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TED2011

Paul Romer: The world's first charter city?

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Back in 2009, Paul Romer unveiled the idea for a "charter city" -- a new kind of city with rules that favor democracy and trade. This year, at TED2011, he tells the story of how such a city might just happen in Honduras ... with a little help from his TEDTalk.

- New-growth economist
Paul Romer is developing a radical new model of growth and governance, which calls for the establishment of city-scale special administrative zones. Full bio

In 2007,
00:15
I decided that we needed to reconceptualize
00:17
how we thought about economic development.
00:19
Our new goal should be
00:21
that when every family thinks about where they want to live and work,
00:23
they should be able to choose between
00:26
at least a handful
00:28
of different cities
00:30
that were all competing to attract new residents.
00:32
Now we're a long way away from that goal right now.
00:35
There are billions of people in developing countries
00:38
who don't have even a single city that would be willing to welcome them.
00:41
But the amazing thing about cities
00:44
is they're worth so much more
00:46
than it costs to build them.
00:48
So we could easily supply the world
00:50
with dozens, maybe hundreds,
00:53
of new cities.
00:55
Now this might sound preposterous to you
00:57
if you've never thought about new cities.
00:59
But just substitute apartment building for cities.
01:01
Imagine half the people who wanted to be in apartments already had them;
01:03
the other half aren't there yet.
01:06
You could try and expand the capacity
01:08
by doing additions on all the existing apartments.
01:11
But you know what you'd run into
01:14
is those apartments and the surrounding areas
01:16
have rules to avoid discomfort
01:18
and the distractions of construction.
01:20
So it's extremely hard to do all of those additions.
01:23
But you could go out someplace brand new,
01:25
build a brand new apartment building,
01:27
as long as the rules there
01:30
were ones that facilitated construction
01:32
rather than getting in the way.
01:34
So I proposed
01:36
that governments create new reform zones
01:38
big enough to hold cities
01:41
and gave them a name: charter cities.
01:43
Later I learned that at about this same time,
01:46
Javier and Octavio
01:48
were thinking about the challenge of reform
01:50
in Honduras.
01:52
They knew that about 75,000 Hondurans every year
01:54
would leave to go to the United States,
01:58
and they wanted to ask, what could they do
02:00
to make sure that those people could stay
02:02
and do the same things in Honduras.
02:04
At one point, Javier said to Octavio,
02:07
"What if we took some of our empty land --
02:09
what if we just gave it to an embassy --
02:11
give some to the U.S. embassy; give some to the Canadian embassy --
02:13
and then if people want to go work
02:16
under the rules of Canada or under the rules of the United States,
02:18
they can go get jobs,
02:20
do everything they do on those embassy grounds
02:22
that they would otherwise have to go to Canada or the U.S. to do?"
02:24
In the summer of 2009,
02:29
Honduras went through a wrenching constitutional crisis.
02:31
At the next regularly scheduled election,
02:34
Pepe Lobo won in a landslide
02:37
on a platform that promised reform,
02:39
but reconciliation as well.
02:42
He asked Octavio to be his chief of staff.
02:45
Meanwhile, I was getting ready
02:49
to give a talk at TEDGlobal.
02:51
Through a process of refinement,
02:53
trial and error, a lot of user testing,
02:55
I tried to boil this complicated concept of charter city
02:58
down to the bare essentials.
03:01
The first point was the importance of rules,
03:05
like those rules that say
03:07
you can't come in and disturb all the existing apartment holders.
03:09
We pay a lot of attention to new technologies,
03:12
but it takes technologies and rules to get progress,
03:14
and it's usually the rules that hold us back.
03:17
In the fall of 2010, a friend from Guatemala
03:21
sent Octavio a link to the TEDTalk.
03:24
He showed it to Javier.
03:27
They called me.
03:29
They said, "Let's present this to the leaders of our country."
03:31
So in December we met in Miami,
03:34
in a hotel conference room.
03:37
I tried to explain this point
03:39
about how valuable cities are,
03:41
how much more valuable they are than they cost.
03:43
And I used this slide
03:45
showing how valuable the raw land is
03:47
in a place like New York City:
03:49
notice, land that's worth thousands of dollars, in some cases,
03:51
per square meter.
03:54
But it was a fairly abstract discussion,
03:56
and at some point when there was a pause,
03:59
Octavio said,
04:02
"Paul, maybe we could watch the TEDTalk."
04:04
(Laughing)
04:07
So the TEDTalk laid out in very simple terms,
04:09
a charter city is a place
04:12
where you start with uninhabited land,
04:14
a charter that specifies the rules that will apply there
04:17
and then a chance for people to opt in,
04:20
to go live under those rules or not.
04:22
So I was asked by the president of Honduras
04:26
who said that we need to do this project,
04:29
this is important,
04:31
this could be the way forward for our country.
04:33
I was asked to come to Tegucigalpa
04:36
and talk again on January fourth and fifth.
04:38
So I presented
04:41
another fact-filled lecture
04:43
that included a slide like this,
04:45
which tried to make the point that, if you want to create a lot of value in a city,
04:47
it has to be very big.
04:50
This is a picture of Denver,
04:52
and the outline is the new airport that was built in Denver.
04:54
This airport alone
04:56
covers more than 100 square kilometers.
04:58
So I was trying to persuade the Hondurans,
05:00
if you build a new city,
05:02
you've got to start with a site that's at least 1,000 square kilometers.
05:04
That's more than 250 hundred-thousand acres.
05:07
Everybody applauded politely.
05:13
The faces in the audience
05:15
were very serious and attentive.
05:17
The leader of the congress came up on stage and said,
05:20
"Professor Romer, thank you very much for your lecture,
05:23
but maybe we could watch the TEDTalk.
05:26
I've got it here on my laptop."
05:29
So I sat down, and they played the TEDTalk.
05:33
And it got to the essence,
05:36
which is that a new city could offer new choices for people.
05:38
There would be a choice of a city which you could go to
05:41
which could be in Honduras,
05:43
instead of hundreds of miles away in the North.
05:45
And it also involved new choices for leaders.
05:47
Because the leaders in the government there in Honduras
05:49
would need help from partner countries,
05:52
who could benefit from partner countries
05:54
who help them set up the rules in this charter and the enforcement,
05:56
so everybody can trust
05:59
that the charter really will be enforced.
06:01
And the insight of President Lobo
06:04
was that that assurance of enforcement
06:06
that I was thinking about
06:09
as a way to get the foreign investors to come in and build the city
06:11
could be equally important for all the different parties in Honduras
06:14
who had suffered for so many years
06:17
from fear and distrust.
06:19
We went and looked at a site.
06:21
This picture's from there.
06:23
It easily could hold a thousand square kilometers.
06:25
And shortly thereafter, on January 19th,
06:28
they voted in the congress to amend their constitution
06:31
to have a constitutional provision
06:34
that allows for special development regions.
06:36
In a country which had just gone through this wrenching crisis,
06:38
the vote in the congress in favor of this constitutional amendment
06:41
was 124 to one.
06:44
All parties, all factions in society, backed this.
06:47
To be part of the constitution, you actually have to pass it twice in the congress.
06:50
On February 17th they passed it again
06:53
with another vote of 114 to one.
06:56
Immediately after that vote,
06:59
on February 21st to the 24th,
07:01
a delegation of about 30 Hondurans
07:04
went to the two places in the world
07:06
that are most interested in getting into the city building business.
07:08
One is South Korea.
07:10
This is a picture of a big, new city center
07:12
that's being built in South Korea --
07:14
bigger than downtown Boston.
07:16
Everything you see there was built in four years,
07:18
after they spent four years getting the permits.
07:20
The other place that's very interested in city building is Singapore.
07:24
They've actually built two cities already in China
07:26
and are preparing the third.
07:28
So if you think about this practically,
07:30
here's where we are.
07:32
They've got a site; they're already thinking about this site for the second city.
07:34
They're putting in place a legal system
07:37
that could allow for managers to come in,
07:39
and also an external legal system.
07:41
One country has already volunteered to let its supreme court
07:43
be the court of final appeal for the new judicial system there.
07:46
There's designers and builders of cities
07:49
who are very interested.
07:51
They even can bring with them some financing.
07:53
But the one thing you know they've already solved
07:55
is that there's lots of tenants.
07:57
There's lots of businesses that would like to locate in the Americas,
07:59
especially in a place with a free trade zone,
08:02
and there's lots of people who'd like to go there.
08:04
Around the world, there's 700 million people
08:07
who say they'd like to move permanently someplace else right now.
08:09
There's a million a year
08:12
who leave Latin America to go to the United States.
08:14
Many of these are a father
08:16
who has to leave his family behind to go get a job --
08:18
sometimes a single mother
08:20
who has to get enough money to even pay for food or clothing.
08:22
Sadly, sometimes there are even children
08:25
who are trying to get reunited with their parents
08:27
that they haven't seen, in some cases, for a decade.
08:29
So what kind of an idea is it
08:34
to think about building a brand new city in Honduras?
08:36
Or to build a dozen of these,
08:38
or a hundred of these, around the world?
08:40
What kind of an idea is it
08:42
to think about insisting
08:44
that every family have a choice of several cities
08:46
that are competing to attract new residents?
08:49
This is an idea worth spreading.
08:52
And my friends from Honduras
08:55
asked me to say thank you, TED.
08:57
(Applause)
08:59

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About the Speaker:

Paul Romer - New-growth economist
Paul Romer is developing a radical new model of growth and governance, which calls for the establishment of city-scale special administrative zones.

Why you should listen

Stanford economist Paul Romer believes in the power of ideas. He first studied how to speed up the discovery and implementation of new technologies. But to address the big problems we'll face this century -- insecurity, harm to the environment, global poverty --  new technologies will not be enough. We must also speed up the discovery and implementation of new rules, of new ideas about how people interact.

Throughout human history, big improvements in systems of rules took place when new governments entered the scene. In today's world, this process has been largely shut down. To bring it back to life, Romer proposes that we create new cities where people can go to escape from bad rules and opt in to new and better ones. With better rules, people can be safe, self-interest can protect the environment, and investment can bring families all the resources that the modern world has to offer.

More profile about the speaker
Paul Romer | Speaker | TED.com