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What Does Peter Thiel Think About Startup Cities?

Peter Thiel

He offers an investment hint for the right proposal

Written with input from Tom W. Bell.

In the Q&A following his public conversation with Tyler Cowen, somebody in the audience claimed that “the future of human evolution and how we think about how we structure society lies in privately funded, managed, for-profit cities built in partnership with, but independent from, governments today in the world.”

Then this person asked Thiel: “What do we need to do to enlist your powerful support in that view, in addition to getting introduced by someone in your inner circle?”

Thiel’s answer: “If we could reopen the frontier in geopolitical terms and find a way to really innovate on society, I think this would be a terrific thing to do.”

Okay, so far, good. He sees the value. Competition hastens innovation.

But, says Thiel:

Then the question ‘How does one actually do this?’ is very tricky. All the surface area on this planet is occupied. It seems very hard to get this to work. I know Romer had this experiment with these city-states in Africa. I think it was prohibitively expensive. It could never really quite get started.

Surely Thiel and others are aware of the startup cities projects being launched in Honduras, thanks to that countries ZEDEs legislation, which enables the development of special economic zones, similar to what China has done.

So how much would Peter Thiel be willing to invest?

You need to have some version of where this would work and you could get started with a budget of let’s say less than $50 billion. If you could give me a convincing way it would work for $50 million instead of $50 billion, I’d be interested.

But can the groups working down there make the $50 million case?

Well, here’s a glimpse of what’s possible:

In Sandy Springs, Georgia, the city is famous for outsourcing most of its city services to private concerns, they run a city on a shoestring. The place has a populations of about 100,000, and when they “privatized” (read: opened city services to bidders), the city saved hundreds of millions of dollars. All this is generally credited to a guy named Oliver Porter, who has been written up in the New York Times, and interviewed here.

Sandy Springs has an annual budget of about $90 million as of 2015 for all of its municipal services. Now that’s only one year for an affluent American city that exists in the context of state and federal largesse.

That being said, as a starting point for a back-of-the-envelop calculation, closing the gap to Peter Thiel’s inner circle might be in the realm of possibility.

Here’s Zachary Caceres talking Startup Cities in 2014 at Voice & Exit.

HT: to Tom W. Bell who has devised an open source legal code for Startup Cities called Ulex.

On June 20-21 at V&E 2015, Marginal Revolution co-blogger Alex Tabarrok will imagine a borderless world. Get your passes today.