Over the last few years, Stanford economist Paul Romer has championed a radical solution for ending world poverty — establishing brand new charter cities across the developing world. By encouraging migration to these cities, Romer hopes to compensate for problems urbanization has caused in existing cities, like unemployment, low standards of living and crime. An article by Sebastian Mallaby in the latest issue of The Atlantic called “The Politically Incorrect Guide to Ending Poverty" fleshes out Romer’s proposal.
Mallaby writes that the goal of the project is “to bring the governance of the developed world to workers in undeveloped places.” Romer goes into greater detail about his proposal in this TED talk he gave in July of 2009.
Charter cities sidestep the problem of what Romer calls “bad rules” — laws or regulations that stunt economic growth. Changing these kinds of laws from within takes time and can be difficult, so he thinks it would be much easier to take uninhabited land and start from scratch. People would then be free to move to places with better rules, which would accelerate change in their home countries. As Romer explains in his TED talk, the first step for a new charter city is to write "good" rules — rules that favor industry, but also provide reliable public services to residents.
Romer suspects that the people who would migrate to a charter city would be leaving slums or subsistence farms to come to the city, which would raise their standard of living and reduce global poverty. “By building urban oases of technocratic sanity,” writes Mallaby, “struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed.”
Romer envisions these cities as special administrative zones run by developed nations. In one possible scenario, Romer suggests that Cuba could donate land in Guantanamo Bay for a charter city and that a group of rich countries would share the costs of building the city and implementing the charter. He gives Canada, Mexico, Brazil, Norway and Spain as a possible consortium.
There’s even a model for the type of city Romer wants to build: Hong Kong. For much of the 21st century, Hong Kong was governed under British rules that allowed it to prosper independently of China. As the rest of China followed Hong Kong's example, about 100 million Chinese escaped poverty. Romer acknowledges this, saying “Britain inadvertently, through its actions in Hong Kong, did more to reduce world poverty than all the aid programs we’ve undertaken in the last century.”
But skeptics like Columbia professor Elliott Sclar claim that "charter cities amount to a new form of colonialism." From the TED talk, Romer disagrees. “It’s not," he says, "The thing that was bad about colonialism and the thing which is residually bad in some of our aid programs is that it involved elements of coercion and condescension.” He argues that his model is based on choice, which is “the antidote to coercion and condescension.” No one would be forced to move to a charter city if they didn't want to go.
Leaders of a few nations, mostly African, have already met with Romer about starting charter cities. At this point, it's all talk. But if Romer's ideas are put into practice and are successful, poverty could be written out of existence.