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
An interview with Joe Quirk, President of the Seasteading Institute
Please introduce us to Seasteading, what is the vision?
Seasteading is homesteading the high sea. In 2008, Robert Ballard, the famous oceanographer who discovered The Titanic, gave a famous TED talk where he concluded:
“Why are we not looking at moving out onto the sea? Why do we have programs to build habitation on Mars … but we do *not* have a program looking at how we colonize our own planet? And the technology is at hand!”
That same year, Patri Friedman and Peter Thiel co-founded The Seasteading Institute. Nearly half the Earth’s surface is unclaimed by any state. That means each seastead would essentially be its own nano-nation. We’d like to create thousands.
What are common misconceptions about Seasteading?
Seasteading is not a plan for society. Seasteading is a technology for anybody to try their own society. The Seasteading Institute takes no position on what kind of societies should be formed. We foster the research and technology for individuals to try their own societies. As long as people can leave seasteads voluntarily, and join them voluntarily, we think exciting governance solutions will emerge.
Why do you think we need autonomous countries? Why existing governments are not sufficient?
I often use Steve Wozniak as an example. He loved working for Hewlett-Packard and was loyal. He proposed his design for the personal computer to his company bosses five times and was rejected each time. His superiors at Hewlett-Packard couldn’t imagine how personal computers could solve problems that Hewlett-Packard’s giant computers couldn’t. In order to show the world what was possible with personal computers, Steve Wozniak had to leave Hewlett-Packard and start his own company with Steve Jobs, who named the new company Apple.
I think of seasteads as platforms where the Wozniaks of governance can demonstrate startling innovations we can’t imagine because we all work for the Hewlett-Packards of governance.
Can you share an episode of how you first became interested in the idea of creating seasteads?
I learned from Milton Friedman that monopolies are bad for the consumer and good for the provider who holds a monopoly. I met Patri Friedman, Milton Friedman’s grandson, at Burning Man, a festival of social experimentation in an American desert that produces remarkably positive results in multiple domains simultaneously.
Patri explained that governance is the most important service in the world, and countries essentially hold a monopoly on this service. If we could create a technology for floating societies in international waters, we would essentially have a startup sector for governance, a Silicon Valley of the Sea.
I had just been on a cruise ship six weeks before, when I realized floating cities were possible. I had already attended Burning Man ten times and witnessed first-hand how rules can evolve in unpredictably positive ways when societies can start from scratch and permit decentralized organization. Burning Man essentially starts over every year, throwing away bad rules and incorporating new rules that work.
Patri explained that this would work even better on the ocean, because floating neighborhoods could disassemble and move about like a jigsaw puzzle, increasing the power of governance consumers to choose new societies, and creating the incentives for governance providers to innovate to please residents. This would rapidly accelerate the rate of peaceful innovation in governance, the most important service in the world.
Humanity urgently needs to solve the problem of sea level rise, and we urgently need to innovate peacefully to discover better technologies for governance. Seasteading is an affordable technology to begin to solve both problems, and the company Blue Frontiers plans to start immediately.
What are main challenges that need to be overcome to realize autonomous floating cities? Are they mainly technical or political?
The technical challenges for this project have been largely solved by Dutch engineers at Blue21, who designed and built the Floating Pavilion in Rotterdam and have partnered with Blue Frontiers to build seasteads. The governance challenges have been largely explored by over 4000 Special Economic Zones around the world, which have been studied by Blue Frontiers’ legal counsel, Tom W. Bell, author of Your Next Government? From Nation-States to Stateless Nations. Tom W. Bell has studied the best practices of these Special Economic Zones and designed the SeaZone specifically for first seastead.
The remaining challenge to inform the public that the way to participate in Blue Frontiers, the first seasteading company, is by buying Varyon, a token that will be used for the exchange of goods and services in the Blue Frontiers ecosystem. You can use Varyon to stake residence on a seastead, and thus participate in governance. Owners and renters can veto based on vesting in the floating society. You can read more about it by reading the Varyon white paper.
How are you thinking about governance and what do you envision the Seazone looking like?
We hope to establish a private “SeaZone Authority,” through which Blue Frontiers will manage the project. As Tom W. Bell specifics, Instead of asking for *no* regulations, we’re going to ask for the *best* regulations. The world’s greatest hits. We and future host countries will define a Peer Group of countries from among the most peaceful, prosperous, and well-run nations on earth. Those Peer countries will provide the regulations for the SeaZone.
How much freedom will we have? If an activity is illegal everywhere in the Peer Group, it won’t be legal in the SeaZone. If one member of the Peer Group dissents, and has demonstrated that a certain freedom works out fine in their country, it will be legal in the SeaZone. That way the SeaZone will be maximally inclined toward business and personal freedom.
Thus the SeaZone will be the freest place in the world, but it won’t be too radical. It will be the first incremental step toward freedom on the high seas, and seasteaders will absorb the cost of failure. It The SeaZone succeeds in bringing prosperity to the local community, Blue Frontiers can return to the host country and say, “Are you happy with what we created together? How about a little more autonomy, a little further out to sea?”
Instead of arguing for freedom, we demonstrate it works step by step, and we don’t ask anyone else to pay the price, but we share in the prosperity. We call this strategic incrementalism.
Peter Thiel last donated to the Institute in 2014. What is relationship with him? Is he still involved in the project?
Peter Thiel co-founded The Seasteading Institute with Patri Friedman in 2008 and has been the most generous donor to the nonprofit. Peter Thiel is not involved with the startup company Blue Frontiers, but we hope our first seastead makes him proud.Read More
Lotta Moberg completed a PhD in economics at George Mason University. She wrote a wonderful book, The Political Economy of Special Economic Zones. Our discussion ranges from the benefits of special economic zones, to the failures of special economic zones, to what the future of special economic zones can bring.Read More
A conversation with Michael Castle Miller, the Founder and CEO of Politas Consulting
Tell us about Poltias Consulting. What do you do? Who are your clients? What is your value proposition?
Politas exists to help cities and special jurisdictions shape the future of governance. We provide legal and public policy solutions for special economic zones, charter cities, refugee cities, and other special-status areas. We help these areas overcome political roadblocks to innovate and implement new institutions that promote inclusive economic development. We are currently working on projects in Latin America, Central Asia, North Africa, and the United States. We are a boutique firm with the world’s leading experts on special jurisdictions, specializing in law, public policy, institutional design, urban planning, economic development, and political economy.
You focus on special economic zones and new cities. Do you see such projects as playing a role in economic development and poverty alleviation?
Cities and special zones hold the key to building inclusive, prosperous societies that address the major challenges of the 21st century. Special economic zones can be vehicles for introducing new policies that otherwise might be impossible for states/provinces or national governments to carry out. They do this by introducing new rules in a limited area, which avoids political conflict with people who prefer to preserve the status quo. New cities can play a similar role, except the potential is even greater. Cities are magnets for diverse people, ideas, industries, and creative expressions. So, when given enough power, they can combine all of these resources with good policies to unleash explosive growth.
Cities and special zones play a key role in international development and poverty reduction because they help reform institutions. Institutions – including laws, governance structures, and administrative practices – are the largest factor in the success of countries. Institutions determine whether businesses benefit more from delivering high-quality, affordable products or from chasing after political favors. They determine whether politicians benefit more from seeking the best interest of society or from taking bribes and helping elites. They determine whether poor people and migrants can find a safe, legal, and affordable home and job, or whether they stay in the shadows. Politas helps its clients restructure institutions in cities and zones to create more open, prosperous, and inclusive societies.
What are some projects that you have worked on that are most promising or you are most proud of?
First, we’re helping develop the institutions for a special jurisdiction in Latin America. We have the opportunity to greatly improve governance in the area for the benefit of all – from poor farmers to international investors.
Secondly, we’re developing new policy ideas that combat housing prices and homelessness in U.S. cities. Much of the problem with high housing costs in cities like Los Angeles, San Francisco, New York, and Washington, DC, stem from overly restrictive zoning that limits the supply of new housing. Many zoning restrictions are good and understandable, but they also prevent cities from being inclusive and affordable, especially for low- and middle-income residents. Easing these restrictions in a sensible way requires us to make sure existing residents don’t bear all the burdens and none of the benefits of new development in the neighborhood. We’re about to unveil some exciting work on this front soon.
Finally, we’re working on refugee cities projects for countries hosting large displaced populations. Refugee cities are special designated areas where the normal immigration, land use, and business rules are tweaked. Instead of forcing displaced people to stay on the margins of society, the special areas allow them to work, start businesses, and hold property.
What are some trends which you see in the development of new city projects and special economic zones?
Globally, cities and special jurisdictions are gaining influence. As more and more of the world’s population moves to cities, national and provincial governments are recognizing the outsized role cities play and letting them take more responsibility for their own governance. Power is becoming more decentralized by necessity and by common sense.
We’ve been working on a project in Libya, where decentralization is happening by necessity. The failure to form a state over the entire country has meant that mayors and local councils have had to fill a governance gap – providing public goods that were previously only provided by the state. We’re helping empower those local leaders through municipal capacity building and special development zones. Ultimately, we believe these cities and towns hold the best prospects for building a peaceful and prosperous Libya.
Decentralization is happening by common sense with many new city and special economic zone programs. The Republic of Georgia has decided to accelerate its impressive recent economic reforms, by building a new city and special economic zone in Anaklia. Anaklia has incredible potential because it will include a major, badly needed deep sea port on the Black Sea and is a perfect vacation spot. But even more importantly, the Parliament will give Anaklia special status under the Constitution, enabling it to pilot innovative new policies and governance structures. (It’s perfect weather means its a great vacation spot too!)
What this means is a shift is occurring. Zones are not just tax havens, they are becoming diverse, urban areas with new public policies, services, and administrative frameworks. Cities are similarly leaders in solving pressing global issues like immigration, the environment, and building an inclusive economy. It is an exciting time!Read More