Disney’s Private City

Disney World is often cited as a real-world proprietary community. The fact that what is essentially a private, for-profit city can provide high-quality public services should warm the heart of any fan of competitive government, especially those with a plan for getting from here to there.

I’ve not previously seen any detailed analyses of how the Disney World’s private government operates, though, so I was thrilled to see a new report from Arin Greenwood of the Competitive Enterprise Institute, Privatize American Cities? Learning Lessons from Disney’s Experiment with “Private” Government:

Walt Disney World sits on of 25,000 acres in Central Florida governed and managed by an essentially “private” government—the Reedy Creek Improvement District (RCID). RCID levies taxes on its residents, devises and enforces building codes, handles waste management and fre protection, issues bonds to finance infrastructure projects, and performs many other functions ordinarily performed by local governments.

Greenwood points out that the publicly-managed areas of Florida suffered large losses during the 2004 hurricane, while Disney World escaped relatively unscathed. She argues that this is due to the area’s private government: the flexibility of RCID combined with Disney’s long-term interest in its property creates the right incentives to prepare for hurricanes. In contrast, the public government of Florida creates perverse incentives for the construction of buildings in unsafe locations.

Ray Maxwell says that a number of factors contributed to Disney’s low hurricane damage—all structures are built to code, for example, and anything that could fy in the wind is tied down before the winds pick up. Well-planned on-site wetlands protection (which helps to absorb flood waters) and advanced drainage systems also contribute to this successful damage mitigation.

The success of private governments in particular ventures can, of course, serve as model for general-purpose government:

As Florida’s legislators look for politically feasible ways to save wetlands, save money, and keep Florida’s Citizens Property Insurance Corporation and Catastrophe Fund solvent, Disney’s Reedy Creek Improvement District offers a compelling—though not uncontroversial—example of how private government can help reduce taxpayers’ burden in paying for storm mitigation, while giving fexibility and control to private landowners. If the experiment does not work, the private government can always be dissolved.

Indeed! It’s nice to see a beltway free-market organization thinking innovatively and structurally about governance.