When Jurisdictions Compete

When businesses compete freely, without the use of political favors or coercion, efficiency improves and customers benefit. Competition is a discovery process, a way to determine what products and methods will best satisfy needs and wants. Those businesses owners who refuse to adapt to changing needs will become unprofitable and will be forced out of business.

Residents of the various jurisdictions can also benefit from the same type of competition among political organizations. Some systems work better than others. Wealth is the result of productivity, and more productive countries are generally more prosperous. Those systems in which people reap the rewards of their efforts and bear the burden of their mistakes tend to be more productive, experiencing less poverty and higher prosperity.

When people have a choice, they prefer a higher level of freedom over a lower level. They would rather pay less for a given product or service than more. They choose prosperity over poverty. People are willing to work longer and harder when they will directly benefit from it and build a level of well-being for the families.

The idea of jurisdictional competition has powerful implications for economic development and human choice. Countries in the developing world have experimented with top-down, central-planning methods since gaining independence. For most of them, decades of trial and error have resulted only in error, because the systems chosen bound, and still bind, people and economies by the chains of dictatorship or by bureaucratic strangulation. Competition in business and in political life was and is viewed as the enemy of progress. We now can see how wrong that perspective is.

Developing countries have an opportunity awaiting them. Rather than being monolithic institutions of powerful central-planners, they could become testing grounds for ideas. The concept of startup-cities is gaining traction because it promotes the establishment of small geographic areas where the local people decide on their system of governance and their approach to economic progress. They expand control over their own lives while minimizing the risks to the national economy. The regions where people are the poorest are those where tyranny in government prevails, and powerful dictators are not likely to give up their power over other other’s lives voluntarily. National leaders who have at least some level of accountability to the people, however, have some incentive to improving the lives of the citizens, if only to get votes.

The activities in a small geographic area would not be a threat to the entire economy or nation as whole, no matter how bad it performed. Those bad performers would not grow. People living there would not support it, and would likely change it or vote with their feet if it got too bad, a viable option only when there are other localities with different governance. An area that prospers over time, however, can present a pattern for progress that can be emulated, and most likely would be.

This would be a special economic zone in a general sense, not just for particular purposes, making special rules for taxes and regulation within a small jurisdiction to cater to cronies and special interests. They would be places where the people establish their own rules, bound only by the responsibility to refrain from harming other people and communities. No person or group has a right to destroy or pollute the property of others, and the role of an overarching judicial framework would be to hold people accountable.

Such free cities can be leading lights into future prosperity for billions of people over time. The groundwork now is being laid for just such a project in Ghana. Stay tuned.

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