charter cities

there’s been a lot of discussion about how new firms are created and find their way to becoming self-sustaining. I’m thinking of paul graham and similar thinkers on this. the benefits of startups include the ability to create a new organization with new goals and new ways of operating such that the faulty assumptions of the past are no longer weighing on the ability to move forward. the trade off is that the nascent firm has no established customer base, little money, and no existing internal culture or social capital.

so why stop at firms? a firm is situated within a physical place, which is itself part of a polity that claims some right of sovereignty over that firm, the right to tax and regulate them. how do we get innovation in rule sets of political entities? history is full of examples, but most involve conquest, internal violent revolutions, etc. charter cities are a way to create new political entities voluntarily.

the power of this concept is well illustrated by paul romer. he describes how the example of hong kong was emulated by the mainland chinese government in special zones, and now those regions are a booming megalopolis. watch the example here

the charter city institute describes charter cities like so:

A charter city is a city granted a special jurisdiction to create a new governance system. The purpose of the special jurisdiction is simple but powerful; it allows city officials to adopt the best practices in commercial regulation.

many of the new ideas, those “best practices in commercial regulation” will not work, just like many startups also don’t work. but the ones that do work can be observed and adopted by others. civilization can learn in this way.