Guest post by Patrick Barron
Detroit is bankrupt, and its problems appear to be unsolvable. Its population peaked in 1950 at 1,850,000 only to fall to 706,000 in 2011, surely representative of people voting with their feet. As British politician Daniel Hannan has written, the Detroit disease may be well advanced in the rest of American cities and perhaps in all of America as well. Before the disease can kill the rest of America we have the opportunity to give free market reforms a chance in a fairly controlled setting — the bankrupt and dysfunctional city of Detroit.
The decades’ growing tragedy of a now bankrupt Detroit provides a unique opportunity to test our fundamental principles. What if Detroit became a free city in which government provided for public safety, honest courts, protection of property rights, and little else? Might not unabated free enterprise take hold as it always has in America?
All that Detroit really needs is economic freedom and secure property rights. Give Detroit its freedom from all manner of government, including the federal government. Declare Detroit a free city. (You can rest assured, Detroit, that America will come to your rescue if those bloodthirsty Canadians attack!) In other words, no one would pay any federal taxes whatsoever or be subject to any federal regulations whatsoever. Wouldn’t it be nice not to pay federal taxes, not even Social Security and Medicare taxes? Do the same with Michigan taxes. No taxes BUT also no federal or state aid either.
A Free Detroit would have absolutely no labor and workplace regulations, including minimum wages, mandatory insurance, equal opportunity rules, occupational safety rules, etc. People would be allowed to work together cooperatively for whatever terms their marginal productivity of labor will secure.
End all red tape that thwarts business startups and hobbles its expansion, such as licensing, public health regulations and inspections, zoning restrictions, etc. Do not be concerned that people may be employed in low wage, dangerous jobs against their will. The reality is that business owners must recruit workers and not dragoon them and chain them to their workplaces. Nor are business owners interested in harming either their workers or their customers. If they do, normal civil and commercial law will suffice.
Privatize all government services, such as garbage pickup, water and sewage services, and allow for unbridled competition in these and other areas, even fire protection. Sell off city property (who needs offices that are empty of government bureaucrats anyway?) and deed public housing to its current occupants, making them responsible for their own abodes. You may be surprised how responsible people can be with their own property. End public education and all its costs. Allow the people to get the kind of education that they desire, whatever that may be. Since half the current population of Detroit is functionally illiterate, what’s the risk?
Do you want a safe society? Then let people arm themselves without any licensing requirements. Since it takes Detroit police approximately an hour to answer a typical 911 call, this is simply a practical solution to the basic human right of self-defense. Above all end welfare. The destructive cycle of dependency is driving American cities to the financial and cultural wall.
Do not expect overnight success, but who knows? A free market always surprises us with new innovations. At first one can expect lots of mom and pop startups, sidewalk vendors, unlicensed and untaxed services such as simple property repair, home schools, private taxis, etc. But if Nike and other American businesses are enticed by lower costs and fewer regulatory burdens to outsource their manufacturing operations overseas, why would they not take a good look at a Free Detroit? Expect to be amazed.
Allow Detroit to become a safe, cooperative city that represents the best that America can be. Economic freedom will ensure the rebirth of Detroit. This city can become the beacon of true prosperity to the rest of America and to the world.
Patrick Barron is a private consultant in the banking industry. He teaches in the Graduate School of Banking at the University of Wisconsin, Madison, and teaches Austrian economics at the University of Iowa, in Iowa City, where he lives with his wife of 40 years. Read his blog.
This post first appeared at the Mises Daily.
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12 comments:
I would seriously love it if they did this - Libertarianism needs a proper experiment. I'd be fascinated to see how it would turn out.
The population decline would reverse and Detroit would be a Mecca for business interests, employment and prosperity if it was made a free city, and Michigan a free state. I'd be buying up some of those $1 houses!
It might just work, which is reason enough why it will not be given the chance.
And if it were to succeed what measures could be put in place to stop the busy-bodies starting the rot again...
We know this will work because it already has in Dubai. I was there in the early 80s when the Jebel Ali tax free zone was declared. It was a long, long road running through empty desert. As soon as the zone was declared huge companies like Canon moved in, now the area is unrecognizable with industry as far as the eye can see. Prior to this, apart from oil, the only item manufactured in Dubai was macaroni.
This approach would never be tolerated in modern America, not because it wouldn't work but because it would. No government would allow itself to be exposed as part of the problem in such a manner. You'd have to go back to 1776 to find any politicians interested in trying this out.
Sounds like a fun and rewarding exercise to me.
I have a question however about Libertarian opinion regarding a possible conflict between these two things;
A:All that Detroit really needs is economic freedom and secure property rights.
B:End all red tape that thwarts business startups and hobbles its expansion, such as licensing, public health regulations and inspections, zoning restrictions, etc.
I presume by this plan that all public infrastructure - power, water, sewage, is to be sold into private hands and all property currently occupied by such assets either put into those companies hands or somehow convented to them and any future expansion/developement to be strictly contracted.
But it seems likely that at some point property rights will clash - perhaps someone builds on a property blocking all sunlight to another, perhaps someone dams a stream completely that was feeding anothers gardens.
Out of curiosity is the Libertarian position not to care, that even if someone worries about access to sunlight (or other non-ownable tangible thing) that the lesser of all evils is not to worry and trust that the disadvantaged, free of over-regulation, can find a innovative solution to their dilemma?
I can imagine that as in the grand scheme of things these are improbable scenarios that often suggest within themselves the solution - if someone is building a tower tall enough to block your sunlight it probably means you own land that should have it's own tower for instance.
Or is there some other theory in Libertarian thought about access to natures bounty which we cannot fence?
The latest Economist has an article on Detroit and as well as the obvious shambles there is some good stuff going on in the city centre where private innvestors are spending and replacing the govt services. Govt has its place I guess but I wish most of it was somewhere else.
Nice idea, but the Democratic Party machine that has controlled Detroit's local government since 1962 is never going to let it happen.
Fentex, you asked two questions:
1. about how to deal with private utilities; and
2. about "clashing" property rights with respect to light and air and water and so on.
The answer to the two questions is related.
The basic principle of common law is that every land owner/occupier has the right to peaceful enjoyment of their land.
And as it happens, over its seven-hundred or so years of dealing with issues like those you cite, common law has been remarkably successful in recognising where property rights lie.
An important corollary of that principle of peaceful enjoyment is the common law rights to light and air and sunlight, which over those seven-hundred years (and particularly during the years following the Industrial Revolution) became very well developed indeed as Laws of Tort--as you will find in any early-twentieth century book on the Law of Tort.
Another basic principle underlying rights to land is that there are several 'sticks' in the bundle of ownership. You may have the right to enjoy all or just one of the right to occupy, to fish, to hunt, to log, to take water, to fish and so on. As a corollary to this, other parties are able to strike bargains with those who wish to utilise particular aspects of that land--to negotiate for an easement, for example (giving certain prescribed rights to occupy, or to pass through, or to take some specifically prescribed portion of light or air), or for a covenant (limiting ownership rights in a mutually agreed manner, such as an agreed prohibition on chopping down a much-loved tree).
In the past, recognition of these ownership rights allowed skyscraper builders and railroad builders, for example, to negotiate with neighbours; and for utility owners to negotiate with owners of land and of existing private roads, thoroughfares, accessways and the like. This was made more difficult by the 'advance' of having govt own the roads, but the simple solution for utilities in a Free Detroit--or in a Free Christchurch, which would certainly help rebuilding there--would be 1) to recognise existing rights in utilities by transferring ownership rights in shares to existing users (thereby transferring ownership to those with an already vested interest in the services), and 2) allow existing utilities easements across and under property where those utilities exist, and 3) allow parties free negotiation of new easements where needed.
[Continued ... ]
Another principle that is important here is essentially a 'who got here first' principle.
If for example I am in a wilderness taking a certain amount of water from a stream, then anyone who comes to the stream thereafter must recognise my pre-existing right. If the newcomer wants more water than would be available, this might mean negotiating with me to take some of the water right that I had previously enjoyed.
Equally, if I have an existing tall building standing next to unowned/unoccupied land, then this also gives me a pre-existing right, which any newcomer would then have to accept as being the state of play when he arrived.
The last example especially can be summed up in the common law doctrine of Coming to the Nuisance, which is not aonly an antidote to zoning, but also a way to recognise property rights that appear to be clashing, but only because they are ill-defined.
PS: Now, obviously, if one were to establish a Free Detroit--or a Free Christchurch--one would need to ensure that common law would work this way again, without modern statutes throttling its proper working. The simple way to do that would be to enact a Codification in Law of these simple common law principles. Simple.
Peter is right. Fentex, this is easy to solve. In Detroit it would be simplicity. Do not forget that much of the city is abandoned. There are wrecked ruins as far as the eye can see. I doubt anyone from the rubble of the Packard factory ruins is going to be upset if you build a drop forge next door anyway. Same goes for a high rise out on 5-mile. Easy experiment to try out. Anyone what do not like it can move on to Chicago or better yet next to Prez Obama in D.C.
Amit
principle of common law
This is why I asked the question, to see if common law would be invoked as opposed to any other reasoning.
Local Improvement Acts, the beginning of town planning law in Britain, were enacted specifically to deal with problems created by land development in burgeoning urban areas that the common law was failing to address.
Apparently, from historical observation, the common law does not protect ones right to enjoy ones property when one cannot afford to contest a wealthier persons acts.
This is maybe a first step... a bit dated. No idea if this stuff is still going on: Detroit Lives!
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