Sunday, September 06, 2009

The Power of Freedom

Paul Romer's idea of 'charter cities' is starting to gain some acceptance.

Romer, an economist, is a leading expert on the dynamics of economic growth...

He sees charter cities as beachheads where laws and institutions and habits that have worked in the wealthy world can take root, and as civic laboratories where new ways of doing business and hybrids of local and imported customs can emerge. Unemployed workers and frustrated entrepreneurs from the host country would flock there for the opportunities; international firms would be drawn by the combination of First World stability and cheap labor. And from these nodes, money and expertise, laws and norms would spread throughout the rest of the country and, potentially, the developing world. Ultimately, their work done, the cities would revert to local control.

“The upshot of this,” Romer says, “would be a radically different and more effective way to help poor people throughout the world catch up more rapidly with the standards of living we take for granted in rich countries.”


Rather than give people bed nets or heifers or wells or composting toilets, he sees an opportunity to set off a contagion of fast and lasting growth in the world’s poorest nations, with all the choices and opportunities that come with it.

“In a sense,” he said in a recent talk, “Britain, inadvertently, through its actions in Hong Kong, did more to reduce world poverty than all of the aid programs that we’ve undertaken in the last century.”

The belief that exemplary cities can change the world has long fired the imagination of prophets and reformers. Boston itself was born out of such a faith: sailing across the Atlantic to establish the Massachusetts Bay colony, John Winthrop announced to his fellow Puritans that their new community would be “as a city on a hill{hellip} we shall be made a story and a by-word through the world.”

Romer’s project comes from a similar desire to start afresh. Like many development specialists, he argues that the principal reason some countries lag behind others is not talent or ambition or technology (even in sub-Saharan Africa cellphones are becoming commonplace). Instead, it’s the rules, formal and informal, that govern their economies. If companies wonder whether the government will seize their assets or capriciously remake the regulatory code, if they fear that competitors will make off with their intellectual property, if every transaction is weighed down by the cost of bribes and kickbacks, all of that slows and eventually strangles economic growth.


The rules in the cities’ governing charters would be, Romer argues, “pretty basic stuff”: he mentions reliable law enforcement, an impartial judiciary to enforce contracts, and laws forbidding wasteful subsidies for energy and other vital resources. As for the details, different cities could try different approaches, experimentation that would help separate good strategies from bad.


Romer strongly objects to the idea that he’s peddling a new colonialism. Charter cities would not rely on coercion, he insists, and no one would be forced to live in them. “Is it an evil imperialistic thing if we let someone from Haiti move to the United States, even if we don’t let them vote immediately?” he asks. “This is someone who would rather live under the rules in the United States than the rules in Haiti.”

As he sees it, the accusations of colonialism betray not only a lack of ambition, but a tragically patronizing attitude of their own.

I might be skirting the limits of fair use, but I wanted to give enough to demonstrate the idea.

The United States became a great power using similar principles. Our founding charter and first organic law states that government derives its just powers from the consent of the governed. Consent isn't the ability to dissent, but the freedom to ope out. The growth in the size and scope of the federal government since abandoning this simple principle illustrates the truth of it. Government responds to people's actions, just as a business will do what it takes to keep customers, by giving people what they want. Over time, this principle produces progressively superior products than when consumers are denied a choice.

And if people were given the freedom to live under socialism until they tired of it, socialism would soon perish from the earth. That's why socialist work so hard to deny others this freedom. The freedom to consent to government produced the most capitalist nation in history. The structural protection of that freedom was removed by the 17th Amendment, and since then socialism has grown and will continue to do so.

It's amazing what freedom can do, and those who believe that they have the right to deny others a life of freedom live in fear of what free people can do.

Hat tip: Let a Thousand Nations Bloom

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