Arnold Kling pits Bruno Leoni vs. Paul Romer. First, Leoni:
In reality, the law is something which is not pre-fabricated in some specially-designated place, by some specially-designated producer and with some pre-established technique. In much the same way, no followers of the artificial languages such as Esperanto and Volapuk have yet succeeded in finding a substitute for the language that we speak every day, which also is not pre-fabricated. The law is in the last analysis something which everyone makes every day with his behavior, his spontaneous acceptance and observance of the rules that everyone helps to establish, and finally, even if it seems paradoxical, with the disagreements themselves which eventually arise among the various individuals on the observance of these rules.
Then he summarizes Romer:
Paul Romer, in presenting his idea for charter cities, makes it sound as though we can take rules “manufactured” in, say, Canada, and export them anywhere in the world. Leoni would say that instead most law is embedded in social customs In fact, my daughter who just spent the summer in Tanzania, says that the custom of seeing law as something that ought to be obeyed is not nearly as natural there as it is here.
I suspect there’s a difference between exporting Canadian rules to Tanzania and exporting Canadian rules to a city-state along the coast of Tanzania, full of Canadian merchants and self-selected Tanzanians looking to work for and with those Canadians.
Will Chamberlain seems to agree:
Romer seems quite cognizant of the fact that you can’t just take Senegal’s legal code, replace it with Canada’s, and expect things to be peachy. If you’ve watched Romer’s TED talk, you’ll recall the image of those African students, all of whom probably have cell phones, studying under streetlights. The reason these students don’t have power in their homes is because of price controls that disincentivize power companies from supplying more people with power . And Romer notes that the political class in these countries is aware that these laws suck, but can’t change them because there are existing, entrenched interests that benefit from the existence of these laws.Deng Xiaoping was facing the same situation. He went to places like Singapore, and saw that Communism didn’t work. But rather than replace communism with another system in one fell swoop, he created special economic zones where people could self-select to try a new system, and over time, there was incremental reform throughout the country in the direction of more economic freedom and respect for private property. Customs may not interchangeable, but they can evolve over time.
Romer wants charter cities to be built on uninhabited land for a number of very good reasons. One of them is that he sees them as a kind of intentional community – a city in which people self-select to try and live under a new set of rules. It’s because laws cannot be easily exported that Romer is trying to create new jurisdictions to experiment with new laws, rather than trying to convince leaders in established jurisdictions to adopt better laws.