Capitalists simply do not have a plan for interacting with people that does not involve economic exploitation.
Albert Schweitzer, who knew well the economic situation in the colonies of Africa, wrote nearly sixty years ago: “Whenever the timber trade is good, permanent famine reigns in the Ogowe region because the villagers abandon their farms to fell as many trees as possible.” We should notice especially that the goal of production was “as many…as possible.” And Schweitzer makes my point exactly: “These people could achieve true wealth if they could develop their agriculture and trade to meet their own needs.” Instead they produced timber for export to “the world economy,” which made them dependent upon imported goods that they bought with money earned from their exports. They gave up their local means of subsistence, and imposed the false standard of a foreign demand (“as many trees as possible”) upon their forests. They thus became helplessly dependent on an economy over which they had no control.
If you have stuck with Romer thus far, you are ready for the last part of his argument. If good rules are the key to development, it follows that the big development challenge is to grasp how to reform bad rules—and to accept that conventional approaches are not terribly successful... The standard response to this obstacle is to advocate democracy and hope that voters will force change... But Romer argues that this way forward is too slow... we are better off starting a new experiment with brand-new rules—a charter city that stands outside the ministry's authority. Rather than going at an obstacle head-on, Romer is saying, sidestepping it is frequently a better option.
But the largest obstacle Romer faces, by his own admission, still remains: he has to find countries willing to play the role of Britain in Hong Kong. Despite the good arguments that Romer makes for his vision, the responsibilities entailed in Empire 2.0 are not popular. How would a rich government contend with the shantytowns that might spring up around the borders of a charter city? Would it deport the inhabitants, and be accused of human-rights abuses? Or tolerate them and allow its oasis to be overrun with people who don't respect its city charter? And what would the foreign trustee do if its host tried to nullify the lease? Would it defend its development experiment with an expeditionary army, as Margaret Thatcher defended the Falklands? A top official at one of Europe's aid agencies told me, "Since we are responsible for our remaining overseas territories, I can tell you there is much grief in running these things. I would be surprised if Romer gets any takers."
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