Have you heard the old libertarian joke? It goes like this. Should heroin sales to minors be legal on public sidewalks? The libertarian responds, why are there public sidewalks? The libertarian answer captures a certain truth. Conflict arises when spheres of action, the set of actions deemed by others as reasonable, are ill defined. Private property denotes clear spheres of action, thereby minimizing conflict. By resorting to private property instead of public property, questions of appropriateness of certain courses of action are taken out of the public sphere. In essence, the joke says the sales of heroin (I will ignore the aspect of children) should be a private matter.
However, while I believe the public sphere is currently too big, I do not believe the optimal size of the public sphere is zero. The following essay is my attempt to square my advocacy for private or proprietary cities, cities where a single entity owns the land on which the city is constructed and leases it to renters, with my belief in a public sphere.
First, one can distinguish between what might be termed an economic (or crude) defense of proprietary cities vs a holistic (or liberal) defense. An economic defense would solely consider whether people vote with their feet. If people choose to move to the proprietary city, it is better than their alternative options. A holistic defense considers more than just people voting with their feet. It questions whether proprietary cities can offer adequate protections for civil rights. Will there be a healthy civil society, freedom of speech, freedom of association, due process for those accused of crimes. In short, will a proprietary city be an extension of the modern liberal order, or a subversion of it.
As an economist I am very sympathetic to the economic arguments. In fact, all other things being equal, more crude proprietary cities are better than fewer. However, all other things are not equal. Crude and liberal proprietary cities are, to some extent, substitutes. This is especially true for the first proprietary cities, whose success (or failure) will likely determine the future evolution of proprietary cities.
Dubai, though not a proprietary city itself, offers a glimpse of what crude proprietary cities could become. A society segmented by class, South East Asians providing the manual labor, admittedly at higher wages than they could get at home, but without many basic freedoms, and Europeans. There is little mixture between the classes, and no hope for the South East Asians to enter the upper class.
On a more theoretical level, we can consider the limits of proprietary cities. Private spheres allow for action that is unacceptable in public spheres. If you visit my house, I am perfectly within my rights to restrict your actions. I may ask you not to voice certain opinions or to enter without my permission.
This line, however, becomes blurry as private spaces enter commercial arrangements. The argument for banning discrimination based on race is that business is fundamentally different from residence. The sphere of action businesses can take is more restricted than the private sphere one can take in one’s home.
As nominally private enterprises scale, the distinctions further blur. In a company town, should the company be legally allowed to restrict speech critical of the company? Aside from legality, morally, should it?
When considering proprietary cities, we can compare Dubai and Hong Kong. Do we want a city where manual laborers are second class citizens, unable to participate in the public sphere, or a city where the poor have comparable opportunities to the wealthy? Hong Kong is obviously not an ideal liberal city, but it is far ahead of Dubai.
I have argued that proprietary cities be given institutional autonomy as well. With such autonomy it seems reasonable for the host country to ask for certain procedural safeguards for civil liberties. A bill of rights, if you will, protecting the residents rights to speech, religion, association, protest, fair trials, and more.
While I strongly support political decentralization, there are differing visions on how a decentralized world would appear. It could be fragmented into different groups, with little trust and interaction between the groups, with no group representing liberal ideals. On the other hand, decentralization could allow us to escape modern tyranny, experiment with better governance, and kept intact basic values which continue to hold us together. With regard to proprietary cities, the latter must be fought for.