Definition and origins
Tom W. Bell, whose specialty is special economic zones and special jurisdictions, explains that these are places where a country governs under different rules: the country sets aside part of its territory and says that within that zone different rules apply Vote to Float (2020). Bell tells Bob Zadek that his research uncovered the earliest example in the Roman Empire in 166 BC, a free port at Delos. He describes zones as an old idea that has taken off in the last 50 or 40 years and that creates competition for governments, allowing a person to obtain a better legal regime without totally leaving a country. Bell’s research uncovered a trend whose numbers and direction he calls remarkable. Bell notes that one example close at hand is treating each American state as a separate jurisdiction, though he agrees with Bob that this is not the most interesting example.
Dubai and the turn to common law
Michael Strong, in a 2017 episode, describes Dubai as a bright spot: it went from basically an empty place in the desert to the leading cosmopolitan innovative city in the Arab world in the last 30 years Michael Strong on Creating a World in Which All Humanity Flourishes (2017). He says Dubai’s innovation in free zones accelerated its progress, and that one of the most innovative was the Dubai International Financial Centre, where 110 acres of land were placed under British common law while the rest of Dubai and the UAE is under Sharia law. Strong says the rulers of Dubai looked around the world, saw that London, New York, Chicago, Sydney, Hong Kong and Singapore all run British common law, and put a retired British commercial law judge, and a retired Singaporean commercial law judge, in charge. With credible judges administering common law, Strong says, Dubai is now a top 20 financial center. He also says Dubai has treated workers very badly, with almost slave-like conditions for domestic workers and sex workers, but argues Saudi Arabia is a lot worse.
Strong adds that Honduras passed legislation a few years earlier allowing jurisdictions similar to the Dubai International Financial Centre, with common law and free markets within Honduras. He says the hope is that this leads to pockets of prosperity in Honduras and prevents the need for millions of Hondurans to leave for the US, where he says they have no rights and are abused by coyotes. Strong states the general ambition that many developing countries experiment with common law jurisdictions and special economic zones designed for entrepreneurial capitalism, more free market than Hong Kong or Singapore.
Hong Kong, Singapore and Shenzhen
Patri Friedman says in a 2022 episode that charter cities have their own laws, their own courts, their own police, and that the business model of a land community generally involves a share of the land, with revenue from rent and taxes if they collect taxes Patri Friedman’s Plan to Accelerate the Free Cities of the Future (2022). Bob Zadek frames the universe as competitive governmental units competing for customers, or citizens, and lists seasteading, ZEDEs, Singapore, Dubai and Hong Kong, noting Hong Kong may be slipping off the list, plus the Free City Movement with experimentation in Central America, specifically Honduras.
Friedman dates the Honduran program’s constitutional change to 2010, 2011 and 2012, creating what he calls the RED or ZEDE program, zones of economic development. He calls it the first modern version of a special economic zone, contrasting it with traditional zones that offer only tax breaks, tariff breaks or foreign workers. He says the ZEDEs looked to the Dubai International Financial Centre, where Dubai treated its laws and institutions like a startup treats its tech stack, copying British regulations in English and applying them to the zone; a corporation incorporating there is under that law anywhere in the United Arab Emirates. Under the Honduran program, Friedman says, a private developer applies to a regulator, jobs must be at least 90% for Hondurans, the zones follow Honduran criminal law but can create their own commercial law with the regulator’s approval, and all projects remain under the country’s sovereignty and follow its constitution and international treaties. He adds that some projects under discussion would let a zone create a full legal system, criminal as well as commercial, and that companies uncomfortable with the Honduran regulatory system may be comfortable with Delaware corporate law.
In a 2018 episode, the guest says Hong Kong, China, Hong Kong, Shenzhen and Singapore show that at the city level, rule of law, property rights and ease of doing business and enforcing contracts can turn a backwater into a thriving metropolis in two or three generations The End of Nation-States? (2018). The guest says Singapore is the only country in the world that exists because it was kicked out of a union, gaining independence from Britain in what the guest believes was 1961 and joining Malaysia, which kicked it out a few years later because Singapore is majority Chinese while Malaysia is majority Malay; at the time per capita income hovered around $1,000 per year and there were ethnic riots every few years. The guest says Singapore is now one of the wealthiest countries and a finance leader, crediting an effective government alongside markets, and cites reading Lee Kuan Yew’s biography, with its first chapters devoted to building the government before creating a market. The guest says Hong Kong, as a British colony, had the common law system, and that John Cowperthwaite, a British appointee and classical liberal, had a policy called positive non-interventionism that let people in Hong Kong live as they saw fit, allowing Hong Kong to become a leading manufacturing and then financial center in Asia. The guest says Hong Kong and Singapore inspired China’s special economic zone reforms; China created four special economic zones in 1980, the most prominent being Shenzhen, then a fishing village of 30,000 people, and lifted approximately 800 million people out of poverty according to the World Bank.
Seasteading as jurisdictional competition
Joe Quirk, president of the Seasteading Institute and co-author with Patri Friedman of the Seasteading book, describes in the 2017 episode a historical sequence — ancient Greece’s island city-states, Venice, the Hanseatic League, the American frontier — and says the mechanism that drives improved governments is the liberty of people to choose among different governance entities Michael Strong on Creating a World in Which All Humanity Flourishes (2017). He says more than 4,000 special economic zones are sweeping across the world and vastly outnumber city-states, and that 45% of the world’s surface is unclaimed by any existing nation-state. Quirk says he is co-founder of Blue Frontiers, which planned to establish small floating islands with significant regulatory and administrative autonomy in French Polynesia, and describes the future as unleashing choice among jurisdictions on the oceans starting in 2020.
An ancient lineage
Bell’s account of the Delos free port in 166 BC places zones far earlier than the modern era, and he describes the last 50 or 40 years as the period in which the idea has taken off Vote to Float (2020). Bob Zadek tells Bell that the concept of zones goes back as far back in economic life as there has been economic life on the planet, and asks why zones are libertarian and why they make sense; Bell’s answer is that they allow a person to get better government without leaving home.
Across episodes
Michael Strong in 2017 and Patri Friedman in 2022 both describe the same mechanism — deliberately constructing a jurisdiction by copying another country’s law — but the treatment changes between them. Strong presents Dubai’s use of British common law on 110 acres and Honduras’s legislation allowing similar jurisdictions as a hope in progress. Friedman, five years later, says Honduras changed its mind and shut down the program and that it is unclear what happens going forward; he nonetheless uses it as the example because it was, in his words, the one program out there fully operating. Bell in 2020 supplies the definition and the ancient origin that the later discussions assume.
What the sources do not cover
The excerpts do not state what became of the ZEDE program after Friedman’s 2022 remarks, nor the name of any Honduran bill or statute. They do not give the legal citation or holding of any case involving zones, and they do not identify the 2018 episode’s guest by name. Bell’s account of the Delos free port ends at its date, and several other passages in the excerpts break off before completing their thought.