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Mark Lutter, founder of the Center for Innovative Governance Research, discusses the creation of charter cities. These cities are seen as a way to significantly improve governance in countries with poor governance indicators by implementing new jurisdictions focusing on economic development and job creation to demonstrate positive reforms.
Charter cities aim to introduce substantial governance improvements compared to existing systems, particularly by simplifying business registration processes and creating an environment that promotes investment, job creation, and economic growth. The governance of charter cities can vary, including being governed by other countries or businesses, or having a different legal arrangement with the host country.
The funding mechanism for charter cities involves purchasing undervalued land that appreciates as the city develops, allowing for the sale of the land to fund public services and infrastructure. While there are no historical precedents, examples like Hong Kong and Dubai exemplify government ownership affecting land value.
Ideal charter city candidates are countries with moderate governance challenges and commitment, around a 1000 to 5000 per capita GDP level. Critical factors for selecting charter city locations include bipartisan support, stability, and an upward growth trajectory. Countries like Bangladesh, Ethiopia, and Kenya are potential candidates.
Charter cities offer benefits on two levels. Firstly, they improve the lives of their residents by creating economic opportunities, and secondly, they contribute to the global economy by allowing young and talented individuals to participate. The idea of expanding into Asia is of interest, although concrete steps in this direction have not been taken.
Several criticisms are raised regarding charter cities, including concerns about political feasibility and long-term sustainability. However, recent developments show increased acceptance of such projects by governments and a clearer pathway for their implementation. Strategies such as treaty agreements and mitigating expropriation risks have been proposed to address these concerns.
To ensure the success of charter cities, alignment of interests between the host country and the charter city is crucial. Creating employment opportunities, fostering education, and generating positive spillover effects are key factors in gaining support and pride from the host country's population and leaders. Additionally, maintaining a long-term vision for land usage and governance structures aids in sustaining growth and aligning stakeholders' interests.
The vision of charter cities faces challenges such as the risk of becoming enclaves for the wealthy. Efforts to ensure inclusivity and open immigration policies can enhance the success and social impact of charter cities. Leveraging international relationships, diverse expertise, and effective communication are essential in driving the future of charter cities, fostering economic growth, and overcoming potential obstacles.
Spending time on building relationships with media, Silicon Valley, and New York finance professionals is crucial for Charter Cities due to its new concept, helping in external boosts and networking.
Implementing a filtering mechanism through creative strategies helps identify and engage with potential supporters for Charter Cities. Building a network acts as a clearinghouse to connect with individuals crucial for the project.
Facing skepticism and diverse stakeholder perspectives, Charter Cities encounters challenges like proof of concept demands in DC but finds open-mindedness in San Francisco. Strategies adapt based on the stakeholder landscape.
Embracing a long-term vision to alleviate poverty by setting ambitious goals for Charter Cities at 3 -year milestones. Adapting goal-setting with weekly and monthly targets to drive daily strategies and operations.
Governance matters. Policy change quickly took China from famine to fortune; Singapore from swamps to skyscrapers; and Hong Kong from fishing village to financial centre. Unfortunately, many governments are hard to reform and — to put it mildly — it's not easy to found a new country.
This has prompted poverty-fighters and political dreamers to look for creative ways to get new and better 'pseudo-countries' off the ground. The poor could then voluntary migrate to in search of security and prosperity. And innovators would be free to experiment with new political and legal systems without having to impose their ideas on existing jurisdictions.
The 'seasteading movement' imagined founding new self-governing cities on the sea, but obvious challenges have kept that one on the drawing board. Nobel Prize winner and World Bank President Paul Romer suggested 'charter cities', where a host country would volunteer for another country with better legal institutions to effectively govern some of its territory. But that idea too ran aground for political, practical and personal reasons.
Now Mark Lutter and Tamara Winter, of The Center for Innovative Governance Research (CIGR), are reviving the idea of 'charter cities', with some modifications. Gone is the idea of transferring sovereignty. Instead these cities would look more like the 'special economic zones' that worked miracles for Taiwan and China among others. But rather than keep the rest of the country's rules with a few pieces removed, they hope to start from scratch, opting in to the laws they want to keep, in order to leap forward to "best practices in commercial law."
Links to learn more, summary and full transcript.
Rob on The Good Life: Andrew Leigh in Conversation — on 'making the most of your 80,000 hours'.
The project has quickly gotten attention, with Mark and Tamara receiving funding from Tyler Cowen's Emergent Ventures (discussed in episode 45) and winning a Pioneer tournament.
Starting afresh with a new city makes it possible to clear away thousands of harmful rules without having to fight each of the thousands of interest groups that will viciously defend their privileges. Initially the city can fund infrastructure and public services by gradually selling off its land, which appreciates as the city flourishes. And with 40 million people relocating to cities every year, there are plenty of prospective migrants.
CIGR is fleshing out how these arrangements would work, advocating for them, and developing supporting services that make it easier for any jurisdiction to implement. They're currently in the process of influencing a new prospective satellite city in Zambia.
Of course, one can raise many criticisms of this idea: Is it likely to be taken up? Is CIGR really doing the right things to make it happen? Will it really reduce poverty if it is?
We discuss those questions, as well as:
• How did Mark get a new organisation off the ground, with fundraising and other staff?
• What made China's 'special economic zones' so successful?
• What are the biggest challenges in getting new cities off the ground?
• How did Mark find and hire Tamara? How did he know this was a good idea?
• Should people care about this idea if they aren't focussed on tackling poverty?
• Why aren't people already doing this?
• Why does Tamara support more people starting families?
Get this episode by subscribing to our podcast on the world’s most pressing problems and how to solve them: type 80,000 Hours into your podcasting app.
The 80,000 Hours Podcast is produced by Keiran Harris.
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