Scott Adams, of Dilbert cartoon fame, stumbles onto—or marches boldly into—the idea of charter cities on his always-fascinating blog today. He calls them "startup countries," but the idea is fundamentally the same as economist Paul Romer's notion of charter cities. Both men envision carve-outs from existing nations where people can shed the burdens of old, bad institutions and establish new rules, systems, and customs.
Adams favors an engineered, top-down approach and he is more specific about what he would like to see:
One of the biggest problems with the world is that we're bound by so many legacy systems….
My idea for today is that established nations could launch startup countries within their own borders, free of all the legacy restrictions in the parent country. The startup country, let's say the size of modern day Israel, would be designed from the ground up for efficiency. Buildings and cars would be so energy efficient that the startup country could generate all the power it needed from sun and wind….The entire banking system would be automated. There would be no cash in the start-up country. You wouldn't need to "apply" for a loan because the virtual bank would always have a current notion of your credit-worthiness….The tax code in the startup country would be simplified to the point where residents might forget it exists….The Fire Department would be tiny. You can design modern homes to be virtually fireproof.
Whereas Romer's approach is less specific than Adams', but powered by the same insight:
Economists tend to assume that societies will naturally adopt good rules. If that were true, societies would put in place the rules needed to get the gains from a city and well-run cities would indeed spring up.
The evidence suggests to the contrary that many societies are stuck with bad rules. Moving from bad rules to better ones may be much harder than most economists have allowed. The construct of a charter city is a suggestion about how we can change the dynamics of rules. It is a way to speed up the rate of improvement in the rules….
The key to the project is a charter city, which starts out as a city-sized piece of uninhabited territory and a charter or constitution specifying the rules that will apply there. If the charter specifies good rules (or in our professional jargon, good institutions) millions of people will come together to build a new city.
For more theoretical underpinnings and practical explorations of this family of ideas, and alternative visions of the cities/countries, check out this slick site with many versions of digestible introduction to charter cities.