– Titus Gebel – 

Do Free Private Cities grant their own citizenship?

No, because Free Private Cities are not independent, sovereign entities, but a kind of special administrative zone within existing states. This means that every resident of a Free Private City initially retains their own citizenship. The Free Private City only issues residence permits, not passports. In the long term, however, some Free Private Cities could develop into independent city states.

What is the difference to smart cities?

Smart cities use new technologies to make daily life and processes in a city easier. In this respect, free private cities can also be smart cities. But not everything that is technically feasible is also desirable. Smart cities can also mean total surveillance of citizens. In free private cities, on the other hand, there would be a contractual guarantee that this would not happen. The crucial point is the question of a guaranteed legal position and the corresponding freedom of action for citizens. In this respect, it is more important to live in a free city than in a smart city.

The city operator is a kind of monopolist, at least as far as security is concerned. Doesn’t that lead to the usual problems of monopolies, in particular poorer quality at higher prices due to a lack of competition?

The approach of allowing competing security service providers, each with their own rules and therefore competing legal systems, may seem attractive in theory for reasons of monopoly prevention. In practice, the associated effort and inconvenience (the so-called transaction costs) are probably too high. It would take years for rules to emerge on the market on how to resolve conflicts between the various providers and legal systems. Organized crime can easily infiltrate such systems and provide even the strongest security forces.

The resulting inability of the operator to provide security is likely to make such systems relatively unattractive, especially for families and businesses. An abuse of power by the operator is unlikely due to the requirement of paying customers and their enforceable contractual position, including against the operator or its security forces, and competition with other local authorities. If the security situation is poor or the security forces regularly exceed the powers granted in the citizens’ contract, the city will not be successful in the long term. New customers will stay away, contracted citizens will leave and the value of the company will fall, not rise. There are therefore sufficient incentives for the operator to behave in accordance with the contract, also with regard to its monopoly on the use of force.

Aren’t free private cities seized by the host state at the first opportunity? Even if they are defensible and independent, they don’t stand a chance against great powers.

The host state has a contract with the city operator, which is also likely to contain standard investment protection clauses; in this respect, the latter would run the risk of being exposed to considerable financial claims after occupying the Free Private City, which could also result in the seizure of its foreign assets. Nevertheless, the Free Private City will try to prevent this from happening at all, for example through a combination of various means such as public relations work, diplomatic contacts with other states and a certain defensive capability, which at least links the occupation of the Free Private City with a price. Incidentally, it can be pointed out in good time that the inhabitants are highly mobile and would quickly leave the city in such a case, making it an unattractive takeover target. Very few states stand a chance against great powers, and in this respect there is only real sovereignty anyway if the great powers allow it. Nevertheless, even powerful states cannot simply occupy other territories without further justification. This calls other powers into action and can be dangerous for the respective ruler(s) in terms of domestic politics. If this were not the case, all small states would no longer exist today.

How can residents enforce court rulings and arbitration awards made against the operator?

The situation is no different from that in international commercial law. Anyone holding a title against a foreign state that is unwilling to pay has no superior executive power to enforce it, but can attempt to seize assets of the state concerned in other countries. The same would apply here against the operator. The operator also has an incentive to be faithful to the contract and to avoid such decisions.

Can systems without ethnic, cultural or religious cohesion survive in the long term?

In all likelihood, a separate culture will gradually develop in the free private city on the basis of shared values, as has happened in the USA. It is also plausible to imagine free private cities that are only aimed at certain ethnic, cultural or religious groups. Incidentally, the question must be regarded as open; Dubai and Singapore have so far existed without such means of cohesion.

Sooner or later, changes to contracts and adjustments to current developments are inevitable. These will either be imposed in an authoritarian manner or defined by institutions of participation, so won’t we end up back with the traditional systems?

It should be possible for arbitration tribunals and courts to also decide on new types of issues by drawing on the legal principles that have been in force for centuries and striking a balanced, reasonable balance of interests. This is how common law works. The relevant principles of today’s civil law systems still correspond to those of Roman law from over two thousand years ago. In practice, it is likely that in many new areas of life, regulations will be found that are in line with the interests of the parties involved, even without the intervention of case law or contractual amendments, as has happened in the credit card industry to regulate cases of fraud. Finally, it is possible to offer new residents different contracts from those offered to existing residents and thus gradually create a new order without disenfranchising anyone. The problem of changing contracts is nevertheless one of the most cogent objections, and in this respect we refer to chapter 15 of the book on free private cities.

Isn’t this all too simple? Doesn’t an increasingly complex world also need complex rules?

The approach of Free Private Cities is to counter the hypercomplexity of the present with simple, robust framework regulations and not with complex laws, which then have unexpected side effects and offer various loopholes for abuse and taking advantage. Only a simple regulatory framework that offers sufficient space for the emergence of spontaneous orders is able to make the decentralized knowledge of countless individuals fruitful.

Political issues are not a market, any more than religion, love or science. Can states simply be run like companies?

Free private cities create a supply for a presumed demand on a … (market?). An ideal demand is also a demand, an ideal supply is also a supply. And it is not the case that all other areas of life are not covered in a free private city, they are just not answered “politically” by the operator. It may be that conventional states cannot be run like companies. In any case, free private cities are run like companies. The answer to the question of whether this works can be left to the market, even if you don’t want to call it that.

It is inevitable that some city operators will miscalculate and go bankrupt. Are all the life plans of the inhabitants of these cities then doomed to failure?

In the event of imminent or actual insolvency of the operator, as with other companies, there is always the possibility that a competitor, some of the residents or the residents as a whole will take over the city themselves (“resident buy-out”). Moreover, insolvency enables a regulated and debt-free new start. Our current world would also be a better place if bankrupt states could go through insolvency proceedings in good time.

Don’t free private cities use the infrastructure of their host state and its military protection, so they couldn’t exist on their own?

Almost no state in the world is truly self-sufficient. This is not a problem if services such as infrastructure or military protection are provided in return (e.g. payments). It can also be assumed that successful free private cities, following the example of Singapore, will build up both sufficient infrastructure and a defensive capacity over time.

The city operator is a kind of dictator, aren’t the residents at his mercy?

The city operator is bound by the contract, which limits its powers to a few areas. Furthermore, the operator is subject to independent dispute resolution. Of course, due to its territorial monopoly on the use of force, it would in fact be able to exercise a dictatorship. However, most citizens would then leave the city again and the loss of reputation would prevent the operator from successfully founding new private cities elsewhere. In this respect, he is no different from the captain of a cruise ship on the high seas or the manager of a secluded vacation resort. Both theoretically have the opportunity to act as dictators, but refrain from doing so due to their commercial interests.

Doesn’t the concept result in rich and white people fleeing to their own private urban ghettos and shirking their responsibilities?

Blacks and whites, rich and poor, Jews and Japanese and all other groups that define themselves as such have every right in the world to decide for themselves who they want to live with. Anything else would mean forcing them against their will to do something they don’t want to do. That is totalitarian. Systems that have to threaten their inhabitants with violence or expropriation in order for them to remain in them will not last in the long run. As far as responsibility for others is concerned, each individual is of course free to feel a moral obligation towards complete strangers over and above their own family. However, no objective obligation can be derived from this, for example for particularly talented people to entertain people they do not know. There is no right to live at the expense of others.

Aren’t the weak being exploited by the strong due to the lack of a welfare state and the corresponding protective regulations?

If people voluntarily come to a Free Private City to take a job there, knowing that there is no welfare state and no minimum wage, then the claim of any kind of “exploitation” is only viable if the people concerned are denied the right to make their own decisions. In fact, many people take the view that most people are not in a position to safeguard their legitimate interests. In doing so, they implicitly claim that they themselves are better able to do so and therefore have the right to patronize others. In truth, this is presumptuous. There is no middle ground here; either adults have the right to decide for themselves or they do not.

Moreover, even in a Free Private City, the vulnerable are not without protection, because there is a civil law system that protects, for example, against surprising clauses in contracts. Finally, the objection ignores the fact that the protection of the vulnerable and help for the truly needy, who cannot help themselves, can also be guaranteed without coercive state systems. And without their harmful side effects. As a result, Free Private Cities will be more social than so-called welfare states. The question of social security is dealt with in detail in Chapter 21 of the book on Free Private Cities.

If Free Private Cities became established worldwide, would the socially disadvantaged no longer be accepted anywhere?

The dividing line is not between rich and poor, but between willing and unwilling to work. As long as someone is able and willing to work, they will be welcome and there will be specialized communities, especially for the low-wage sector. But a society can only develop further if there are incentives to improve one’s own behavior, for example with regard to willingness to perform, self-discipline and reliability. In this respect, there is no reason to accommodate people who are unwilling to perform in any way. They have to adapt much more in order to be accepted. The bottom line is that this benefits everyone. The only remaining question is how to deal with those who are actually unable to help themselves due to disability, illness or other incapacity, usually no more than 5% in any social order. They have been the target of charitable aid for most of history. Free Private Cities will not deliberately attract this clientele, but conversely will not abandon those who find themselves in such a situation due to accident, illness or birth.

How could global human problems such as environmental and climate protection be solved with a structure of Free Private Cities?

Most environmental problems are regional and can therefore also be solved at regional level. The attractiveness of a Free Private City also includes a clean environment, so the regulatory regime will take this aspect into account (more on this in Chapter 23 of the book). Free Private Cities or residents who harm the environment of other countries beyond their borders are also exposed to legal action by those affected. As far as supposed global human problems are concerned, the following applies: solutions are either possible without a single world government, as was the case with the restriction of chlorofluorocarbons (CFCs), or the problem or the proposed therapy are so questionable that different approaches are desirable. For example, the Club of Rome predicted in 1972 that many metals would be exhausted by 1990. If the world had listened to this erroneous prediction, the rise of the emerging economies, which has lifted billions of people out of poverty, would not have taken place, and millions would probably have died unnecessarily as a result of a planned and scarce economy. In this respect, it helps if there are small Gallic villages somewhere that hold differing views on issues relating to supposedly pressing human problems. In truth, the biggest problem facing humanity is that people want to impose their will on other people. This problem is solved by Free Private Cities.

Free Private Cities would polarize and divide society. People choose where to live out of pure selfishness: their own individual desire for a better life. If you think about it further, wouldn’t every society be destroyed because you end up alone on an island where no one is allowed who doesn’t think the same way as you?

Humans are and will remain herd animals and will therefore generally prefer to live with others rather than alone. For reasons of aggression defense, he probably even has to join forces with others. In return, it is prepared to make concessions to its absolute freedom. But all group formation must be voluntary. Just look at the clubs, interest groups and other associations in which we are already active. Why should this suddenly change if the “state” in the form of free private cities limits itself to the production of security? The more similar the views of the inhabitants on the extent of the necessary restrictions on freedom, the better coexistence will work. There must therefore be many different ways of living together. Competition between systems ultimately leads to existing societies changing in the direction of greater customer satisfaction and to fewer people living in systems in which they do not feel comfortable. That would not be a bad outcome. As far as selfishness is concerned, there are two groups of people: those who admit that they are ultimately acting selfishly and those who do their utmost to hide it, sometimes even from themselves. The individual desire for a better life is not only legitimate, it is the reason for all of humanity’s progress to date.

What are the basic differences to existing city states such as Singapore, Monaco and Dubai?

In these city states, there is a government or parliament that can change the current rules practically at any time without asking the inhabitants. And this is also to their detriment and also in derogation of why most of the inhabitants actually came there. They are not customers, but subjects. The saying “whenever parliament is in session, the property and freedom of the citizens are at risk” unfortunately also applies there. The number of regulations and thus restrictions on freedom is constantly growing.

In a Free Private City, on the other hand, you receive a contract offer from the operator, who is, so to speak, a ” government service provider”. This contract clearly sets out the services he will provide and what they will cost you. It will also set out what obligations you have in terms of peaceful coexistence, which legal system applies and the like. The operator cannot later unilaterally change these regulations or the amounts to be paid, as is common practice in politics. You have a legal claim to this. Disputes with the operator are negotiated before an independent court of arbitration, for example. This contract runs for an indefinite period, possibly after a certain trial period. As with a long-term insurance contract, you can terminate the contract at any time with notice, but the operator can only do so in exceptional cases, for example if you have breached your contractual obligations.

Why would states decide to give up partial control over part of their territory in the first place? Which laws of the state would continue to apply and which would be suspended?

States can only be won over to such a concept if they expect to benefit from it. Take Hong Kong, Singapore or Monaco as an example. A cordon of densely populated and, compared to the rest of the country, quite prosperous areas has formed around these city states. Their inhabitants often work in the neighboring city-state, but pay tax in the home country. If one assumes that such developments occur in a previously structurally weak or completely unpopulated area, then the host state can only gain from this. Ideally, none of its laws would continue to apply. For practical and political reasons, this will probably not be possible in its pure form. The degree of internal autonomy that the respective free private city actually has is ultimately a matter for negotiation.

What are the immigration conditions? Who decides on them?

In principle, anyone who can support themselves and who accepts the basic rules will be allowed to immigrate. In addition to the payment of the contribution and some rules of conduct, which can vary from city to city, these basic rules include above all that everyone can do what they want as long as they do not interfere with the rights of others. Furthermore, there is no right to live at the expense of others. Every resident with legal capacity is responsible for the consequences of their own actions. In this respect, applicants who from the outset hold views that are incompatible with this order or are even aimed at its elimination, for example socialists or Islamists, will not be allowed to immigrate. The same applies to known ex-dictators, internationally wanted serious criminals and the like. The relevant suitability is assessed by questionnaire/interview. As it is of course possible to misrepresent oneself in this respect, a trial period is agreed during which the operator can terminate the contract at any time.

The operator alone decides on immigration issues. After all, its main service is to ensure that immigrants do not disturb the free order or even threaten life and limb for the existing residents. It can only do this if it controls immigration accordingly and can also eject troublemakers. Otherwise it is not possible to maintain social peace and prosperity at a high level in the long term. However, it is conceivable that residents who absolutely want certain people (as employees, for example) could provide security for them if their suitability cannot be conclusively determined or if they do not (yet) have their own resources.  

Are Free Private Cities only for the rich?

Not at all. The estimated costs for the mandatory basic package, i.e. security and court system, are no more than a thousand euros per year. If minimum social security is added to this, it comes to a few thousand euros per year. Most people should be able to afford that. The fact that no taxes are levied should significantly relieve the burden on unmarried young professionals in particular, but also on all middle-income earners. The money freed up will be available for personal health and pension savings plans or membership of self-help organizations, as well as for children’s education. Free Private Cities offer considerable incentives for companies in particular to locate here. As a result, jobs will also be created for low and middle earners. Given the low taxes and other benefits, why shouldn’t they live in the city?

What currency should be used for payment?

For payments to the operating company of the Free Private City, a common main or regional currency will presumably be specified in the citizens’ contract. Otherwise, “free banking” applies, i.e. the residents and tradespeople can decide for themselves in which currency they want to pay or be paid.

How are Free Private Cities financed?

In principle, through contributions that cover the costs of security, a legal system and a certain infrastructure. The operator probably has to pre-finance something for the first few years. Once a certain number of inhabitants has been reached, this is profitable because security forces, arbitration centers and infrastructure do not have to be doubled to provide the same level of service. In practice, the operating company will generate a good portion of its income through real estate transactions by purchasing land early on, which then increases in value through the establishment of a stable and sought-after private city system. The land can then be parceled out and sold or leased. The corresponding income can then cross-finance expenditure and reduce the contribution level.

What is the difference between the contribution system and taxes in conventional systems?

In conventional systems, citizens are obliged to pay taxes without having a corresponding right to benefits. In a Free Private City, performance and consideration are in a direct relationship. Both contractual partners have a claim to fulfillment of the contract, i.e. the operator can demand payment of the fixed fee from the citizen, but no additional amounts. The citizen, in turn, can demand that the operator fulfills its contractual obligations, for example by guaranteeing security and a functioning legal system. Anyone who is the victim of a crime has a claim for damages against the operator.

What is the main advantage of a contractual system over constitutional systems?

The decisive difference to conventional systems is that the operator or a body elected by the majority cannot take on more and more powers and interfere with the residents’ way of life. Constitutions can be changed, even against the will of those affected, provided there is a corresponding majority. Contracts, on the other hand, can only be changed if the contracting party agrees. This is why the contract with each individual and the corresponding legal position are so important. It is about the greatest possible self-determination, not the greatest possible co-determination. If everyone is free to decide what they want to do and how they want to live, there is no real need for co-determination bodies such as parliaments. Moreover, they always run the risk of being hijacked by interest groups or the government for their own purposes. Finally, any citizen under contract can sue the city operator or withhold payments if they believe the contract is not being properly fulfilled. In constitutional systems, individual citizens generally have no standing to sue if the government is performing its duties poorly, and certainly no right to withhold taxes.

Is there anything else that specific interested parties should consider?

Every interested party should think in advance about how they want to make a living. Of course, a Free Private City will try to attract as many companies as possible, but this is a question that everyone has to answer for themselves. Enthusiasm and a passion for freedom alone are not enough. Even those looking for a libertarian utopia may be disappointed. There will be rules for living together and a monopoly on the use of force by the operator to enforce them. If you are still interested, you can sign up for the newsletter on free-cities.org, for example. You will be informed as soon as the first projects are launched.