Charter Cities: why they’re exciting & how they might work
Hello! What follows is a work-in-progress script about the idea of Charter Cities, which the EA-adjacent youtube channel RationalAnimations plans to animate soon. I want to make sure I’m presenting the idea of charter cities properly and in a compelling, understandable way, so I thought it would be helpful to post it here and get feedback from this forum!
Introduction: charter cities, as economic growth, as neartermism
When you think about ways to help people in developing countries, you probably think of international aid—providing medical supplies, or coordinating disaster relief, or even just giving cash, like we discussed in our recent video about global poverty. These things are great, and this kind of charitable aid saves lives every day. But there’s something a little curious here, because these interventions AREN’T what helped the world’s most prosperous countries succeed in the first place.
Up until the 1700s, essentially the entire population of the planet lived in poverty. [1] That started to change during the industrial revolution, when humanity developed more efficient, mechanized ways of producing goods and capturing energy. Hundreds of millions of people were able to live better lives thanks to economic growth—learning to use technology to grow food, make clothes, and get from place to place more efficiently.
The overwhelming importance of economic growth remains true in modern times—by far the greatest ongoing reductions in poverty and suffering are coming not from international aid projects, but from development, as low-income countries find new ways to do things more efficiently and climb the ladder of technological advancement.
For example, in the year 1960, Singapore was a poor and undeveloped country, producing only $428 per citizen. Today, singapore’s economy has grown by many times, to around $73,000 per person.[2] That’s an incredible amount of progress within a single lifetime.
Almost every country on earth has made some economic progress over the past few decades, but unfortunately only a few have succeeded as spectacularly as economic-development superstars like Singapore, or South Korea. There are hundreds of millions of people still living on just a few dollars per day, like Singaporians in 1960. So, why do some countries grow more quickly than others? And, since economic growth continues to be the most powerful force for reducing poverty and suffering, how can we help countries with slower growth learn from the biggest successes?
One important factor is the quality of a country’s institutions[3]: Can the local court system make fair and speedy decisions, or do cases take years to resolve while working through a system mired in corruption? Can the local government efficiently build infrastructure for electricity, roads, and public transit? Are elections trustworthy? Can people be confident that their savings and investments are secure?
Trying to improve a nation’s existing institutions can thus be very helpful, but it can also be very difficult. When a system has been around for a long time, there will always be a lot of entrenched interests who benefit from the status quo and like things the way they are. But if you want to reform a broken institution, there’s no avoiding this kind of long, arduous political struggle, right?
Describing the charter city concept & the example of Itana, Nigeria
Well, in 2009, Nobel-prize-winning economist Paul Romer proposed a new strategy. He argued that going through the painstaking process of fighting for incremental changes from within the existing system might not always be a country’s best choice. Sometimes, it might be easier to start from scratch, developing an entirely new city with a new legal code and new institutions, inspired by the best international examples.[4]
Charter cities, Romer said, would be like a nation within a nation. They’ll still need to follow their mother country’s constitution, criminal code, and international treaties, but should otherwise be given the freedom to design their own legal code to encourage the growth of new industries—setting their own immigration rules, tax codes, business regulations, civil court systems, and more. The way that the city holds elections, the structure of its government, and the way it provides public services could all be designed based on the playbook of success stories like Singapore.
There aren’t many charter cities that exist today, but for a real-world example, let’s look at “Itana”, a small charter city project being spearheaded by the Nigerian entrepreneur Iyinolowa Aboyeji[5]. Itana is a town being built near Lagos, designed to attract talented tech workers from across Africa to found their own new companies or work remotely for employers overseas. Of course, in order to realize that dream, Itana is going to need a stable supply of electricity and a strong internet connection. But that’s difficult in Nigeria, which has struggled for decades with electrical blackouts and grid collapses, only managing to provide power for about four hours out of each day.[6] One of the many obstacles to better service is that the government insists power be provided very cheaply. It’s a vote-winning policy, but it makes power companies reluctant to transmit electricity that they’re forced to buy at a high price and sell at a loss.[7] This is one reason Itana wants the ability to write its own business regulations—if Itana could choose to pay a higher price for more consistent power, that could set the stage for a brighter future.
Furthermore, in order to attract talented people from across all of Africa, it would be great if Itana could write its own, town-specific immigration rules, granting visas quickly instead of having them go through an arduous, months-long process. And for similar reasons, it’s planning to make it as easy as possible for entrepreneurs to quickly register a new business.
Objection: why whole new cities?
Now, some of you might be thinking—this sounds nice, but isn’t it overkill to build an ENTIRE NEW CITY, just to test out some better business regulations? Who would want to be the first to move there? It’s true that this might seem drastic in places like the United states, where no new large cities have been built in the last hundred years. But across Latin America, Africa, and Asia, millions of people move from the countryside to urban areas each year, with the United Nations expecting 2.5 billion new city-dwellers by 2050.[8] Urbanization in many countries is happening so fast that it’s outpacing the ability of existing cities to build supporting infrastructure—leading to problems with providing clean water, electricity, and so on.[9] Lagos, for instance, is one of the fastest-growing cities in the world, doubling in size over the past twenty years from seven million to fourteen million people.[10] Building out infrastructure for new charter cities would help channel the power of this urbanization to create healthy, productive engines of long-term growth, rather than stressing existing megacities with continuing haphazard, unplanned sprawl.
Objection: Political Tractability
A bigger problem is political feasibility. The whole point of giving a city the ability to write its own rules is to make reform easier, but in order to get that ball rolling, you first need to find a nation willing to give away lots of their own regulation-writing authority in order to enable your charter city project. This isn’t completely unheard of—in many ways, charter cities are just a bigger and bolder version of “Special Economic Zones”, where a port might be granted lower tariffs or streamlined permitting for the sake of spurring industrial development. Nevertheless, asking for broad autonomy to create an entire city is a tall order.
Indeed, Paul Romer was originally involved in efforts to create charter cities in Madagascar and Honduras, but later abandoned both projects. Despite being invited by each country’s president, the idea became politically controversial in both nations, and the project in Madagascar fell apart when the president’s party was voted out of power.[11] In Honduras, a law authorizing charter cities was passed after years of political wrangling, but Paul Romer distanced himself from the result, saying that Honduran corporate special interests had corrupted his original vision.[12]
Wider benefits: inspiration, competition, & experimentation
Charter cities are a new idea—the first projects are just getting started now—so we don’t know for sure how politically tractable they’ll be to create, or how effectively they’ll boost growth. But these uncertainties should be weighed against the immense potential benefit—the chance to lift millions of residents out of poverty through improved governance and sustainable economic growth.
And, it gets even better, because it’s likely that the growth-boosting benefits of charter cities could spread to far more people than just the residents who move there. There are three main ways this could happen: inspiration, competition, and experimentation.
First, seeing legal reforms work well on a small scale could inspire larger national changes. For instance, Itana in Nigeria is only planned to be a small town of a few thousand people at first. But if Itana’s ideas prove successful, they might inspire national-level policy changes that could improve the lives of all of Nigeria’s 200 million inhabitants.
Second, is the idea that charter cities could spur “governance competition”. If you give people lots of options about where and how to live, people will naturally flock to the places that offer them the most freedom, safety, and prosperity. Unfortunately, right now, lots of people don’t have many good options, and that makes it easier for governments to restrict people’s rights or otherwise exploit their citizens. In a world with lots of charter cities, fewer people will have to put up with that kind of abuse, and would-be exploitative governments will be pressured to start treating their citizens better, lest they start losing all their best people to the city next door.
Finally, experimenting with totally new types of law could bring huge benefits. What about going beyond just imitating the best practices of developed countries, and instead trying to do even better? Since charter cities are building whole new laws and institutions from a clean slate, it’ll also be easier for them to experiment with radically new concepts which, if successful, could become leading examples for the whole world.
For example, Prospera is a charter city that’s currently operating within a special economic zone in Honduras.[13] They’ve implemented a completely novel legal framework that enables rapid innovation across industries. Alongside benefits for areas like finance and biotech, Próspera’s legal platform enables architects to design modern, eco-friendly buildings connected by parks and walking paths, in a way that wouldn’t be possible under the zoning rules of most American cities.[14]
There are all kinds of new policy ideas that charter cities could potentially explore. The new-city project of Telosa is planning to base its economic system around the philosophy of “Georgism”, taxing land in a way that will help fund city services while also avoiding the problems of high rental prices that plague many big cities. A city could also try out improved ways of voting, like “liquid democracy”, or they could take inspiration from a previous video of ours, and have the city government use prediction markets to help inform important public decisions. All of these ideas would be considered huge, fundamental reforms to the status quo of today’s rich countries. Trying them out on a small scale in a charter city would be much easier.
Conclusion
The idea of building charter cities with new legal systems to boost economic growth is strange and untested. Today’s projects are small, with uncertain prospects. But consider this: two hundred and fifty years ago, the United States was small and uncertain. It was experimenting with a bizarre, Roman-era style of government called “democracy”, and nobody knew if it would really work. But over time, democracy proved so successful that it inspired countless nations around the world to make the switch—and this new system led to greater peace, faster economic growth, and more human freedom.
If some of today’s charter cities are successful, then maybe the idea of semi-autonomous cities could spread across the world just like democracy did. A century from now, maybe the idea that promoting governance competition leads to faster growth and greater liberty, will seem just as obvious as the idea that an elected president usually provides better leadership than a dictator or a king. Charter cities today are focused on making life better for the people who choose to move there. But if we’re lucky, they might help make our civilization wiser, richer, fairer, and better able to navigate future challenges.
Resources to learn more
If you loved this video, consider checking out the website of the Charter Cities Institute to learn more. The Charter Cities Institute does research to understand the detailed legal frameworks and governmental best-practices that new cities can use to set themselves up for success. They also consult with interested governments and city developers, spreading the word about the charter cities idea and helping new projects get off the ground.
On their website, you can read their research and learn the history of development superstars like Dubai and Shenzhen. You can also listen to podcast interviews with the people involved in some of today’s most exciting new city projects.
Another fun resource is the “Startup Cities Map”, where you can learn about dozens of innovative special economic zones and ambitious new-city projects underway across the developing world.
And as always, we have detailed links in this video’s description, so if you want to read all about Prospera Honduras’s 3D voxel-based property rights, or watch the original TED talk where Paul Romer first introduced the idea of charter cities, you can check out those links!
- FLI podcast series, “Imagine A World”, about aspirational futures with AGI by (EA Forum; 13 Oct 2023 16:03 UTC; 18 points)
- FLI podcast series, “Imagine A World”, about aspirational futures with AGI by (13 Oct 2023 16:07 UTC; 9 points)
- 's comment on Will no one rid me of this turbulent pest? by (17 Oct 2023 0:12 UTC; 2 points)
I think this functions well as an introduction to Charter Cities. It doesn’t grapple with any of the real-world difficulties, but it shouldn’t need to as an introduction.
It might be beneficial to mention the benefits of agglomeration effects as a justification of why cities are so often the engines of economic growth, and another point in favor of Charter Cities as opposed to Charter Villages, Charter Towns, or Charter Countries.
Thanks! Apparently I am in a mood to write very long comments today, so if you like, you can see some thoughts about addressing potential objections / difficulties in a response I made to a comment on the EA Forum version of this post.
Somewhat tangential, but I’ve previously seen rationalists endorse charter cities before, but recently due to Ben Hoffman’s writings (e.g. Oppression and production are competing explanations for wealth inequality, Parkinson’s Law and the Ideology of Statistics), I’ve been thinking that when rationalists suggest revolutionarily impactful changes to foreign countries, I should not be blindly trusting the rationalists, but instead spot-checking that the suggestions are reasonable (rather than e.g. being likely to be abused by the powerful in these places to oppress and net harm the powerless).
Unfortunately I don’t have time to spot-check many things all over the world, so I have to pick something more singular. Is there some good choice of what I should spot-check? Would it be reasonable to look into Itana, to see how oppressive vs productive it is, and infer that e.g. rationalist international policy is really some sort of colonial dominance thing if it turns out that Itana is some sort of colonial dominance thing?
Probably the charter city with the most publicity is Prospera, so you could do stuff like:
read a bunch of hostile news articles complaining about how Prospera is neocolonialism and might be secretly hoping to confiscate people’s land
read stuff put out by the Prospera organization about how they are actually fanatics about the importance of property rights and would never confiscate anyone’s land, and how in general they are trying to be responsible and nice and create lots of positive externalities for neighboring communities (jobs, construction, etc)
read analysis by interested people (including numerous rationalists) who have visited Prospera, etc, which tends to be pretty sympathetic to Prospera and thinks they are upstanding people trying to do cool stuff
But idk if it’s worth going on that journey since it’s something that a lot of other people have done before (such as myself—I came away thinking that Prospera is doing great stuff and their critics are being extremely uncharitable / ill-intentioned. the one possible ding against Prospera IMO is that in addition to their main site on Roatan which is the cool libertarian city-state in the making, they are also using the ZEDE law to create an import/export center on the mainland, called La Ceiba, which seems less like an amazing innovative experiment in state-of-the-art governance and more like just an ordinary Special Economic Zone where lower taxes encourage freer trade. Personally I think freer trade is probably good for Honduras, but if you like protectionism then you might not like the idea of special economic zones whose main benefit is a somewhat lower tax rate).
Anyways, if you are interested, it would probably produce a lot more social value to investigate some other, lesser-known charter cities and report back with your thoughts. There are two other projects in Honduras under the “ZEDE” charter city law—“Ciudad Morzan”, which seems like an effort to basically create a gated community—a neighborhood in crime-ridden Honduras where workers can opt into a higher standard of policing in exchange for presumably higher local taxes to fund the police, and maybe some restrictions on activity like nightly curfews (idk if Ciudad Morzan has these… just brainstorming). Seems like a nice option for working-class Hondurans to have, IMO, but maybe if I looked into it more closely I’d come away with a worse impression. And then there is “Orqueda”, which seems straightforwardly like a large business exploiting the ZEDE law simply in order to pay lower taxes or otherwise getting out of Honduran regulations, without really experimenting with any cool new governance institutions or trying to create an awesome new city where lots of people might like to live.
But there are lots and lots of new-city projects throughout the world—as I mention in the draft, new cities aren’t that unusual in quickly-urbanizing developing countries. Some projects, like Saudi Arabia’s “NEOM”, seem like poorly-concieved vanity megaprojects that will probably come bundled with human rights abuses (and which have indeed been condemned by rationalists like Scott Alexander / Astral Codex Ten). Others are just blander and lower-profile since they aren’t shooting for the same kind of broad regulatory independence that places like Prospera or Itana are hoping for. See this “Startup Cities Map” (the green dots, not the blue or purple ones) for a directory of interesting projects: https://www.startupcitiesmap.com/map
Personally I would be kind of interested in finding out what the heck is the deal with Telosa—this is a new-city project funded by a billionare in the United States, seemingly around an economic philosophy that combines Georgism (which I love!!) with some vague but pretty strong lefty / egalitarian / social-justice vibes (which I kinda don’t really understand in terms of how this is supposed to influence the design and government of the city, but whatever). Is there some special angle here beyond the surface presentation? Who is the guy funding it and how did he become such a huge Georgist that he wanted to use his life’s fortune to build a new city on these principles? Why not just use the money to lobby for more lefty & Georgist policy changes like a normal person, instead of building a new city in the desert? etc.
Hm, I should read a bit up on Prospera then. The extended history behind it sounds wild, like with the coup and everything, but I haven’t made heads and tails in it yet.
Edit: Made a separate thread for it: Prospera-dump
Somewhat over-stating the uniqueness of that “bizarre” idea—it’s not like democracy was wholly unknown in the span between Antiquity and 1776.
Also I don’t know if the exact text here matters when the end-goal is a video, but in case it copies through to a transcript or subtitles or something, there are little things like “Singaporians” (Singapor[e]ans) and “singapore’s economy” (lowercase s)
Thanks for catching that about Singaporeans!
Re: democracy, yeah, we debated how exactly to phrase this. People were definitely aware of the democracies of ancient Greece and Rome, and democracy was sometimes used on a local level in some countries, and there were sometimes situations where the nobles of a country had some sway / constraints over the king (like with the Magna Carta). But the idea of really running an entire large country on American-style democracy seems like it was a pretty big step and must’ve seemed a bit crazy at the time… IMO, it would seem as least as crazy as of like if a large country today (like, say, Chile after it voted to rewrite its constitution, or a new and more-united version of the European Union, or a future post-Putin Russia trying to reform itself) did something like:
Deciding to try out direct democracy, where instead of a Senate or Parliament, legislation would be voted on directly by the people via a secure smartphone app.
Deciding to try out prediction-market-based governance, where economic policy was automatically adjusted in order to maximize some national GDP-like metric according to the principles of “futarchy”.
Deciding that they would select their political leaders using the same method as medieval Venice used to select their Doge. (“Thirty members of the Great Council, chosen by lot, were reduced by lot to nine; the nine chose forty and the forty were reduced by lot to twelve, who chose twenty-five. The twenty-five were reduced by lot to nine, and the nine elected forty-five. These forty-five were once more reduced by lot to eleven, and the eleven finally chose the forty-one who elected the doge.”) And maybe to base a bunch of other parts of their political system off of random selection (“sortition”) -- not just jury members in trials but also members of parliament, or using sortition to poll a random 1% of the population about important issues instead of having everyone vote on issues, etc.