Andy Weir, the best-selling author of The Martian, recently published Artemis, a novel set in a small moon colony, the namesake of the book. Weir is very explicit about modeling Artemis on frontier towns. With a population of around 2000 residents, Weir dives into the social structures that keep Artemis together, hence the relation to innovative governance.
Artemis exists because Fidelis Ngugi, Kenyan’s Minister of finance, took advantage of Kenya’s proximity to the equator and created a special jurisdiction to entice space companies to locate there. The special jurisdiction, by cutting away red tape and taxes, combined with the good location, was sufficient for the investment necessary to create the world’s first moon colony.
The social structure of Artemis is similarly interesting. The residents come from a variety of countries, Saudi Arabia, Vietnam, and Brazil are among those named. A kind of chain migration, where someone brings their cousin, the cousin brings their friend, etc, is explicitly mentioned.
Guilds dominate Artemis. There’s a welding guild, a spacesuit guild, etc. The guilds operate in the weird line between ensuring quality and existing as cartels to raise prices, though they don’t operate via force. Though the protagonist is clearly anti guild.
Laws, in the Hayekian sense, as opposed to legislation, doesn’t really exist. For example, there is no drinking age or age of consent. This is explained as necessary given the different cultures. The enforcement mechanism for both drinking and consent is the angry parents of the youth coming to enact frontier justice on the ‘aggressor’.
Power in Artemis is split between Ngugi, who is the administrator, and Rudy DeBois, the head of security. The relationship between Ngugi and DeBois isn’t clear, they have distinct roles and neither answers to the other. There is no jail, norm violations are punished by frontier justice, fines, or deportation. Serious crimes, such as murder, result in the perpetrator being deported to the country of victim.
One of the major challenges Artemis faces is generating economic activity. It is primarily a tourist destination, but for long term survival and growth, it needs to become more than that, to attract an anchor tenant, a similar challenge facing charter cities.
Few novels take seriously social organization, so it’s a pleasure to read one that does. Weir actually estimates the cost of a visit to Artemis in the appendix. In addition to the perspective on social order, Artemis is also a well written thriller. I recommend it.Read More
Paul Romer, along with William Nordhaus, just won the Nobel Prize in economics for his work on endogenous growth theory. As usual, Tyler Cowen has the best summary of Romer’s ideas. I would like to use this as an opportunity to give a comprehensive overview of Romer’s public works on charter cities and to discuss what we’ve learned since Romer’s charter cities TED Talk.
Romer’s involvement in charter cities began with his now famous TED talk. His initial charter cities proposal has a guarantor country, maybe two combined, act to import good institutions to a host country. For example, Canada (or Canada and Denmark) could act as a guarantor to a charter city in Honduras.
His first involvement on the ground was in Madagascar, which was chronicled in this Atlantic article. Romer got the president of Madagascar excited about charter cities. However, the president was soon deposed after his guards fired upon protestors, who were protesting against selling land to a foreign company, Daewoo. The protests do not appear to have been directly linked to Romer’s charter city proposal. I haven’t seen any other original sources regarding Romer’s time in Madagascar, though I haven’t looked extensively.
Romer’s next involvement was in Honduras. He helped craft charter city legislation, as he details in this follow up TED talk. He left the Honduras project a year later, accusing the government of a lack of transparency in this post. As a side note, Honduran charter city projects are still ongoing and I am hearing most positive rumors than any time within the last four years.
Other times Romer has commented on charter cities include this paper, where he appears to move away from the necessity of a guarantor country. Here he, writing with Brandon Fuller, place charter cities in the context of urbanization and Chinese special economic zones. Here is an interview he did on charter cities. Here he proposes charter cities as a mechanism to help with the refugee crisis. Unfortunately, he didn’t, or was unable, to use his time as Chief Economist of the World Bank to promote charter cities.
There have been two major geopolitical developments with charter cities implications since Romer gave his original TED talk. The first is China’s One Belt One Road. The second is the refugee crisis.
One Belt One Road is China’s attempt to export their industrialization model, combining urbanization with special economic zones. With Chinese money and influence, this is changing norms regarding territorial autonomy. China, for example, via debt, has got Sri Lanka to give control of a key port to a Chinese state owned enterprise. Such changing norms removes one of the key barriers to implanting charter cities. It becomes easier to frame them in the wider geopolitical context as merely the next evolution in existing projects.
The refugee crisis is the other important geo-political event with charter city implications. Romer comments on it here. A few organizations have formed with similar goals, including refugee cities and refugee nation. Several prominent individuals, including Kilian Kleinschmidt, former ‘mayor’ of the Za’atari refugee camp, and Joachim Rucker, former President of the UN Human Rights Council have been working on special development zones, a concept similar to charter cities.
There are three lessons to learn from Romer’s pioneering work on charter cities, politics, real estate, and staging.
Romer was very successful at one aspect of politics, bringing excitement about charter cities to change the Overton window. His TED talk led to legislation getting passed in Honduras, and he was close to getting legislation passed in Madagascar. However, subsequent events demonstrated that high level political engagement is not sufficient for the legislative change necessary for charter cities. In addition to engaging the president, it is necessary to engage key ministries, the opposition party, etc.
Charter cities are real estate ventures. As such, it is important to bring in real estate companies from an early stage. The infrastructure is the primary cost of a charter city, and must be financially viable to attract investment.
Lastly, staging is important. Raising $5 billion for an untested concept is unlikely. Instead, the money should be raised in stages. The first stage might be an industrial park, then adding residential. Or maybe the first stage includes industry, commerce, and residential, then can be scaled. Either way, charter cities must figure out a minimum viable product that can serve as proof of concept for attracting billions of dollars in investment.
For further strategic thoughts, see here.Read More
This is a guest post by Mischa Spiegelmock.
What kinds of professionals spend their days reading, writing, and editing rules? Two kinds: lawyers and computer programmers. Despite this fundamental similarity, however, they seem to live in different worlds. That’s probably because lawyers mistakenly think that programmers don’t have much to teach them (and, as a consequence, because programmers try to stay very, very far away from lawyers). In fact, though, lawyers could learn a lot from coders.
Computer code and legal code are similar in more than a few respects. Both declare operations to be performed under specific sets of conditions, attempt to create definitions that correspond to human activity, incorporate and revise previously-written code, and (hopefully) account for exceptional circumstances. While there are a great many differences as well, there may yet be an opportunity for cross-pollinating knowledge and experience from one field to the other.
Legal systems resemble pre-1970’s software in terms of portability and reusability. Much like how programs and operating systems were bespoke designed unique for each architecture, governance and codes of laws are currently crafted for each environment or government and unable to build upon each other, despite performing very similar functions.
Modern software developers are aware of the recent explosion of new ideas, experimentation, forms of organization and impressive decentralized projects that came with the introduction of suitable layers of abstraction and portability in the form of C and UNIX and later combined with the open source movement and the internet. By freeing programmers from having to rewrite operating systems that did more or less the same thing but with different interfaces, they could focus on actually writing programs, and even port those programs to different computer architectures without having to rewrite the entire application. Instead of writing code in an assembly language that was incompatible with all other platforms, the introduction of a higher-level language allowed programs to be transferred from one environment to another.
While some members of the software profession may take this wonderful state of affairs for granted in the digital realm, in the offline world they live under systems of laws and governance that are still waiting for a common framework, a standardized legal operating system, a basic foundation that hobbyists and experts from different countries and disciplines can openly collaborate on. Many of us may have vague desires and ideas of how to share the lessons learned from portable computer systems with the legal profession, though such ideas are likely worth their weight in gold Dunning-Krugerrands. Now however, a few in the legal profession have attempted to apply these concepts to law.
But first, an explanation of the problem: many people are unsatisfied with aspects of the governments and legal systems they live under, and most people have little agency to come up with their own improvements. There is a high exit cost to changing countries, citizenship, and governments. Improvements and refinements from one jurisdiction cannot always be easily taken and applied to another because of incompatible legal systems, different definitions, unintelligible languages, and jurisprudence. The overhead of experimentation can be great; each new government writes its constitution from scratch, comes up with court systems, has its own legislatures and judges, and so on. This limits the scope for the sort of healthy robust competition and innovation that has been seen in the world of software since the introduction of portable programs and operating systems, open-source development, reusable libraries, and collaboration on a global scale.
Perhaps you would like to create a new set of codes for yourself and like-minded individuals to live by. Maybe you believe laws or punishments are unfair or unjust, or you certain immoral or unsavory behavior should be curtailed. Taxes should go to fund socially useful schemes or taxes are too damn high. Freedom of movement is a basic human right or we need to keep the bad guys out. Whatever your vision, there are practical and theoretical ways of implementing it today, be it via homeowner associations, Special Economic Zones, setting up your own seasteading colony in international waters, founding a religion, or incorporating a new town. There exists a vast number of overlapping codes and laws that govern all people already, but they often lack a shared foundation of well-understood, time-tested common principles. Enter Ulex.
What is Ulex?
In a nutshell, Ulex provides a set of sane legal defaults including a simple system for resolving disputes closely modeled on the system commonly used to arbitrate international trading disputes. There are recommended basic modules for civil procedure, torts, contracts, and property that incorporate best practices as codified by organizations including the American Law Institute/International Institute for the Unification of Law’s (ALI/UNIDROIT’s) Principles of Transnational Civil Procedure, and selected volumes from The ALI’s Restatements of the Law.
Ulex 1.0 can be viewed as a template for creating a legal distribution. It references the contents of the legal packages from quality upstream maintainers, along with some system utilities in the form of meta-rules, optional modules for criminal law, procedural rules and substantive rules. This distribution should not be considered final, complete, or the best legal system for any new self-governing group of people, but rather a starting point for experimentation. Since not everyone who wishes to create a new society is well versed in legal history and modern best practices, having a jumping-off point with quality material curated by a law professor should be useful. Not everyone wanting to build applications may know how to design a working operating system, and they shouldn’t have to.
Creating legal systems by means of references other documents is a common and systematic practice, much in the way that software is rarely written from scratch but instead makes use of libraries of already packaged code. So too can legal distributions be created with a few well-thought references to systems that already work well and some legal wording glue to create a coherent system. Implementation is accomplished via contract law in the context of the host state, a necessary bootstrapping mechanism for now. Ulex version 1.1 includes an optional host sovereign integration module (section 5) if better compatibility is desired.
All that is needed for implementation is for parties to formally agree:
Only Ulex 1.1 shall govern any claim or question arising under or related to this agreement, including the proper forum for resolving disputes, all rules applied therein, and the form and effect of any judgment.
Ulex is not the final answer in self-organizing legal systems but a potential first organizing principle and base layer of abstraction upon which more varied and ambitious legal projects can be based. If a common template and minimum functioning system can be designed, the process and results can be embraced and extended around the world as people increasingly experiment with new forms and options for self-governance. With competing designs and implementations may come, eventually, more inspired and community-driven legal systems all developed in the finest tradition of open source development.
For future reading, the description of Ulex 1.1 is recommended.Read More
Some commentary on innovative governance news
Titus Gebel, a German entrepreneur just had his book, Free Private Cities, published in English. He was kind enough to thank me in the acknowledgements! He presents a radical libertarian, Rothbardian inspired case for free private cities. I am less radical than he is, and fear that such a strict property rights regime is unworkable in practice. However, he lays out the best case for it, and is worth grappling with. Further, he is interested in implementing his vision, and given his successful history as an entrepreneur, I wouldn’t bet against him.
Tyler Cowen discusses Chinese urbanization and economic development. I remain continually surprised by how underdiscussed these ideas are. At the World Bank Urbanization and Poverty Reduction Research Conference last Friday, the opening panel spent about 5 minutes discussing China. Tyler is a welcome corrective.
“Disney World is what it looks like if you give a corporation full control over an area of land as big as San Francisco.” Not only does Disney have full control, it also has a medium degree of autonomy from Florida. That being said, Disney’s attempts at creating communities, not amusement parks, haven’t been as successful, though they weren’t unsuccessful either.
The Economist has been the most prominent institution supporting Georgism over the last 5 years. Here’s one of their longer pieces.
McKinsey Global Institute is catching the new cities bug, but their article is a bit dated. Masdar is generally perceived as a failure, having spent about $20 billion to develop and area of 5 square blocks. Songdo is still relatively underpopulated.
There’s a lot of reporting on African cities. Here is the Financial Times on the fastest growing cities, which are African. Here is CityLab on urbanization without development, which is unfortunately common in Africa. Here and here are two articles about how Addis Ababa is beginning to resemble a Chinese city. Here is a new city project in Senegal, which my Senegalese friends tell me is mostly overhyped.
One of the challenges in building a charter city is protecting it from future state expropriation. International laws can help limit the risk, as Dubai Ports World successfully sued Djibouti over a port seizure.Read More
Devon Zuegel is a writer and software engineer living in San Francisco. She writes about cities, tech, and is part of the YIMBY movement. Our conversation goes from walkable cities, to the need for weirdness, to what cities are overrated and underrated.Read More
Alexander William Salter, Assistant Professor of Economics in the Rawls College of Business, and the Comparative Economics Research Fellow with the Free Market Institute, at Texas Tech University, writes on political entrepreneurship.
I contribute to the literature on political entrepreneurship by analyzing the role of the political entrepreneur in Frederick the Great’s Anti-Machiavel. Frederick the Great (Frederick II of Prussia) is best known for turning Prussia into an international power during the mid- to late-18th century. His perspective on governance contains many valuable insights into the nature of political entrepreneurship, the institutions within which it occurs, and its effects on material prosperity. I detail key points from Anti-Machiavel that can advance scholarship on political entrepreneurship, and conclude by discussing how Frederick’s insights into political entrepreneurship can be put to work.Read More
Alexander William Salter, Assistant Professor of Economics in the Rawls College of Business, and the Comparative Economics Research Fellow with the Free Market Institute, at Texas Tech University, writes on sovereign entrepreneurship.
I develop a theory of sovereign entrepreneurship, which is a special kind of political entrepreneurship. Sovereignty is rooted in self-enforced exchange of political property rights. Sovereign entrepreneurship is the creative employment of political property rights to advance a plan. Building on several literatures in political economy and the managerial-organizational sciences, I show how sovereign entrepreneurship is related to ownership and residual judgment rights to government activities. I illustrate the theory by using it to reinterpret the rise of modern states as the entrepreneurial reassembly of ownership rights and control rights within government. I conclude by discussing future avenues of research on sovereign entrepreneurship.Read More
The nomination of Brett Kavanuagh to the Supreme Court has ignited an interesting discussion about the rise of the conservative legal movement. While Trump has challenged the conservative establishment in many ways, he has remained deferential to the conservative legal establishment, effectively handing over judicial appointment decision rights to the Federalist Society.
David Brooks has the best overview of the rise of the conservative legal establishment, tracing the rise of the Federalist Society. It is worth reading in whole. He summarizes the outcome of existence of the conservative legal establishment.
Kavanaugh is the product of a community. He is the product of a conservative legal infrastructure that develops ideas, recruits talent, links rising stars, nurtures genius, molds and launches judicial nominees. It almost doesn’t matter which Republican is president. The conservative legal infrastructure is the entity driving the whole project. It almost doesn’t even matter if Kavanaugh is confirmed or shot down; there are dozens more who can fill the vacancy, just as smart and just as conservative.
This community didn’t just happen; it was self-consciously built. If you want to understand how to permanently change the political landscape, it’s a good idea to study and be inspired how it was done.
Moreover, it took time for conservatives to develop a successful nomination strategy. Their initial attempts were unsuccessful.
As Steven Teles notes in “The Rise of the Conservative Legal Movement,” the first conservative efforts to stand up to the left failed. Business groups funded a series of conservative public interest law firms. But the business groups had no intellectual heft, they were opportunistic and they had zero moral appeal.
But at some point they began to realize their mistakes, and adjusted their strategy accordingly.
Then came the intellectual entrepreneurs. Aaron Director of the University of Chicago Law School inspired many of the thinkers — like Ronald Coase and Richard Posner — who would create the law and economics movement. This was a body of ideas that moved from the fringes of American legal thought to the very center. This movement was funded by groups like the John M. Olin Foundation, which was willing to invest for the long term and not worry about “metrics” or “measurable outcomes.”
Key to the success of the Federalist Society and the conservative legal movement was its seriousness.
As Teles points out, the key features of the Federalist Society were the limits it would put on itself. It did not take stands on specific policy issues. It did not sponsor litigation on behalf of favorite causes. It did not rate judicial nominees the way the American Bar Association did. It did not go in for cheap publicity stunts, like the Dartmouth Review crowd of that era did.
It wielded its immense influence indirectly, by cohering a serious, disciplined community and letting it do the work.
The innovative governance movement should adopt the best practices of the conservative legal movement if advocates want to be similarly effective. First, because this is a long-term project, ecosystem building must come first to make success sustainable. Second, movement building should be prioritized over promoting any single person or project; doing the latter is a recipe for failure. Third, the movement must develop and nurture talent.
The innovative governance movement has always been primarily concerned with long-term projects. A charter city takes decades to reach its potential, but so far, such thinking hasn’t translated into strategic action. This is likely because efforts have been directed towards single projects, and there has been little realization of the importance of an innovative governance ecosystem.
A charter city requires coordinating three distinct moving parts: real estate, governance, and politics. Alone, each of these is highly complex. The necessary real estate investment for a charter city is more often than not in the billions. Governance requires creating and administering a new legal system from scratch. Politics requires convincing a host country to pass legislation creating a charter city and credibly commit to enforcing it.
This lack of long term strategic thinking can also lead to unproductive headline-chasing. The Seasteading Institute ran into this problem early in their existence. “Libertarian Island: A billionaire’s utopia” was a common framing of early seasteading, though they’ve since successfully rebranded.
Similarly, innovative governance has been overly dependent on Paul Romer and Honduras. Romer gave his famous TED talk and almost was able to get legislation passed in Madagascar, and then was involved in passing charter city legislation in Honduras before a fight broke out between him and the Honduran government. As Honduras had the most advanced legislation, there have been a number of firms formed to create a charter city there. Unfortunately, this focus has come at the expense of building out the city’s ecosystem. And though Paul Romer is a great advocate for charter cities, his voice alone isn’t enough to sustain an entire movement.
Those interested in making charter cities a global reality should get serious about developing a coalition of capable advocates with different skill sets A handful of very talented individuals have entered the innovative governance space, but not nearly enough. Who are the entrepreneurs who will build charter cities? Who are the managers who can help administer them? Who are the lawyers who will create the legal system and draft the legislation?
The next generation of innovative governance leaders needs to be identified and trained. Not only that, but those sympathetic to innovative governance need to collaborate. Economists don’t even have an agreed upon definition for ‘charter cities’, as my recent exchange with Lant Pritchett demonstrates. The increased transaction costs because of different conceptions of charter cities makes building them that much more difficult. Every meeting, whether to raise money, negotiate with a host country, etc, requires first developing common knowledge. Only then can collaboration be productive.
The innovative governance movement is in its early stages. Long-term success will require careful planning and coordination. Still, there’s no reason for charter city advocates to reinvent the wheel; taking a page from the Federalist Society and conservative legal movement could make all the difference.Read More