Wednesday 10 October 2012

Charter Cities by Paul Rommer

Q: Would the government in the city subsidize the housing for the workers? 
A: The government can’t give residents in a city a higher standard of living by charging higher rent for the land and then giving renters their money back as a housing subsidy. People who work can afford to pay rent.

Q: If charter city residents live in small apartments with few amenities, would life there be any better than life in a slum?
A: In a charter city, all residents would have access to utilities like safe municipal water at costs below those that they would pay in a slum. They would not be subject to arbitrary relocation by predatory officials or gang leaders. They would live in a place with no tolerance for violence and crime, a place where people have to follow formal rules, rules that prevent harmful activities like dumping garbage in the street or building unsafe structures.

Q: Would housing in a charter city be constructed according to building codes?
A: Possibly. The people who rent apartments can’t verify after the fact that the building where they will live was constructed to be safe. Building codes are one way to solve the informational asymmetry. Efficient building codes can ensure safety without restricting the supply of small, low cost apartments.