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Caplan to Gates Foundation, “You’ve Made a Mistake”

March 24, 2011

A cogent and pithy case for charter cities from Bryan Caplan:

Intense populist opposition aside, it is hard to graft one country’s institutions on to another’s – especially when entrenched interests fight you every step of the way.  This is true in the business world as well.  Competitors often try and fail to adopt leading firms’ “best practices.”  Corporate culture is notoriously stubborn.  In both business and politics, success often requires a clean slate.  It is easier to open a new WalMart than to make the Kmart chain better.  Advocates of charter cities argue that is also easier to bring in “outside management” to make a new city that works than to reform existing countries that don’t.

As the example of Hong Kong suggests, charter cities have both direct and indirect benefits.

Directly, each charter city would allow millions of people to better their lives by integration with the world economy.  While critics often belittle this achievement as mere “cream-skimming,” the sad truth is that much if not most of the world’s cream now curdles in backwards farms and dysfunctional slums.  If the native entrepreneurs who built Hong Kong had been trapped in mainland China, most would have wasted their lives in dead-end jobs on Maoist communes or joined the Communist elite.  Hong Kong gave them opportunities to use talents that otherwise would have gone to waste.

A lot of his key points support competitive governance generally, and Seasteading, too. Enjoy.

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