Tyler Cowen: belief

Transcript context

…I thought in selling this idea, to do this, you’d need both some country that is willing to volunteer or supply the location for a new jurisdiction, and then some countries — a country, or more than one country — that can help establish the new jurisdiction, like its legal systems and so forth, and administrative — all the systems you’d need. I thought the biggest risk constraint on this idea was that it would be hard to find countries that would be willing to say, “You could use our land to start something new.” So I spent time in Madagascar. I spent time in Honduras. They were actually willing to try this, but what I think, in retrospect, I should have done, and what I’ll do now, is go first to the countries which are willing to help set something up because a country like Honduras was not — the reason it was willing to do something radical like a new charter city was that it did not have the internal capacity to do something like a charter city. What went wrong was that we couldn’t get sufficient participation from outside of Honduras in setting this up. And then, frankly, in Honduras there was a little bit of lack of transparency. They didn’t really want outsiders either because it was kind of a small group that actually wanted to set these things up and control it internally. So I think the scarce player, the short side of this market is going to be countries that are willing to say, “We will help set up a new place that people can go to.” It’s the citizens of those potential countries that we need to persuade. This would be worth trying. And if they’re willing to do it, then I think we can find locations where it could be done. Do you worry about a negative selection effect in the volunteers? In a lot of your work, you’re concerned with corruption, quite appropriately, I would say. And could it be, the countries that want to do charter cities — well, it’s one branch of the government wants to do something a little funny without the other branches of the government seeing, and, in essence, cut its own deal, and that there’s something intrinsically worrisome about a country volunteering to do it. I think this is one of these places where we have to be willing to just select from the feasible alternatives and not hold out for some ideal that we can’t achieve. It’s worth being specific here. My hunch is that China will eventually realize that the way to pay for the infrastructure that it’s building as part of this Belt and Road program is to do urban real estate development. The transport never pays for itself. It’s always the real estate that goes up in value that you use to pay for all of this. So I think that the Belt and Road project is inevitably going to turn to a version of new city, city-scale real estate development to finance what they’re trying to do. In parallel, the United States could be offering its own version of cities around the world that are new. There’s gains in the value of the land that pay for the stuff you want to do. Then to answer your question, would I be worried if that’s the way that China and the US compete with each other? Actually, no, I think that would be pretty good. The Chinese wouldn’t set up those cities and run them exactly the way that somebody from the United States might prefer. But if people who want to migrate could choose between a Chinese location and a US location, that would put some pressure on both the US and China to organize these new opportunities in ways that really benefit the people who will go there.…

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