Free Cities: A New Option for Expats?

by | Jul 4, 2022 | Blog

It will come as no surprise to readers of this article that the current situation is perilous in the US and throughout much of the western world. We are ensconced in debt and our political leaders are preoccupied with virtue signaling on foreign affairs rather than ensuring babies have the formula they need. Both major parties argue over the legitimacy of US elections. Any semblance of a solution seems unlikely.

What are we to do? Do we stay and fight for liberty? If so, how? Do we resign ourselves to staying put and voting for the lesser of two evils? 

Some who feel dissatisfied with their country’s system choose to move abroad in search of greater freedom and a community more aligned with their values. If you value a calm and stable albeit expensive lifestyle you might consider Switzerland. If you prefer a cheaper lifestyle where your hard-earned dollars go further you might look to Latin America. Would you prefer a country with relatively lax laws and regulations that are well-enforced or a country with relatively more burdensome rules that are simply not possible to enforce? It’s hard to find solutions that work for everyone. 

However, a new type of jurisdiction is emerging that may provide an attractive alternative for those seeking a “live and let live” environment absent of political drama. This kind of jurisdiction is called a Free City. 

The concept of Free Cities is rooted in the idea developed by Dr. Titus Gebel in his book Free Private Cities: Making Governments Compete for You. For the purposes of this article, I will simply use the term Free Cities rather than Free Private Cities. The broader term Free Cities includes other liberty-focused governance models such as Prosperity Zones, Charter Cities, (some) Special Economic Zones, semi-autonomous regions of nation-states and intentional communities. In future articles, I will highlight the key differences between these structures but here I’ll discuss the topic using the broader term Free Cities.

Free Cities are jurisdictions within an already existing nation-state that allow for entrepreneurial action in the domain of government. Governments are in the business of providing the rules and regulations that the residents have to live by. Proponents of Free Cities argue that government services should be treated more like the services we acquire from private businesses in industries such as electronics, food, construction, and clothing. They argue that services normally associated with government – like infrastructure, policing and legal arbitration – would be provided more effectively through market mechanisms, where citizens only pay for the services they want.

Today’s Western world prides itself on its democratic systems of governance. However, if the democracy is defined as “self-governance”, then these states are not nearly democratic enough. If one-size-fits-all solutions have to be made for millions of people, there is a limit to the ability for any average person to influence outcomes at the nation-state level, and, consequently, there is little self-governance to speak of. 

We have seen a growth in the number of expats moving away from Western nations over recent years. Unfortunately for them, they must pick a new home from amongst the existing nation states, where not a lot of variety exists in governance. Some states have stronger rule of law and democratic processes, some are more dictatorial and some more kleptocratic, but the basic model of funding government services through taxation is common to all.

More democratic states seem to appeal to most, but even the highest-performing democracy is far from excellent at maximizing human freedom. Regardless of government type, free jurisdictions are in short supply.

Here are some reasons why Free Cities may prove more successful than conventionally governed territories: 

1. They Are For-Profit

Free Cities are trying to make money. To some, this might seem like a drawback — won’t they try to get as much money from their residents as possible via taxes or fees? Maybe, but they will have to outcompete current governance options to entice residents to move there. This can hardly be done by setting fees unreasonably high. At the same time, the profit motive makes Free Cities much more responsive to their residents’ demands. Free Cities can only succeed (and make money) if their citizens are happy and prosperous and their living environment is pleasant, safe, and well maintained.

2. They Implement Best Practices

Free Cities are not bound by arcane laws, bureaucracy, and the various geopolitical arrangements that existing governments must navigate. For example, Free Cities can follow the e-governance ideas from Estonia, the sound money policies of El Salvador, the ease of doing business of New Zealand or Singapore, police/security services from minimally invasive private security providers, and regulation and dispute resolution from well-developed Common Law countries.

3. They Are Small

This means they will need to be innovative and adaptive and we can have a range of Free City forms and structures. This will create more competition and the ability for residents to choose the combination of services and obligations they find most attractive.

While the idea of Free Cities is still in its infancy, there are already projects in existence that are putting elements of the model into practice. The best examples are Honduran Zones for Employment and Economic Development (ZEDEs). Although, unfortunately, the ZEDE law was recently repealed — meaning no new ZEDEs can now be created — the existing ones will keep their status for the foreseeable future. In fact, this is a very real exercise in realizing and learning about the robustness of Free City legislation in the face of uncertainty.

In Honduras alone, three very different Free City-inspired projects are ongoing, all operated by investor-owned companies. There are many people working tirelessly on projects like these to make sure that more Free City-aligned projects will develop worldwide in the coming years. 

There will always be challenges in negotiating the establishment of Free Cities with Host States. City Operators must create a win-win situation for the Host State in order for projects to be viable. However, as governments continue to struggle to pay off their debts, it seems likely they will come to the negotiating table looking for new ways to attract investment and spur development. The new Free Cities that emerge will present a genuine exit option for people who are frustrated by the lack of variety in governance and are seeking greater freedom.

I plan to write in greater detail in the coming months about projects and structures for Free Cities, and why I believe the Free Private City framework outlined by Dr. Gebel in his seminal work is the best solution.

If you are interested in learning more about the ideas discussed in this article then the best way to do so is to attend our Liberty in Our Lifetime conference, taking place from 21-23 October in Prague. The Free Cities Foundation is arranging an exciting three-day program of talks, seminars, and networking events exploring how new communities, financial technologies, and innovative education products are supporting individual sovereignty. Find out more about the conference and get your tickets here. Use my promo code Alex to get 15% off tickets when checking out via Eventbrite.

This blog post is an amended version of an article originally published in Escape Artist Insiders Magazine in June 2022. Visit their website for more articles, information and advice on becoming an expat or digital nomad.