Saturday, May 01, 2010

Charter cities: Institute Occidental rules, realize Occidental results?

In a recent EconTalk podcast, host Russ Roberts had Stanford's Paul Romer on to talk about the latter's ideas about what he calls "charter cities". Romer explains that Haitians are miserable because they live under terrible rules. He suggests letting them seek out 'charter cities'--something akin to Singapore with a suzerainty and guarantor of laws that doesn't interfere with internal affairs--and in the process allowing the rest of the world to learn from experimentation in the field. It's the "laboratory of the states idea" on steroids.

The glaring problem in the eyes of HBD realists, of course, is that it is more than just 'rules' that make Haiti Haiti--Haitians themselves play a big role. Relative performance of immigrant groups in the US is similar to the performance of the home countries those immigrants come from. Moving pockets of the underclass into middle class suburbia does not turn the hood rats into burghers--turns out you can take the underclass out of the hood, but you can't take the hood out of the underclass. Likewise, it's easy to get Mexicans out of Mexico, but taking Mexico out of Mexicans is not so simple.

Because it operates under the presumption that human populations are completely interchangeable, the hour long discussion is almost worthless intellectually. But the content isn't all forgettable flotsam. Worse that that, much of it is civilizationally masochistic (28:33):

I think it would be great if we let poor people come to the United States. As [Romer] say[s], their incomes usually jump manyfold. They're very productive. They make our lives better.
Yes, clearly importing poverty on a massive scale is the best way to increase the quality of life in the US! The only reason places like Zimbabwe and Somalia are such hellholes is because they have governments that are too heavy-handed and too feeble, respectively, for a Western standard of living to be realized. Since we have a poor track record when it comes to changing the governmental structures of other countries, a better way of fighting poverty is to take the world's impoverished and put them within the borders of the developed world. What could possibly go wrong?

Roberts goes on to agree with Romer that just allowing a few hundred thousand poor migrants into the US each year is merely a drop in the bucket, that there are one billion people who would benefit from coming here. Those we are unable to take in should be transported to these charter cities (presumably on the developed world's dime, although that's not fleshed out in the podcast). Because they become much wealthier upon taking up residency in the US, largescale immigration of impoverished third-worlders not only carries with it a putative economic benefit (because everyone knows that it is countries where labor costs are lowest are the same countries where standard of livings are the highest!), it also brings a humanitarian one.

The same logic can be applied to wealth redistribution at the individual level. If a bunch of indigents are free to take up residence on Bill Gates' Lake Washington property and use the facilities for their own well-being, it will markedly increase their quality of life. It won't even break Bill's bank. But it will bring down the value of his property, cause him to devote more of his energy to addressing the issues that arise as a result of having indigents living under his roof, decrease the trust existing within the household (Bill's not doing the same thing with his spare time as the indigents are), and disincentivize the behaviors that allowed him to acquire the property in the first place.

I suspect that in response Romer would point out that such indigents being allowed to take up residency on Bill's property is a violation of his personal property rights. But are property rights at the individual level principally different from the rights of a national sovereign to the territory that comprises it? If the majority of the Gates' household was in favor of allowing the indigents to move in, the political argument would be different. When it comes to illegal immigration in the US, however, it is clear that the majority of the Gates' are opposed to hosting the indigents. Forced against their will to accept their new housemates, the Gates' will be prone to move to sections of the house where the indigents don't frequent, such as the northeast quadrant of the property.

The American Southwest is approaching the Deep South in terms of poor scholastic performance, public indebtedness, unemployment, and criminal activity. White flight has been an element of California's existence for over a decade now, due in part to unskilled immigration from Mexico and Central America, most of it unregulated or based on family reunification rather than any measure of merit. The negative externalities listed previously (in addition to accentuated economic and social inequality) associated with largescale unskilled immigration is why laws like the one recently signed in Arizona are created--residents of the states on the front lines realize the transformation from first-world United States into third-world Mexico is not a desirable one.

That Northeastern professors existing in the most unrealistic setting imaginable--the university setting--see no meaningful difference between Ellis Island Jewish immigrants from Russia in the late 19th and early 20th centuries--before the modern welfare state came into being, when a couple percent of aspiring immigrants were actually turned away in fear they'd become public charges, and when the need for physical labor was rapidly rising--and the immigration patterns today is unsurprising.

While I generally enjoy EconTalk podcasts, Roberts regularly makes empirical assertions that are simply incorrect (although to be fair, he usually prefaces them with something along the lines of "I think, although I'm not familiar with the latest data..."). The one theoretical problem he sees with unfettered immigration--although his comments show he really only thinks it's a political, not a legitimate, problem--into the US is the potential for abuse of the welfare system. After asserting that immigrants in the US improve the lives of natives, he insinuates that welfare use among immigrants is not an actual problem (28:42):

As long as they didn't live off our welfare system, which is a big handicap--I don't think they want to live off our welfare system, but the fact that they could, means people aren't going to let them in. We don't have that luxury [the realization that current immigration patterns are beneficial for natives] right now, politically, I don't think.
A graph comparing usage rates of various welfare programs in the US from the Center for Immigration's impressive 2007 report profiling the US' foreign-born population demonstrates, however, that while it may not be the case in Fairfax, on the whole immigrants make considerably better use of welfare programs in the US than natives do:


Anonymous said...

I'm not going to watch the video because your description makes me think it would send me into a rage. Besides, I know these types and I've heard their arguments a thousand times. But this whole "charter cities" thing sounds an awful lot like colonialism. I'm sure they also didn't consider, even for a second, whether some of these other countries might actually like their lazy "unproductive" lifestyles. I live in an area with a lot of immigrants, and it seems like the first thing most of them do when they arrive is start wishing America was more like their home country.

I sort of understand why elites support unlimited immigration, though I think they're a bit naive especially if they have children. What annoys me is the way they take the moral high ground while they're selling out their less fortunate countrymen.

Anonymous said...

I don't understand why it would be better to get people to come here and get political control over our economies than for us to go there and take political control of their economies, so long as no military force is involved. In fact, it would seem preferable to invite the people who have a history of good goverance run the economies that don't, rather than vice versa.

Neither of these things is necessarily particularly desirable, but at least the "colonial" model, would allow us to reduce population pressures at home (making having babies more attractive as there is more opportunity for the offspring, even if it just the opportunity of poor people to have fruit-picking, toilet-cleaning children) and would increase the area of land with resources that could potentially be input to the world economy.

(As an aside, the importing model is based on a kind Conservatism, unfortunately, as it posits that political culture cannot be articulated and hence exported in a colonial fashion, as it is part of a unarticulated tradition.)

Audacious Epigone said...


Yes, they stake out the moral high ground while also acting as though they hold the practical high ground as well (ie immigration is good for everyone, including working class natives)--that's one of the many costs of a worldview that doesn't take HBD into account.


Right. Occupying Iraq costs us while we're there, diverts resources that could be used more productively elsewhere, etc but it does little to undermine the engine--the US and the people who inhabit it--that powers the quality of life we enjoy.

kurt9 said...

There has been lots of discussion about the charter cities concept on the thousand nations blog:

I think misunderstand this concept. The charter city idea is not for the purpose of "colonializing" the rest of country they are affiliated with. Rather, the idea is to provide an physical outlet for people from those societies who want more out of life than what there culture allows for, without requiring that they immigrate to the U.S. or other developed country.

For example, a charter city would be like building a Singapore or Hong Kong next to Haiti. People from Haiti would want opportunity and want to create a new life for themselves could "immigrate" to the charter city and build a new life for themselves. There are difficult political issues to overcome to realize this concept. However, I fail to see what is so objectionable about it in principle.

Consider this as a choice. Would you rather that ambitious Haitians immigrate to a charter city in the Caribbean, or would you rather they come to the U.S.? Viewed in this context, I think you will consider the charter city concept to be very attractive.

Audacious Epigone said...


I should've made it clear, but I was just responding to the specific comments made above. I don't dislike the idea--a charter city existing within Haiti's borders but separate from it would probably be a good thing for HBD realism, as it is highly unlikely that anything approaching Singapore or Hong Kong would develop. At the same time, it could potentially showcase the difference better rules can make (which I'd guess will be less than Romer assumes, but still something greater than zero). And it reduces all the pressures and externalities associated with migration into the West.

It was the discussion surrounding, rather than the actual idea of, charter cities that struck me as being so ridiculous.

kurt9 said...

Audacious Epigone,

It wasn't so much you that I was responding to as much as the first "Anonymous". His comments were self-contradictory. On one hand he thinks the charter city concept is "colonialist" (I have no idea where he gets this from) and is somehow bad and evil. Yet, on the other hand, he seems to want to reduce or stop immigration to the U.S.

For whatever reason, he fails to comprehend that successful charter cities will attract immigrants that would otherwise come to the U.S. If he does not want more immigrants coming to the U.S., he should be in favor of the charter cities concept.

In any case, he clearly is clueless on the concept of charter cities.

Anonymous said...

These people must be stopped by any means necessary.

Anonymous said...

All colonial holdings in the European Asian and African Empires, AFAIK, radiated from "charter cities" (a city which Europeans gained control of under some kind of semi-feudal arrangement with a local polity in exchange for goods or services). These were run in accordance with more or less European standards of governance. They came to have defacto control over the adjacent territory through economic links and providing European military protection to these links against harassment by members of the local polity or bandits (and because they provided protection they wanted protection money and taxes are protection money).

This is the colonialism that is found objectionable by anti-colonialists, not merely the terra nullius variety. That's why it is being referred to as colonialism by Anon.

It's unclear to me exactly how the charter cities project would implement the exact same policies as former colonialism, have the benefits stated and neither be called colonialism nor have similar consequences in terms of political control. It's also unclear to me how anyone can support this while being staunchly anti-colonialist, rather than admitting that they agree with colonialism but merely want it to be more accountable or that colonialists should be less racist or somesuch.

kurt9 said...

Why would anyone want to stop the formation of charter cities? This is just plain silly.

The charter city concept is essentially about created Hong Kong like free enterprise zones where the people who are attracted to such can relocate to, start businesses, and generally create new lives for themselves. It is irrational to oppose this.

Some people want opportunity. This is why they immigrate to places like the U.S. If the U.S. cannot or will not take them in, it make sense to create an equally attractive alternative location for them to go to. This is what chartered cities are all about. Claiming that the charter city concept has anything to do with colonialism is mental illness.

Anonymous said...

"Claiming that the charter city concept has anything to do with colonialism is mental illness."

No, exactly the opposite. Claiming that "charter cities" are nothing like colonies is some kind of mental illness. Anonymous at 3:42AM has it exactly right.

It seems you have a mental block along the lines of "colonies = unspeakable evil, charter cities = potential for great good, therefore charter cities must be nothing like colonies".

It's telling that you immediately assumed when I said "colonialism" that I meant "bad and evil", and that you coined the term "colonializing" instead of using the proper term, colonizing.

By the way, Hong Kong was a colony of the British Empire for over 150 years so maybe it's not the best example to use if you want to draw a clear distinction. Singapore was also a British colony for roughly the same period.