The Localised Dilution of Resources: A look at Paul Romer's 'Charter City' Concept

This is a TED Talk by Paul Romer, a professor who left his job at Stanford to pursue his very revolutionary idea of the ‘Charter City’. In this talk, he emphasises on the power of rules, and how they guide the technology which it needs to actualise ideas. This he conveys with the following image.

Ideas

Now, rules are the little builders that erect walls within a system, the walls that will bring to life guiding paths for data to move in and out. They specify what can happen and what can’t. With the right technology, what rules can do is not only bring to life ideas – which they make possible because they bring to life the goals that the idea has in mind – but also behave as administrative interfaces between the intelligence that has put them in place and the machinery that will do the manufacturing. For example, in a car, the gearbox behaves like a rule that creates smaller rules. The engine of the car produces power which is conveyed to the wheels by means of a crankshaft. By bringing in the gearbox, I am able to enforce a set of rules in the system. If I now set the gear to ‘R’, the system will deliver outputs of a different kind by moving the car backwards.

CAR = ENGINE + GEARBOX + WHEELS

Similarly,

RULES = BEHAVIOR + INTERFACE

In essence, they govern systems by enabling the incorporation of ideas in the working machinery.

When Romer talks about the good rules and the bad rules, I believe that he is talking about the behavior of any rule in general. A good rule is that which makes the car move backwards when the gear is set to ‘R’ and forward when set to anything else. A bad rule can either be a car that doesn’t move when a gear is changed or that which behaves in opposing manners.

That being said, I was thinking of my ocuntry, India, and how these good rules and bad rules can be identified within its administrative cogs, and how those Charter Cities can be brought to life. Because, just as much as Romer points out to the examples of North and South Korea, and Cuba and Canada, he is essentially pointing to regions in the world where neighboring populations have access to disproportionate amounts of resources because of a change in leadership.

Let me establish the analogy to India here. In India, the nation is divided into little states (on a linguistic basis) each of which has its own little government and a Chief Minister at the helms. Therefore, different states have different policies of governance. This means that they have different rules. This disparity, to note, is lessened by the fact that the central government is usually a coalition of these smaller state parties. But that doesn’t change the fact that when I cross the border from Tamil Nadu into Kerala, I’m exposed to (possibly) the same resources but in different amounts because of a change in leadership.

Let me question myself at this stage.

1. What are the problems I see? To answer this, imagine a vector field that illustrates the policies of the different states. Extrapolated on the India map, they would be a set of arrows pointing in different directions, some similar, representing their individual goals. If two arrows point in opposite directions, they don’t necessarily different goals, but different target groups. For example, Gujarat may target the farmer more than Rajasthan, which will eye the urban crowd. Although they do aid the nation from different directions, this fragmented governing as I see it has one pro and one con.
   1. Pro: With leaders governing smaller and smaller pieces of land, they are able to manage resources better than just one person and one party at the top.
   2. Con: Sometimes, resources are spread across borders and it may be beneficial for a region in particular to be governed in a specific way.
2. What are the bad rules? The bad rules I choose to see are with respect to this fragmented government policy of the nation.
3. What are the outcomes of these bad rules? As Romer says in his talk, villages are too small to experience the benefits of a good business and nations are too big. What is of just the right size is the city. In the Indian political context, when a state assumes the administrative parenthood of a city, it gives rise to a mismanagement of resources. Let me elucidate thorugh some points.
   1. Imagine a state that has a political capital and a commercial capital. Now, suppose that the state is so large that close to 95% of its population resides in small villages.
   2. A party gets elected to govern the state by a mostly rural turnout. Therefore, it is possible that the party that has come to power would have promised benefits for the farmer more than the software engineer.
   3. Now, the state can either be aligned with the central government’s interests or opposed to it.
      1. If aligned, then a nationalised subsidy for the farmer will be compounded by the state’s interests.
      2. If opposed, then the state will turn down the nationalised subsidy and bring into picture its own. Result? The state is wasting its resources.
   4. This localised policy shift will have two outcomes of its own.
      1. If aligned, the farmer will be receiving twice as many benefits as the software engineer.
      2. If opposed, the software engineer in the state will be moving at a pace different from a software engineer elsewhere in the nation.
   5. This particular scenario is quite relevant I would say to the current Indian sociopolitical scenario. Therefore, what the fragmented governance is giving rise to is an uneven utilisation of resources that in a region throughout which the resources are spread out – a localised resource concentration/dilution.
   6. The ultimate loser is the city. Since it is a collection of humans, the value of the city itself is derived from the capabilities of these people. When Romer says that the land value increases because the city’s inhabitants are earning more, it actually means that the city – through its location and other properties – has enabled its people to be like that. In the scenario I detailed out, the urban population is either exposed to a disparate quantity and quality of resources or does not avail them at all.
4. What is my solution? The set of bad rules that I attributed this problem to was the usage of a fragmented governing system. My solution is to fragment the already existing pieces into even smaller ones. And before you think I’m an idiot, let me tell you why that solve some problems.

Even though close to 64% of the Indian population is engaged in agrarian activities most of which falls into the rural category, it is the cities that make a difference. With the amount of data that is sent in and out of them, a city makes itself relevant by making sure the data comes from and reaches the right group of people. For starters, think of the two technologies that have substantially increased the nation’s crop output over the last 10 years.

The first was the launch of the INSAT weather satellite. A look at the following table will give you an idea of the benefits of the launch – which was a very important outcome of the utilisation of urban solutions.

Economic Benefits		Rs. Millions
	Program	Nature of Benefit	Estimate from Case Studies	Potential Benefit to the country in the Long-run
1.	National Drinking Water Technology Mission	Cost saving due to increase in success rate	2,560 (5 States)	5,000 – 8,000
2.	Urban Area Perspective / Development / Zonal / Amenities Plan for Cities / Towns	Cost saving in mapping	50.4 (6 Cities)	16,000 – 20,000
3.	Forest Working Plan	Cost saving in mapping	2,000 (200 Divisions)	11,860
4.	Potential Fishing Zone Advisories	Cost saving due to avoidance of trips in non-PFZ advisories	5,450	16,350
5.	Wasteland Mapping: Solid Land Reclamation	Productivity gain	990 (UP)	24,690
6.	Integrated Mission for Sustainable Development: Horticultural Development in Land With and Without Shrub	Gross income	Rs.0.20 to 0.40 (per hectare)	13,000 – 26,000
7.	Bio-prospecting for Medicinal Herbs	Value of Indian life saving drugs		800

(From http://epress.anu.edu.au/narayanan/mobile_devices/ch10s06.html)

The second technology that came to the aid of the farmer was the combined harvester-thresher, which reduced the duration of labor that was required to harvest and thresh a piece of land by substantial amounts.

In this fragmentation process, the nation could be divided down to form clearly discernible urban and rural regions. As I said earlier, it is important for the cities to be governed similar so that all cities in a particular region are availed similar qualities of the similar quantities of resources. Does this look like Communism on a broader scale? Perhaps. But what it ensures is that, with the democratization of information exchange through urban areas, there can be greater coordination towards acheiving common goals. At the same time, rural areas, specifically the agrarian ones, will receive greater and greater concentrations of useful information instead of what just the state has decided to give them.

In this fragmentation, which I call the second-degree fragmentation (SDF), the danger of there arising a difference in policies as a result of the installation of different state governments is eliminated. Secondly, the Charter Cities that Paul Romer suggested could be translated into this SDF picture in that all cities work as one super-city in terms of resource management and policy establishment.

I have two concerns at the end of this post.

1. With the current system set so firmly in its ways, bring in such a massive change is quite impossible. Therefore, if anyone has any such comments to put forth, please don’t do so. Instead, what I’d like to hear about is its theoretical validity.
2. I have not studied this subject (yet). There’s still a long time to go for me to be there. But before then, if you have anything to suggest or criticise (constructively), let me know.

Welcome to the city

When you look at a city, it’s like reading the hopes, aspirations and pride of everyone who built it.

– Hugh Newell Jacobsen

There are two opposing schools of thought popular amongst philosophers called teleology and metaphysical naturalism. While the former dictates that we have eyes just to we can fulfill the purpose of sight, the latter has us believe that we can see because we have eyes. If one were to disregard both and instead notice the importance paid to the relationship between cause of effect, one will consequently observe that cannot exist without the occurrence of the other. It is the same with the wishes of mind and the desire it manifests in out actions. Whether or not we choose to understand it, has been present for eons and will inevitably persist. This has been evident ever since mankind, as we understand it be in form and function today, began to group itself into small communities that soon proved to be the fundamental and formative units of civilization. In what can only be termed as a systemic progression that involved man utilizing the natural resources around him, similar communities, which evidenced the possibility (or, to be more optimistic, the presence) of a common purpose of humanity itself, began to get drawn toward each other because of a few reasons. One of these included the fact that since each community had its own set of requirements in terms of the quantity and quality of those natural resources, those with similar demands had similar patterns of migration and settlement. This pattern was also the basis of the formation of little villages, towns and, eventually, large cities.

In India, the four largest cities of Delhi, Mumbai, Chennai and Kolkata are prime examples of such regionalistic concentrations. The population within these cities is very high, especially since the last three are coastal settlements. But once you step outside their limits, the density drops drastically. Although this drop in numbers could have been more gradual earlier on, the high slope indicates that people settling in such hotspots began to fare better economically and, thus, socially, which in turn led to a steady migration from rural to such urban settlements, which in turn led to an unnatural distribution of natural resources. For example, suppose a 1,000 nomads are looking for a suitable place to settle, when they chance upon a large lake. They decide to settle at one point, say Point A. At another point B, at the opposite side of the lake, there is a mountain range at the feet of which flourishes a herd of cows. The community chief decides to send a group of 200 people to B to hunt down the animals, skin them and put them up for trade. The 200 then proceed to settle down at B since it is a more convenient option. Now, there is a possibility of there emerging a propensity amongst those at B to trade their valuables from B itself instead of sending them down to A and then waiting for the return of the caravans. Such a decision seeming a logistically enhanced one, the settlement at B will now exhibit greater and perhaps accelerated growth rates. At this point, those from A will abandon their homes in favor of moving to B. As the settlement grows larger, the group will now, as a second step, seek to minimize the amount of inconvenience tolerated in the procurement of resources. Sitting at B, the people will now travel a particular distance from B, gather the resources and then return home. Since traveling longer distances entailed a greater number of inconveniences, the density of a particular resource will decrease exponentially along a radially outward direction beginning from the heart of the settlement.

Graph depicting density of resources

(The curve will climb up again, exponentially or not, once the distance from a particular settlement is large enough to ensure that no inhabitant will have ventured in those parts.)

Now, points A and B can be compared in real life to any one of the following pairs:

1. Rural and urban settlements: With the onset of industrialization, almost everything that man used – from the tools in manufacturing to the vehicles in procurement – leaped a giant leap from singular primitivism to a point where he could now put together different tools to make one ‘supertool’ that handled more than one job. With the forerunners being the automotive and shipping industries, other smaller manufacturers and, subsequently, their competitors were forced to switch to machine-labor. In the example above, the lake can be compared to the factories and warehouses that enhanced the availability of these machine parts.
2. Developing and developed nations: Similar to the first case, a developed nation has more resources – whether in terms of money or otherwise – to offer anyone who wants a shot at them. One good example would be how skilled software engineers from south India migrate to the Silicon Valley: the Indian has the skill, and the US has the resource.
3. At a simpler level, points A and B can be alternatively compared to summer and winter capitals of some states.

Now, at this point, cities employ the basis they have in the availability of resources and begin to flourish as economic hotbeds. By this, I mean that cities as a whole begin to realize the fluency its people will begin to have in terms of trading in resources other than the ones with which they established themselves. Up until this point in time, the inhabitants will have concentrated on developmental activities. Once it becomes evident that the resources circulating within the city have become self-sustainable, the limits of the settlement will begin to expand – in terms of size, population and, most importantly, as a new source of resources. Now, what will happen is something like ripples on water. This city will now behave like the lake, drawing skilled people towards it, simultaneously rejecting those who seem incapable of surviving in its environs (like the abandonment of A).

So, we have seen how a community is born, how it grows to become a city, and how a city itself begins to attract people from different parts of the nation. However, ultimately, what does a city represent in a non-utilitarian sense? How does it contribute to humanity as a whole instead of just to the nation that harbors it? If you go through the previous paragraph, you will find that the answer is simple. A city contributes to humanity as a whole not by giving away something that belongs to itself, but by manifesting the triumph that nestles silently in the nudges that it gives us when we think we have lost. In other words, a city is the first image that comes to mind when you might speak to me of humanity as a whole. When you might tell me that there are always some people who will find it in them to help me selflessly, I will think of a city first. In fact, when you live in a city, you will realize that it is just more than the shelter it first took form as. It transforms itself, blind to the eye and shielded from the piercing gaze of the mind, gradually consuming our sorrows for nutrition and purifying the air around us. We ignore it as it speaks of a mind of its own, and we shun it when it rains the day we leave for a different city, when the roads are bad, when we almost miss the flight we’ve to catch, when we finally board the flight and find that the journey has been delayed for an hour due to bad weather, when we land in a strange place later to find no friendliness lingering the air as it once did…