The Normality of Free Cities

The first reaction to discussing free cities is confusion. After an explanation, the second reaction is typically detached bemusement. Free cities are seen as attempts to create libertarian utopias, tax havens, or playgrounds for the rich. They are perceived as kooky and unserious.

This is a mistake. Free cities have two defining features. First, autonomy from the host country. Second, new institutions for the city. It is, of course, possible to propose kooky new institutions for a free city. However, such proposals are unlikely to gain traction and the necessary resources to build a city.

More likely, and what I propose, is to use best practices from around the world to create the best institutions possible. Abstractly this means rule of law, property rights, and economic freedom. Such ideas are hardly radical; they have been espoused by the Washington Consensus for years. Most economists would agree that rule of law, property rights, and economic freedom are some of the most, if not the most, determinants of economic success.

What is new about free cities is not the policies they will likely implement, but the manner in which those policies are implemented. The traditional model is that the nation state creates a legal baseline. Cities and towns can add to that baseline, increasing taxes or regulatory requirements for example, but not opt out of it. A special economic zone is an institutional arrangement which allows territories to opt out of aspects of the institutional baseline.

A free city is an institutional arrangement which allows a territory to opt out of most aspects of the institutional baseline. In recent history, this is a radical change. However, it is a radical change necessary to import good institutions; rule of law, property rights, and economic freedom. We already know what works. Free cities offer a path to get there.

1 thought on “The Normality of Free Cities”

Leave a Reply