhaps unfair on Romer personally in parts, but I think he makes a great argument that if this actually works, it will do so for the same reasons that colonialism works. In other words, Romer wants to pretend that this is nothing whatsoever to do with colonialism, when in actual fact it's probably best described as colonialism with a better PR department, redesigned for modern political sensibilities to appeal to progressives.

But even that may not be enough. The Achilles heel of the current setup is that progressives, Romer included, at heart all believe in democracy. The system being proposed is definitively undemocratic at a local level (but for which individuals join only by choice).

That's fine - the city claims a right to enforce its laws, and people, by entering, forfeit the right to change the rules themselves.

But is this a credible threat by the city?

Moldbug, I think very presciently, looks ahead and asks a very tough question that I fear Romer doesn't want to answer:

Professor Romer, here is a question for you: suppose your good Mr. Castro says yes, and you get your Guantanamo City up and running, with its Haitian population and Canadian proconsuls. It is, of course, a smashing success, with investment galore.

And then, in ten years, a mob of Haitians gathers in the beautifully landscaped central square, wearing coloured rosettes and throwing rotten eggs, all chanting a single demand: democracy for Guanatanamo City. The Canadians, all in a tizzy, call you. It's the middle of the night in Palo Alto. You pick up the phone. "What should we say?" the Canadians ask. "Yes, or no?"

If they say yes - what, in ten years, will be the difference between Guantanamo and Haiti? If they say no - what do they say next? You'll notice that you have no answer to this question. Hell has little pity for those who decide to forget history.

Perhaps the reason you have so much trouble imagining this scenario is that your own country has been so successful in suppressing actual political democracy, in favor of the administrative caste of which you are a member. To you, the proposition that "politics" should affect the formulation or execution of "public policy" is no less than heresy - like Velveeta on a communion wafer.

Thus, you reinvent colonialism by simply teleporting this managerial state from Canada, where democracy has been effectively suppressed, to Cuba, where democracy has been effectively suppressed. But the subjects of your new state are not Canadians, or even Cubans. The job has not been done.

If you want to suppress their lust for power, a lust which grows in the heart of every man, you can do so. All it takes is a bit of gear and the will to use it. As Wellington said: pour la canaille, la mitraille. But then, my dear professor, you are really reinventing colonialism - not just pretending to do so, for an audience as ignorant, hypocritical and naive as yourself.

Bingo.

Charter cities, should they get off the ground, will last only up until the local citizens start agitating for democracy.

Which they will.

And when that happens, do you think the Canadian administrators will have the nerve to tell them no? And to order the local army and police to enforce such an edict? What, exactly, is the argument that Canadian public servants will be able to advance as to why they should use force to suppress political agitation for a democratic vote? Can you see them making any such pronouncement without their heads exploding?

To ask the question is to know the answer.

I'd be delighted to see Charter Cities succeed. They seem a damn sight better than foreign aid. Moldbug claimed that he didn't think the idea would ever get off the ground. In the three years since, it looks like he might be proved wrong on this point.

But I fear he'll be right on the larger point.

Iterate forwards, Mr Romer. The day will come when you'll have to face a stark choice.

One choice will make you the next Deng Xiaoping.

The other choice will make you the next Ian Smith.

The implications for the ethics of these choices are complicated and thorny.

The implications for economic development, (which this was apparently all about in the first place), alas, are not.