This section answers the most Frequently Asked Questions (FAQs) about the Free Cities model and its implementation.
WHAT IS A FREE CITY?
Q: What is a Free City?
A: Free Cities are Special Administrative Zones within the territories of existing Host States that enjoy regulatory and legal autonomy. They are characterized by a distinctive system of governance. In a Free City, a private company (a City Operator) is responsible for the city’s administration and the provision of security and the rule of law. All other services are provided by private third parties and/or residents themselves.
A central feature of this system is the Citizen Contract, in which the rights and obligations of both the resident and the City Operator are explicitly laid out. Besides the rules of living together specified in the Contract, the Operator has no right to further intervene in any areas of the resident’s life without their consent. Disputes over the contents of the Contract or the conduct of one of the parties are adjudicated by a third-party arbitration court that is fully independent from the Operator.
With such a system in place, Free Cities aim to offer their residents unprecedented levels of legal security, freedom, and, in time, unmatched prosperity.
CONTRACTUAL VS. CONSTITUTIONAL SYSTEMS
Q: Why is a contractual system better than a constitutional system?
A: The key difference between conventional constitutional systems and Free Cities is that the City Operator, or even a majority-elected body, cannot increasingly take on more powers and interfere with residents’ lives. Constitutions can be changed, even against the will of the individuals they impact, provided there is a majority that supports such changes. Contracts, on the other hand, can only be amended if the contracting parties agree. That is why it is so important that a contract is established with each individual—because each citizen thus gains the corresponding legal position.
Conventional constitutional systems portray co-determination bodies such as parliaments as one of their greatest advantages. However, these advantages are rendered obsolete in a Free City. Such cities are created to enable the greatest possible degree of self-determination, not the greatest possible degree of co-determination. If everyone is free to decide what they want to do and how they want to live, the raison d’être for parliaments is removed.
In a Free City, any citizen with a contract can sue or withhold payments from the City Operator if he or she believes that the contract is not being properly fulfilled. In constitutional systems, the individual citizen usually does not have the right to bring legal action against the state if it does not fulfill its tasks properly; and they certainly do not have the right to withhold tax under any circumstances. Compared to a constitutional system, the residents of the Free City are in a much stronger legal position.
Q: Since the City Operator is not accountable to a parliament, aren’t the citizens of the Free City simply at its mercy, since it can do whatever it wants?
A: The Operator is not all-powerful. On the contrary, its hands are in fact extraordinarily tied, because the City Operator is bound by the Citizen Contracts it signs with the residents, which substantially limits what it is allowed to do. Furthermore, unlike in constitutional systems, Citizen Contracts in a Free City are adjudicated by independent arbitration underpinned by the threat of foreign asset seizure under international commercial law, binding the Operator even further.
The City Operator could still theoretically choose not to honor its contractual pledges. However, Free Cities are territorially small units in a world of endless other options. As a private company, the Operator’s foremost priority is to ensure the continued profitability of the city. Since a Free City is only profitable when it is attractive to prospective citizens, its business model relies on it having a spotless reputation. If the Operator were to display any kind of bad behavior towards its citizens, it would damage its reputation and along with it the ability to do future business.
This is not just a theoretical possibility. There are many real-world situations already in existence that operate on these principles—for example in the case of cruise ships on the high seas or secluded holiday resorts. In some such cases, those in charge actually have more extensive powers than an Operator of a Free City (e.g. the captain can detain anyone on board at will). Nevertheless, though such situations are commonplace today, abuse of any kind is extremely rare because it hurts the respective companies’ commercial interests.
By having a contractual relationship with each of its residents that clearly sets out the rights and obligations of both parties, the Operator of a Free City is much more restricted than a typical government in how it can behave towards its citizens. Furthermore, by guaranteeing its citizens complete freedom apart from the rules of living together specified in the Citizen Contract, the Free City provides an unmatched level of individual self-determination. If democracy is to be understood as an ideal of self-government, Free Cities are trail-blazing a new, improved form of democratic governance.
CARING FOR THE DISADVANTAGED
Q: Without a welfare state, how will a Free City deal with the most vulnerable in society?
A: Charitable giving is a huge global industry (worth hundreds of billions of dollars annually). People like giving to people in need and the vast majority find it important to care for those left behind through no fault of their own. However, in the past century welfare states have displaced much of this industry, especially in its local or domestic form. With welfare states in place, many people are absolved of the responsibility they otherwise naturally feel towards the disadvantaged, because “the state takes care of it”. However, state-based social support systems do not work as well as advertised. They are usually not effective at alleviating poverty or helping the disadvantaged. Some even argue they actually worsen the problems they are supposed to solve.
In the absence of a state-based welfare system, people start feeling the heat of social responsibility once again, and are willing to go to great lengths to offer their aid to those who need it. This used to be the case before welfare states were established, when society was bound together by a vast network of charitable organizations, even though the average person back then was immeasurably poorer than today. With the rise in wealth and the standard of living since then, our instincts to care for one another have much more space today to exert themselves. Free Cities help this by leaving as many resources in citizens’ hands as possible by keeping governance fees low, rather than siphoning off a large proportion of citizens’ income – some of which could otherwise be spent on charitable projects – through taxation.
Finally, it is important to note that, “How would the disadvantaged be taken care of?” is usually one of the very first questions asked by anyone who hears about alternatives to today’s states. It is an issue that is of paramount importance for almost everyone. This fact shows us that it is not political structures that provide social support—it is really the general population through its almost unanimous public opinion. In the absence of a welfare state, this public opinion would be strengthened even further, creating an unprecedented boom of private charity and solidarity with the unfortunate and the vulnerable.
NOT ONLY FOR THE RICH
Q: Are Free Cities only for the rich, excluding the poor and the socially disadvantaged?
A: The goal of the Free City is to create the best living standard for all. In doing so, they are open and welcoming to anyone who is looking for a better life and willing to work to achieve it. Free Cities can be wide and varied, with different cities attracting different industries and ways of life. With many private cities around the world, everyone will be able to find a place that suits them best and will be happy to accept them.
There is always a section of society that will be dependent on the help of others due to disability, illness, or other factors beyond their control. Such people have always had to rely on the generosity and charity of the public at large. However, when such charity is mediated by the state through one-size-fits-all solutions, these socially disadvantaged individuals often fall through the cracks and are left behind. In contrast, with their innovative model of governance focused on liberty, consent, and efficiency, Free Cities and their citizens will be able to take much better care of those who need their help.
NO LACK OF SOLIDARITY
Q: Is the idea of Free Cities just based on egoism without any regard or solidarity with the rest of society?
A: Free Cities give people an additional option for how they can live their best possible lives. Even in today’s world, many people end up leaving their places of origin for very good reasons in search of a better future. We cannot judge them for that. The desire to improve one’s lot is not only legitimate, it is the cornerstone of all human progress. By working to make one’s life better by peaceful means, one often ultimately ends up benefiting the whole of society in unexpected ways. Those who choose to live in a Free City have decided to join a new kind of community, one towards which they will likely feel a greater deal of solidarity and belonging than the one they chose to leave behind. In a world where people’s native affiliations, determined by the accident of birth, are often troublesome and unhappy, Free Cities help foster a sense of local community and solidarity by providing new ways of living together according to one’s own choice.
NO REGULATORY STATE, BUT NO EXPLOITATION
Q: One of the central functions of the traditional state is to establish a system of regulations that protects society from would-be exploiters. How do you avoid such exploitation in a Free City?
A: In a Free City, there is a civil code that always serves to protect the weak. In addition, a contractual system of governance ensures that political structures cannot be captured by the rich and powerful and used to grant them legal advantages at the expense of the weak and the poor, which is often the case in conventional political systems. Free Cities, therefore, provide excellent foundations for people to grow and prosper. Such cities will also be much more pro-social. A social safety net is best provided by civil society through voluntary means, in contrast to state-provided coercive welfare systems that produce systemic and widespread harmful anti-social side effects.
Free Cities are based foremost on the ideals of consent and voluntary participation. Only those who wish to live or work there strongly enough to actually make this step will become part of the community of the city. Such a decision is made with full prior knowledge of what kind of policies and protections the city offers. That means it does not make sense to speak of any kind of exploitation unless we deny the right of individuals to make their own decisions about their lives.
Many could and do argue that most people are not in a position to protect their own personal interests. In doing so, they implicitly claim that they themselves would be in a better position to do so instead, and would therefore have the right to patronize others and to make decisions for them without their consent. However, either each individual has the right to decide for themselves or they do not and are therefore subjected to the decisions of someone else. In reality, far from coming from a humanitarian place, such claims are often just bids for power over others in order to exploit them. Free Cities firmly reject such an approach and in doing so, they prevent the most common type of exploitation in today’s world.
Q: Won’t Free Cities just lead to rich people fleeing into their own offshore guarded mansions and evading their social responsibilities?
A: Rich and poor, Jews and Japanese, coders and artists, and all other groups of people, down to each individual, have the right to decide what kind of company they want to keep. Forcing them to do something else would be totalitarian. Systems that threaten their inhabitants with violence or expropriation if they try to escape are the undisputed villains of history that never last in the long run.
Labels such as those mentioned above are usually just descriptors, but they can morph into social groups, cliques, and identities instead if there is a lot of tension or danger in society and people start fearing their neighbors. Unhealthy societies divide people into such categories and pit those against each other by means of toxic politics. Free Cities aim to avoid such pernicious relations completely. Their Operators have no interest in stirring up hatred among social groups. Quite the opposite—it is in the best interest of the City Operator if people from all walks of life live in harmony next to one another in their city. Free Cities treat each of their citizens as a valued customer, irrespective of their personal or cultural characteristics.
When it comes to those who have been more fortunate in their lives than others, it is easy to misinterpret the essence of what the term “social responsibility” really implies and what it cannot justify. Social responsibilities are real moral obligations, but abstaining from aggression is a much more fundamental moral obligation, so one has no claim to morality if he or she resorts to enforcing the former through institutionalized threats of violence.
Finally, it is worth reiterating that if people are happy where they live and feel part of the local community, they are much more likely to help their fellow man in need. In providing a good place to live based on shared beliefs and ambitions, Free Cities will be helping to turn the world into a more genuinely pro-social and compassionate place.
RESIDENT FEE VS. TAXATION
Q: The citizens of the Free City still have to pay regular fees to the City Operator. How is this any different from taxation?
A: In conventional political systems, citizens have to pay taxes without having corresponding rights to any benefits from the state. It is legal for the state to unilaterally decide to withhold its payments, assistance, or services from its citizens at any time. In a Free City, the resident’s payments and the City Operator’s services are inseparably tied. On the one hand, the Operator can demand the payment of the contractual fee from the citizen. Consequently, however, the citizen can in turn demand the Operator fulfill its obligations, such as by guaranteeing security and providing a functioning legal system. If the citizen feels like the Operator is not holding up its end of the Citizen Contract, he or she can sue the Operator for damages.
For example, if the Operator guarantees security and a citizen becomes a victim of street crime, the citizen is in principle entitled to compensation from the Operator in addition to restitution by the victim because, by allowing any crime to take place, the Operator has failed to uphold its end of the Citizen Contract.
Last but not least, perhaps the most important difference between the contractual fee and taxation is that the amount to be regularly paid is specified in advance and it cannot be increased once both the citizen and the Operator sign the Contract. The City Operator thus cannot “raise the fee” as is standard practice with tax hikes in conventional political systems.
FREE CITIES VS. CITY-STATES
Q: There are already city-states like Monaco or Singapore in existence today. What makes Free Cities different from those?
A: Though they are small and distinctive in some respects, the political structures of city-states in existence today are very similar to regular nation-states. They still have parliaments and governments that can legislate and enforce rules and laws at their discretion without the consent of the cities’ inhabitants. From a legal point of view, residents of these city-states are still more like subjects than customers. This lack of individual rights enforceable against the government means that even in these very successful cities, the number of regulations and other restrictions on liberty keeps growing just as it does in other states.
Politics in a Free City is completely different. In fact, it is devoid of politics. The rights and obligations of both the City Operator and each resident are clearly laid out in a transparent Citizen Contract that cannot be unilaterally changed. Residents have a legal claim to the Operator’s obligations, and any disputes that might arise are adjudicated by an independent, third-party arbitration court. Apart from the few residents’ duties enumerated in the Contract, the Operator has no right to intervene in the resident’s life. In fact, doing so would be a breach of terms for which it would be fully liable in court. With such a contractual governance system in place, residents of the Free City are not subject to political whims. Instead, they are free to live their lives as they see fit as long as they do not harm others.
FREE CITIES VS. CHARTER CITIES
Q: What makes Free Cities different from the Charter City model, originally introduced by Paul Romer?
A: Charter Cities and Free Cities share some common characteristics but also differ in certain important ways. A Charter City is a special zone within a country that is granted separate legislative powers via a charter that establishes the city and its status. This allows such a zone to become a partially autonomous territory that is able to set its own targeted policies aimed at growth and prosperity, which is often not feasible to do in a nationwide setting.
Free Cities are likewise special, partially autonomous jurisdictions. However, one of their central characteristics is contractual governance. In a Free City, each resident signs a personal Citizen Contract with the City Operator, which forms the basis of the relationship between the two parties—a sort of personalized constitution or a written, explicit social contract. Such a system of governance is not present in regular Charter Cities, which instead feature a traditional municipal government. Therefore, while Charter Cities can offer more regulatory flexibility and adaptability compared to their mother states, their citizens do not enjoy the same improved legal status and stability as do the residents of Free Cities.
FREE CITIES VS. PROSPERITY ZONES
Q: What is the difference between the two main models featured on the Free Cities website—the Free City and the Prosperity Zone?
A: All Free Cities are Prosperity Zones but not all Prosperity Zones are Free Cities.
Prosperity Zone is any enhanced Special Economic Zone that features a certain level of regulatory autonomy and contractual governance. Due to the unique nature of each case of negotiations, Prosperity Zones exist on a spectrum from traditional SEZs to full autonomy. The more extensive the arrangement concerning the Zone’s contractual self-governance is, the more it makes sense to speak of it as a Prosperity Zone.
Free Cities are those Prosperity Zones that enjoy substantial autonomy and contractual governance on the one hand and are focused on building the best possible place to live, not just on economic output, on the other. One of the associated criteria for a Free City is that it needs to have a residential population and the associated everyday amenities. For example, a Prosperity Zone that developed only into an industrial park would not qualify as a Free City.
FREE CITIES AND DISNEY WORLD
Q: Is Disney World in Florida close to an example of a Free City?
A: Contrary to popular perception, Florida’s Disney World is not an example of an independent city. The legal status it enjoys (or enjoyed until 2022) is known in the US as a Special District. The most significant feature of this status is that a given area is exempted from local ordinances. However, it still remains subject to all US State and Federal legislation. Though Disney World contracts external security services, its land falls within the jurisdiction of the local police. Furthermore, Special Districts like Disney World only exist at the discretion of the particular US State government.
Due to all these factors, the Disney World development cannot be considered independent or a Free City. It might be more accurately described as an example of a traditional public-private partnership. A more detailed explanation of Disney World’s status can be found here.
THE MARKET FOR GOOD GOVERNANCE
Q: Politics is not a market, just like there is no market for religion, love, or science. Therefore, how can you purport to solve anything by turning governance into a business?
A: People all over the world wish to live in a place that is governed well. They want rule of law, peace, stability, and freedom to build prosperity for themselves. This is a very real demand that is often not being met by existing political structures. Free Cities are a response to this demand—they offer an additional supply of what people already want.
Apart from ensuring security and a rule of law, the Operator of a Free City is not involved in people’s lives. It has nothing to say on questions regarding religion, love, or science. Those are areas of life in which people take part purely on their own initiative without the involvement of any political structures.
Finally, it might be the case that existing states cannot be successfully managed along business lines like Free Cities. That is why the Free Cities model involves building itself up from scratch instead of changing the political structures of any existing states or cities.
MONOPOLY ON FORCE
Q: The City Operator is a kind of monopolist, at least as far as safety is concerned. Does this not lead to the usual problems of monopolies, in particular to poorer quality at higher prices due to a lack of competition?
A: In its position of being a use-of-force monopolist, the City Operator is in the very same position as all existing states. If this objection is levied against the Free City, it has to be levied against all other states just as much, if not more so.
That being said, there are several redeeming factors that make it much less likely for a Free City Operator than its counterparts elsewhere to abuse its monopoly position. First and foremost, a Free City is small in territory, which means that its inhabitants are much more mobile, should any services provided be inadequate or inferior to an alternative location. This puts considerable competitive pressure on the City Operator, whose business model is reliant on the attractiveness of the city to both existing and prospective residents.
Second, the fees that the citizens pay to the Operator are contractually fixed and cannot be unilaterally raised. This is assured because the Free City Operator does its business under existing international commercial law, meaning its foreign assets can be seized by the injured parties if it does not follow through on its contractual obligations. This would be the case if the Operator demanded extra payments for its monopoly-based services.
Unlike in conventional political systems, the provision of high-quality services for an affordable price is at the heart of the City Operator’s business model. It is only a monopolist in a limited sense of the word since it competes with all the other established jurisdictions in the world as well as with other Free Cities. Though monopolies always bring potential problems, the institutional structure of Free Cities ensures that in this case such problems are well mitigated.
THE NEED FOR RULES AND REGULATIONS
Q: A complex world needs a complex set of rules and regulations to ensure that society can flourish. Without such rules, how can Free Cities be a viable alternative?
A: Today’s world suffers from rampant over-legislation. One of the most basic legal principles says that one has to be able to know and understand the rules they are supposed to follow. Unfortunately, that is not at all the case at the present. No one even knows how many different rules and regulations there are in any given society, much less being able to remember or understand them. This is an appalling situation that leads to widespread uncertainty, instability, and arbitrary or punitive enforcement.
The goal of Free Cities is a return back to normal. They present a simple, robust legal framework that is comprehensive but not complex. The simpler a legal system is, the easier it is to avoid unexpected side effects, loopholes, and space for abuse in the first place, rather than trying to fix them by creating even more laws and regulations.
There is immense potential in the collective well of human knowledge which is decentralized and dispersed among countless diverse individuals. Free Cities provide a way to harness this knowledge by offering a simple regulatory framework that leaves enough open space for spontaneous order to emerge.
NO DANGER TO EXISTING SOCIETIES
Q: Are Free Cities a threat to existing societies?
A: Free Cities do not seek to directly challenge or dispute the sovereignty of existing states and countries. In fact, if they want to be successful, they must cooperate with states on friendly terms to foster trade and productive peaceful relations. That being said, if there were many Free Cities in the world, not only would their existence not pose a threat to existing societies, it would be actively beneficial to them. Political power anywhere is ultimately only kept in check by outside competition. With many Free Cities around, everyone would be much more free to choose where they will reside and what kind of life they want to live. This, in turn, would force existing political structures to behave “better”, to provide higher-quality services to their citizens, and to refrain from persecuting or actively harming them. Far from being a threat, not only do Free Cities create freedom and prosperity for their own citizens, but they also indirectly benefit societies and individuals around the world.
BENEFITS TO EXISTING STATES
Q: Why should states ever decide to partially abandon control over part of their territory? Which laws of the state would continue to apply and which would be repealed in a Free City?
A: Existing states can only be expected to support the formation of a Free City if they stand to benefit from it. And they do! If we look at existing successful city-states like Hong Kong, Singapore, or Monaco as examples, we notice that cordons of densely populated and prosperous areas (compared to the rest of their respective countries) have formed around these city-states. The inhabitants of such “wealth belts” often work in the neighboring city-state, but pay income taxes in the motherland. If such developments take place in a formerly structurally weak or completely uninhabited area, as is often the case in practice, the Host State stands to reap immense benefits from hosting a Free City on its territory while not being itself exposed to any risks whatsoever. For the Host State, this is a golden opportunity.
If a Free City can be expected to provide such substantial benefits to the Host State, it would be ideal if it could enjoy complete legal autonomy in return. However, for practical and political reasons, this will not always be possible to the full extent. Ultimately, then, what degree of autonomy any given Free City will actually enjoy is a matter of case-by-case negotiation with the Host State.
NO FREE-RIDING ON EXISTING STATES
Q: If Free Cities rely on the use of military protection and infrastructure of the Host States surrounding them, aren’t they just free riders that couldn’t exist and survive on their own?
A: Almost no state in the world today is truly self-sufficient. They all rely on trade with one another for goods and services that would be too expensive or impossible to produce domestically. Similarly, if a Free City uses any services provided by the Host State, such as infrastructure or military protection, it is expected to provide something in return. This could be as straightforward as payments to the Host State, or the Free City could offer the Host State some of its own unique services in return.
In addition, if a given Free City is particularly successful and grows considerably in population, it will likely build up its own complete infrastructure over time, much like Singapore has done since its independence.
Q: Who can immigrate into a Free City, and under which conditions?
A: The City Operator decides who can enter the city and live there. One of its main responsibilities is to ensure the peace and safety of the existing residents. Immigration conditions will therefore reflect this goal. For example, known serious criminals, ex-dictators and the like will not be welcome. If someone’s primary goal in life is to undermine the ideas and the order on which the Free City is built, such as radical communists or people who want to impose their religious ideas on others, they are likely to be turned away as well.
With such exceptions, anyone who can support themselves and who accepts the basic rules of life according to the Citizen Contract should be allowed to immigrate. These basic rules include the payment of the contractual fee to the City Operator and some elementary rules of conduct, which can differ with each city. Above all, in a Free City, everyone can do what they want, as long as they do not interfere with the equal rights of others. However, there is no right to live at the expense of others, and every legally competent resident is responsible for the consequences of their own actions.
Q: If Free Cities offer such high-quality services, who will be able to afford to live in them?
A: Residents of the Free City pay the City Operator fixed fees for a mandatory basic service package that includes security and a court system. In most cases, the price for such a package should not be more than a thousand euros per year. Even if social security is added on top, a few thousand euros per year should suffice. That is affordable for most people, especially given how much of their income is usually lost through taxation today. In a Free City, there are no mandatory payments apart from the fixed-price basic package. Its inhabitants will therefore be freed of a considerable burden they might have been living with elsewhere.
The funds that individuals are able to save are thus available for any other uses, such as one’s own health, retirement plans, or membership in mutual-aid institutions, as well as education for one’s children. A Free City is likely to be a hub for innovation in these areas, as it offers considerable incentives for companies, startups, and creative individuals to live and do business in them.
Far from being only for the rich, who already have plenty of existing attractive places that cater specifically to them, Free Cities are a concept that can make the biggest difference to capable low- and middle-income earners who are looking for a way to make their lives better, happier, and more prosperous.
CHANGES IN CITIZENS CONTRACTS
Q: If the relationship between the City Operator and the resident is set out in a fixed Citizen Contract, how can adjustments be made when needed? Don’t contractual changes become inevitable at some point?
A: Contract changes and adjustments can be decided upon by arbitration tribunals and courts, and they can do so while ensuring a reasonable balance of interests of the parties involved. Such adjudication can be done within the common law framework by making use of fundamental legal principles that have been in force for centuries. Even in today’s civil law systems, for example, some of the basic legal principles still correspond to those of Roman law from more than two thousand years ago. This would not change in a Free City.
Sometimes, new and unpredictable types of individual or business relationships can arise due to technological or social development. In such cases, the emergent rules of conduct are likely to be in line with the interests of the public in the first place without any need for the intervention of case law or contractual amendments. There is plenty of historical precedent for this: for example, we could see such a progression in how internal regulations in the credit card industry evolved to prevent fraud.
Finally, new citizens can be offered different Contracts than existing residents. In this way, a new order is gradually and successively being created without disenfranchising anyone or breaching existing obligations.
All of these solutions notwithstanding, the problem of amending Citizen Contracts is nevertheless a valid concern, and as such, it is addressed in more detail in Chapter 15 of Titus Gebel’s book on Free Cities.
ENFORCEMENT AGAINST THE CITY OPERATOR
Q: In a Free City, which enforcement mechanisms do residents have available against the City Operator? For example, how can court rulings and arbitration awards made against it be enforced?
A: In today’s international commercial law, those who have a title against a foreign state that is unwilling to pay have no brute-force means to enforce it, but they can try to seize the assets that the state concerned holds abroad. The same applies to the Operator of the Free City, who would be putting its foreign assets at risk by not complying with contractual obligations and court rulings.
Looking at the issue from a different point of view, the Operator of a Free City has a strong incentive to follow through on its obligations and contracts. If it did not, it would quickly lose its reputation for reliability and stability, which is the cornerstone of its business model. Reneging on one’s contractual obligations is the fastest way for a City Operator to ensure that it goes out of business forever.
Q: How are Free Cities financed and how are they financially sustainable?
A: In an established Free City, citizens pay an annual contractual fee in exchange for which they are guaranteed security, a legal system, and in some cases also certain infrastructure. All other services are provided by third parties that are fully in control of their own finances, and therefore these expenses do not enter into the City Operator’s accounting.
Such a stable equilibrium can only be reached above a certain number of inhabitants, because the marginal cost of security forces, dispute resolution services, and infrastructure starts high and decreases with each additional citizen. Therefore, it is expected that the City Operator will at first be significantly co-financed by real estate sales. As the city grows and becomes prosperous and in demand, real estate prices rise and the City Operator can benefit from having made early investments into land in the city. As a result, most of the land is progressively parceled out and sold off, and the corresponding revenues can then be used to cross-finance other expenditures and citizens’ contractual fees can thus be lowered.
Q: It is inevitable that among many Free Cities, some City Operators will make bad business decisions and go bankrupt. What happens to the inhabitants of these cities and to their livelihoods?
A: In the business world, the process of insolvency enables a regulated and debt-free way to start over. The City Operator in a Free City is a regular company, which means that if it becomes insolvent or is threatened with insolvency, it can always be acquired by its competitor, some of its inhabitants, or all of its citizens as a whole (in a ‘resident buy-out’).
In the case of the Operator’s insolvency, the inhabitants of the city are not at all condemned to ruin. In fact, inhabitants of current bankrupt cities and states would be in a much better position if these institutions could go through insolvency proceedings swiftly and efficiently, as will be the case in Free Cities.
COOPERATION ON GLOBAL ISSUES
Q: How could global humanitarian problems such as environmental and climate protection be addressed in a Free City, given the political structure it has?
A: Though there are problems that are truly global in scope, most environmental issues are regional or local. A clean environment is one of the selling points of any quality-of-life-focused city, which Free Cities definitely are, and their internal policies are expected to reflect that. In addition, Free Cities or their individual residents who damage the environment of other countries can find themselves exposed to legal measures brought by those affected.
With regard to global issues, part of the rationale for establishing Free Cities is the principle that central planning is incredibly dangerous. Where universal solutions are truly warranted and desired, they can be reached through cooperation and without an overarching world government (as was the case, for example, with the restriction of chlorofluorocarbons, or CFCs). On the other hand, if some proposed solution is highly questionable, it is a good thing that there is no structure that can force all parties to comply.
For example, in 1972 the Club of Rome predicted that the supply of numerous metals would be exhausted by 1990. If the world had listened to this wrong prognosis, the rise of developing countries, which relied on the widespread use of these metals, would not have taken place. This means that billions of people would not have been brought out of poverty, and it is likely that millions more would have died unnecessarily due to artificial scarcity caused by central planning.
For this reason, it is crucial that there are small ‘Gaelic villages’ dotted around the world that hold differing views even on supposedly global issues. This is what Free Cities can be. They provide checks and balances to make sure that some deeply destructive course of action is not taken, or at least not universally so.
More information about this topic can be found in Chapter 23 of Titus Gebel’s book on Free Cities.
DEFENSE AGAINST FOREIGN AGGRESSION
Q: Won’t Free Cities just be occupied and reclaimed by the Host State at the first opportunity? They have no chance to defend themselves against much bigger powers.
A: Raw military power is far from the only way of defending oneself against others’ possible aggression. There are existing states today that are tiny in comparison to their neighbors (some of them don’t even have standing armies), and yet, they are not annexed and conquered by them. This is because small units defend themselves very effectively by other means: by public relations, diplomatic ties to other states, creating commercial stakes that would make it costly for others to invade, and so on.
A Free City tries to utilize all of these methods of protection, which often prove more effective in practice than military might. In addition, the Operator has a contract with the Host State, which may include common investment protection clauses. This means that by occupying the Free City, the Host State would be exposing itself to harm and its foreign assets to seizure. Even in the absence of all other possible means of protection, this factor by itself is likely to put to rest any invasion plans.
There must be plenty of effective non-military ways to maintain one’s independence—otherwise, small states would not exist today. Avoiding annexation is the Free City’s foremost priority, and therefore the Operator will make sure to utilize all the best practices that already protect small states against powerful states in today’s world.
FREE CITY VS. SMART CITY
Q: What is the difference between a Smart City and a Free City?
A: These are two completely different concepts. The idea of Smart Cities is to utilize new technologies to improve the quality of administration or the daily lives of their citizens. A Free City, on the other hand, is defined by its unique political and governance structure. A Free City may therefore also be a Smart City, but it may not. What kind of technologies will be used by a given City Operator is irrelevant with respect to the idea of Free Cities as a whole.
MONEY AND CURRENCY
Q: Which currency will be used in Free Cities?
A: Free Cities should operate under the paradigm of free banking, meaning that in everyday business transactions residents and traders can decide for themselves in which currency they want to pay or be paid.
Since citizens of the Free City are obligated to pay their regular fees to the City Operator, the Citizen Contract will specify the currency in which these fees should be paid. A common main regional currency, one of the world’s reserve currencies or a decentralized form of money like Bitcoin is likely to be chosen in the agreement, depending on situational circumstances.
CITIZENSHIP AND PASSPORTS
Q: Do Free Cities grant their own citizenship status and issue their own passports?
A: No, because Free Cities are not independent, sovereign entities, but specific Special Administrative Zones within the territories of existing states. Each inhabitant of a Free City, therefore, retains his or her citizenship upon moving. Since they are not sovereign entities, Free Cities also only issue residence permits, not passports.
In the long run, however, it is not out of the question that some Free Cities could develop into fully independent city-states. In that case, in matters of citizenship, they would be in a similar situation as, say, Singapore or Monaco today.
WHY BE A FIRST-MOVER
Q: No one wants to move to a “city” that does not exist yet. How do you expect to get any such project up and running?
A: It is indeed easier to offer something that is already developed. However, a newly established Free City can offer many benefits to its residents right from the start.
For example, the city can offer job opportunities for people from neighboring areas, becoming first a hub of trade and business activity before growing into a population center.
On another note, many purpose-built family- or retirement-oriented resorts already exist around the world—away from population centers—and similar kinds of services and businesses could be established in a newly formed Free City.
A Free City can also be a refuge and a safe haven for people who wish to escape war, draconian public health measures, or other dramatic events rocking the world. In such cases, safety, stability, and good prospects for the future are among the most important things missing in one’s life that even a newly created Free City can offer.
Finally, if one believes that a given Free City is set for future success, being an early mover can be a golden investment opportunity.
These are just a few options for how a Free City could attract its first residents and start developing itself. The list is, of course, not exhaustive. One could imagine hundreds of opportunities that even a newly-founded Free City could offer people from all walks of life.
Q: What should I think about or consider before moving into a Free City?
A: Anyone who wishes to move into a Free City should think about how they plan to make a living. This is an individual decision that should not be overlooked. Enthusiasm for the project and a desire for freedom are not enough. Free Cities offer the freedom for anyone to build their own dream future as they see fit, but such dreams will not just materialize without work and effort.
Those looking for a certain brand of anarchist utopia might be disappointed in some ways. There will still be rules of living together and there will still be an Operator with the monopoly on the use of force to enforce them.
If you are still interested, sign up for our newsletter on this website. You will be the first to know whenever any new Free Cities projects are launched. If you would like to learn more about Free Cities and network with like-minded people, we will be delighted to meet you at our annual Liberty in Our Lifetime conference.
I WANT TO HELP!
Q: How can I invest my money in actual Free Cities projects?
A: As a not-for-profit organization, we do not facilitate investments into projects directly. However, you may want to reach out to TIPOLIS, a commercial entity working in the field of Free Cities, who will be delighted to give you more information about real-world commercial projects that are seeking investment.