Mark Lutter on Proprietary Cities
2016-08-20 · Guest: Mark Lutter (PhD Candidate at George Mason University) · 8:44
The Free City Movement and proprietary cities
Bob Zadek interviews Mark Lutter, a PhD candidate at George Mason University, about the “Free City Movement” and proprietary cities. They explore the economic and political implications of devolving authority to the local level, allowing cities to compete for residents and businesses by offering superior legal and regulatory environments.
Topics: Free City Movement, Proprietary Cities, Regulatory Competition, Voting with Feet, Public Choice Economics, Charter Cities, Urban Policy
Speakers:
- Bob Zadek – Host
- Mark Lutter – PhD Candidate in Economics at George Mason University
Introduction to the Free City Movement [00:00]
Bob Zadek: Hello everyone, welcome to the Bob Zadek Show, the only live libertarian talk radio show on the air all weekend. This show is always and proudly the show of ideas, not attitude. Thanks so much for listening. I am broadcasting from my new home in Fremont, California. Thanks so much for listening, and any city with “free” as its first syllable has got to be a good place to broadcast libertarian radio from.
This morning’s show is about freedom. It is about the Free City Movement. The Free City Movement gives me goosebumps whenever I hear the concept or learn more about the Free City Movement. The Free City Movement is a fascinating, interesting, old yet very new concept that looks to give cities maximum political and legal autonomy, free of states and federal governments—not free of them, but mostly free of federal and state intrusion—so that cities can operate in competition with one another, finding collectively the best organization for their population.
And there is no one better to help us understand the Free City Movement than my guest this morning, Mark Lutter. Mark is a graduate of the University of Maryland in College Park, and he is working on his PhD in economics at GMU, George Mason University, soon to be home of the Scalia School of Law. He’s working on his dissertation under a former and frequent guest on my show, Professor Don Boudreaux. Mark, welcome to the show this morning and thanks so much for giving us an hour of your time.
Mark Lutter: Oh, thanks for having me on.
Defining the Free City Concept [01:55]
Bob Zadek: Now Mark, probably it’s the case that our audience this morning has at best a passing familiarity with the Free City Movement. And if they are like me, the second I read the opening paragraph of any discussion on the Free City Movement, I felt, “Wow, this is really—this is the way life and the political system ought to be organized.” Now, tell us about the Free City Movement. Give us a primer on the Free City Movement. How is life under a free city different than today in an unfree city?
Mark Lutter: Sure. So the idea of a free city is just to devolve political authority to the city level to allow cities to be able to use good laws, good regulations to attract investment, attract businesses, and jumpstart economic growth.
Bob Zadek: Well, cities have some political autonomy now, of course. There are city governments. So what’s different about the Free City Movement as you conceive it, as compared to what it is now?
Mark Lutter: Sure. Well, free cities would take laws and regulations that are traditionally thought of as belonging on a national level and bring them down to the city level. So imagine, for example, Amazon. Amazon recently moved their drone program from the United States to Canada. If the US had free cities, then—because Amazon moved their drone program because the FAA was unable to create regulations that would allow Amazon to experiment at the pace they wanted. And so if there was a free city in the US, they would be able to opt out of the FAA regulations on drones, create their own regulatory system that would be more conducive to Amazon developing their drone program, and then Amazon might keep their drone program in the United States instead of moving to countries that are better able to meet their needs. So free cities are a way to take regulations and laws that are typically thought of as at the national level and give them to cities that can be more adaptable and better able to meet the needs of the existing and current and evolving economy.
Voting with Your Feet [04:56]
Bob Zadek: Now, let’s—I’d like to interrupt just for a moment if I may, because in that very brief example of Amazon moving its drone program to Canada, you touched upon several very important political concepts. The first concept is—and this is crucial, I think, to the Free City Movement—and that is the concept of voting with one’s feet. And that concept is that a vote at the ballot box is relatively meaningless; it doesn’t cause change very often or very much. But when people vote with their feet, when people or companies—think about companies moving overseas, moving their headquarters—when companies or people move with their feet, they say, “I’m out of here,” and they leave. That sends a message that is very powerful.
And the concept, I think, Mark, of the Free City Movement is that as cities experiment, the population, which is what they need to function, will vote with their feet. And therefore, very quickly, we will find cities that provide what the customer wants and those that do not. And those that do not will change to conform to those that do. So it has a very small-d democratic effect as well.
Mark Lutter: Oh, yeah, I completely agree. I think the ability of any free city to attract residents, to attract businesses, to create jobs will need to have a good legal environment to ensure that these businesses want to do business there, to have a nice downtown, to have to be a livable city to make sure that these residents want to move to the city, that it provides the necessary amenities for these residents. And so it changes the typical dynamic of cities by treating residents, by treating businesses as customers by providing services that they want, which is a little bit different than the traditional conception of cities.
Bob Zadek: I ask the audience just to share my goosebumps at the very thought. Just imagine if the city in which you live treated you like a customer, one who they had to satisfy lest you move your business elsewhere. Just imagine how your relationship with all of the various local services would be different if you were looked upon as a customer, not as a captive audience who could not leave but had to buy the service. So Mark, that is the concept, I believe.
Global Applications of Free Cities [07:50]
Mark Lutter: Yeah, that is. And so if I can just take a brief overview of how I think about free cities, I see there as being two avenues for free cities: one in the developing world and one in the developed world. And so free cities are, in a way, a tool to get around political difficulties, around public choice problems, because it tends to be very difficult to change laws or regulations on a national level. However, by taking land that nobody lives on where there are no special interests, you can have a lot more autonomy, a lot more freedom than you might have if you try to effect those changes on a national level.
So in poor countries, such as India or Nigeria, they have large urbanizing populations. They need new cities to accommodate these large urbanizing populations. They don’t have good governance. They have low rule of law. They have business regulations that are highly burdensome. And so what these countries…