The Freeman was kind enough to publish my piece on autonomous cities having the ability to solve the refugee crisis. I try to gently poke those discussing the idea, namely Jason Buzi and his Refugee Nation, and more importantly, Egyptian billionaire Naguib Sawiris and his attempt to buy a Greek island, to consider the governance of the city. Most of the discussion has focused on engineering and political difficulties. However, ultimately the success of such a project, namely, not simply being a giant refugee camp but a vibrant city, will depend on the legal system under which the city operates. I make this point more forcefully in the article.
When determining the success of a new country or city, the most important three things are laws, laws, and laws (with location being a distant fourth). Acquiring land, setting up tents, and giving away food and water will only create a giant refugee camp — not a city. To create a sustainable, livable city, where refugees want to move, there must be jobs, and for there to be jobs, there must be enterprise, and for there to be enterprise, the law must encourage it.
In practice what this means is that a refugee city must have economic freedom. Entrants must be free to own property, trade with each other, start businesses, and become productive citizens.
Paul Romer makes a similar point in a recent blog post of his, he writes.
To see what a real solution would look like, you need only remember three things:
1. It takes only a few cities, on very little land, to accommodate tens or hundreds of millions of people.
2. Building cities does not take charity. A city is worth far more than it costs to build.
3. To build a city, do not copy Field of Dreams. (“Build it and they will come.”) Copy Burning Man. (“Let them come, and they will build it.”)
How do we know that cities are worth more than they cost to build? Just look at the value of the land they sit on. Building a city on top converts land that used to be worth very little into land that is extremely valuable. The increase in the value of the land is the sign of the gains that can finance the cost of offering people a government that can create the conditions that offer residents safety, dignity, opportunity, hope.
Creating these conditions does require a local government; even at Burning Man, there is no libertarian free-for-all about where you can set up camp and where the public space will be. The local governing entity determines this before anyone shows up.
Unfortunately he stops short of directly advocating for Charter Cities to be used to stop the refugee crisis, though Alex Tabarrok did tweet at both him and Naguib Sawiris, so if I am feeling optimistic I will assume they are collaborating. I was also pleasantly surprised about his favorable reference to Burning Man, it seems Burner culture has permeated even high academia. Lastly, I feel a need to correct his use of libertarian. Libertarians are not against rules and institutions, they merely favor a specific kind of rules and institutions. Burning Man is libertarian to the extent it is an opt in culture with clearly defined rules that are agreed ex ante by participants.
Overall, I am pleased about the recent and new advocates for refugee cities. It shows the idea of free cities is gaining traction in unrelated circles, perhaps it is an idea whose time has come. That being said, I do hope they take seriously the problems of governance. I fear if they don’t, they risk setting up failure on a massive scale that would both have a high immediate human cost, the refugees, as well as a high future cost by reducing the likelihood of the initiation of similar projects.
One thing I did not discuss in The Freeman piece was the structure of governance. This is a little more difficult than what the laws should actually be (namely British Common Law). Should a refugee city be a democracy, private city, or some hybrid. The question is tricky because democracies have citizens. A refugee city, at least in its early years, wouldn’t have citizens in the same sense America does today, long time residents with a vested interest in the success of the city itself. What would the requirements to vote be, live there for 6 months, 1 year? Who would make the initial investments in a port and other basic public goods, would those investments be recouped, and if so, how?
My bias would be toward a private city, which would solve most of these questions, though in a somewhat unsatisfactory manner. Decision making authority would be clearly delineated, and a person like Naguib Sawiris does seem to have the best intentions of the refugees at heart and enough resources to invest in such a venture. But I doubt he would be willing to spend tens of millions of dollars on such a project as charity. The downside to a private city would be the potential for exploitation of those most in need of refuge. The primary advantage would be a much faster reaction time.
The other alternative would be the EU sponsoring such a city. Raising a few hundred million dollars to stem the refugee crisis would likely not be difficult. Further, they would be in a better position to bargain for economic freedom for the new city. The drawback is such an effort would probably be bogged down by politics and take several years to get off the ground when the worst of the crisis is over.
As usual, I would support both these efforts, though I lean toward the private city. Luckily, there are plenty of refugees for both approaches and the downside is relatively low. Hopefully these attempts can provide some alleviation of suffering and even hope for those who have been forced from their homes by war.