In the second half of the 20th century, Singapore used the right institutions to go through economic development faster than any city in history before it - despite being home to varied racial and religious groups. Could a charter city for refugees do the same?
Australia has recently experienced a small increase in the number of refugees attempting to arrive here by boat from Indonesia. The Government is trying to avoid accepting them into Australia, believing that public opinion does not support receiving ‘potentially dangerous queue jumpers’ into the country. In my view rejecting these refugees is a terrible decision both for them and for Australia. As Andrew Bartlett put it: “history shows the vast majority go on to become very productive and responsible members of our community”. It is only by an act of collective moral blindness that most Australians can feel righteous enforcing rules that prevent people suffering poverty and persecution from enjoying the benefits of living in Australia; benefits which they experience either by an accident of birth or because they themselves were allowed to come here.
Nonetheless, it is unlikely that public fear about accepting large number of asylum seekers into the community will go away any time soon or that the Labor Government will risk an electoral backlash by ignoring it. What then can we do for the tens of millions of desperate refugees in the world who won’t find wealthy and functioning countries to accept them? Paul Romer has an idea:
Charter cities offer a truly global win-win solution. These cities address global poverty by giving people the chance to escape from precarious and harmful subsistence agriculture or dangerous urban slums. Charter cities let people move to a place with rules that provide security, economic opportunity, and improved quality of life. Charter cities also give leaders more options for improving governance and investors more opportunities to finance socially beneficial infrastructure projects.
All it takes to grow a charter city is an unoccupied piece of land and a charter. The human, material, and financial resources needed to build a new city will follow, attracted by the chance to work together under the good rules that the charter specifies.
Action by one or more existing governments can provide the essentials. One government provides land and one or more governments grant the charter and stand ready to enforce it.
Romer suggests such a city would be viable in northern Australia:
Case 2: Australia and Indonesia create a new regional manufacturing hub
In a treaty that Australia could sign with Indonesia, Australia would set aside an uninhabited city-sized piece of its own territory. An official appointed by the Australian prime minister would apply Australian law and administer Australian institutions, with some modifications agreed to in consultation with the government of Indonesia.
The main insight here is that some of what makes high income countries so rich can be franchised. Rich countries are rich largely because they have large quantities of natural, physical and human capital, access to technology and the expertise to use it, as well as governmental, legal and cultural institutions which facilitate wealth production. Refugees moving to Australia from dysfunctional states would suddenly have access to far more of all of these things, but Australians presumably fear they might also reduce the natural, cultural and physical capital available for those, including themselves, who are already here. If Australians aren’t so enthusiastic about sharing their good luck with refugees, a Charter City administered by Australia could at least allow them access to the governmental and legal institutions which have served Australia so well. By credibly providing those rules in this new city Australia would make it a desirable place for investment, thereby also increasing the residents’ access to physical capital and technological expertise. While migrants to the charter city wouldn’t have access to the cultural and human capital that a new resident of Sydney would have, the close proximity to Australian culture and citizens would be sure to provide at some benefits in these areas as well. Romer is even confident that these cities would be able to pay for themselves and eventually turn a profit for the host country through tax revenue, which would essentially be selling their legal institutions to willing buyers.
The primary difficulty of building a city of refugees from scratch would be putting together the social capital and norms necessary for disparate social groups to obey the law and work together effectively and by so doing attract the investment necessary to build such a city. As Arnold Kling has pointed out:
Paul Romer, in presenting his idea for charter cities, makes it sound as though we can take rules “manufactured” in, say, Canada, and export them anywhere in the world. Leoni would say that instead most law is embedded in social customs In fact, my daughter who just spent the summer in Tanzania, says that the custom of seeing law as something that ought to be obeyed is not nearly as natural there as it is here.
Would refugees from a variety of different cultures be able to produce and follow a common set of laws and norms which would allow them to work and life well together? Would refugees, with little hope of returning home, jump at such an opportunity to start a new life in such an experimental city? If the answers are yes, it is possible Australians could help many more refugees than they would be willing to accept as immigrants to their country.
Alternative view: Greg Clark says culture and personality matter more than institutions.
Tagged: economics, growth, immigration, politics, utilitarianism
