Business leaders often see government regulations as a choking mass of jungle vines they are forced to hack through with a machete to find the road to El Dorado. If you think you might have a solution, one think tank is offering a $10,000 prize for the best proposal. The application deadline is March 17th. See below for how to apply. 

The Center for Innovative Governance Research (CIGR) focuses on how changes in regulatory structures can foster human flourishing. Their shtick is that while emerging technologies have transformed manufacturing, communications, travel, entertainment and many other sectors, governance remains static. They posit that adopting a more flexible approach to legislation, and experimenting with multiple competing small scale zones where different governance models can be tried, will lead to more positive outcomes for all and will drive both economic growth and scientific progress.

To that end the Center for Innovative Governance Research has launched a prize. They are looking for white papers proposing new regulatory structures for technological innovation zones. The idea is that such zones might become a reality, and draw investment and business away from overheated cities like San Francisco into the heart of the country.

Applicants are asked to suggest how to best strip away red tape inhibiting technological innovation at a time when the number of new startups is dropping and the United States risks losing its status as the world’s most cutting-edge economy.

“New businesses are disproportionately responsible for the innovation that drives productivity and economic growth, and they account for virtually all net new job creation,” John Dearie, executive vice president for policy at the Financial Services Forum, told Inc. He was discussing the long term impact of a lack of entrepreneurship in America. “I would say, as a policy person, this is nothing short of a national emergency.”

Tamara Winter, Operations Lead at the Center for Innovative Governance Research, told Lunacy Now that a big challenge in the United States right now is how to encourage companies and talented people to invest in the middle of the country, away from the metropolitan hubs of DC and New York on the East Coast, and San Francisco and Los Angeles on the West Coast. To achieve that goal will require fresh thinking.

If you’re interested in winning the $10,000 first prize and helping brainstorm solutions to kickstart technological innovation, read on.

Who’s In Charge Here Anyway?

Before we start looking at why creating small scale administrative jurisdictions with different legal codes might be the answer, we first ask what the problems are with the systems we already have. Partly we struggle to identify our rulers accurately. Take Facebook. It has 2.34 billion users, on whom it collects reams of data. It can use this information to send out targeted specific messages, and dramatically alter the information its users perceive about the world. In 2014 the company even ran a scientific experiment to show it could alter users’ moods at will. Meanwhile the United States has a population of 328 million, and a government in such disorder that it just shut down for a month.

Does a company that can effectively send out a message to over two billion people have more power? Or does the United States?

In Europe the situation is more complicated still. The European Union (EU) is a political and economic arrangement between 28 countries in Europe. The EU delegates certain powers to a central authority in Brussels, while retaining the independence of member states. However, not everyone is happy with the arrangement, as evidenced by Britain’s recent vote to exit the organization. Other European countries such as Switzerland and Norway have elected to remain outside of the EU itself, but formed trading agreements of their own. That’s without even getting into the various religious, corporate, criminal, and political organizations which exercise varying levels of power across national borders at a sub-governmental level.

Neo-Medievalism

In the academic discipline of International Relations, this situation whereby entities of varying strengths and jurisdictions exist in an overlapping networks of power has been termed “Neo-medievalism.” The term is associated with Hedley Bull, a political theorist and economist who compared the emerging interlocked global political order to the High Medieval system of Christian Europe (The Anarchical Society: A Study of Order in World Politics, 1977). Power in that context was distributed between the Holy Roman Emperor, the Church, and various vassals, princelings and semi-independent entities such as free cities.

Yet this system is unstable. Current ruling elites are derided by many as sclerotic, incompetent and out-of-touch. Increasing regulatory burdens and a lack of clarity over which masters to obey are also slowing down America’s previously robust start-up economy.

It is also corrupt. Local municipalities across America spend millions of dollars each year in corporate subsidies to attract large corporations to their city. Amazon recently caused headlines by carrying out a huge national search for its new headquarters, encouraging cities to bid on the chance to become the company’s new home. In the end it accepted $3 billion in subsidies from New York. The former Mayor of Kansas City has called for a federal ban on the kinds of subsidies which see $80 billion a year enter the pockets of major corporations from the public purse, all in an attempt to woo business leaders.

In this complex network of distributed power, there is a lot of room for visionary thinkers and entrepreneurs to create viable alternatives.

Our burdensome and increasingly outdated federal regulatory system bears some responsibility for this slowdown,” the Center for Innovative Governance Research said in their press release announcing their prize. “The modern American administrative state was built during an era in which most innovations came from large, slow-moving corporations, at times in conjunction with the government. But this is no longer the case, and as the nature of innovation changes, so too must our regulatory system. Reversing course requires a bold, new regulatory framework.”

Free Cities

So what are some alternatives? Humanity and civilization has been around for a long time, so it’s worth looking into the past to see what has worked before, in order to project what might work again in the future.

When you look at the broad sweep, clear patterns emerge. Historians and political researchers have long pointed out that competition has long fuelled innovation and excellence. Additionally, cities, rather than towns or rural areas, seem pretty uncontroversially to be the engines of economic growth and new ideas.

Competition between cities then, can result in serious intellectual and economic progress.

Where there has been competition between independent cities in the past, vying to attract the best people within their walls, humanity has reaped the benefits. Italian city states during the 14th century continue to inspire strategists and business leaders such as management consultancy firm McKinsey to this day. Fierce competition erupted as the nobility competed to excel as patrons of art and beauty. The result was one of the world’s most concentrated periods of intellectual and artistic flourishings the world had ever seen. In Ancient Greece, the competing city states were moved to excel in philosophy, in theatre and in cultural and mercantile achievement by the fact they were independent entities.

Under the Holy Roman Empire in the late middle ages cities such as Freiburg and Hamburg operated as semi independent entities with differing amount of autonomy. Freiburg was created with a charter as a market town granting the population certain freedoms not afforded to other towns. Hamburg, a larger and more powerful city, held the prestigious status of Free and Imperial City, which meant that it was only subordinate to the Emperor and owed no realty to local liege lords. These semi-independent entities became the engines of German economic production. From 1358 the several of the powerful cities and merchant guilds in Northern Europe formed the Hanseatic League for mutual protection. This confederation came to dominate Baltic trade for three hundred years.

Small autonomous urban areas competing with one another have a proven track record of spurring each other on to greatness. This pedigree has been duly noted by those who favor charter cities.

Colonialism

In the modern era the notion of Charter Cities is drenched in the legacy of colonialism. What Singapore and Hong Kong have in common is their legacy as former British colonies. The unique legal systems so praised as pushing forward success were in part derived from Britain’s common law legal tradition. Economist Tyler Cowen, a professor at George Mason University and Director of the Mercatus Center,  identifies three different kinds of Charter Cities with different relationships to culture on his blog Marginal Revolution.

    • A Minimal Entity, such as a cruise ship, in which people exist under a set of rules in a specific situation.
    • A Hegemon-Backed Charter City, such as a colony, in which an imperial power imposes extra-territorial jurisdiction over a specific geographic area.
    • Complementary Exported Culture, in which the Charter City blends elements of different cultures and legal traditions to create an effective but rooted shared identity and mores.

Cowen notes that “exporting legal systems without exporting their cultural preconditions can lead to failure,” and explicitly mentioned Britain and the other European powers’ escapades in Africa and Asia over the course of the 19th century.

The architects of the new charter cities movement seem to be aware of this issue and are working to ensure that new initiatives do not replicate the hungry power grabs of bygone years.

Paul Romer, senior Vice President of the World Bank, defended Charter Cities from allegations of neo-colonialism in a Ted Talk. He argued that the primary difference between colonial era territorial concessions and contemporary charter city movements is that the former was forced, whereas the latter is voluntary and empowers choice.

The kind of Charter Cities Romer and others are talking about bear some similarities to Charter Cities in California, where municipal district law can override state legislation on certain topics.

New Governance Structures

So what could Charter Cities and other alternative governance frameworks look like in the present day? What kind of legislative structures would incentivize and attract growth?

In 2014 Facebook co-founder and venture capitalist Marc Andreesen wrote an article in Politico calling on politicians to resurrect the struggling former industrial heartland of America (specifically Detroit), by altering the legislative structure to encourage more technological risk taking. By altering or removing regulations over what can be tried in a small specific area, he reasoned, companies interested in experimentation would flock to the designated zone, bringing investment, jobs, and R&D labs with them. The piece argued pretty convincingly that such legislative retreat would “Turn Detroit Into Drone Valley.”

First prize is $10,000 cash, with a $5,000 second prize. The assignment is a white paper detailing the form of a new governance construct, such that it encourages innovation and fosters an environment conducive to economic growth.

The Center for Innovative Governance Research supports the idea of Charter Cities, which are specifically zoned areas with a separate legal jurisdiction from the rest of the country.

A prize is in the finest traditions of seeking excellence. Rather than simply hiring a researcher (or a research team), a prize encourages innovation by pushing people to compete at their best level for the goal.

The Prize

The White Paper has to be 35 pages long and properly sourced. It should focus on a new framework for governance which can be applied in the real world to boost innovation in a part of the tech sector.

The prize will be judged by “Tyler Cowen, Professor of Economics at George Mason University and General Director of the Mercatus Center; Eli Dourado, Head of Global Policy and Communications at Boom; and Joe Lonsdale, co-founder of Palantir Technologies and co-founder and General Partner of 8VC.”

Tamara Winter, the Operations Lead for the Center for Innovative Governance Research, spoke to Lunacy Now for this piece. “Just do it,” she told anyone thinking of applying for the prize. “You have nothing to lose, and you just might change the future of governance.”

Read the full details of the prize and how to apply hereThe application deadline is March 17th.

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