Fresh as boiled cabbage
Having endured one of his commencement addresses, I naively assumed that my opinion of Newt Gingrich could not get much lower. Boy was I wrong! No, I’m not referring to his incoherent objections to the Ground Zero Mosque or his odious personal habits. Instead, I’m baffled by the persistence of his reputation as an “ideas guy” despite the fact that every “idea” he presents is either tired or transparently stolen from someone else.
His latest article for National Review is a case in point:
The U.S. should negotiate a series of bilateral treaties with receptive governments, carving out undeveloped sites the size of Hong Kong. Then a joint venture between the host government and the U.S. would launch brand new Free Cities in these places, with a complete set of American-style freedoms and responsibilities, guaranteed by treaty for 50 years.
Treaty-based Free Cities would entice and attract enterprising people and capital from around the world by offering: self-government; the rule of law; low taxes; reliable prosecution of corruption; freedom of faith, speech, and press; public registration of real property; a merit-based civil service; multi-ethnic meritocracy; zero tariffs; and an American university.
I actually find this proposal pretty fascinating. But it’s also vaguely familiar:
Rather than betting that aid dollars can beat poverty, Romer is peddling a radical vision: that dysfunctional nations can kick-start their own development by creating new cities with new rules—Lübeck-style centers of progress that Romer calls “charter cities.” By building urban oases of technocratic sanity, struggling nations could attract investment and jobs; private capital would flood in and foreign aid would not be needed. And since Henry the Lion is not on hand to establish these new cities, Romer looks to the chief source of legitimate coercion that exists today—the governments that preside over the world’s more successful countries. To launch new charter cities, he says, poor countries should lease chunks of territory to enlightened foreign powers, which would take charge as though presiding over some imperial protectorate.
But hey, it’s not as if the originator of this idea – Paul Romer – is a well-known economist. It’s not as if he was profiled in a major American magazine last month. It’s not as if “charter cities” have been covered just about everywhere.
On a more serious note, one of the reasons I’m drawn to Romer’s Gingrich’s proposal is because it offers an empirical testing-ground for various theories of economic development. One of the issues this blog has grappled with recently is Gregory Clark’s A Farewell to Alms, which suggests that institutions don’t matter and industrial development only proceeds after societies reach a Malthusian “tipping point” (go here for a critical take on the book; here’s a more sympathetic review from yours truly). If Romer is right and good institutions spur growth, free cities ought to quickly outpace their neighbors. If Clark is correct, however, institutional reforms – and, by extension, free cities – are a lost cause.