The Future of Free Cities, Part 2

In my first post on last week’s “Future of Free Cities” conference, I discussed the legislation Honduras has put forward to authorize the creation of new “free-market cities.” In this second look at the conference, I summarize the discussions and some of the points I came away with.

The first talk on the main day was by Kevin Lyons, co-founder of Consent Unlimited, on “A Legal Strategy for Immediately Creating Private Free Cities” (video here). The strategy is essentially to include clauses in private contracts that stipulate that disputes arising under this contract will be judged under the law of X, where X can be Hong Kong, the United States, or a private arbitrator. This strategy should help people in countries with corrupt or irrational legal systems reduce transaction costs. Of course, the two limitations are that it doesn’t exempt you from criminal or regulatory penalties (you couldn’t use it to get out of health insurance mandates), and that ultimately the validity of those very contractual clauses can be contested in the courts of the country where you are attempting to have the contract enforced. On the former issue, however, Kevin maintains that most judges will uphold contracts that are entered into clearly voluntarily. I worry about one branch of the government’s not respecting what the other is doing, however.

Next, ex-Mexican businessman Ricardo Valenzuela spoke on “Free Cities: A Solution to Mercantilism in Mexico” (no video yet). Ricardo’s talk focused on the problems he has faced as a businessman in a market-hostile country. When he was young, the state expropriated most of the ranch his father had acquired through a lifetime of work. Then he went into banking, and the day after he became president of the bank, he went to work to find it surrounded by soldiers: it too had been nationalized. After that, he fled to Arizona. I wish my students had seen this talk, just so that they could put a face to “expropriation risk.”

Next, I gave my talk on “Secession as a Continuum” (video here). It was a distillation of some of the arguments and findings in my forthcoming book Secessionism: Identity, Interest, and Strategy (McGill-Queen’s University Press). I argued that full secession is not necessary for the types of autonomy most libertarians want. On the other hand, secessionism can be useful leverage to provoke concessions, provided the threat of secession is credible.

After a break, we had a series of four talks: economics professor Fred Foldvary on the fiscal constitution of a free city (video here), Spanish architecture professor Gonzalo Melián on the property ownership structures of a free city (no video yet), Seasteading Institute founder Patri Friedman on seasteading (video here), and public policy professor Bob Nelson on private neighborhood associations (video here). During Bob Nelson’s talk, you could almost see the heads exploding as he explained how private neighborhood associations are much more intrusive than public, municipal governments in what people may do with their own property. To readers of this site, of course, it will come as no surprise that what people often want to do with freedom is to restrain themselves just under condition that their neighbors do the same – this indeed is the whole point of Robert Nozick’s “utopia of utopias.” But it’s not what a lot of people thinking about “free cities” want.

I thought Bob’s and Fred’s talks could have been scheduled at the beginning of the day, along with closing speaker Fred Kofman’s talk, which basically defined a free city as a market anarchy with competing justice providers. Fred Foldvary’s talk discussed the ideal elements of a free city’s fiscal policy regime, including a single land tax and the use of demand revelation votes for the provision of public goods. We needed to have much more of a debate than we did about what constitutes a free city. Given what is attainable in the medium term, what should our objective be? Creating more Hong Kongs and Cayman Islands with the aim of fighting poverty above all? Or creating one recognizably libertarian city: Hong Kong on the economics, Amsterdam on pot and prostitution, Anchorage on firearms and privacy?

Patri’s talk could have been grouped with mine and Kevin’s for a panel on strategy. For my thoughts on seasteading, see this Cato Unbound forum. Ultimately, we need to be sophisticated about the political foundations of a free society’s autonomy. That means working with people in a place that already demands autonomy and may be sympathetic to our ideological interests. The former governor of the Bay Islands of Honduras, Dorn Ebanks, was in attendance and expressed his sympathy with our general aims. He believes that most Bay Islanders would like more autonomy from Honduras in order to pursue economic policies for rapid development. I overheard some conversations from other participants with him about attracting “millions” of people to Roatán as a “new Hong Kong” and winced inwardly a little. I am not sure that the Garifuna and Caracolle peoples who are essentially “native” to the islands would like being swamped by gringos and mainlanders, to say nothing of the massive environmental strain such a migration would cause. Unfortunately, the surplus demand for freedom is such that places that can offer it have to limit the amount of people who can enjoy it. Witness the strict immigration and naturalization requirements in places like the Caymans, Anguilla, and Switzerland. Those of us libertarians who also value community and understand externality problems need to think creatively about the kinds of political alliances we are willing to make in order to achieve the goal of more numerous, more diverse, more competitive governments.

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