Charter cities, alternative tax systems, and Conservatives pretending to be Libertarians.

A quick one. Over on Marginal Revolution I picked up this little gem. The title runs "Developer pitches $1B commonwealth for Belle Isle."

That's pretty interesting. Supposedly Belle Isle, off the coast of Detroit and between the United States and Canada, could be potentially up for grabs as a "charter city". If you don't know what that is, it's essentially a plot of land where most "state, provincial, regional or national laws" don't apply. An example would be Hong Kong where, despite popular belief, it's not technically controlled by China just yet. In fact, it holds a considerable amount of autonomy as a "Special Administrative Region", and will do so until China takes complete control in 2047 to mess up a good thing. As of now, though, it can make some of it's own rules. Hence the fact it still drives on the left side of the road (leftover from British colonial rule, which ended in 1997), and China drives on the right. Giving awkward transitions like this:

Yes, they are switching sides in probably the weirdest way possible.

Anyways, back to Belle Isle. Now, the people pushing the idea admit that "The idea won't go anywhere", but even then it's fascinating. Running social experiments by changing economic and political institutions sounds fun, albeit a bit dangerous. Although it'll be very iffy if any sort of good conclusions or credible results will follow, it'll be interesting nonetheless. Hell, I guess this is about as good as controlled experiments can run in economics, which is saying something, because this is pathetic.

Moving on. What most interests me is that it'll be dedicated as a "free-market utopia." Which sounds interesting. I find myself more on that side of the political spectrum, but not for the petty philosophical bickering for more "freedom", but rather from more consequentialistic, practical, and empirical reasons.

Now, how will this utopia be run?

"Under the plan, it would become an economic and social laboratory where government is limited in scope and taxation is far different than the current U.S. system.There is no personal or corporate income tax. Much of the tax base would be provided by a different property tax — one based on the value of the land and not the value of the property."

Well, I'm following, although some of those are vague. As John Cochrane would put it, it's not about "limiting" government, or making it smaller, per se, but making it efficient. It's not less regulation, or more regulation, it's smart regulation and dumb regulation. That, and it kind of annoys me that they only mention the tax system. Yes, it's horribly discriminatory, distortionary, and generally unhelpful and complex. Also, it's great that they bring up another plausible solution, namely the land value tax. A land value tax, although not the only or best solution for the rest of the world I believe, would have very limited distortionary effects on an island, especially since it already has miniscule distortionary effects anyways. But there's so many ills with policy, why not mention any of those? Who're you catering to? The fact that they mentioned taxes first and foremost seems to imply that...

"It would take $300,000 to become a "Belle Islander," though 20 percent of citizenships would be open for striving immigrants, starving artists and up-and-coming entrepreneurs who don't meet the financial requirement."

Yep, this is just a high income resort. The whole "free market utopia" thing doesn't sound like a very fitting title when you keep people out, and charge ridiculous prices in order to get in.

However, I will give them some credit. I understand their restraints. This will be one island outside of a very impoverished and crime ridden city. Opening the flood gates of immigration to a place that would have no taxes and no barriers to entry would probably be unhelpful, and ruin it for everyone. If they have limited land, and may need some income to pay for certain infrastructure, then perhaps it's necessary that the first attempt at a governmental alternative be limited enough to survive. Perhaps it's best that they at least offer for some people who, although constrained in income, would provide benefits to the Isle. However, It does nearly kill all chances of a reliable control (as if it was even reasonable beforehand) by making it, as one put it, "'a drain of talent and resources' at the expense of Detroit." 

Still, even understanding all of their restraints, I can't get the taste of pseudo-Libertarianism and Conservatism off my tongue. It almost seems like the next thing they'll say is...

"Among the citizenship requirements are a command of the English language".

God damn it.