I was very intrigued by the note below on Jane Jacob, is her Hayekian or not. Most interesting point for me was what this would do for the poorest of poor of the world. Usually critics jump on these ideas and label them elitist – “Rich are trying to secede”.

Also check out the TED presentation. Arable land versus urban space ( Romer illustrates using light points on night map of the earth) is really cool.

Related posts:

1. Wheelchair test (3.023)
2. Not just Delhi, Madam Sheilaji! (2.957)
3. Let a hundred Hong Kong bloom (2.472)
4. Hope is the antidote to Naxalism (2.251)

Cuba liberalises barber shops and beauty salons

Cuban state-owned barber shops face new style: Privatisation

On a more serious note, imagine how much damage a handful of “revolutionary” windbags and buffoons, who think of themselves above laws of nature and economics, can do to society. Imagine how much Cuban society needs to develop to be able to manage a modern economy. Hope the fact that Cuba economy has fallen apart, thanks to Communism, will be a good example for other societies. But that would be asking for too much.

East Germany had West Germany to help. Still they went through a lot of pain. Who will help Cuba? Cuba is a beautiful island with, probably, the warmest people. But Cuba is a tiny, irrelevant island. It gained prominence only because some idiot Americans decided to treat Castro as something special, instead of just another third world thug – who tortures his people by forcing them to listen to his 12 hour speeches. Once Castro is gone, the significance of Cuba disappears.

Though American embargo has been a convenient excuse, given the fact that the rest of the world trades with Cuba, for their failed communist economy, it has been a good cover for the windbag Castro brothers to cover up their mess. Once Castro crocks, the fun begins. There will be the usual tussle between reformers and diehards.

Few interesting points to ponder on world hypocrisy. Two Latin American thugs – A and B. Two different treatment from the so called world community. Thug A comes to power using force and tries socialism first. Thug A survives in power less than 20 years. Thug A and friends cause the death of hundreds of political opponents, students and labour leaders. He later realises that socialism does not work, switches to a market based economy. This dramatically improves the living conditions in his country. In surveys even poor people emphasis that their lives are better today. As expected, as the economy improved, fellow citizens of thug A increasingly demand more political and social freedoms. Thug A steps down when his country is one of the richest nations in the world and soon develops one of the most vibrant democracies in the world. Politicians whom thug A tortured and persecuted come to power. Interestingly, they not only pursue the same market based policies but even improve upon it.

Thug B comes to power using force and imposes communism. His country had an average economy where the citizens were not struggling. Thug B and friends are still well and alive after more than 40 years. They are still in power. Thug B nationalises everything, ruins the economy and turns it into a basket case. As expected in any nationalised economy, political freedoms disappear. Dissidents languish in prison. People desperate to escape this socialist paradise are caught, beaten, tortured and imprisoned. (see Amnesty International.) Entire society is converted into a den of informers where even grandmothers are expected to inform on their children and grandchildren, lest the revolution be harmed. Thug B exports skilled people, especially doctors, in exchange for oil and other resources. Confirming the idea that under thug B’s ideology, people belong to the state, to be exploited as the leader sees fit. He exports his armies to all corners of the world in an attempt to export his brand of economics.

Thug B is felicitated all around the world as a great revolutionary and visionary. He is given a platform everywhere he goes to indulge in windbagging, delivering crazy rants that last hours. No warrants are issued for his arrest for his crimes and violation of human rights of his society”s citizens. Thug B, like his idol Lenin, tries market based solutions to fix the mess he and his friends created. As expected situation improves. Enterprising citizens use the opportunity to create wealth by serving others. Paranoid thug B pulls the plug on fledgling entrepreneurship, lest his system be put to shame while he is alive.

Thug A is hounded by the international community. Charges are brought against him for violation of human rights. Thanks to legal technicalities and his friends who remember that thug A saved his country from falling into the hands of communists, he stays out of prison. He dies while still being hated and condemned by the so called international community.

Thug B lives on, to give glowing accounts of his life and his achievements, standing on the ruins of his society. Glowing under thunderous applause of fawning admirers who don’t have to live under the system thug B created.

Thug B violated every human right one can think of, killed and imprisoned innocent people, presides over a ruined and suppressed society. He is admired.

Thug A violated human rights, killed and imprisoned innocent people, but left behind a wealthy and a freer society. He is hated.

Thug B is Castro. (In fact he is the prominent one among the many socialist thugs that paraded on the 20th century stage). Who is thug A?

Free trading cities, each flourishing by leveraging its comparative
advantage. These cities hopefully would not be exact replicas of the
great city, as I mentioned in my earlier post.  But Hong Kongs built
with local characteristics and culture as foundation.

How would this come about?  Why not do what Sir John Cowperthwaithe
did for Hong Kong. Government could start by showing ‘benign neglect’
instead of active obstruction.  Remove all economic laws that obstruct
people from earning a living, trade with each other and generate wealth.

Force central government and state governments to devolve most of
the power and accountability to the local level.  Implement the 73rd
and 74th amendments to the Indian constitution in letter and spirit. 
Actually put some resource and energy behind the local government and
panchayati raj concept. 

Let local institutions, both private and public flourish.  Let them
be capable of responding to the concerns and needs of the local
citizens.  Empower local authorities to serve the people who elect
them.  Empower the local citizen to punish the authorities when they
fail to deliver.

Of course there are other issues like land law reform that are
crucial for a city to bloom.  But let us start somewhere.  Let us not
allow the complexity and chaos of the present situation to paralyse us.

Think this is too far fetched?  Not really.  Every government in our
country has toyed with the idea of economic free trade zones.  The idea
is to identity a region and simplify or eliminate all or most of the
pernicious economic laws, give tax holidays to industries in that
region, and so on. 

(I would rather see the entire country enjoy such benefits rather
than politicians and bureaucrats picking winning and loosing regions. 
But a friend pointed out, why not take what you get and ask for more
later.)

If we buy into the economic free trade zone argument, why not
declare a bunch of cities as free trade zones.  Suspend all economic
laws and restrictions.  Drastically simplify taxes.  Why not try this
as an experiment in a few cities. 

I am pretty sure that this would set off the next phase of
competition among states and regions.  Liberalisation process, which
started in the early 1990s, sparked off competition among states in
attracting capital and industries.  Now let the cities compete with
each other in attracting capital, resources and most importantly,
people. 

Good cities will attract the most important of resources — people. 
Bad ones will lose people and with it the tax base, creativity and
dynamism. 

Unleash the potential of our cities.  Let a hundred Hong Kong bloom.

More on the great man Cowperthwaithe and Hong Kong

• Sir John Cowperthwaithe from Telegraph, UK
• The Hong Kong Experiment by Milton Friedman in Hoover Digest
• Sir John Cowperthwaithe by Alex Singleton, Globalisation Institute