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May 28, 2012 | by  | in Opinion |
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C.R.E.A.M. – The World Needs More Canada

It’s depressing to look at the billions of dollars private charities put into the third world development, only to see third world governments plunge their citizens back into poverty with appalling economic policy. Governments undermine property rights, enable corruption and cronyism, stifle trade and start wars. Unfortunately the problem of terrible government is hard to overcome: governments by definition have a monopoly on force over their countries, so are not subject to the same competition that incentivises businesses to run efficiently. Even where it exists, democracy has done precious little to solve this problem.

But what if we took an area of third world country (not a huge area but one big enough to build a city) and let a more successful first world government run it? What if that country had open immigration, meaning anyone in the world seeking opportunity could move there? That is the question asked by Stanford Economics Professor and software entrepreneur Paul Romer who is leading just that initiative, calling it a charter city.

The idea is based on the governance of

Hong Kong. For most of the 20th century Hong Kong was a British colony. It was not run by elected politicians, but British appointed overseers who imported UK law but set their own economic policies: Low taxes, free trade and well-protected property rights. The result speaks for itself; Hong Kong is now the 6th wealthiest nation in the world measured by GDP per capita at purchasing power parity. Its real GDP grew 180 times bigger between 1961 and 1997 when China assumed sovereignty (and it largely retains independence). Hong Kong’s rapid growth left mainland China in the dust, leading the Chinese to copy the idea and set up Special Economic Zones with no restrictions on foreign investment.

Romer has actually succeeded in the first part of his project: Find a country willing to host such a city. Negotiations with Madagascar broke down due to a change in government. However Romer’s next target was Honduras, where the National Congress recently voted near unanimously to amend the constitution allowing the government to set up Special Development

Regions with their own administration and laws. The next step has proven harder: Romer needs to find a government willing to administer the region. He is currently trying to convince Canada to assume the task. On 25 April, Romer wrote an extraordinary joint op-ed piece with the Chief of Staff to Honduras’s President in the Globe and Mail, Canada’s biggest newspaper, essentially admitting that the country was poorly governed and declaring that “The world doesn’t need more aid, it needs more Canada”. I agree with him, and since open immigration to Canada is unlikely to happen, this is worth a try.

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