Terrorism, Foreign Aid, and
‘Free Cities’

The experts consider a novel proposal.


Last week on National Review Online, Newt Gingrich and Ken Hagerty proposed a free-market strategy to “subvert global terror by providing hope and opportunity in the Third World.” Could “Free Cities,” which take their inspiration from Hong Kong’s success, provide a market-friendly alternative to foreign aid as it is presently handled? And could they make a difference in the war on terror?

Freedom works: There’s probably no more powerful sentence in all of public policy. Freedom works to expand the scope of human activity, to allow people to explore their own talents, strengths, interests, and humanity. Not incidentally, freedom also works to build economic prosperity. Former House majority leader Dick Armey was certainly on to something when he named his new organization “FreedomWorks.”

So it should surprise no one that Armey’s revolutionary brother-in-arms, former House speaker Newt Gingrich, has come up witha new way to make freedom work around the world. He observes that freedom works very well for Hong Kong, which, despite its proximity to the Communist Chinese colossus, has used its treaty-ensured freedoms to become a remarkable economic and political success story. Gingrich’s notion is a simple one: If it worked for Hong Kong, it can work elsewhere.

Government-to-government aid cannot defeat the terrorists or even materially improve the quality of life of those trapped in poverty abroad; but what Gingrich calls “Free Cities” could do both. Updating Jack Kemp’s venerable idea of enterprise zones, he proposes that the U.S. negotiate bilateral treaties with receptive foreign governments to create designated pockets of political and economic freedom. Within these pockets, U.S.-style laws establishing economic and political freedom would be guaranteed for 50 years. The U.S. would teach and advise on how these systems work, and direct foreign aid toward these Free Cities. In turn, these cities’ more fertile environments and comparative advantages would lure foreign capital. The net result: pockets of prosperity based on economic freedom.

Free Cities would provide examples across the globe of the power of free peoples to prosper themselves and their communities. There is no better way, perhaps no other way at all, to defeat terrorism and government repression than with a plethora of examples of hope and freedom. Freedom works abroad, too.

J. D. Foster is Norman B. Ture Senior Fellow in the economics of fiscal policy at the Heritage Foundation.

The Free Cities idea is intriguing, as long as we recognize that today’s “free cities” are free-market, capitalist places such as Singapore, Hong Kong, or even some of the Gulf-sheikhdom urban centers, which are run largely on authoritarian principles, albeit not murderous ones of the sort we see in Africa and parts of South America and Asia.

But creating enclaves of free-market economics and constitutionally protected freedoms as atolls in surrounding seas of statism and autocracy, it seems to me, would entail some sort of transnational IRS/Amnesty International in order to ensure the compliance of what I’m assuming are not otherwise liberal societies.

And given that the U.S. is awash in debt, seemingly tired after two wars, and now more protectionist than free-trade in spirit, I wonder how willing U.S. private and public interests will be to invest time, capital, and labor in creating mirror images of America in places that otherwise have had very different cultural paradigms (e.g., a free Benghazi or Tirana).

I understand the ink-blot theory — that once these entrepreneurial zones get going, they will swell and others will emulate them — but in all candor I am not sure the U.S. has the will, resources, or skill, whether privately or publicly, to take something like this on.

If large swaths of Detroit are turning into urban prairieland as Stockton becomes a sea of foreclosures and New York capitalists face the prospect of 65 percent aggregate income, FICA, state, local, and capital-gains taxes (in addition to rising sales, property, and inheritance taxes), we might first try the idea here at home. How about a free New York, or a free Oakland?

– Victor Davis Hanson is a senior fellow at the
Hoover Institution, the editor of Makers of Ancient Strategy: From the Persian Wars to the Fall of Rome, and the author of The Father of Us All: War and History, Ancient and Modern.