A Zone of Liberty in the Making?

I am breaking my silence — for the moment, at least — because I see a faint ray of hope for liberty. The source is not electoral politics, which has become liberty’s burial ground.

The source is an initiative that seems to be modeled on a proposal that I made almost almost seven years ago, in this post. There, I proposed an arrangement that I call the “zone of liberty.” What is it? As I explain here, it

would be something like a “new city” — with a big difference. Uninhabited land would be acquired by a wealthy lover (or lovers) of liberty, who would establish a development authority for the sole purpose of selling the land in the zone. The zone would be populated initially by immigrants from other parts of the United States. The immigrants would buy parcels of land from the development authority, and on those parcels they could build homes or businesses of their choosing. Buyers of parcels would be allowed to attach perpetual covenants to the parcels they acquire, and to subdivide their parcels with (or without) the covenants attached. All homes and businesses would have to be owned by residents of the zone, in order to ensure a close connection between property interests and governance of the zone.

Infrastructure would be provided by competing vendors of energy, telecommunications, and transportation services (including roads and their appurtenances). Rights-of-way would be created through negotiations between vendors and property owners. All other goods and services — including education and medical care — would be provided by competing vendors. No vendor, whether or not a resident of the zone, would be subject to any regulation, save the threat of civil suits and prosecution for criminal acts (e.g., fraud). Any homeowner or business owner could import or export any article or service from or to any place, including another country; there would be no import controls, duties, or tariffs on imported or exported goods and services.

The zone’s government would comprise an elected council, a police force, and a court (all paid for by assessments based on the last sale price of each parcel in the zone). The police force would be empowered to keep the peace among the residents of the zone, and to protect the residents from outsiders, who would be allowed to enter the zone only with the specific consent of resident homeowners or business owners. Breaches of the peace (including criminal acts) would be defined by the development of a common law through the court. The elected council (whose members would serve single, four-year terms) would oversee the police force and court, and would impose the assessments necessary to defray the costs of government. The council would have no other powers, and it would be able to exercise its limited powers only by agreement among three-fourths of the members of the council. The members, who would not be salaried, would annually submit a proposed budget to the electorate, which would have to approve the budget by a three-fourths majority. The electorate would consist of every resident who is an owner or joint owner of a residence or business (not undeveloped land), and who has attained the age of 30.

A zone of liberty would not be bound by the laws (statutory and otherwise) of the United States, the individual States, or any of political subdivision of a State. (The federal government could impose a per-capita tax on residents of the zone, in order to defray the zone’s per-capita share of the national budget for defense and foreign affairs.) The actions of the zone’s government would be reviewable only by the U.S. Supreme Court, and then only following the passage of a bill of particulars by two-thirds of each house of Congress, and with  the concurrence the president. (A zone could be abolished only with the approval of four-fifths of each house of Congress, and with the concurrence of the president.)

Now comes a proposal for the establishment of the Commonwealth of Belle Isle, which seems to be modeled on my zone of liberty. The following explanatory material is from the FAQ page for the Commonwealth:

Where is Belle Isle?

Belle Isle is a 982 acre island located in the Detroit River, which separates the cities of Detroit, Michigan and Windsor, Ontario.

What is Belle Isle used for currently?

It is owned by the City of Detroit.  It is uninhabited and functions as a public park.

What happens to Belle Isle … ?

Belle Isle is sold by the City of Detroit to a group of investors for $1 billion.  The island is then developed into a city-state of 35,000 people, with its own laws and customs, under United States supervision as a Commonwealth.  Set 29 years into the future, the book is a fictional, although the main characters are based on real people.

Is it possible to put 35,000 people on Belle Isle?

Yes.  The city-state of Monaco has 33,000 people on land half the size of Belle Isle.

What are expected to be the primary industries of Belle Isle?

The primary industries are expected to be finance, insurance and investments.  As land is very limited, no large plants will be built on Belle Isle.  However, it is highly likely plants will be built across the Detroit River in Detroit, with the engineering and management functions on Belle Isle.  Companies from all over the world will locate on Belle Isle, bringing massive amounts of capital and GDP to the area.  Detroit, the State of Michigan and the U.S. will benefit from this influx of capital and ongoing GDP growth.

How will someone become a citizen of Belle Isle?

There will be an application process which will be reviewed by a citizenship board.  Applicants will have to post a citizenship fee, which will probably be in the $300,000 range, plus have a working command of English.  The citizenship fees will repay the investors who funded the purchase of the island from the City of Detroit, plus built the infrastructure such as sewer, water, paving, electric and gas utilities and the monorail.

Will the citizenship fee pay for the purchase of any land for homes or businesses on Belle Isle?

No- that will be an additional cost.

What are the main principles of the Belle Isle society?

There are three:

1)      Government is limited in its scope and provides only services required for the benefit of all citizens.  This is the fundamental enabler of low taxation, itself a key factor in competitiveness.  Competitiveness in turn drives the economy, providing both job and wage growth.  Also, the government is highly transparent and overseen by an active “Anti-Corruption Group”, which employs strict measures to prevent, as opposed to catch after the fact, corruption.  The government operates at or below 10% of GDP, by constitutional dictate.  The social safety net is operated by charities, which are highly encouraged and supported by the government.

2)       Belle Isle has exceptional aesthetics.  It is a walking community without motor vehicles, except service vehicles in the middle of the night.  A monorail provides the primary transportation, both around the island and to the Transportation Center located on the Detroit side of the river.  The buildings conform to high architectural standards, overseen by a talented planning director, who is advised by the best architects and planners from around the world.

3)      One of the core values is respect for all its citizens, no matter their station in life.  Belle Isle doesn’t encourage anything which might cause divisiveness or envy among its citizens, by segmenting people into groups.  The culture is one of bringing people together, not dividing them.  Also, a command of English is required to be an immigrant, as a common language fosters common understandings.  Probably the most important personal value we like to see is that of “Self-Reliance.”  It is so important to individual freedom and a sense of worth, and is the key to limited government (55% of U. S. government spending is for entitlements).  It was one of the key principles on which America was based and has gradually been forgotten over the years.

What is the tax system of Belle Isle?

Taxes have to conform to three basic principles.  They need to be transparent, never levied on what is encouraged, and the costs of collection low.  Importantly, there are no income taxes on individuals or companies, and no taxes on interest, dividends, capital gains or estates.

There are three sources of revenue.  The first is user fees, which apply primarily to the monorail.  A 10% sales tax provides a second source.  Importantly, sales taxes encourage thrift and are collected outside the cost structure of the products. Real estate taxes provide the third, but the system is radically different than that employed in the U.S.  Only the raw land value is taxed, not what the owner builds on it.  This follows the principle of government only receiving compensation for what it provides.  Government didn’t pay to construct buildings on the owner’s land, nor does it bear the risk of loss.  We encourage development of property, not discourage it.

The goal, which is very achievable, is to have total tax expense limited to 10% of GDP of Belle Isle, compared to the 40% of GDP government expense in America.

Do Belle Isle citizens pay taxes to the United States?

Yes.  As a Commonwealth of the United States, Belle Isle relies upon the United States for its defense.  Belle Isle pays its share of the U.S. defense budget, based on its population.  It amounts to about $2,000 per person per year.

How does Belle Isle achieve a spending level of only 10% of GDP?

Belle Isle achieves 10% in substantial measure because people here are able to take care of themselves throughout their lives.  That’s where self-reliance begins.  Self-reliance will be possible as a result of the  abundance of jobs and strong wages arising from Belle Isle’s economic advantages.  The question Washington should ask every morning is “what can we do to permit our people to become more competitive?”  Small government, , low levels of taxation and taxing the right things, and competitive levels of regulation are where the conversation should start.  This is the question we asked when we envisioned Belle Isle with high levels of efficiency and a minimal governmental burden on her people.

There is much more that I will not reproduce here. But I must include this:

What are the chances this vision could become reality?

That is the $64 dollar question!  The hurdle is entirely political.  Will the U.S. allow this experiment to happen?  There are other commonwealths of the United States- namely Northern Marianas and Puerto Rico, so there is existing precedent.  The compelling political argument in favor of letting this happen is the benefit of Belle Isle being a game-changer for Detroit, which many will argue is the city in the U.S. most in need of a turnaround.  The influx of capital and jobs will be staggering.  The author [of the book on which the Commonwealth is based] estimates 200,000 job years will be created in the construction phase alone…. The author has no doubt, if allowed, it will happen as the book describes.  And once the discussion turns to the feasibility of the ideas in the book, rather than the politics of permitting it, the “impossible” will become the “inevitable.”  Detroiters will see this vision as the answer to their prayers, and how could the federal government deny Detroit a chance to turn itself around, accelerate its re-birth, all at no cost to the taxpayer?  How could they deny this long suffering population of over 700,000 their first real shot at the American dream.

Leftists will oppose the Commonwealth of Belle Isle for fear of its success, which would undercut their claim that a people cannot prosper and coexist peacefully absent heavy-handed government. Invoking”compassion” and “fairness,” the left will agree to the establishment of the Commonwealth only if it is subject to all of the laws and regulations of the United States — the same laws and regulations that now stifle Americans’ liberty and prosperity. Leftists will begin by insisting that the citizenship fee and language requirement are discriminatory and should not be imposed. They will go from there to demand acceptance of affirmative action, recognition of labor unions, conformance with edicts of the U.S. Treasury and Federal Reserve, and compliance with the myriad regulations and tariffs that burden America’s social and economic liberty — and prosperity — in the name of the children, the environment, fairness, consumerism, and the bogus threat du jour (e.g., anthropgenic global warming).

That said, any step toward a libertarian regime within the United States would be a step in the right direction. Let us hope that the developers of the Commonwealth have the political savvy and connections required to take that step successfully. Their success would be a step toward the establishment of a New Republic.

Related posts about Big Government and how to escape it (listed chronologically):
Finding Liberty
The Laffer Curve, “Fiscal Responsibility,” and Economic Growth
How to Think about Secession
The Causes of Economic Growth
In the Long Run We Are All Poorer
A Short Course in Economics
Addendum to a Short Course in Economics
The Price of Government
Is Statism Inevitable?
The Interest-Group Paradox
Utilitarianism vs. Liberty
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Fascism and the Future of America
Secession Redux
Negative Rights, Social Norms, and the Constitution
A New Cold War or Secession?
Rights, Liberty, the Golden Rule, and the Legitimate State
The Price of Government Redux
The Real Constitution and Civil Disobedience
The Near-Victory of Communism
A Declaration of Independence
The Mega-Depression
Tocqueville’s Prescience
State of the Union: 2010
The Shape of Things to Come
As Goes Greece
Ricardian Equivalence Reconsidered
The Real Burden of Government
The Real Burden of Government
Zones of Liberty
The Constitution: Original Meaning, Corruption, and Restoration
A Conversation with Uncle Sam
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
Taxing the Rich
More about Taxing the Rich
America’s Financial Crisis Is Now
The Southern Secession Reconsidered
A Declaration of Civil Disobedience
A Keynesian Fantasy Land
The Keynesian Fallacy and Regime Uncertainty
Why the “Stimulus” Failed to Stimulate
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Re-Forming the United States
Unemployment and Economic Growth
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
The Real Multiplier
Vulgar Keynesianism and Capitalism
Why Are Interest Rates So Low?
The Commandeered Economy
Stocks for the Long Run?
We Owe It to Ourselves
Stocks for the Long Run? (Part II)
Estimating the Rahn Curve: A Sequel
In Defense of the 1%
Bonds for the Long Run?
The Real Multiplier (II)
Lay My (Regulatory) Burden Down
Our Perfect, Perfect Constitution
The Burden of Government
Reclaiming Liberty throughout the Land
Economic Growth Since World War II
Race and Reason: The Victims of Affirmative Action
More Evidence for the Rahn Curve
Secession, Anyone?
Race and Reason: The Achievement Gap — Causes and Implications
The Economy Slogs Along
The Obama Effect: Disguised Unemployment
The Stock Market as a Leading Indicator of GDP
Government in Macroeconomic Perspective
Where We Are, Economically
Keynesianism: Upside-Down Economics in the Collectivist Cause
Secession for All Seasons
The Economic Outlook in Brief
A New Constitution for a New Republic
Is Taxation Slavery? (yes)
A Contrarian View of Universal Suffrage
Obamanomics: A Report Card