Topias Realistic plans for an ideal city By Douglas J Shaw Copyright (c) 2005 Douglas J Shaw All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without the prior written permission of the Publisher. If you ask, though, he'll probably give you permission because he's quite relaxed about that kind of thing. Global Press Johannesburg South Africa dougieshaw@bigfoot.com ISBN 0 9533306 6 4 Printed in South Africa. Cover image by Christine Armstrong 072 375 6444 . CHAPTERS INTRODUCTION 1. CITIES AND UTOPIA 2. THE PRIVATISED ECONOMY 3. WHAT MAKES TAX FREE ZONES WORK 4. HIGH DENSITY/ SMART GROWTH 5. LEGAL AND CONSTITUTIONAL 6. THE INVESTOR 7. FINANCING 8. IT INFRASTRUCTURE 9. LOWERING BUSINESS COSTS 10. POVERTY REDUCTION 11. THE NUMBERS 12. MARKETING THE ZONE 13. THE TEAM Introduction This book is the story of how things can be better. It incorporates a lot of strains of thinking that individual disciplines have made and integrates them into a whole: A city called Libertonia, one that we expect to be built one day. There are 6 main planks to making the world a better place: 1. Free Market Economics: this makes everything better and cheaper and makes us free. The regression to having government using 50% or more of a nationals resources has to be reduced to tax levels of 2-3% with delivery never being done by government. 1 2. A legal system that supports this Wealth Maximisation 3. An urban planning model that incorporates both the insights of urban planning and a way of privately implementing them to synergise with 'Smart Growth" and create cities that are economically efficient as well as beautiful and environmentally friendly. 4. A use of IT to co ordinate the city and solve many existing problems and reduce many costs 5. Innovative ways to reduce the costs of business and thus the costs of everyone 6. Integrating this with development insights to ensure that this city is as powerful as it can be in lifting the poor out of poverty far better than outdated and destructive ideas like welfare, government action and hand outs. This book is called Topias. Utopia is the name for an idealistic scheme but one that cannot work in practice. It comes from the Greek words meaning 'no' and 'place'.2 It's no place. So I call it Topia because its 'place' not a 'no place', a practical, costed, thought- through scheme, that doesn't involved unworkable notions like socialism3 or agrarianism4. The reason its plural5 is that there isn't just one ideal there are many and with a few common successful elements as we explore here, there are an endless amount of different worlds we can create for the people of the earth. The future is not the monolithic world of social democracy or communism. Each city in the future will differ more from other cities than is the case today. I hope you enjoy Douglas J Shaw Johannesburg Gaberone Dubai 2005 SUMMMARY This research is the result of fifteen years of reading totaling more than seven hundred books on subjects related to some degree. It is also more than concepts, most of these ideas have been talked through with providers who have informed the process about how things work in practice. As a result we have agreements with more than thirty individuals and companies (some very large) who stand ready to actually deliver what we are suggesting here. This is a business plan of sorts not just a conceptual exploration. The city is legally a tax free zone. To attract investors it also must be immune from certain Acts in the host country. Particularly it must have flexible labour markets, the right for landlords to evict tenants who do not pay and a free telecoms/utilities environment. So the standard of living of the poor is instead improved in other far more effective ways. Everyone will be able to make as many telephone calls, either mobile or fixed line6 for $10 per month . Electricity will be less than a third of the usual retail price. Other bulk buying programs will reduce the average price paid for retail goods by 50%. The high density leads to lower costs. So clearly does the lack of tax on goods. See the relevant chapter for more strategies for saving people money. So the way people are uplifted is not by using restrictive laws which is highly counterproductive and simply means jobs for the poor are not won, but by improving the purchasing power of their incomes. Education in this kind of environment can be delivered in a highly technological manner which will ultimately make the The host country workforce highly internet literate. Without this legal status investors simply will not come and the project will not work. There are a number of other key 'deal breaker' criteria that are very important. One is the tax free nature. After thinking about this I am of the opinion that income tax, capital gains tax, corporation tax, etc should remain at zero as per the original proposal but that Libertonian companies pay the general duties to SACU as its contribution to the The host country revenue. It is suggested that since less radical attempts to attract investors have not been successful in The host country in the past even with some tax cuts ,that this supports the case that this more complete proposal is necessary. Furthermore if the project is to be sustainable the incentives have to be long term. We accept there are certain aspects of the local situation that affect the project. Not least the availability of funds with which to participate in joint ventures.. As requested, we have a few ideas on the joint venture concept. The city itself drawing upon the latest "smart growth" thinking in Town Planning and Architecture is very dense. This is not simply because we have limited land but because it enables us deliver many services to every class of person for an extremely affordable cost. This makes business profitable and also draws the poor out of poverty. Complying with WTO means the zone must not have specific subsidies, so it cannot be on the EPZ basis. The zero tax rate must apply to all companies are not to specific industries. This it core difference between our zone and the EPZ model So we recall the benefit to Africa of such a zone. Firstly it would provide a large number of jobs to Africa citizens, secondly everything that Libertonians buy from Africa will have been already taxed and thus will contribute to taxes, thirdly Motswana working in Libertonia will remit earnings back to Africa which will then be taxed as it is spent contributing tax to Africa, fourthly Libertonia will pay duties under SACU which will come to Africa, fifthly, if successful it will lead to more private funding for infrastructure in Africa, sixthly there will undoubtedly be greater investment in Africa as a whole and more tourist revenue, seventhly, all Africa companies that choose to operate in the zone will be more internationally competitive as a result. All will contribute immensely to meeting the targets for economic growth, reduced dependence on diamonds and other economic goals that you have set. Libertonia also sports certain unique features, these help to draw people there. There is a network of tunnels underneath the skyscrapers to contain pipes and cables, being highly dense, it is feasible that people can have their shopping delivered through this system. Roads in Libertonia are underground, all one way with no traffic lights only slip roads which means cars can move from one place to another much more quickly than in most cities. On top of the roads above ground is landscaped trees, grass and shrubs with cafes and shops on either side. Libertonia is not grey it's green. You can walk to mostly anywhere amongst pleasant surroundings. Some or all flats have not just their water but many liquids (coke, gin and tonic, soap, fabric conditioner, on tap- pay as you go. Privatised policing ensures that crime stays low and provides jobs for lots of people. In order to go forward from this point, we need to either pass the act and buy the land so we can fund this from selling the land on or if you prefer more details and action we can co ordinate a consultancy project that would involve commissioning professionals to produce still more detail and also talking to hundreds of multi nationals to get their views and sign up enough to guarantee the first stage of the zone. CHAPTER ONE WHAT SHOULD A CITY BE? This book is about a city that will be privately founded and managed for the benefit of private business and thus the creator of hundreds of thousands of jobs for poor people. Yet this is not completely without precedent. Many European finest cities were founded by private entrepreneurs and managed by their heirs. After the revolutions starting in 1789, many of these cities were appropriated by the new states and have since lost their innovative character. 7 Values Cities are not simply about economics and engineering however, good cities have a personality. As James Naughtie says, `a city must have a sense of itself, or it hardly counts as a city'. He looks for the personality of his city [Aberdeen]: warmth, granite city, close links to the countryside, enlightened civic leadership and so on.8 In Libertonia, our ideal city the values centre on freedom and on the absence of theft. When we speak about the absence of theft we speak particularly about redistributory taxation. This was thought in the past to reduce poverty. It is our view that the protection of property rights and the absence of 'theft' taxation reduces poverty more. Theories about Cities Cities have been seen as centres of vice or of freedom, or of social mobility against hierarchy. "9 Leonardo [da Vinci] envisioned a multi-tiered city, with three distinct levels corresponding to social position in much the same fashion as the concentric circles of Plato and Bruni or the segregated neighborhoods of Alberti. Luxurious houses, spacious walkways, and hanging gardens adorned the highest level, reserved for the "gentlemen" and the upper echelon; the middle range, with its canals, mass-produced houses, and broad roadways, served the needs of the working class; and underground waterways for the disposal of sewage and "fetid substances" composed the third and lowest level (Mumford 360). Like Filarete, Leonardo's city designs indicate a portrayal of the city almost as a living being, exhibiting "a characteristically organic sense of dynamic function" (Kemp 117). A heavy emphasis on circulation spelled the frequent intersection of pathways between these three levels and the efficient passage between them, as well as the separation of pedestrian footpaths from areas of heavy traffic (Kemp 117, Mumford 360). Leonardo also paid special attention to hygiene, placing his ideal city next to a fast flowing river so as to quickly rid it of sewage and outlining legislation to compel waterfront property owners to aid in maintenance of the canals (Kemp 117, Masters 43). Leonardo's ideal city was a thoroughly innovative concept which, true to Garin's interpretation of Leonardo, marked the first attempt "to survey and organize the natural forces of a whole region so as to serve human purposes" (Masters 43)." "Given these similarities of current trends to the Renaissance ideal cities, it is interesting and even amusing, to note the differences as well. For example, Sir Thomas More's Utopia, published in 1516, proposed the archetypal ideal city, whose citizens worked a mere six hours per day, devoting much of their abundant spare time to reading and studying (Mumford 326). Compare this model to that of the modern-day United States, where (between 1977 and 1997) the average work week surged from 43 to 47 hours, the number of employees working 50 or more hours per week jumped from 24 to 37 percent, and the U.S. overtook Japan as "the longest-working nation in the advanced industrial world" (Lardner 42). Coupled with accusations that "the young do not seem to read newspapers" and the fading popularity of pleasure reading, these statistics place the U.S. more than a little short of ideal (Leo 20). And while Venice employed sweeping zoning and differentiation to "minimize the wasteful journey to work," in Silicon Valley, arguably the economic envy of the world, the "wasteful journey" is often an hour and a half commute (Mumford 325, Lardner 42). Most striking of all is the total disregard in modern cities for the beloved natural order of the Renaissance, leading to sections in Lewis Mumford's The City in History with titles like "Standardized Chaos," "Urban Devastation," and "The Space Eaters" (Graphic Section III)." Seperation Seperation of gentlemen and commoners was first mooted by Da Vinci. Forced mixing and forced separation have both had horrendous results in the 20th century and our preference is complete freedom with regard to where and with whom people want to stay. Claude-Nicolas Ledoux (1736-1806) drew an elaborate plan for a "built" city. A project, begun in 1773 when he was asked to propose some improvements in the residential quarters of a small, salt-producing town, continued all his life and resulted in the publication of L'Architecture considérée sous le rapport de l'art, des moeurs, et de la législation (1804). "Ledoux planned five volumes, but completed only one. Filled with enthusiasm for J. J. Rousseau and the hope for an improved social order, Ledoux envisioned his ideal city and drew plans for it, thereby boldly combining traditional patterns with original motifs. The shape of his ideal town is a semicircle, with the factory at its center and the important buildings on the rings. He thus anticipated both Ebenezer Howard's "garden city" and Le Corbusier's cité radieuse. Ledoux's poetic gifts become particularly evident in his plans for individual buildings which, although designed in the form of simple geometric shapes, are permeated by a personal, subjective symbolism." We should comment that semi circles aren't the best shape for modern roads and zoning by use is convincingly opposed by the smart growth movement as it absence hugely increases traffic flow. "10Howard envisaged a self-contained town of strictly predetermined size (approximately 35,000 inhabitants) and plan. A well-balanced proportion between the urban area and agricultural land is essential. Any increase in population would be met by the creation of satellites, none nearer than four miles to the original city. Even nature is planned, being fundamentally recreation ground. Howard's close relation to what is known as the "English garden" is obvious." Again this low density/ sprawl idea is met with opposition by the smart growth movement due to much high infrastructure costs and travelling times thus less interaction. Clearly distinguishing between the different functions of the city (living, work, leisure, education, traffic), Garnier undertakes to design a town which will fully serve the needs of man in an industrial age. A bold innovator in the use of materials and in the shape of individual buildings (preferring an ascetic geometry), he is also highly original in the disposition of the town as a whole: he separates vehicular and pedestrian traffic, designs a residential district without enclosed courtyards but featuring continuous green areas, and plans a community center that anticipates contemporary social centers." We do of course agree with his separation of pedestrians and traffic as it allows traffic to go faster and also reduces pedestrian accidents which is important. Another advantage of high density is you can have your large green areas outside the city as they are still close to everyone. Unlike a sprawl situation where the green belt can be miles away from the city center. "11 His grandiose project for a Città Nuova was shown in Milan in 1914. In the catalogue to the exhibition Sant' Elia published a manifesto on the need of breaking with the past. The "New City" should correspond to the mentality of men freed from the bonds of tradition and conventions. In his many drawings a major theme is the architecture of a metropolis which is the result of a technological and industrialized society. In designing towering buildings with exterior elevators, multi-level road bridges, and imaginary factories ("monuments of the city of the future"), Sant' Elia raised these modern forms to the level of symbols." "Le Corbusier planned in detail for a city of 3,000,000 inhabitants. From the outset he steered towards the problems of the "change-over town" (as he later called it), a metropolis with diverse functions which must be disentangled." "He also rejected the utopian ideas of limiting the size of cities, and contrary to Frank Lloyd Wright, who advocated the diffusion of urban communities, was opposed to horizontal spreading of the urban complex." Clearly Libetonia is more with Corbusier rather than Wright, at least in this respect. The establishing of an orderly relationship between traffic lanes, on the one hand, and living and working zones, on the other, is of primary importance in this context. A famous result of this approach is Le Corbusier's famous hierarchy of roadsv(the 7 V system), starting with 1 V, an artery carrying international and inter-urban traffic, and ending with 7 V, a fine capillary system in the zone reserved for children and schools. The analytical character is expressed even in small details. "So great is Le Corbusier's need for logical organization that, having to lay out the vast capital of Candigarh, he divides the vegetation to be used into six categories, each of which receives a precise function" (F. Choay, p. 16). Radburn had different ideas 1 the superblock (30-50 acres) as opposed to narrow rectangular (this is low rise) 2 Specialised roads 3 The separation of pedestrian and motorist 4 Bedrooms and living rooms face private garden 5 Center of block is a park Radburn influenced a few cities in the US (Greenbelt, Greenhills, Greendale) The Problems of No Planning It is alleged that the 'laisez faire environment of colonial Bombay eventually led to the plague. 12 The Problems of Planning The USSR built 800 new towns and 2000 urban settlements up to 1977. Central government initiated and planned each.13 There is no doubt that attempts in the first quarter of the 20th century by various Bombay powers to improve housing did more harm than good, clearing slums simply leading to higher rents and more floors being built on existing unsanitary buildings.14 The 28 planned new towns of the UK attracted more than 1.5 million people from the mid 1940s to the mid 1960s.15 Much of the central planning of this era would not be attractive today. Average acres for new towns was 8500 for a population of 117,000 which is 30,000 per hectare. The UK Development Corporations owned all housing, shopping centres and leisure facilities16 and as a result had to fund it from the public purse. Licensing in the 50s restricted private housing to 1 house for every 4 build by the government! 17 This public planning created all the usual misallocation problems that private planning would have avoided. 18 Private firms had similar houses to those built by the Crawley Development Corporation for about a third less. The development housing was slow to sell. On the other hand, once private developers were allowed to build the houses were over subscribed.19 Similarly in the Bombay example most of the 'social' housing turned out to be too expensive: of the 17,000 one room tenements built, only a fifth ever came to be occupied, . The government being out of touch with the lower end of the market in a way a private developer could never afford to be.20 Clearly in the modern environment all the building and managing of houses and other properties would be private. Nor would the vision of artificially trying to mix different income levels fit with the modern insights around club goods. The 50s planners vision of neighbourly fraternisation across the class divide simply led to association between people of similar interests not on a neighbourhood basis.21 Nowadays people of similar interests are thought to be best kept together so the public goods they purchase jointly will best fit their needs and preferences. Similarly trying to locate industry across a country to areas of highest unemployment seems very anti-market today and the policy was dropped in the Thatcher era (Bruton 35) Policies that restrict change of use from housing simply because the council thinks there isn't enough housing (Westminster District Council in Bruton 140) should not be permitted. Planning in order to decrease density in general (Bruton 141) may have been very detrimental as we discuss in the chapter on Smart Growth. Haringey' District Plan is better in 'encouraging' industrial development in a particular area while not preventing it in any other (Bruton 142) Planning on a Smaller Scale The British experience was not limited to large new towns. In 1958 40% of planning applications were for houses (more than any other single type of application. Mostly for single homes. In total 462,000 planning applications were received in 1964 of which only 18% were refused. The original Town Planning system under the 1947 UK Act was to permit/refuse permission based on whether it conformed to the local authority's 20 yr plan for development. (Reynolds 43) The conventional view is in fact that town planning essentially is the production of plans and thereby the control of development (Bruton et al 19). Clearly a plan such as this would have no ways of knowing what sites economic value would be and would inevitably reduce the efficient allocation of resources from their highest value uses. By the early 60s its inability to cope with rapid change was also realised (Bruton 21) We should also note planning gives opportunity for corruption especially in developing countries. Good planning is more to recognise the value of one person's land use to the people around: in other words to internalise externalities. Planning to Internalise Externalities Would include: 1. Creation of property rights in views so that they could be traded. 2. For protection of the surrounding countryside, rather than control it by planning permission, float a number of trusts which own the 'countryside value' of the countryside around a city with their shares being subscribed by the public and the money used to lower taxes that year as a once off. Then the shares will be owned by the public and probably by developers. In order to develop an area, more than 51% of the share holders must vote for this. At the time of the decision other developers or people in favour of the countryside can bid for the shares. The underlying rights to use the land remain with the owner not the trust. So for example a farmer can continue to farm, put up barns etc while the trust owns the 'countryside rights' to the land. This means that the land of least value in terms of countryside value to those who value countryside would be developed first. 3. Creating tradable noise rights in cities so that if people were going to make noise by having a party they could buy the rights online from their neighbours. Alternatively people could all agree to make noise/have a party and if sufficient numbers voted for it then the others would not be entitled to compensation. This would prevent the hold out problem. 4. Permission for mixed used, where it does not much affect those outside a community or block should be a matter of the vote of those in the community. This would include matters like whether to license pubs and other types of businesses within the area. This would also incorporate change of use on one house in an area. Perhaps someone denied the change by his community should be able to appeal that the change has no impact at all on the community and a court could allow the change. If the change is allowed by the community however, it should not be forbidden by other bodies. 5. Similar methods for determining mixed use in shopping areas would be to allow retailers and anyone else who is interested to bid for the right to exclude non retail from the shopping streets of cities. This is made a rule in the Leamington Council's Plan (Bruton 140) but allowing those affected to vote would be better. The keep retail retail is based on the idea that shopping benefits with being with other shopping. It is less clear that office space would not benefit from having a few shops to service it rather than from more office space nearby. Again, letting the community vote on such issues reveals their preferences. 6. NIMBY22 situations: More ambitious would be to allow neighbourhoods to bid for the right to decide where an unpopular facility is located. For example, no one really wants a sewage works, prison, lunatic asylum or even a power facility on their doorstep. Zones could all contribute an amount not to have the facility and then the community that offered the least would be compensated. Some communities might even offer a negative amount (pay to have it) or the basis that if they were the lowest their compensation would be more than what they paid. 7. MIMBY23 situations: citing an office complex in the middle of a community may or may not be popular with that community. In some senses people might feel it spoils the character of the community but other people might see it as a source of employment and a reduction in travel to work costs. Again a bidding procedure can be organised to encourage particular businesses to locate in the communities that most want them. Businesses will also have their own criteria, however, and may not affect the top bid. They may even decide to move in somewhere where the citizens require compensation if they build their office block in their leafy suburb... 8. Clearly in NIMBY and MIMBY situations factories would often end up together, away from residential accommodation as with today but the exact locations would be far more efficient. Light industry may be desired in the midst of housing rather than a long commute away.24 9. Preserving the aesthetics of a community can be achieved in similar ways. Firstly, if the residents themselves by a vote wish to preserve a particular specified aesthetic then that should be sufficient to make that a local law for the zone. On the other hand if outside forces wish to preserve the zone and the residents do not then compensation is in order. Of course this is problematic as residents may vote as if they do not want the aesthetic rule when they do with a view to picking up compensation. The solution is that if compensation comes from elsewhere then whoever it is that contributed the compensation now owns the rights to the aesthetic of the area. Most residents if they are genuinely concerned about the aesthetics of the area will not want outsiders dictating them, or selling those rights to unknown third party developers. a. Note that this means that if someone wants to build a house in terms of the aesthetic of any area, they do not need to seek planning permission to build, they just build. If they build outside the aesthetic then they will have to pay significant compensation which may sometimes make it more feasible to knock down and rebuild. b. One of the main achievements of the planning community in terms of aesthetics is thought to be the prevention of ribbon development and urban sprawl (Bruton 41) Although many of these solutions are not perfect solutions from an efficiency point of view, they are far more effective than an arbitrary decision by a planning authority. Its also worth saying that when there is a vote mechanism that might trigger compensation it is sometimes best that people pay to vote since that eliminates some of those who have no real interest in the matter and would otherwise be receiving compensation for a loss they have not suffered. These decentralised solutions are market based even though they deal with groups rather than individuals and incorporate some voting mechanisms. Decentralised market solutions are necessary because of the complex nature of the problems and its inter-relations with other problems (Bruton 54). Central Planning cannot work in this kind of environment as the works of Hayek show so clearly. Chadwick's "Law of Requisite Variety" means that 'a complex system can only be guided and controlled by a system that is equally complex [and varied]."(Bruton 61) Its worth noting that in terms of feasibility many of the methods above, while feasible before, are made a lot more feasible by the internet. In a similar vein some of the local council rules for an area could remain the default rules until communities use the techniques above to change the characteristics of their areas. Planning and Privatisation Some privatisation would reduce, though not always eliminate the need for some areas of planning 1. Traffic planning would be reduce by allowing private parties to build and toll roads in the sense that congestion might simply be met by a private company building another road. Rezoning Bounties The developer under the original UK planning system also had to pay the difference in the original use and rezoned use prices! But this system broke down because the seller now only got the former price. (Reynolds 43) Visionary Communities "While great differences existed between the various utopian communities or colonies, each society shared a common bond in a vision of communal living in a utopian society. The definition of a utopian colony, according to Robert V. Hine, author of California's Utopian Colonies, "consists of a group of people who are attempting to establish a new social pattern based upon a vision of the ideal society and who have withdrawn themselves from the community at large to embody that vision in experimental form."25 "The Greek philosopher Plato (427?-347 BC) postulated a human utopian society in his Republic, where he imagined the ideal Greek city-state, with communal living among the ruling class, perhaps based on the model of the ancient Greek city-state of Sparta."26 'One of Luther's beliefs broke with the medieval conception of labour, which involved a hierarchy of professions, by stressing that all work was of equal spiritual dignity.'27 "Generally, most analysts of utopian experiments, from Charles Nordhoff to Arthur Bestor, Jr., have found that religious utopian colonies possessed a longer life then their secular counterparts. http://www.lih.gre.ac.uk/policies/urban.htm" Bruni28 "At the center were the Palace of the Signori and the temple. Stretching along a river, Bruni's city was divided rationally, with houses equipped with rooms for summer and winter built "beautifully and precisely" along streets which meandered into the hills. Echoing a design expounded in Book VI of Plato's Laws, Bruni's proposal in effect extolled concentric circles denoting these social strata (Garin 30)." Note please that concentric circles are not ideal for modern road based communities. "Like Leonardo after him, Alberti was a born perfectionist, encouraging would-be architects to rethink their designs up to ten times, "until from the very roots to the uppermost tile there is nothing, concealed or open, large or small, for which you have not thought out, resolved, and determined..." "Rejecting the extravagance of many contemporary cathedrals and other structures, Alberti touted simplicity and frugality as central virtues (290, 293, 308, 326). Nevertheless he lauded the majestic elegance of many ancient edifices (most notably the Pantheon), and he aimed to revive the shunned style of Roman architecture (290, 320). As for the ideal city... Constructed from scratch on the optimal site and organized into separate neighborhoods corresponding to class and occupation, the city's buildings would be divided further into spaces for men and women, as well as public and private areas" We do not agree ,of course, with areas for men/women of occupations, but more for stages of life. Purpose Built Cities "29The greater Seoul metropolis is cramped-almost half of the country's 48m people are squeezed in there-and its dominant size is widely seen as hindering the development of the rest of the country. "However, a blueprint for the move was approved by parliament last year. And on Wednesday August 11th the government said it was going ahead with the plan, which involves building the new capital from scratch on a 7,100-hectare greenfield site in the middle of the country. "It is budgeted at a whopping $45 billion, but history shows that schemes to build new capitals tend to overrun their budgets wildly "To give a few examples: the small Central American state of Belize was further impoverished by the construction of a new capital, Belmopan, in the 1960s-1970s, whose cost spiralled to four times its original estimate. Before that, the new-born United States of America waited for ten years for the White House and the Capitol to be built, only to see both destoyed by the British in the war of 1812. Likewise, Australia's project to construct Canberra, launched in 1911, dragged on into the 1980s. Brazil's concrete bureaucropolis, Brasília, was thrown together in just three frantic years in the late 1950s-but its huge cost added to the country's crippling debts. And in the 1990s, the huge cost of building Malaysia's new capital, Putrajaya, added to the country's economic crisis, forcing the then prime minister, Mahathir Mohamad, to scale back his extravagant plans for a futuristic "multimedia" city. "As with Canberra, a competition will be held for the best design for South Korea's as-yet unnamed new capital. History shows that the architects given the job of designing new capitals tend to get carried away with grandiose ideas that ignore both the geography and climate of the chosen site, and the needs of the people who will eventually live there. "The occupants of Kazakhstan's new capital, Astana, have had to endure the frequent dust storms that blow off the steppes surrounding the city, as well as icy winters. Brasília has become a grotesque caricature of Brazilian inequality: the rich elite live in the mansions and fancy apartments in the architect-designed centre-whose broad, multi-lane highways make it a dream for drivers but a nightmare for pedestrians-while the servant underclass lives in the squalid periphery. "Purpose-built capitals also struggle to create a cultural life of their own, especially since the politicians and their flunkeys tend to fly back to their constituencies at the end of each week's parliamentary sessions, leaving the city half-deserted. On seeing the young Canberra, a reporter from Britain's Punch magazine quipped: "Londoners may be all too aware of the disadvantages of living in a city without a plan, but these cannot be compared with the rival disadvantages of living in a plan without a city." "One of the odd exceptions is perhaps St Petersburg. Establishing it took the forcible relocation of Russian noblemen and merchants, and cost the lives of many serfs and foreign slaves who were worked to death building it. Yet, though it is no longer Russia's political capital, it is unquestionably one of the world's great cultural centres." Brasilia "Who would want to live in that dreary place in the middle of nowhere, when he could choose Rio? Actually, quite a lot of people. In 40 years, Brasilia, designed for 500,000 people, has acquired 1.8m. "The city was planned as a fearless celebration of a new world: as Mr Costa, the chief Brazilian disciple of Le Corbusier, conceived it, a statement of how people should live, not how they do. His partner in the project, and designer of its public buildings, Oscar Niemeyer, was (and, at 90, is) a communist. Here was to be a city where space was scientifically organised according to function, not by arbitrary criteria like human whim or market value. "Hence Brasilia's Orwellian touches: addresses such as "the southern individual habitation sector, group K, lot 8", or "the northern hotel sector". And Mr Costa wanted no ugly slums: all the housing was to be in six-storey "superblocks". 30The social gradations of that temporary aberration, capitalism, he reckoned, could be handled by differences in things like the layout and finish of each flat. And since the car too was part of the future, Brasilia was designed with broad roads and clover-leaf junctions to let traffic flow non-stop. "In vain. The capital today is Brazil's most socially segregated city, its poor huddled in favelas on the outskirts. until a civic campaign last year changed driving habits, its fine roads gave it an appalling safety record. And public transport is awful: only now, expensively, is a metro being built. "Above all, Brasilia has succeeded in what it was meant to do: shifting the country's centre of gravity towards its vast interior, after 450 years in which settlers had clung to the seaboard. What Brazil's statistics call "the centre-west", a great swathe of plateau and savannah (yes, and cleared forest) is its fastest-growing region, producing large harvests of soya: by 1995 it accounted for 7.3% of GDP, up from 2.4% in 1959. "Le Corbusier, the French modernist architect, called la ville radieuse -a garden city, lots of greenery, a lake, slab skyscrapers raised on posts, all wrapped in ribbons of asphalt. Costa's design for an aeroplane-shaped city won the contest. "He and Oscar Niemeyer, the architect he chose to design the buildings, were in thrall, like Le Corbusier, to the motor car, for the 1950s an emblem of the future. Express lanes and feeder roads loop through and around Brasilia, rarely hampered by stop lights or street corners. But the city is more than a hymn to the motor age. Few architects have had such fun with reinforced concrete as Niemeyer. His buildings swoop and soar with vertiginous curves and startling precipices that seem to defy gravity. Akmola "31JUST lately, the former Soviet republic of Kazakhstan has been busy moving its capital from the bustling city of Almaty to the rural backwater of Akmola. The new seat of government suffers frequent shortages of electricity, gas and water. Its site on the over-farmed and eroded steppe guarantees frequent dust storms, howling winds and icy winters. There is no overall plan for Akmola's redevelopment, despite the government's predictions that the city's population will double by 2005. The president hopes that tax benefits and the like will induce private investors to pay for the removal, but the government has said neither how much the project will cost nor how much has been paid for Set back-for who knows how long-are grandiose schemes for a 270-square-kilometre "multimedia supercorridor", complete with its own "multimedia university" and an "intellectual property park". "Dr Mahathir doubtless views Putrajaya as a bold innovation in the field of urban design, a far cry from the chaos of Akmola. But, at least so far as delays, shortages of money and public complaints are concerned, Putrajaya and Akmola are peas from the same pod. Every ready-made capital ever built has suffered from the same chaotic construction and popular scepticism. Worse, even if such cities are eventually completed (many are not), they inevitably fail to meet expectations: the development they are supposed to promote never comes, the images they are intended to project soon lose relevance, and, centuries later, they retain an artificial air which continues to hamper their growth. "Much expense and delay springs from the use of ill-informed designs. Burley Griffin posted his winning design for Canberra from Chicago, using the Australian government's handy application kit (consisting of a set of panoramic oil paintings of the site, a fact sheet on its climate and geology, 12 pages of instructions and two contour maps on which to sketch a proposal). The second prize went to Eliel Saarinen, a Finnish romantic architect, who was presumably equally ignorant of conditions in Australia. When Burley Griffin eventually travelled to Canberra to supervise construction, he had to spend the next few years adjusting his plans to fit his first-hand observations of the site. At least Burley Griffin did adapt. Belmopan's American designers, who were moving the capital in part to escape Belize's coastal hurricanes, drew up housing plans that omitted to consider the ferocity of Belize's tropical rainstorms, forcing the first inhabitants to spend the rainy season bailing out their homes. Without providing for public transport, the planners also placed the industrial zone half an hour's walk from the workers' cheap housing, in order to include an ornamental park in a hamlet already surrounded by jungle. "Locals can be just as unthinking: George Washington himself helped choose Washington's waterlogged site, leaving the city unpleasantly humid to this day. (As if in retaliation, Abigail Adams, on first occupying the White House, decided to use the building's grandest reception room to dry the president's underwear.) Most of the Brazilian architects who competed to design Brasilia ignored the site's topography completely. "Predictably, almost all the first citizens of artificial capitals are civil servants. Three-quarters of the original inhabitants of Belmopan were employed by the government, as were most of the original inhabitants of Abuja, Brasilia, Canberra and Washington. Urban monotony, in turn, puts off other prospective settlers. Belizeans did not want to move to Belmopan because it had no place to dance. Simone de Beauvoir asked of Brasilia, "What possible interest could there be in wandering about?" A visiting New Zealand city councillor said of Canberra in the 1970s, "The atmosphere is one of job security sans paupers, sans criminals, sans unemployed, sans vitality and sans colour." Washington, too, retains to this day its reputation as a drab, bureaucratic city, culturally not a patch on New York, Los Angeles or Chicago. "To be fair, the designers usually intended as much. Brasilia was supposed to be everything that Rio de Janeiro, the previous capital, was not: small, sober and efficient. When the debate about a new capital was still in its infancy, in 1810, Veloso de Oliveira, an adviser to the Portuguese king, insisted that "the capital should be in a healthy, agreeable location free from the clamorous multitudes of people indiscriminately thrown together." Washington, Canberra, Brasilia and Belmopan were all conceived as quiet, orderly places where civil servants could get on with their jobs without distraction. As one Australian bureaucrat put it, "I love Canberra, because it's a place designed for middle-aged civil servants with children." "Indeed, capitals designed to project a particular image, as Dr Mahathir intends with the futuristic Putrajaya, soon come to seem anachronistic, eccentric or both. Brasilia, for example, was intended in its day to be a city of the future, at a time when cars, aeroplanes and moulded concrete were the ultimate symbols of progress. The city itself is laid out in the shape of an aeroplane, with the federal government and the cathedral in the cockpit, commerce in the cabin, industry in the tail and housing on the wings. The centre of the design is an enormous motorway junction connecting the monotonous cinderblocks of the "Esplanade of the Ministries" with the monotonous cinderblocks of the residential zone. What was intended at the time to showcase a spirit of rationalism and modernity now showcases 1950s kitsch. "Canberra's designer, Burley Griffin, wrote that he wanted "to treat architecture as a democratic language of everyday life." To that end, he laid Canberra out in the shape of a huge theatre of democracy, with the population in the racked seating sloping down the hillsides to an artificial lake, the government on the raised stage beyond, and the beauty of the mountains behind as an inspirational backdrop. Very clever, but would you want to live there? Quite possibly not. The end result of planning along these lines is usually a city that is neither inspirational nor functional. Brasilia's designers, for example, dreamt of a prosperous, mobile society. So they made no provision for the poor. Predictably enough, huge, unplanned shanty towns have sprung up beyond the sleek, rational city centre. Likewise, many of Washington's problems spring from its conception as a showpiece rather than a working city. And the capital's hybrid status-not quite a state, nor a municipality, nor a federal territory-hampers efforts to fix things."32 "Such man-made islands are quadrupling Dubai's tiny 40km (25 mile) coastline." So that's the theory and history of how cities should be but what are our options and our optimal results in practice: above all our cities should be beautiful and they should be economical. The first to increase our quality of life, the second to lift the standard of living of the poor and of us all. Ways to increase Aesthetics33 Cities do not have to be grey. What if each building has a picture of a landscape of at least a colourful pattern? What if each block had a roof garden with a view? What if there was some kind of incentive scheme to make it worth while plus legal obligation to keep the place beautiful. Window boxes full of flowers. Pyramid shaped towers with gardens at different points. Tree lined pavements? Waterfalls on outside of skyscrapers? Offices blocks covered in ivy trellises or bougainvillea? Outside blocks like a medieval castle wall? One hotel just off the Champs Elysee in Paris has more than 60 window boxes all filled with the most beautiful red flowers. 34 Key thing is that what people see as they walk about is green and pretty. Tree lines roads? Moving water along roads? Aesthetics could mean in some blocks that everyone has a balcony and must grow plants in it or pay damages to everyone within view. Facades of buildings could be drawn from history: sphinx, lion, taj mahal, castles. hanging gardens. Ivy. Waterfalls. Each block has an obligation to be beautiful which it then passes on to tennants in terms of flowers/ etc Aesthetics: electricity substations, sewage treatment disguised as other things in keeping with Themes. Water features are great for adding charm and beauty. If the city was near the sea of a lake then canals are particularly effective as with Venice or Chicago. There is no reason not to see waterfalls going down the sides of skyscrapers. Parks, Green Belts and Greenways Beautiful can mean good architecture but to many people it also means greenness and countryside. The Garden City idea was part of that, so was the 60s idea to put vast green spaces between badly designed high rises. Communist China also adhered to the green belt idea.35 However an Elizabethan ordinance perhaps lays claim to the first green belt: "all manner of persons, of whatever quality soever they might be, desist and forebear from [building any new] house or tenement within three miles of any of the gates of the said city of London"36 So there are different ways to have green space. Parks, for example are not often used by modern man, but green space that replaced roads as transit space would be appreciated by many as it is inevitable seen, a good use of green space. Green space is sacred in the West, headlines like the following are common: "Up to 1,000 square miles of virgin British countryside is to be bulldozed to make way for the government's planned 4.4 m new homes, leaked figures reveal. Jonathan leake Sunday Times 18.1.1998." The quote drew the following poignant response "One does speak of virgin forest being chainsawed. But when a square mile of farmland has lain on its back being ploughed to dust for centuries, the term seems inappropriate. If the poor land has also received lashings of EU-subsidised fertiliser and herbicide, one might prefer to speak of 'reclamation for housing'. Landscape architects can plan housing estates with better ecological and visual characteristics than barren fields. Homes can have beauty, porous paving, vegetated roofs and abundant wildlife. Instead of mindlessly 'defending' Green Belts, as though they were chastity belts, we should commission assessments to guide us in defending such landscape quality as exists and in making plans to create it elsewhere." In other words, green belts may not be the way to go, rather one wants ones greeness in the space where one lives and works and walks. Rather let them build houses on the greenbelt if they can bring the greeness into our normal environments instead. A landscape assessment, to determine the different types of quality which it possess, followed by: 1. A plan for public goods 2. A plan for common rights 3. A plan for scenic improvement 4. A plan for greenways 5. A plan for habitat creation 6. A plan for new settlements 'It is good policy not to build on 'green' land with high landscape value, but you will not find this land in belts. Most probably it will be what landscape ecologists describe as patches and corridors [belts are man-made]: Rather than green belts then or parks for that matter (which are greatly underused), he argues for greenways, with which I agree: "Greenways should be planned in both urban and rural areas.. Greenways have recreational, ecological and aesthetic roles. In an earlier age, it was appropriate to plan public parks where industrial workers could rest in green surroundings after a week of strenuous labour. In our own times, when a majority of the population have sedentary jobs, the primary open space demand is for exercise in pleasant surroundings". And I might add simply having a pleasing backdrop whenever you go anywhere or meet anyone. Open space is no good unless its beautiful space. These leafy paths between the skyscrapers where roads would be could also host cycle paths and some could be used as children's playgrounds if schools are nearby. Greenways "The 'greenway' idea developed in America in the 1960s, with the term formed by joining the 'green' from green belt to the 'way' from parkway. Greenways link the environmental objectives of green belts to the recreational objectives of parkways. A greenway can be defined as 'a route which is good from an environmental point of view'. "In 1996, the international greenways movement can be said to have come of age with the publication, by Elsevier, of: Greenways: the beginning of an international movement. The book contains 26 papers of which the editors, Fabos and Ahern, state: Greenless also is involved with building construction. http://www.economist.com/displaystory.cfm?story_id=3422965 ROADS Pattern Grid iron is the best way to build roads. Its simply the quickest way to get from A to B. The maximum you would save from diagonal roads according to Pythagorus's theorem, would be 40% and that would be for an equilateral triangle. For most journeys the savings would be much less. Yet, diversions from grid iron have high costs in disruption of buildings The Romans were the inventors of the grid iron road network in towns and all their town were built that way.37 The medieval aberation, however romantic, is not practical for day to day life. Chaotic road networks are fine for the after-work/ weekend network of restaurants and riverside walks but not for the day to day getting to appointments. Junctions and Road Space The key to making roads more efficient is to make them alternating one way streets and to makes them go under and over so theres no traffic lights and thus much faster movement. The average speed of traffic in London has been 10 miles per hour for the last 50 years. With the fast junctions described above speeds of six times that can be reached . If traffic travel 6 times as fast, its only on the road for a sixth of the time, hugely reducing congestion. If everything is one way then at each ' junction' you only need one sliproad off and one sliproad on . For example 100 by 100 roads each 5 km long is 1000 km with 4 lanes each and with cars 2m long is space for 2 million cars at a time and 10 millions cars owned if everyone has one plus they aren't on the road for long if the roads are fast. About a quarter of the space is roads. If 10 million adults all go to work between 8 and 10 and spend 20 mins each then that's 6 journeys that take place in the period which is 1.6 million at once. Advantage of a one way system is that you do not have to cross the traffic when you turn left or right into other one way streets As an intersection approaches the road narrows into one less lane and that's where the traffic comes in? So no lights required to join someone in. Ideally you should separate pedestrians and cars. LA tried to hard to separate pedestrians from motorists apparently. Pedestrians then are either underground getting taxes or walking on the surface through the trees. With a dense city such as we advocate then to go 3km at 100km/ hr is 2mins. So the journey for any meeting is 2mins. The cost of bridging (so that the roads go over or under one another and avoid junctions is about 4 times the normal cost but if this is only on perhaps 10% of the road area. If it thus enables traffic to travel at 100 km/hr instead of 20 km/hr it avoids the need for 5 times as many road. Traffic traveling five times as fast is as good as five times as many roads! A road will cost roughly R300/m2 for a low traffic situation or R450/m2 on a long term spec. Bridging costs about R1500 per m2 although it can be as high as R5000 for a really complex system. This is just for the road and not for sidewalks. 38 Blocks Urban planners tell us that cities with more narrower streets have better traffic flow than ones with fewer wider ones, due to traffic flow. They also tell us that buildings have to have to be no wider than 30m wide for light to reach the inside of the building. Block sizes vary Johannesburg has 7 million square meters of space in 63m square blocks. Pretoria has 2 million square metres of space in much larger blocks of 150m x250m. Sandton has 1 million square metres. New York's blocks are about 266m x 63m. More, narrower roads as in the Joburg model leads to far less traffic congestion than the wide, few roads model in Pretoria and Sandton. 39 Crisis Management If there's a crash and people slow down there must be a electronic bill board that tells people to move to other parallel roads and trucks to lift them out quickly. Similarly with people that park illegally or do not move in time Privatisation and Variety Roads being privately owned may segment the market. Some might have high speed limits for the time conscious, others lower limits for the safety conscious. Some people might subscribe to only 2 or 3 road companies, others to them all Although we have no traffic lights at intersections, we can still use red lights in roads without intersections to slow down cars when further cars would cause congestion ahead (or even to redirect them). You do not actually want too many road companies or there is never a way to get to one place using only one ? This isn't a huge problem though as long as you are not compelled to use a particular one. Reynolds suggests not general road pricing but simply pricing at congested times (Reynolds 36) Roads and Aesthetics Roads are functional rather than beautiful and people prefer not to walk in grey concrete but rather amongst green grass and trees. So although roads are built on the ground level, people actually walk over them on a garden built above floor two with the roads far below. To do this requires the garden to sit on a double strength concrete slab costing from R1500 to R3000 per square m including waterproofing. For a road the length of a block say 150m that is 20m wide, that is 3000m2, the cost would be R450,000 per street, although it could possibly run to double that. However compared to the cost for the neighbouring skyscrapers with at least 90,000 square meters each, the cost is only R2.50 per m2 extra. Against a building cost of R4000 per m2, this is insignificant. .Compared to the slab the costs of ventilating the road are not hugely significant. The capital cost would be R300/ m2 or less with nominal maintenance It might even be sensible to place initial roads 3 or 4 floors underground near the skyscrapers foundations so that if traffic increases then there can be 3 or 4 more floors of roads if traffic volumes justify it in the future. This will of course be a decision for the road companies. Under block car parks will thus be able to exit on a number of levels to the road system. This would also require other roads to be also on the higher level of course or people would need to drive into a car park somewhere else to go down on to the lower level again! It might similarly be an idea to have roads on a slightly different level depending on whether they are going north/south or east west to reduce bridging costs at the intersection. They shouldn't be too different however or the slip roads on and off would be too steep. Under the Roads Space for subways, sewers, incoming water, telephones, pipes, In some ways we leave this open in the manner of von Mises to recognize we do not necessarily realized what they could use them for. In some ways we start with an initial use and strong ownership rights and see how things evolve. Ideally for sewages and even for goods delivery. Building on a slight incline is best . In an existing city you would make the roads at high level and the pedestrians underneath like Thailand or the way the M2 goes through Joburg central. So what stops Libertonia becoming congested? 1. Faster traffic because no traffic lights only slip roads on one way streets. 2. More road space per ha. 3. High density means people can walk for most of their errands and some can walk to work ( errands are more driving than commute). It also means children and teenagers can get places (walking) and do not need to be constantly run places.40 4. Walkable communities and density means many people do not even need to own cars. 5. Delicensed taxis means anyone can get anywhere without having their own car. Systems A system that measured traffic flow and then redirected people to other routes could either work by knowing where everyone was going or simply by electronic signs that say: if you are leaving the 41city, go this route. Or if you are going to XYZ district then go here. For people going close by, it shouldn't matter that much, not much they can do about congestion on this block (maybe next block ) but not if you are going just to the next block after that. It would have to be someone other than the road companies doing this as they are not going to redirect to other people's roads. Varying height Start at the edge of the city 20 stories going to 50 stories at the center so everyone can see out from the top of their block.42 Tops must be public open and attractive, able to see for miles to green outside the city. Outside the city's view rights are owned by the people in the city. As assets are always sold to their highest value users, any damage to that aesthetic will cost a lot. Orientation The direction that the city faces is also important. In the southern hemisphere buildings usually face north. Living rooms get the sun and its not so important with bedrooms as people are only sleeping there. Similarly, most office lights are on most of the time and if the light is bright people put up blinds to avoid it. Parking Minimisation 43 The Petronas towers in Kuala Lumpur are 452 m in height (88 floors). Fifty thousand people per day use it, though many of them may be shopping there rather than working there. They have 4500 parking bays for such a tower.44 Basement parking bays cost R50,000 each to build, R40,000 for sub basement and R30,000 for above ground. That's why we want to minimize the need. Above ground parking only costs R1000 but used up huge amount of space which defeats our objective to be high density. In fact for every m2 of office the rule of thumb is that you need 1.2 m2 of parking ! That's 30m2 per bay parking. Now the actual bay is only 2.5 x 5 =12.5 m2 (or sometimes 3 x6 ) but if you count access, ramps etc, it adds up to 30m2. Parking and Traffic. If offices and residential are mixed then everyone goes in different directions in the morning and parking for one by night becomes that of the other by day. Some people can walk or take taxis. For 1600 people/ high rise and 100% adult car ownership = 800 cars at 2m by 1m ie 1600 m2. ie either two stories or one and the space round the building and offices. Roads better to be many narrow ones than a few wide ones so that there is parking after the rush hour. If slots are owned then enforcement of people in the wrong space is easy. Some will walk to work because of the short distances: a large health benefit. Use the roads that are used for rushhour (6 to 9) /(5 to 8) for carparking after that time and during the night for houses in the area. Only problem is where you park if you get home between these hours. Fine if you go somewhere else like gymn or meetings after work. Note most water in urban areas is used on gardens and washing cars. Car minimization means less water usage as well. Population/ Infrastructure Calculations If you have 100 x 100 in 5km ( 40m buildings plus 10m of road times 100 = 5km) and if this can accommodate 5 million households. Actually a lot more if the inner city goes up to 50 stories. That would mean no expansion into the greenbelt until all the central buildings are built. If average flat is 100m2 45 that's 16 flats per floor @ 20 floors that's 320 households, with 10,000 blocks that's 3 million household. But if the number of floors averaged 100 then we have 15 million households! We have not allowed for offices, retail, etc. If they are 1 in 3 parts of space we still have enough for 10 million households or 40 million people. If we expand into the greenbelt the height will be low because it will be under 20 stories. But say we do another km in each direction that's roughly 9 x 9 now ie 50 sq km as opposed to 25. Double the area. But with 20 stories only that's only another 3 million households. Maybe better do another one somewhere else, the returns on the division of labour must be getting into diminishing returns at 40 million people! If everyone's house takes up 2m by 1m (smallest) then to house 20 million people you need 40 million m2 ie 40 sqm km or 7km by 7km. If everyones house is 2000m2 (including land) (100 x20 ) then to house 20 million need 1000 times the space ie 40 billion m2 ie 40,000 sq km = 200 km x 200 km. 46 Figures above are for households so need to multiply by 4 for population. 20 million people then can stay in 2000 sq km which is 40 by 40 .Most populated areas of Kansas are 13441 per sq mile = 32,000 per sq km. My idea is 20 million people in 2000 sq km = 10,000 per sq km. HK has 50,000 people per sq km in some districts. The population density is 456 /km2 in Kansas City as a whole, total area of 331 km2 , 3% water. 146,800 people, 61,000 housing units, 55,500 households, 36,200 families. 190 housing units /km2. Singapore has 4 million people in 682 sq km = 8000/ km247 While office space per person net is about 6m2 (the space of a person's desk etc), gross its more like 15-25 m2. You get the second figure by taking the whole space of an office (corridors, lifts, conference rooms, toilets, stairs, reception) and dividing by the number of people. On average the percentage of floor space taken up by residential, office and retail is 70%, 15% and 5% respectively. NEIGHBOURHOODS There's no question of course about telling people where they must live, but one can design areas with particular types of people in mind in order to cater for their needs more effectively Ethnic/Religious Greek/Italian/etc or by community around a church: ie particular type of church in the bottom of that block. Matters could be organized so a particular church could take a floor or a number of churches take a whole block. It's also possible to have building targeting different communities, one with French architecture, French multinationals, French shops. One could do the same for German, Spanish, Japanese, US, UK users. All have particular tastes and would value reminders of their country of origin. Chinatowns and Indiatowns are similar concepts present in many cities., as I'm sure they would be in Libertonia. Families Family accommodation needs to be near schools but also near potential sites for things like ballet, sports, swimming Being highly dense and with private policing to reduce crime, children can walk to most of their activities which density insures are close by. Medical facilities are important for families as well as older people. Buildings, however high, clustered round a central square are conducive to children as parents can watch them. Even better when the central square is owned by a child care company or person who can actually look after the children while they are there. Since the streets between buildings are grass and trees and the cars are underground if makes sense to have play areas for children in these streets so children can play while their parents talk to friends in a street side café. In non high density surroundings, such specialization can cause problems. The New Town of Crawley was found to have 60% married and under 40 vs 25% in English population as a whole! This causes problems as they all grow up and get older, the nursery schools are empty and there are no facilities for teenagers! 48 Singles Singles like to be with people. They want common areas (privately owned) like bars, coffee shops, TV areas, movies, party places where they can meet people and socialize. It's also young singles that often come to the city to seek their fortune. Teenagers Teenagers must be provided for if one wants them not to hang about on street corners. The very high density of the place helps a lot however as there is always plenty to do. The Elderly By Personality Myers Briggs personality testing is one of the most amazing inventions of the 20th century. The 16 types work extremely well in cataloging the clusters of traits that tend to be together in certain types of people.49 Zones of cities or parts of blocks then can be designed specifically round certain personality types. People who want to be constantly learning will be catered for in the bookshop zone, with libraries, electronic boards in lifts and landings providing facts and information50. This type of personality also usually likes the latest technology as well. Peace seeking personalities on the other hand wouldn't want such disturbances but rather more plants in landings and a pet friendly design.51 Extroverts may like a block designed to have lots of interaction and common areas to walk through in order to get anywhere. Introverts might prefer a design were common areas are completely separate from transport routes in order to leave you alone with your thoughts undisturbed. Order based personalities might prefer a higher level of block maintenance than Freedom based ones who would tolerate more disorder and could save money thereby.52 Practical people might fix a lot themselves, Ideas people would want to delegate a lot more to other people and therefore have a higher level of maintenance contract. There is also a connection between common interests and personality. Some blocks might cater to the sporty with sports centers and so on. Other Factors For many people the investments decisions can involve factors you might not expect like 'is there a synagogue' or the closeness to particular leisure activities. Religious and social activities need to be thought through. Community Is it good for residents to meet each other if they have nothing in common. Reason to sort residents by personality? by religion as well as my income. that would be a reason to have different sizes of houses all together. Are leaders going to mix with one another for no reason. Easiest way to facilitate learning or deal making encounters, or romantic for that matter is to make people close together. We must also take into account that the average American only stays in a given community for 5 years. If that is the way of the world then building community is of less value. Alternatively, our dense city means employment opportunities are likely to be nearby rather than in other cities. Transport Costs At some point transport costs to likely places of work overcome extra land cost of living near work. Maybe should have lots of really low cost rental place (2m) throughout the city. Not because of the time cost to the poor but the travel cost. May increase crime. Maybe out of the main complexes. More area means more infrastructure in terms of sewers, electricity ,etc. 53 One might say that to some degree having lots of skyscrapers in the city center is counterproductive because people cant use cars to get to away from them because there are so many people in them that the roads would be really conjested unless you had multistorey roads or big spaces between the buildings. This is solved by having roads with no intersections so cars travel fast and aren't on them very long together with making public transport and walking possible and by having 20% of the city roads. Services Two water systems. One for drinking and the other for toilets and showering which can be fed from the water falls outside the buildings? Height and Efficiency 54"Executives in the City of London, Europe's largest financial market, contend that even in a non-earthquake-prone area, once a building rises much above 50 storeys the demand for additional elevators, stairwells and structural supports makes them unacceptably inefficient." "True, up to a point, says Paul Katz, the architect at KPF in charge of the Tokyo and Shanghai projects-but the most efficient building is not necessarily the most valuable. There are some explicit benefits from skyscrapers, notably efficient energy usage, plus less tangible ones such as the savings and benefits that come from clustering employees in one place. Typically, where firms most like to operate, sites are scarce. As a result, it often makes sense to add floors, even at ever greater cost." "Skyscrapers have risen slowly in Japan due to earthquake fears, but now they are going up. The central Roppongi Hills building will be just under 60 storeys and may be the sturdiest in the world, claims KPF, because of the breadth of the floors it stacks atop each other-many of as much as 5,500 square metres (60,000 square feet), compared with the former World Trade Centre's 3,600 square metres. Early tenants include such investment banks as Goldman Sachs and Lehman Brothers." "The new plans have already run into critics, concerned that both repeat the World Trade Centre's inability to mesh with life on the street, undermining the vitality that characterises neighbourhoods in great cities. But the business of erecting large buildings unfolds over decades" "Even before the events of September 11th, construction techniques were changing to resolve shortcomings that existed in the 1960s when work began on the World Trade Centre. Rather than being supported merely by steel curtain walls and thin connecting beams, the new skyscrapers have concrete cores linked to strong columns in the outer walls. Stairwells are pressurised to repel smoke and entered only through air-lock-style vestibules. Space is reserved every dozen floors or so for refuges. Special elevators are reserved for firemen." "Nobody now underestimates the devastation that would be caused if an aircraft strikes a building; but at the least, the new crop of tall buildings are designed so that they would not collapse if hit by even the largest passenger plane. That may not sound particularly reassuring to anyone asked to work on the 100th floor Trade Offs The normal quotes rate for building in South Africa is about R4000 per m2 for houses and offices. Of course for high finished housing it could go as high as R9000 and for warehouses and factories with little finishings required, R1500-R2000 is possible. 55 These costs are building costs. They do not include what developers add in, VAT, costs of waiting for planning/zoning decisions, the finance cost during construction and so on. Some of these costs are eliminated in Libertonia however, such as VAT and planning permission costs. Labour costs should also be lower and also untaxed (as against about R12 per hour in South Africa for a labourer). Labour costs are usually about the same cost as the material itself, but this should be less in our environment. In other parts of the world, building costs can be a lot higher, particularly for the better buildings on the world: 1. Sydney Horizon $41 Million US, 43 Floors Of Apartments,, bigger the higher they are, 32,000 M2 ($1300 Per M2, 1 Mil Per Floor Of Appt, Say 100k Each) 2. Sydney Altair 12,300m2 , Cost $16 Millions, 139 Apartments Sydney Cbd ( 1300 Per M2, 110,000 P A) 3. Sydney Aurora $180 Mil US, 50,000 M2 16 Stor Res 40 Storey Office ($3000 Per M2) 4. Australia Cult Forum Nyc 2,700 M2, $29 Mill Us ($11,000 Per M2) 5. Westin Hotel NYC 61,000 M2, $300 Mil ($5000 Per M2) 6. Telekom Malays 179,000m2 $158 Mil Us ($800 Per M2) 7. Uk 12,000 M2, $41 Mil ($3000 Per M2) 8. Shanghai $540 Mil , 278,000 M2, 88 Storey, 468 M ($2000 Per M2) 9. Vienna 7100m2, $10 Mil Us ($1300 Per M2)56 Higher building costs translate into higher rents. Lower rents in Libertonia compared to the West is another factor that would draw business. Prime Sandton rents are about R75 per m2 per month for blue chips R60 with bulk discount. Skyscrapers cost around about the same to build per m2 as other kinds of housing. The highest estimate of the difference is about 20% more on build and maintenance. Lifts can cost R300,000 but money is saved in roofs and foundation since you only need one of each for lots of people as opposed to single or double storey housing where you need theses structures for just one family. This applies even though skyscraper foundations are very extensive as the costs are spread over a large number of people.57 Land cost per person are also minimised with larger numbers of stories. On the other hand above 8-10 stories its harder to get building material up to the top and above 50 stories further problems that to occur. High Rise for the Poor as well as Rich How do you make skyscraper accommodation cheaper so that its accessible to the poor. A lot of it is in the detail. Building costs can drop to R2100/ m2 instead of R4000 with less finishings. Making the building a rectangle rather than some more complicated shape saves considerably. The façade can make a big difference. In a lesser finished apartment there will be no appliances, 1.5m of cheaper kitchen cupboards instead of 8m of better quality ones. A cheaper flat will have steel windows not aluminium. Internal doors will be hollow instead of semi solid. The big question is how to prevent the lower cost areas becoming the slums they became when built in the 1960s in the Uk, amongst other places. Partly their problem was a design fault. Too much unowned space. Too much access to everyone's flat from anywhere. Too little 'defensible space'. Part of it was lack of management or management by intrinsically inefficient methods, like local governments. Management is key to the maintenance of value and regeneration developments in Joburg city center spend around 20% of rents on management. The common areas may be correlated with that era's incorrigibly socialist bent. In today's more enlightened world, people would know not to create so much common area. We wouldn't have drying areas but competing drying companies which specialize in drying your clothes and take up much less space. We would have parks supervised by people whose business it was to do so. Large numbers of poor immigrants moving into New York and Paris has partly caused the flight to the suburbs yet private policing and zero city taxes would have reduced this considerably. It's worth mentioning one obvious relationship that is often ignored: the more people earn the more space they buy. Hillbrow used to have 57m2 per person when it was a middle class area. Now the same flats have a density of 18m2 per person. Smaller units and higher expected densities should be designed into flats for the poor. Increasing density is one way to reduce cost and make things affordable. Broadly there are only a a few ways to do this : reduce road width, reduction in communal space, reduce gardens or reduce size of dwelling, In some areas of Soweto 3m2/ person is common though below 5m2/person is thought to create anti social behaviour in prisons. Prisoners however are not known for their pro-social behaviour in any case. Approx 100,000 flats a year were built in the sixties to house 4 times that in Moscow These were mostly high rise 12 to 22 stories. Socialist cities mostly prefabricated. They were badly built by government process as is normal but one has to understand what went before. Working class suburbs in Europe were also high rise and large scale: the 'grand ensemble' of Paris housed 80,000 and in Amsterdam 100,000 in Bijlmermeer 58 The new flats were usually 2-3 rooms /family as opposed to one family per room as in 1950s and before!59 In an African context we need to understand that to provide for the poor we are competing with non-structures, with shanty towns. In Africa 10-20% of people live in shanty towns. We need to create mortgagable properties where the deposit is less than the cost of building a (non mortgagable) shack. Any kind of flats are better built as rectangles as you get more usable space. Diagonal lines are usually a waste. For a typical 60m2 space 4m x 15m is usually idea as then you maximise the number of flats with access to light. Most internal walls are 100mm plasterboard (drywalling) even in expensive apartments.60 These are quick to put up (concrete can take 21 days to set!) and quicker assembly means lower labour costs and lower finance costs. Berlin is also a city of appartments and seems to have no inclination to change in the post communist era. This has been the case not just in Soviet times but from the time of Holbrecht where 7 storey buildings hosted an average 5 per room. Decried by many, they were nevertheless extremely popular,61 probably because they were cheap. New Building Technology Concrete has been a high-tech material since Roman times, when it was discovered that adding volcanic ash to the mix allowed it to set under water. Similarly, the Romans knew that adding horsehair made concrete less liable to shrink while it hardened, and adding blood made it more frost-resistant. In modern times, researchers have added other materials to create concrete that is capable of conducting electricity. It heats up when a voltage is applied, making it possible to build runways and drives that clear themselves of snow "As soon as people encounter the term, even people who aren't architects or designers, they are full of desire, full of excitement," he says. He has visions of cities that glow from within, and buildings whose windows need not be flat, rectangular panes, but can be arbitrary regions of transparency within flowing, curving walls. Skyscrapers "Oddly enough, few Brummies seem bothered by the sheer size of the tower. "Most people we spoke to said marvellous-can we have it taller than the tallest building in Britain," says Martin Field of Hampton Trust. "The development, especially the tower, is so big that it could have the unintended consequence of shifting the city centre rather than just extending it. The new tower would be opposite Birmingham's Symphony Hall, which opens on to Centenary Square, which is used for big open-air events. If the government approves the plans for the skyscraper, it is almost bound to become the image of Birmingham and, in most people's minds, the centre of the city. But since many people still associate Birmingham's centre with the underground awfulness of New Street station, that might be no bad thing. ONCE again, the south shore of Lake Michigan may be graced by the world's tallest building. The Chicago Plan Commission has given the go-ahead for a 108-storey skyscraper in the heart of downtown Chicago that would soar to 1,550 feet, or 2,000 feet (610 metres) with the antennas on the top. That is well above both the Petronas Towers in Kuala Lumpur and Chicago's former record-holder, the Sears Tower. Chicago has been fuming ever since the international body that pronounces on tall buildings decided to count the spires on the Petronas Towers, but not the antennas on the Sears Tower. The developer, European American Realty, says it has financing in place for the $500m-dollar project and commitments to lease a chunk of its 765,000 square feet of office space. The building will contain 40 floors of condominiums; the developer expects some units to fetch $1.5m or more. It also counts on revenue from two 450-feet antennas broadcasting digital television signals. The city's establishment had bet heavily on the Fortune-500 version. After all, the evolution of cities the world over seemed to follow a clear pattern: the better a city did, the more it concentrated on running and financing things, not just making them. Last week Southwark council received a planning application for a spire-shaped tower that would, at 306m, be the tallest building in Europe-twice the height of London's giant Ferris wheel. The London Bridge Tower, designed by Renzo Piano, an Italian architect, would contain offices, a hotel, apartments and public viewing galleries. Judging from the experience of other proposed skyscrapers, Mr Piano's tower faces a tortuous planning process. The Heron Tower (222m, including a 39m spire), proposed for the City, is to be the subject of a public inquiry. Plans for two towers in Paddington have been sent back, with a 100m height limit. But along with the gherkin (180m), these proliferating schemes suggest a new vertical ambition in the capital's property industry. Will it get built? The City Council still needs to approve the project. One hurdle is the economics of skyscrapers. Richard Green, a property economist at the University of Wisconsin, argues that they are disproportionately expensive to build and operate. And this project carries two more uncertainties. LONDON is a great city with a dull skyline. Take a walk up Primrose Hill and see for yourself. It's not just the grimy 1960s tower blocks, dimly visible in small clumps from Shepherd's Bush all the way to Woolwich. Most of the buildings that pass for skyscrapers are duds too. Centrepoint, a grim grey headstone; the Park Lane Hilton, dreary even by cold-war standards; the British Telecom Tower, a gigantic ray-gun barrel that fell to earth. The sleek, flirtatiously winking spires of Canary Wharf, to the east, are shining exceptions. The current bête noire over which conservationists and developers are coming to blows is Heron Tower, a 37-storey, £290m ($436m) glass-and-steel confection which Gerald Ronson, a property magnate, wants to throw up in Bishopsgate, at the very heart of the City. When projects are put on the table, lenders now demand more equity from developers and more pre-leasing. The growth of real-estate investment trusts (REITs), publicly traded companies that invest in commercial properties, has also brought more transparency to an industry in which deals were often made in secret.62 The first is that most companies benefit greatly from their proximity to other firms in the same business. Charles Woo, head of MegaToys, says that he encouraged other toy companies to move close to him when he started up in the early 1980s because they could share suppliers and meet the demand if orders came in too fast. The second is that, thanks to its ports and freeways, LA enjoys good communications with both the Pacific rim and Latin America, not to mention the rest of the United States. Which begs the question of why London's skyline has not been extended so far upwards before. The area's geology is less amenable to high-rise development than Manhattan's, and the need for increased office space has in the past been answered in other ways. In reality, of course, London's choice is not between Canaletto and Manhattan. In comparison with Paris (whose tall buildings are ghettoised in La Défense), London has evolved anarchically. BEAUTIFUL or historic buildings are preserved nowadays as a matter of course. But should the same be done for views? The London Planning Advisory Committee (LPAC) thinks that it should, and this month, responding to a spate of applications to erect very tall buildings in Britain's capital, it is suggesting stricter rules to that end. In particular, it is recommending the adoption of a London-wide high-buildings strategy comparable to that in other capital cities such as Berlin, Paris, Prague and Washington. In a city fringed by hills, any large new building is certain to impinge on a familiar view. In 1991 LPAC, formerly a limb of the late and sometimes lamented Greater London Council, listed ten "strategic views" that ought to be preserved, meaning that no modern structure should be allowed to destroy the composition. Mainly from hilltops, the ten chosen vistas all embrace either St Paul's Cathedral or the Palace of Westminster. Those who oppose freezing these tableaux in time-mainly, of course, people whose building plans would interfere with them-point out that those two buildings themselves radically compromised then existing and doubtless much-loved views when they were completed in 1710 and 1870 respectively Public Transport From the Economist: "Prescott is far from alone in his enthusiasm for trains, trams and buses. Athens, currently served by a single creaky underground line, is building two more. Seattle, which built a monumental downtown bus tunnel a few years ago, is designing a $3.9 billion tram and commuter-train system. The beams and pillars for four different rapid-transit schemes, in various stages of construction, cast shadows on the streets of Bangkok. Sheffield, a struggling industrial town in the north of England, boasts a shiny new tram line. Even Dallas-Fort Worth, where 4.7m people sprawl across 23,000 square kilometres of Texas prairie63, recently got its first commuter train. All of these projects were promoted with a similar rationale: better, faster public transport will make commuters' lives easier and unclog the roads. Turning drivers into public-transport passengers is not an impossible goal. In a handful of cities, notably Vienna, the combination of excellent and highly subsidised public transport, high petrol taxes, lofty parking fees and strict regulation of on-street parking has succeeded in keeping the streets uncongested (although the peripheral motorway is another story). But these benefits can be elusive. To see why, it is worth paying a visit to Toronto. Not all that long ago, Canada's largest city was a textbook case study for urban planners. The first of the city's two subway lines opened in 1954, giving residents quick access to the financial and shopping district near Lake Ontario. In 1967 the province of Ontario started a commuter rail service for downtown workers. Rather than surrendering to sprawl in the 1970s, Toronto tried to guide the process by promoting "town centres", office-and-shopping complexes that could be reached by subway and bus, not just by car. Since the 1980s, a network of pedestrian tunnels has spread beneath downtown streets, allowing subway and commuter-train riders to reach their offices comfortably even in the midst of a Canadian blizzard. But, like most of the world's metropolises, Toronto is decentralising rapidly, which is undermining its efforts to create a transit-friendly city. The city's spine is no longer Yonge Street, which stretches north towards the Arctic, but rather Highway 401, a 16-lane east-west motorway 10km north of the centre, which is bumper-to-bumper by 6.30am and stays that way well into the evening. "On the one hand, people are griping about it," says Doug Floyd, until recently the city's transportation commissioner. "On the other, people seem to want that single-family detached house with access to an automobile." The city's traffic studies track the trend. In 1985, 1.05m vehicles crossed the city limits each day. A decade later, the daily count exceeded 1.5m. The number of vehicles entering areas closer to the urban core, however, has barely grown. Almost all of the additional trips are to or from low-density regions where public transport is infrequent. Bus, subway and tram lines have lost 100m passenger-trips a year since 1991. GO Transit, the commuter rail system, has increased its ridership-but 96% of its users are headed downtown to Union Station in the morning or home from Union Station in the late afternoon. "Transit is sort of becoming irrelevant," says Mike Wolczyk, GO's head of marketing. "We do a real good job of getting people downtown. But most people aren't going downtown." Public transport does have indisputable advantages. A single bus can carry as many people as 60 cars. A single train does the work of 1,000 cars. For some journeys, public transport can be the fastest means of travel. When it is operating near capacity, any form of public transport is more energy efficient, more environmentally friendly and makes better use of scarce road space than the private automobile. Yet in many cases public transport does little or nothing to relieve congestion There are four main reasons for this. First, as in Toronto, public transport is not efficient in serving areas with low population or employment densities. Low usage means infrequent service, and infrequent service, in turn, deters users. Decentralisation is an almost insurmountable challenge for public-transport systems. Baltimore, in the American state of Maryland, offers a clear example. The city's sole heavy rail line stretches 14 miles from Johns Hopkins Medical Centre, a big employer, to Owings Mills, a suburb where office parks and shopping centres are seemingly springing up everywhere. Yet those new developments are scattered over such a wide area that they are not within easy walking distance of the Owings Mills station. To get there, people need to take first the subway and then the bus. No wonder that few of them travel by subway from city homes to suburban jobs. Second, fixed transport systems, such as rail lines, can quickly become obsolescent as travel patterns change. Mexico city's rubber-tyred Metro is a case in point. Although trains are so full that breathing can become difficult, usage has declined over the past decade even as the system has expanded from 119km to 178km. For those who do not mind the crowds, the Metro is unbeatable to central destinations, but it goes nowhere near the booming commercial districts of Lomas, Santa Fe and Perisur. Passengers to those areas typically use taxis or minibuses, which only add to congestion. Third, many types of public transport have high, and often unrecognised, opportunity costs. Flashy rail systems frequently consume resources that could serve far more people if devoted to improving bus travel. Athens, for example, is building two new metro lines, 90% financed by the EU, even as bus usage is plummeting. Yet almost no money is being spent on creating bus lanes on city streets or giving buses priority at traffic signals. Rio de Janeiro, having struggled to finish a portion of its first underground line in the 1980s, nearly had to close it down for want of spare parts. In London, the extension of the Underground's Jubilee line has consumed billions of pounds while other parts of the Underground and bus services have deteriorated. Lastly, public transport is simply not what people would choose for most of their journeys. For the majority of trips, bus, rail, tram and underground connections are too complicated, too unpleasant or too time-consuming. Kuala Lumpur's Light Rail Transit line has empty seats even during the rush hour. In America, where a dozen cities have built rail-transit systems since the late 1970s, total ridership in 1995 was no higher than in 1977 (see chart 5)-in part, perhaps, because the average speed for fully fledged underground lines was less than 34km per hour (21 miles per hour), for tram lines only 23km per hour. In the EU, despite huge investments, passenger mileage on urban rail systems has risen by a scant 9% since 1970. The Dutch transport ministry, which wants such systems to handle a greater share of urban travel in the Netherlands, reckons that trips by public transport should take no more than one-and-a-half times as long as by car. No wonder that people continue to favour their cars. The average speed of a Bangkok bus is 9km per hour. Since only 5% of Bangkok's surface area is given over to roads, less than in any other major city in the world, converting existing traffic lanes into busways is impractical. So the government has turned to "megaprojects" as the only way to get traffic moving. First it granted concessions for building elevated tollways. Now a rail system is on the way. Without subsidies, and with investors in the public-transport projects demanding a return on their money, the average rail trip is likely to cost 25-30 baht ($0.60-0.75), about one-third more than the fare on an air-conditioned bus and eight times that on a regular bus. For an unskilled worker earning less than 200 baht a day, that may be beyond reach. of the financial-services sector, than to a speculative glut. British developers, in particular, became more cautious after the last downturn, during the early 1990s, in which several of their number went bankrupt. In Tokyo, by contrast, lessons have gone unheeded: despite a spectacular property crash in recent years, low interest rates have tempted developers to erect no fewer than 111 skyscrapers this year, around twice as many as have been built in New York. This splurge promises more pain for Japanese developers and for their hapless financiers. Most people also miss that the reason that we have so little public transport is because we license taxis. With a free (or automatic licensing) environment for taxis we would have many more. Before the licensing of the taxi, anyone would stop and pick anyone else up for a small fee. 64 That is the most effective and prevalent public transport system you could possible have, much cheaper than rail etc. CHAPTER TWO THE PRIVATISED ECONOMY Clever design is important but it will not make investors come from all over the world if that's all it has. To make a city really work in the current globalised world, there is no doubt that it has to fully embrace the future with a tax free, completely privatised system. I have written a 400 page book on how (and why) to privatise those areas of the economy that have not yet been privatised with explanations of where this has happened round the world and what lessons we can learn. 65 In this chapter this background is assumed and we simply describe how we are going to organised and implement that privatisation in Libertonia. The book on privatisation can be accessed by clicking the links below: There are a number of areas covered here and in that book: 1. Policing and crime 2. Roads 3. Infrastructure 4. Courts 5. Noise 6. Beauty and the environment 7. Education 8. Health Policing $5 each per household in a skyscraper translates into about $12,000/R84,000 per month per household66. There are a number of security and guarding roles. Two people have to be available to man the entrance/reception to the building and watch the various banks of video screens. Two must patrol in the areas around the building, especially at night to give people a feeling of safety. Two people must be situated in the car park and available to move to potential break ins if people view them on the radar. The cost of this at African wage levels is no more than R1000 per month each. R6000 for all six with three shifts is R18,000/ $2500. If there is a big incident then those off duty can be called in, first those not likely to be sleeping, then those that area. Every block will have comparable forces so they can call in reinforcements if need be. They must have a contractual duty to aid each other in specified ways when the need arises for reasonable payment. The rest of the funds must be used to reward people who catch criminals anywhere in the city. This is by far the larger amount. Ideally the law should state that a criminal must be made to pay back double what has been stolen and then work it off if he has no funds. However until/unless that system applies, the blocks will pay double the costs of police companies that catch a criminal. The reason double is appropriate is that police will not catch every criminal and must have the incentives to investigate. Small one man shows may investigate small crimes and large, well organised professionals will investigate more serious matters. Blocks will be able to commission someone to investigate, but if another company catches the criminal then they must remunerate the actual catcher as well as whoever they commissioned. They have an obligation to pay those catching criminals that have committed crimes against anyone in the block or pro rata with other blocks if the criminal has also been causing problems there. The court will decide the exact arrangement. This arrangement is an initial position. Blocks after two years or by agreement with the Libertonian authority can agree with their members to do it differently but must do so in a way that catches criminals on a consistent basis. If block crime rate and the city crime rate has gone down that year and all the funds are not required, the block has an obligation to take remaining money from the levies for the next year. And can after the first two years, adjust the rate at which funds are levied. If the crime rate of the block or the city has gone up then the rate cannot be decreased and can be increased. It is legitimate to send personnel to help other blocks in other parts of the city. Those sent from the block who catch criminals elsewhere will be able to claim the double costs from that block. Blocks cannot exclude other private police from their blocks. Competition in catching criminals must be preserved. Police have free entry into public areas of blocks and may get warrants into private areas. In the event that police companies doing the patrolling need further backup they can contract in advance with either neighbouring block's police or rapid response third parties to provide extra bodies where needed. There are aspects of the design of the city itself that help reducing crime. In his 1972 book Defensible Space, "which showed that the safest neighborhoods maximized private space and minimized common zones. Safe areas also minimized "permeability," that is, the ease of entry to and exit from the neighborhood or housing area. Cul-de-sacs are thus a crime-prevention device, and any breaching of cul-de-sacs will predictably increase crime. Newman didn't include suburbs in his study because they had much lower crime rates than the urban neighborhoods he did examine. This, he believed, was because the suburbs were less permeable and more defensible."67 Another aspect in the same debate is mixed use. The bottom line is that giving criminals more access to households increases burglary rates. Ideally you close off residential/office space from retail space or public space if you want to reduce crime. This can be done however without preventing the communities that New Urbanism want to create. It simply means that the community areas in the retail mauls in the blocks and on the gardened, cafed areas between the blocks separate from the housing areas. Its possible to make the levy higher for anti-crime to start with a higher number of police to send a clear signal and create a reputation for being tough on crime. This then could be quietly decreased as a % of the levies as time went on and crime stayed low. Whatever rate it was at it, with such low barriers to entry it would attract many people into its ranks. No one need be unemployed when there are criminals to catch. Even people who did other jobs would be on the look out for crime so they could get commissions from the private policing companies. This happens to some degree today in the police but would be hugely increased if there it was a commercial affair. Because of the density, anyone walking anywhere in Libertonia should always be within shouting distance of the police at any time of the day or night. Very reassuring, particularly to women. On top of the highly incentivised private police forces, Libertonia is equipped with the latest in security technology. Access control is implemented by smart cards. Your smart card can open your house, let you into and out of the car park, into the main building and it may even be impossible for people to use your PC without it. That means you can comfortable send your children to a play area a few floors below knowing that no one else will be able to access the area. It means that you can authorise your staff to access your home on their card knowing that you can easily check the records to confirm they were indeed the only person to access your home on the night of the burglary. Added CCTV in the lobby, lift and streets can find out if anyone left carrying a heavy bad or box. More affluent dwellers can even install finger print recognition or even iris recognition using the same system. 68 CCTV with the appropriate software can even detect suspicious movements like loitering outside a bank, cars driving in the wrong direction, or identify a particular person somewhere in the city. Anytime a suspect or convicted criminal steps outside or into a public areas, the system can identify him immediately. This is all automatic, no one has to search through video tapes. This amazing new technology is quite expensive69 but divided amongst everyone in the blocks would be only about $10 per flat once off capital cost. Smart card readers are around $300 and the cards themselves about $30, so although everyone can have a card, it would add too much to the cost of each flat to install smart card readers on low cost flats. Rather a number of flats or the floor would require a smart card to enter. 70 When visitors arrived whose cards were not already enabled to enter your building and come to your floor (only). Reception would phone you and ask if they should be admitted. Their access would expire the next day. You would be able to view the reception area CCTV from your TV (any TV will do). Another aspect of the software is the ability to detect when packages are removed from a place and to also flag this to security. This is great for detecting shop lifting. This saves us all money when we shop. It can also detect when you left something behind by accident. These same cards can be used for shopping. Even the poorest people can pay using cashless method which means mugging people is of little benefit, all you get is a card you cannot use because you do not know the pin. All this information about people's movements is of course only available to block security and in the event of a crime. Privacy is not invaded, it would be legally actionable to sell such information to the press. Due to privacy concerns it would normally be the practice to put cameras in landings but if the area was high crime then they could be erected temporarily until the crime rate came down. Basic alarm systems also include panic buttons in every house along with smoke detectors for fires. Panic buttons are also fitted in streets. People walking home at whatever time of day or night are in any case only a scream away from the security of each of the blocks that they pass. All this technology should make any crimes that in fact somehow manage to happen very easy to solve. In fact the security guards will be able to solve many without recourse to outside detectives and pick up the premium for so doing. An average block might have 2 shifts of 6 guards each this would cost R40,000 to R80,000 per month depending on the quality or the people and their training. Reinforcements could come by car from elsewhere in the city when necessary. The technology also means it is possible for landlords to lock out tenants that have not paid their rent very easily and without getting involved in a potential violent exchange when trying to change physical locks. On top of legal support for easy eviction which is essential if we want people to be competing to build flats for the poor on a long term basis, this easy in practise will also lead to more landlords entering this market. This, incidentally, will also lead to a strong market for very short term accommodation paid for by the day while tenants get their rent sorted out. Smart card technology also can be used to help employers keep track of what time employees or contractors were in the office and even of where repair men or sales people have spent their time in a given day or month. It gives cleaners, for example, access to clean an office at certain times but no access at other times. It means you do not have to stay at home to let a workman in, he can simply be let in remotely from the office. A cell phone can be used to open the door from a distance or to do many of these other functions. Another aspect of security is guarding against 9/11 and Oklahoma style attacks. There are various ways of dealing with this including the practice in London of putting servers in nuclear bunkers under the ground and also making the glass bullet proof to at least the 3rd storey of a skyscraper. Roads In Stage One and Two of the building of the city, the roads will be paid for by the blocks as tolling isn't feasible at that stage. This adds less than 2% to the price of a new flat. 71 As the rest of the street gets built they pay back the first blocks for the roads which reduces the levies of that block. The next street of blocks to be build have a street going in the other direction and the first one becomes one way. Lateral streets are added with slip roads. When there is enough roads to support a tolling system, the roads are sold to 5 or more companies with the remit to create as much competition as possible. The returns from these roads are used to pay levies or in direct payments to flat/office owners and people start to pay directly for their road use. Road companies will not be able to own the roads on both sides of any building. Carparks show allow people to exit to any of the four roads around about (to promote competition). Roads in most cities are about 6m for the road and then 2m each for the pavements totalling 10m. Bus stops add a further 2m. In our city of course, the whole area is used for either roads or pedestrian depending on what level we are on. Infrastructure Competition Infrastructure because of its cost involves a bit of thought to make it competitive, or at least potentially competitive. Electricity for dense city involves a sub station in every block so electricity comes into these stations at 11kv. There is nothing then to prevent each block from contracting with a different provider. The key two for a Africa location would be South Africa's Eskom and the national power company. Most blocks will have back up generators but its not usually economic to generate power this way. It does however provide an upper limit for what the power companies can charge and is thus potential competition. Roads are not tolled to start with, but the blocks are obligated to sell them to competing providers when it becomes feasible. Creating competition in roads then is not an issue. Telecoms again are sold to competing companies who each own one of the 7 interconnected servers that are installed initially. Similarly with interconnected mobile network servers. Blocks can easily switch from one to another for the price of another cable running along the underground tunnels. Water services are a bit more difficult. Its not feasible to have multiple competing sewage and water pipes in the same way as you have with electricity cables or fibre optic telephone lines. In this situation then its better if all the blocks on one side of a road72 jointly own the sewage lines73 and then potentially choose their sewage processor at the point just before the sewage works. Thus if we can envisage one sewage works a discrete distance away from the where the skyscrapers stop at the foot or every road of skyscrapers. Due to the high density, one gets economies of scale at this level. It is feasible at this point to redirect a pipe to the sewage works for another street if it is offering a better deal and run the pure water back to the street from this sewage company. This would not be a simple exercise and would involve clearly more pipes and some pumping but the volumes would justify this work if one company was considerably cheaper than another. Economically, its the possibility of this happening that is important as that competition leads to continual price and quality improvement by the sewage company. Block Responsibility 1. To connect to delivery system 2. Collect for Public Goods a. Defence (if not provided by host country) b. Aesthetics: to create more beauty c. Education $5 a week, can download anything up to a point. 2/3rd of funds go to most downloaded material, rest to maintain system. Blocks vote on provider each year. 3. To connect to services a. Telephone b. Water c. Sewer d. Gas e. Delivery System f. Bulk purchasing g. Electricity h. Rubbish collection 4. To provide services a. Police patrols b. Payments to detective companies What the difference between this and government providing these services? 1. The actual providers (Telecoms /Police companies etc are competing) 2. People can opt out of the whole block choice and make their own arrangements (ie be disconnected from the Telecom go and just use cellphones) 3. There are many buyers and they can change their suppliers. No monopolies. Block Process Block companies are companies like any other but are voted for my the block based on how many meters squared the person owns of the block. The directors must however act according to certain basis rules: 1. For anything they contract for they must get comparatives from lots of companies. 2. They must discuss them on an online discussion forum or blog so that everyone can contribute and circulate all quotes for at least a week or two before the board meets to decide 3. A vote on the system of more than 60% overrides the board 4. The contracting must be arranged so that different contracts come up for renewal at different times in the year 5. Directors can be 'recalled' by a vote of the members of 51%. Any person in the block can start a recall referendum. 6. Solutions should be based on the hierarchy below Hierarchy 1 Where possible private competing companies should supply each member of the block individually. 2 If that's not possible then private competing companies should supply the block as a whole, 3 If that's not possible then the block contracts with one (or if possible more) company(s) to supply for as short a duration as is feasible. To start with as an initial position there would be minimum amounts to spend on police, for the first two years. Blocks can of course choose which company. Since each block is legally liable to refund to any company that catches criminals there is no maximum that they can spend in policing. All the usual items are also included in the levies: common swimming pools, maintenance painting, road maintenance until the roads are sold and tolled, roof garden74 Levies should be kept as low as possible as its surely better for people to charge entrance fees for users and keep levies low. If there is a block owner then they may do this. Making Markets Even Better While markets may fail (not perform perfectly) sometimes, they are nevertheless orders of magnitude better at delivering the goods than government processes in every country of the world. That's why the response to 'market failure' is seldom if ever, for a government department to take over or intervene. That doesn't mean that landowners and communities might not privately want to do things that make the operations of the market even better. Hence then price watch, contract watch and subsidy watch. Price Watch Insurers would quote for the main categories of insurance to price watch website distinguishing between things that affect premium a lot and the minimal factors. Price watch companies do not operate on their own entirely however they also co ordinate, check and record the views and discoveries of the community recorded on online chat sites and similar forums. Contract Watch This function makes people aware of contracts that are unreasonable or unfair. This knowledge means if people continue to buy from those with 'unfair' contracts then they should be enforced fully as they've done it with full understanding (prices might well be cheaper.) On the other hand people may decide to pay more for companies with more reasonable terms in their contracts. This function might also be used for insurance were claims tat were not paid were referred ere and they would decide if the company was acting fairly or not. Opportunity Watch Opportunity watch is where there seems to be a lot of public debate about a certain industry 'ripping people off', such as 'loan sharks'. Usually one finds they just have high costs (people that do not pay back). But lest that is not the case, opportunity watch points out these areas so that if there is a genuine opportunity that sellers will flood the market and bring down prices once again. Of course this is happening anyway in any economic system. Opportunity watch just helps to make the information available to everyone as quickly as possible. Subsidy Watch Subsidy watch looks not at Libertonia but at other countries and particularly at what they are subsidizing. Subsidies are bad, they hurt the third world by not allowing it to compete where it can. They distort the local economy also. Exporters in Libertonia are vulnerable to sudden changes in the regimes to which they ship their products. What better then than to take advantage of other people's subsidies rather than loosing through them. If America subsidises steel, then lets buy their steel and take the subsidy of the US tax payer! If France wants to subsidise its farmers then let's buy our lamb from them.75 If people in Libertonia do not want to spend hard earned cash in the more expensive of university degrees, then let's simply import people with these skills who have been subsidised by those who still think state education is a good idea. Funding of the watchers Funding of the watcher is through a tiny increment to the levy. There is a fixed price for the first year. Four companies get a sum of money to analyse prices, contracts, opportunities and subsidies in the zone and publish on a particular page on the Libertarian website For the next year, the funds are distributed according to the companies people vote provided the best service. The two companies that are lowest are replaced with other companies thought the original two are welcome to continue to provide their services for free in the hope of getting voted back in the next year. The new companies are also voted in based on their promises or existing (free) performance. Dear Peter In South Africa there is a web service which has successfully identified which companies responds to comments from people and fix wrong situations and which do not. This kind of service could certainly be an effective part of a watcher company's repertoire. Who is Who Other useful services would include information about how to set up and be successful in particularly businesses and who the right people are to talk to in certain industries. Again publicly funding people to research this and put what they gain on the internet could be publicly funded with those putting up the most rates or consulted information getting the lion's share of the funding. As usual the people who do the work are private companies or individuals and its just the funding that is public. Full Information These all move our economy closer to the ideal of classical economics that markets work in terms of perfect information. There is another mechanism to do this also. All the mechanisms that we are talking about are funded through levies, though unlike taxes, people can choose to opt out in some circumstances. One way however to reduce these levies while increasing the information flow is to allow companies to send ten emails a week to each person advertising some new business, new product or special offer. These would be filtered to make sure they were something of interest and genuine, they would also be charged for so anyone receiving these emails and reading them each month would get deductions from his levies. Those who opted to get more emails might get even more deductions. People could choose not to get any and thus pay more levies. Ideally however, people would express their preferences on the internet so the emails they were sent were about things they were genuinely interested in. Better still, if products were sent to a small number of people first and you rated how interested you were in four or five new products in a certain area. The best offers then go onto the second round where they compete with other offers that are voted more highly. Thus the offers that reach the mass market are only the best offers. Everyone gains from this process. Not being known is a real burden on start up companies. It takes many painful and expensive years to become well known, even if your product is much better than established brands. The marketing cost to reach you can only be built into the company's pricing. Enabling us to find better companies and products more quickly cuts out that marketing cost and makes products cheaper. Plus it gives much more effective competition to the encumbents, keeping them improving and innovating. And all of it moving us closer to the voluntary full information economy. (And of course we must realize that perfect information is not a static state. The market itself is a discovery process by which we discover what people want and need)76 Disintermediation of (some) Retail There is a burden on blocks to employ every year a company that attempts to bulk buy products for as many items as possible. That is not to stop block members also going with other competing companies but it is to insure in the short term that the scheme gets off the ground. Basically consumers sign up on the website and pay for what they want at greatly reduced prices and the buyer puts in the order when the minimum number of units is reached. He then arranges their delivery to block members. This cuts out retailers thought depending on whether he aggregates the goods before delivering, the distributor sorting function may still exist. A few examples of commodity goods that could be bought in bulk would be : staples: tinned meat, toilet paper, razor blades, bottled water, soap, shampoo, wine, hard liquor, make up, moisturiser, clothes esp socks, underwear (but sizes), coat hangers, batteries, light bulbs, soap powder, fabric conditioner, hi fis, leather jackets , tables, chairs. Durable goods that come in standard sizes are the best for this kind of scheme but other types of goods become possible as the buyers get more sophisticated. Goods can be high or low quality depending on the demand. Even fresh food can be delivered this way if it arrives quickly, the buyer can go directly to farms to order a large number of butchered animals. Similarly he can go to local and foreign factories and deal direct with them. This kind of system might even make it feasible to manufacture things in Libertonia that would otherwise be made in China. Having to order different sizes isn't really a problem in the ordering of the goods. Its must more hassle to deliver. Higher value goods make even more sense that the lower value ones we have been discussing (though low value goods often add up over time.) It's quite feasible that buyers could negotiate deals with car companies to move thousands of cars at a time to Libertonian buyers. Similarly with kitchen appliances and other white goods. The strategy wouldn't need necessarily always to be cheap and cheerful. A 50% discount on some really exclusive items might be effective. On goods where particular tastes are an important part of the selection, bulk buying could be done on a wine of the month/ book of the month basis where people pay a fixed sum and experts select what they think is good or that you will like. You will come to know which experts you trust or who think like you. Programs could even work out your average consumption and automatically send you more when you need it (light bulbs, shampoo, etc) With other things with different types and sizes, it wouldn't really matter at all compared to the value of the goods. In some cases the company selling such goods as Hi-Fis or Large TVs could probably be persuaded to label all the boxes so the buyer could easily deliver them. People of course would not usually be allowed to cancel or the buyer will be left with huge amounts of stock he cant sell. But substitution would usually be fine. By that I mean if one person backed out but he found someone else to continue the order. Buyers might even allow that as long as there was someone somewhere that wanted the goods, even if they were unknown to the original orderer that the person would be allowed to back out. There is no reason why bulk buying should not also work for computer supplies (though margins are pretty low so no huge savings there). Ipods, mobile phones etc can be ordered this way. Commonly used, non prescription pharmaceuticals can also be ordered in bulk: head ache tablets, Another way that it could work however is if you bought, say the top 10 novels each quarter or the top 10 best selling clothes in your style (and size). Note also there are two ways to play this. The very cheapest solution is to bypass the brands and get no-name brands of goods at wholesale prices. However, in many cases, especially at the start of the program it is going to reassure customers more to go with well known brands and the saving will still be significant (30-50% on average). Adding a financing provision to this service would also help it to succeed considerably. Common practice would be that everything sold must be at least 25% cheaper than in the average store before the deal was offered and the company must try to get the maximum possible discount for the bulk purchase. Company doesn't make margin on this but charges an explicit fee. No back handers or presents of any kind can be received from suppliers. Sometimes the factory might deal direct with the block if the buyer is not willing to deal with him. Any resident of a block can raise deals on the internet system. Any violation allows immediate termination of contract. Can ally with other companies to get even bigger discounts but any collusion to raise prices is punishable by damages law. Retail gross margins vary. Edcon has about 40%, Exclusive books about 48%. These are both bad examples for disintermediation as their products are very differentiated. However, it does give an indication of the savings to be made in other areas where the products are more commoditised. Retail margins most fund the rental of stores and all the people that work there; Edgars has 230- 250 people working in their Eastgate or Sandton stores. Large shopping chains of course have huge buying buyer with manufacturers, where a single buyer can spend R300 million per annum and the whole chain in the tens of billions. It may it fact be the retailers themselves that run the bulk buy companies. There are many related areas where bulk buying may make sense. Group life insurance for a whole block may well be cheaper per person than individual policies. Group licensing of software is possible as it may well be with CDs and Movies. Possibly the city could pay a certain amount per year to the music and film houses equivalent to what they would earn in a city of the same size then the material could be copied freely within Libertonia. A similar principle applies at a higher level in paying once to make all the academic journals available online to anyone in the city. Retail changed not eliminated It's worth saying at this stage that I do not anticipate this process eliminating shops, in fact, I expect there will be as many shops as before, they will just sell different things. Those things that are familiar to everyone, that can easily be bought in bulk, that have become commodities, will be bought through the bulk buying process. Other items that need to be tried on, or that you have not seen before, or that you do not understand, or that are sold fresh will continue to be sold from shops. So will things you could get in bulk, but want right now! The end result is a much wider range of new things in shops as shelf space in freed up through buying the standard stuff in bulk. Retailers will do well in Libertonia, their store in Libertonia will most likely have the highest profit per m2 in the world. With densities as high as this it is hard to do badly! There is a market for almost everything. Ways of saving time In some ways saving money and saving time are two sides to the same coin. Money you could say, is time is foldable form. 77 But its worth thinking about them separately. People in the modern world are sometimes even more concerned about saving time than money. They will pay for a more cost effective solution. People do not have to waste work time 1. :Queuing at banks, everyone has internet banking 2. Queuing at government offices. 3. Queuing on roads due to congestion. Minimizing the Time costs of the movers and shapers. Most significant cost is deal cost. 4. Minimised by making things close to each other, easy to meet with someone and make a deal. Even with all the new communication technology people still like to meet. 5. Minimised by eliminating time to get permissions and licenses and company formations. 6. Minimised by putting info about all types of business on the internet for people to see costs of each business and the way it works. Reducing interruptions through 1. Reliable power, etc through competition Faster Delivery due to our underground delivery system Applications Aesthetics 1. With this model consider aesthetics or the beauty of a place as a public good since once you have made something beautiful, everyone benefits and cannot be excluded 2. So we do not get a government department to provide aesthetics but competing private companies. Contribution is compulsory and paid by all but they choose which aesthetics company to pay it to. 3. Here there seems to be no way to effectively set the levy as with defence, so we need to vote on a level perhaps. The difference is that defence is basically an insurance situation and aesthetics is not. Freedom/Variety in Areas There seems to be some demand for areas that are completely void of regulation (as opposed to just mostly like the rest of the city). There is no reason why some areas of the city should not be set up this way, if that is what people genuinely want. It might also be possible for different areas of the city to represent different personalities. Contemplative areas would have low tolerance for noise violations, party areas would have high tolerances. Some parts could be very moral with restrictions on drinking after certain times, on the sex industry/ pornography etc. Family values would be paramount. Churches would be based there. Others areas might want to be more liberal. Some towns in the UK have become focused on families which is a problem as families get older and there are no facilities for young adults. This is better served by different areas focusing on different stages of life and making it really easy to move with the low transaction cost of the computerised deeds transfer system. Other Key Principles Libertonia rests on the principle of the general impossibility of economic planning. It is not desirable to try as they did in the Soviet Union to try and guess what goods people wanted to buy without any feedback from them via the price mechanism to tell you if you guessed right or not and how you can change. Ludwig von Mises puts this very well when describing the process as by human action but not by human design. In other words optimal results are achieved in an economy because the price mechanism co ordinates the plans and preferences of millions of separate individuals without any one individual or group of people being aware of the whole picture. For governments to try and simulate this co ordination with statistics and the spending of taxes is simply impossible. Government spending can only go to areas less optimal for meeting human wants than how it would otherwise be spent by the taxpayers from whom the money was taken. 78 That is why is Libertonia, money is left with people themselves are not taxed away from them on the dubious premise that government knows what is good for a person better than the person themselves! It follows from this that whatever we lay down as how Libertonia should be, should only be an initial position. We leave things flexible so they can change in response to market signals and thus become optimal. Sometimes this is by the creation of new rights. Noise rights are a flexible solution that people can buy and sell. This contrasts with the old fashioned manner: making a law against making more than a certain amount of noise. Such a law is inflexible and doesn't allow peoples preferences as against those of other people to be expressed. So we set initial positions rather than final outcomes. Hayek, added to these insights pointing out that you do not know how people are going to react to new events and products before they take place. The market itself is a process of discovery. Most things cannot be planned therefore. Rather everything should be kept flexible. Ronald Coase, another famous economist pointed out that in the absence of transaction costs, it doesn't matter what the initial position is. Goods and services will end up in their highest value use through trade. This even works well when transaction costs are low. Presuming of course, that everything is kept flexible enough for goods and services and assets to be bought and sold and that the contracts people make to transfer rights can be enforced. We will come back to what happens in Libertonia when transaction costs are high. Another example of keeping things flexible is not deciding in advance that certain areas will be residential or mixed use. With underground tunnels we do not want to specify exactly what they are or are not used for. Someone might think of an amazing new use that we've never thought of. Keeping things flexible adds huge value. CHAPTER 3 What Makes Tax Free Zones Work? Research on the Global Use of Special Economic Zones To be successful the zone needs to be 1. Completely tax free 2. General :Including almost any type of legal business (see negative list). 3. Private Sector Managed 4. Highly deregulated/liberalized/ delicensed. 5. Located in the East of the Country 6. Reasonable size: At least 100 km2 and ideally 300-500 km2. 7. Creating Employment for Batswana 8. Going further than existing run of the mill sites. 9. Supported by government investment in infrastructure. 10. Insured/ Protection of Property rights. 11. Ease of process/ no bureaucracy/ simple. More Information 1. Good and Bad experiences 2. Prevalence (Globally and in Africa) 3. Global Experience of EPZs Benefits Of A Zone EMPLOYMENT 1. To reduce unemployment: estimates of total employment in EPZs in the developed world vary from 530,000 (World Bank 1992 ) to 2.5 million (Starnberg Institute and ILAB). 2. Workers will develop better skills in contact with MNEs. 3. Africa's savings rate is low, outside investment is needed 4. Small increases in global FDI would be extremely significant. 5. Hugely boost the host economy. 6. Tax for the host country through goods Libertonians buy there. Frequently Asked Questions International Treaties: WTO, SACU, Anti-tax haven We cut taxes before and lots of factories didn't arrive. Sustainability Aspects of the Local Situation Tax Free Nature It is well understood that the lower the taxation the more economic growth and the faster the zone will succeed79. I would add that this process is exponential in nature. A fully tax free zone will growth orders of magnitude quicker than a zone with half the current taxes. It could easily have 10-20 times the effectiveness. Also 'fully tax free' is a message that can spread easily. It's not complex and it's very interesting to people. There seemed to be broad consensus on this point (which is key to winning investment) 1. "The emirate recently announced the Dubai Outsource Zone (DOZ) --a 70-acre commercial park in the southeastern corner of the city that will be designated as a tax-free zone for the next 50 years." 2. Dubai is one of the lowest tax zones in the world which is a reason for its success http://www.lowtax.net/lowtax/html/dubai/jdbdctx.html 3. Botswana itself is listed as one of the 30 lowest tax jurisdictions so part of Bostwana's success can also be attributed to its lower tax status. http://www.lowtax.net/lowtax/html/jurhom.html 4. Poland's on the other hand failed by being too complex 5. Indian EPZs were mostly dismal failures because : duty on domestic sales, small size, locational handicaps, and micro management by government. As opposed to Chinese : decentralized authority, commercialization of infrastructure development, flexible labour regulations, aggressive marketing, (Asian Journal of Political Science Khatri, Naresh p142) 6. Dubai got Microsoft and CNN thought its tax free policies (Lee, Eric : Harvard International Review (Global Notebook: Spring 2005 ) 7. Because its tax free, it works out to be one of the cheapest cities in the world, thus encouraging investment. (Textile World Feb 2005 ) 8. The message is much more effective if the zone is fully tax free than if its some complex combination of incentives. Recent marketing best sellers in the business world such as 'The Tipping Point' and all the books about 'memes'80 tell us this. The message must be simple, simple, simple if we want it to spread round the international business community by word of mouth. 9. The taxes that governments get from these zones where they charge them are in any case small because most companies declare losses for a long time. The damage done by the presence of taxes in their zones however is nevertheless great. 10. The government will in fact gain taxes through purchases of Libertonians from elsewhere in the host country. This will probably be the main taxation gain to The host country from the zone. 11. Notwithstanding the above, we recognise there may be some taxes where dual taxation treaties are involved with foreigners. 12. It's been suggested that we make the zone zero rated for VAT rather than exempt which we accept as a good idea.81 13. Countries have cut taxes before and not seen a dramatic increase in investors. That is because firstly, everyone else was cutting at the same time as well usually, and secondly, partly as a result, there wasn't a big enough difference between the lower rate and everyone else's rates to get people talking about it. Tax Simple 1. As well as being tax free its essential that its tax simple! 2. In other words that it's clear that the tax rate cannot increase in the future. Generality 1. Any (legal) business can come to Libertonia, the EPZs by focusing on one industry meant that the EPZ was not integrated with other industries meaning other industries didn't benefit from the tax free, efficient nature of the one the country focused on. 2. One of the big advantages of generality is that it means that companies do not need to fill in application forms and get 'permission to come', as if the EPZ was the one doing the favour to the company. The major problem with this is of course the delay. Egypt realised this and simplified its application forms and need for feasibility studies (see below). Its not hard to compete with international business when the choice is between 'come to Libertonia, buy an office, start trading, no forms' vs. 'fill in this hundred page application with supporting documentation, and if you are lucky we might let you bring our investment here.' 3. EPZ are traditionally very detached from the rest of the economy. They import all their inputs and export all their exports. Their only connection is through employment. With our model, the zone is a fully integrated local economy gaining the benefits of skill transfer, use of local production and division of labour. Types of business 4. Light manufacturing: metals, automotive components, Insurance Services, hospitals, education? Financial Center, Electronics, Call centers, Data Processing, Computer Programming (fast cheap internet), Garment assembly, Pharmaceutical supplies , Retail- Dubai's tax free status makes it a shopper's paradise, Subcontractors: to automobile, etc, Labour intensive : toys, agro industry, plastic, textiles, footwear, leather, electrical, electronic. With certain technology also: "data entry and processing, data conversion, software programming and development, geographic information services, image processing, indexing, automated mapping, electronic publishing, medical transcription, and video conferencing." (Digilink) 5. "Intellectual property, brands and copyright are the latest buzzwords in the UAF. In the past year, the UAK, and Dubai specifically, has witnessed an explosion of the creative industries ." (For more, see overall plan/marketing plan) Private Sector Management The nature of this project as one in which the private sector is running the project gives investors comfort. One of the reason why China and Dubai succeeded and India failed was that the former countries decentralized the development to the private sector and the latter tried to micromanage the projects (Khatri, see above). In many ways Global Intelligence is taking the role of the Dubai Holding Company. Its central role is to sell real estate with value added services such as the ability to get up and running in a few days, fully licensed and with all the equipment and software that you need. DEREGULATED "And EPZ ...offers firms free trade conditions and a liberal regulatory environment" World Bank (1992) Key to this is the delicensing process that we talk about below. If we want to encourage a lot of economic activity its crazy to ask people to require a license before they conduct their particular form of economic activity. This especially true with the investors themselves (the understandably disappointing Senegal EPZ required entrepreneurs to agree to invest a minimum amount of money and employ a minimum amount of people before it could even get permission to begin.) But its also true of all normal economic activities. 82 General Principles Rationale for Exemption from Legislation De-licensing 1. Its not desirable that people should be required to apply for a license simply to carry out a business or profession. This slows down considerably the entrance of new businesses into the markets and deters others from starting up. Nor does this process reduce the number of 'bad guys'. Instead of perpetrators loosing a license they can easily simply be forbidden to undertake the work again if this is desirable, though in most cases the payment of damages should be enough. An internet register can be kept of perpertrators for a certain time. But it is not economically efficient to make everyone apply for a license just so that a very small percentage of people can loose a license. Furthermore a key point in the literature that bureaucracy effects the success of Special Economic Zone. 2. Companies with Significant Balance Sheets It is not necessary to large companies with significant balance sheets in situations where licensing is done for prudential reasons (Banking, Building Societies, Stock Market, Pharmaceuticals) so instead of legislating in details its rather necessary to specify an amount of capital or sales above which no license is required. 3. However, it is not desirable for companies who do not have the balance sheet to pay potential damages in industries where there is great danger or large sums of money involved. So these companies in these industries will be subject to the regulations. 4. It's no coincidence that EPZs in highly licensed and regulated India have not been successful. Kandla and Santa Cruz zones have been of limited importance (Proctor 1995 8) Privatisation 5. Privatisation implied by zero tax status. Furthermore, if we are not directly contributing to the The host country Exchequer it is not desirable that we should be taking from it beyond the minimum to help the zone get off to a good start (see Infrastructure). LOCATION Phillipines Benefits can be outweighed by heavy infrastructure cost due to choosing far out location (160 km from capital) with poor road links. Hilly and substantial earth movement was required. No tax holidays. Overall package not significantly better than that offered elsewhere (Warr 1986) Employed 20,000 people. Location is important. Vanuatu has a fairly ideal fiscal regime with very little taxes but its location 1800 km off the coast of Australia discourages investors. However we should not overstress this, the tax free, deregulated nature of the zone is far more important than the geographical location. If we think of the leading nations in history the geography has changed from a river delta in Egypt to dry rocky coastline in Greece, to rainy Northern Europe to continental America with isolated pockets of in Asian islands. Not much in common geographically. SIZE "And EPZ ...usually 10 to 300 ha offers firms free trade conditions and a liberal regulatory environment" World Bank (1992). This is too small, hence why most do not work. "The minimum size of the Special Economic Zone, however, shall not be less than 1000 hectares. This measure is intended to provide self-contained areas supported by world-class infrastructure oriented towards export production." (www.ieport.com) This suggests that India has learned its lesson and now has bigger zones. China didn't do zones within cities, it created new cities like Shengzen ie the zones were bigger. Employment In the review of the literature Jayanthakumaran says that zones have been an important source of employment in all cases. Shengzen From zero to 2 million inhabitants but only 200,000 work directly in the zone, the rest are spin off jobs. (Summerfield 1995) The state invested Rm100m into the zone and received back Rm50 bl, a ratio of 500 to 1. So Zones are a good investment for governments. In Mauritius unemployment dropped from 20% to 2% in the 20 years. In Tunisia from 1971 to 1986, 3000 new jobs were created per year (net) ( 1998) By 1994 there were 110,000 workers in the zones. "EPZs attract mainly labour-intensive industries -- i.e., textiles, garments, footwear, leather, plastic and agroindustrial goods, toys, as well as electrical, electronic and automotive components and final products. Data processing companies are also drawn to EPZs." (Romero 1998) UNCTAD (1994) reported that there were over 200 EPZs operating in over 60 developing countries. These provided four million jobs in labour-intensive manufacturing such as textiles, clothing, and electrical appliances. Employment in service-sector . In addition some governments have opened the entire country to companies that produce for export. (We should bear in mind that if Libertonia works well, The host country may introduce some of its deregulation or privatisation policies into the whole country.) The percentage of people that are economically active in a rapidly growing population is about 40%, so every job supports about 2.5 people (children, old people, etc). Need To Go Further "Africa has been a latecomer to EPZs and where and when it has embraced them, it has done so half-heartedly," Foreign Direct Investment magazine at www.fdimagazine.com Most Export processing zones in Africa have not received much Investment (Romero 1998 ), although the zones do seem to have created jobs. Libertonia while based on an EPZ goes much further and must if it wants to be a success. From an attracting investment point of view, Libertonia needs to be able to say: Improvements 1. 24 hour turn around on building applications for skyscrapers 2. No need for joint ventures 3. No need for visas (vs Dubai 24 hour turnaround) 4. Less bureaucratic and lower tax than China. 5. Can produce for internal market (Libertonia) as well as for export. 6. An enclave away from all taxes not just export taxes. 7. All investments insured by Lloyds against change in laws or regime. In other words: "No taxes, no waiting, no license, no forms, no hastle" Government Investment In Infrastructure "Most governments assume full responsibility for providing the physical infrastructure. Many of them have incurred considerable debt to provide buildings, sanitation, telecommunication and electricity facilities, and to build or upgrade airports, harbours and access roads." (Romero 1998) Government in the Phillipines also gave subsidized electricity. Investment people concerned about change of policy (particularly in China) "Within the zone the physical infrastructure and all services necessary for manufacturing are provided: roads, power supplies, transport facilities, low-cost/rent buildings. In a number of cases restrictions on foreign ownership which apply in the country as a whole are waved for foreign firms locating in the zone." (Abott 1997) At this point we need to be careful as direct investment into zones could be seen as a subsidy. Better then for government to take the role of bank or developer in either the buildings or the infrastructure .This also demonstrates commitment to the zone. Commercial banks often will only fund the first 40-60% of a building, especially the first few. If the Government took up the other 60 -40% of the first few buildings in return for a higher interest rate then that would aid the zone in getting things off the ground. Alternatively, the government might build a whole building on its own book and lease it to investors. Insurance Of Property Rights Botswana has a relatively good reputation for property rights but anything we can do to bolster the credibility of the region is helpful. Particularly in the light of problems with property rights in certain neighbouring states. For this reason we suggest the technique used by Leon Lowe with the Ciskei government to increase its investment in the 80s. What happened was that the government signed a contract not to change certain laws and the contract was insured by Lloyds and paid for by the Ciskei government. This insured investors against any default. This kind of arrangement would work well for Libertonia for a number of reasons 1. The kind of laws insured against would not be the kind of laws the government of The host country would want to pass anyway. 2. Investors would come in much greater numbers. 3. Clarity and Predictability would characterize the whole investment exercise. 4. The premium would be cheap due to the governments good reputation. This will also make the capital flight situation (detailed below) much less likely. Secure Property Right Foreigners must be able to buy property within the zone. In Cook Islands they can only lease property for 5 years without special permission. The Land should be held freehold or at the very least 100 or 150 year lease. Joint Venture Possibilities The The host country government may want to put money into the infrastructure along with international investors and get a return from the government in that way. Shepherd a prominent architect in Joburg and Dubai, says that its through returns on infrastructure payments that the Dubai government has made most of its money. Why Have A Zone At All? Estimates of total employment in EPZs in the developed world vary from 530,000 (World Bank 1992 ) to 2.5 million (Starnberg Institute and ILAB). UNCTC says 1.5 million. These estimates may be low . In the late 80s China alone had 1.5 -2.5 million and Mexico close to 450,000. For more on employment see the section below. "Almost half of all investment in China has gone into the economic zones."(Firoz 2003) Secondly, workers and local entrepreneurs are expected to develop and upgrade their skills and knowhow as a result of being exposed to new work practices in a competitive business environment. (Romero 1998) Thirdly, the exigencies of structural adjustment programmes have made it necessary to reduce government intervention and create a hospitable environment for private investors. Since the rates of savings and investment, particularly by the local private sector in Africa, are the lowest in the developing world (IMF, 1995: 100), EPZs are seen as a means of obtaining private investment capital. (Romero 1998) Fourthly, there is the realisation that inadequate infrastructure and cumbersome bureaucracy have helped to impede inward FDI and industrial development. With EPZs these problems may be circumvented. (Romero 1998) Fifth, EPZs are expected to reverse the region's marginalisation in global investment and trade. Africa's share of world FDI flows dropped from 3 per cent per annum between 1981-85 to a mere 1.7 per cent between 1991 and 1993. Its share of total FDI stock in developing countries plunged from 14 per cent in 1985 to 9 per cent in 1994. In 1996 only US$5 billion of the US$129 billion FDI into developing countries went to Africa (UN, 1995: 52, 84, 86, 88, 93 & 94; UN, 1997: 56). The region's share of world merchandise exports also declined -- from 5.9 per cent in 1980, to 3 and 2.1 percent in 1990 and 1995 respectively. In 1995 only 0.8 per cent of world exports of manufactures came from Africa (GATT, 1994: 44; WTO, 1995:38 & 62; WTO, 1996:22 & 50). EPZs are expected to stimulate exports of non-traditional goods and eventually, certain services. (Romero 1998) Good experiences " Results suggest that zones in South Korea, Malaysia, Sri Lanka, China and Indonesia are economically efficient and generate returns well above estimated opportunity costs. On the other hand, the heavy infrastructure costs involved in setting up the zone in the Philippines resulted in a negative net present value. The zones have been an important source of employment in all cases and have promoted local entrepreneurs in some" (Jayanthakumaran, K.) "For example, Mexico's in-bond export industry (maquiladora) was the only sector of the economy to register increases in output, jobs and exports, notwithstanding the 1995 devaluation. Between 1994 and 1995 output rose by 7 per cent, jobs by 13 per cent and the value of exports from USS 26.3 billion to US$33 billion -- i.e. about 39 per cent of total exports. By May 1997 the maquiladoras had created 890,412 direct jobs (Mexico and NAFTA Report, 1996: 3; Latin American Weekly Report, 1997: 365)." Of the five countries that launched EPZs in the 1970s, only Mauritius and Tunisia have had success in terms of employment, number of enterprises established, the EPZs' output and their contribution to the diversification of exports. (Romero 1998) African governments are inspired by the experience of Mauritius where EPZs are responsible for the impressive reduction of unemployment from 20 per cent at the time of their inception in 1971 to less than 2 per cent by 1994. The country now imports labour. In September 1995 there were 6,205 migrant workers in EPZs. (Romero 1998) In 1971 there were nine enterprises employing 644 workers. The workforce reached its highest level of 91,000 in 1991. With the closure of some firms and the greater use of labour-saving technologies in others, employment has been falling particularly in the clothing industry. In September 1995 there were 80,700 EPZ workers (ILO, 1995a; Marches tropicaux et mediterraneens, 1996a: 422). (Romero 1998) The impact of EPZs on trade has been outstanding. Between 1980 and 1993 Mauritius became one of Africa's leading exporters of merchandise, with annual growth rates averaging 9 per cent. More than 80 per cent of exports were clothing and textiles. The share of clothing in total merchandise exports soared from 17 per cent in 1980 to 52 per cent in 1990 and 56 per cent in 1995 (GATT, 1994: 45; WTO, 1995: 125; WTO, 1996: 112). In an effort to break the reliance on the clothing industry, the Government, in 1996, signed an agreement with the Freeport Operations Mauritius Company to set up a "Merchandising Centre". While export-oriented factories will be housed in the Centre which will become operational in three years, banking, insurance, warehousing and freight services will be the core activities. (Romero 1998) In Tunisia EPZ-type enterprises accounted for 32 per cent of non-oil exports in 1971. By 1985 the figure had risen to 55 per cent. Between 1973 and 1986 an average of 2,960 posts were created every year, and in 1986 the estimated 40,000 workers in those establishments comprised 11.6 per cent of the workforce in manufacturing. Job creation continued at a robust rate between 1987 and 1989, with 167 new plants recruiting 9,150 persons over that period. By 1994 there were approximately 110,000 workers in 1,500 factories. Clothing became a major export. Its share of merchandise exports rose from 15.4 per cent in 1980 to 32 per cent in 1990 and 42 per cent in 1995 (ILO, 1992: 53; Marches tropicaux et rediterraneens, 1994a: 2642; WTO, 1995: 125; WTO, 1996: 112). (Romero 1998) Ciskei was set up with 0% corporation tax , 15% personal income tax and 15% withholding tax (on profits, not capital). The two industrial estates were filled within two years with an estimated hundred factories. Law firms and other professions also established a presence there. Housing, shops, taxis and other businesses boomed with the usual knock on effects. It was in fact the only homeland in which share of revenue from tax rose afterwards. Although 5 yrs of tax losses were anticipated, tax take actually went up by the end of the first year despite the radically lower rates.(This is known as the Laffer curve phenomena). (Lowe 2005) Taiwan's EPZ, set up from 1966 to 1971 had by 1979 employed 80,200 people which remained fairly static thereafter. Benefit to cost was 2.4 to 1 for the government. (Proctor 1995 8) The performance of other EPZs launched during the 1980s and 1990s remains mixed. In some cases the recency of the zones does not yet permit a meaningful assessment of their impact. In certain countries, developments have been promising. For example in Lesotho, where the Lesotho National Development Corporation (LNDC) supports all export-oriented enterprises regardless of their origin, the contribution of these companies to total exports grew from 9 to 21 per cent between 1981 and 1985. In 1992, garment, leather and other light manufacturing companies generated more than 80 per cent of total exports and created some 11,000 jobs. In 1994, there were 16,000 workers in 48 export enterprises (Baylies and Wright, 1993: 581582; World Bank, 1994: 286; LNDC, 1993/94: 1). Egypt has 13 industrial cities and eight EPZs. Since the start of the 1990s the former have produced goods worth some US$1.2 billion per year. In mid-1995 they provided about 90,000 direct jobs. The industrial cities and EPZs have helped to diversify exports. The share of textiles in total merchandise exports rose from 8.5 per cent in 1980 to 12.7 per cent in 1994. In that year non-traditional goods contributed USS 1.4 billion to total exports which were worth US$3.2 billion. Of the recent EPZ host countries, Madagascar has made significant strides in terms of investment and employment, even though not all enterprises that got approval to set up business have actually done so. When the EPZs came on stream in 1990 the workforce was 5,861, according to Government sources. By December 1994, 66 of the 103 approved projects were operating, with a workforce of 17,400 -- 12 per cent of all workers in manufacturing. They generated 24 per cent of all manufactures exported (Razafintsalama, 1996: 996; ILO, 1995a; Marches tropicaux et mediterraneens, 1994b: 438). (Romero 1998) The New Hampshire Project (document available on request) is a different kind of zone. In this experiment many thousand of freedom oriented people have chosen to move to an area of America attracted by the possibility of minor reductions in taxation and regulation. This kind of person will be very attracted by the kind of zone we are suggesting. Not so successful None of the goals of the three other early EPZ projects was attained. The rationale for building the US$15 million Tema industrial estate in Ghana ran counter to that normally underlying such initiatives. It encouraged not exporters, but enterprises involved in import-substitution activities. Between 1975 and the early 1980s the industrial estate housed only one export-oriented company -- a wholly foreign-owned multinational enterprise (MNE) producing aluminium. Its workforce of mainly well-paid, skilled local personnel, grew from 2,170 in 1975 to 2,606 in 1981, then shrank to 2,060 in 1982. Between 1975 and 1982 that company employed about 20 per cent of all workers at the Tema industrial estate. Indirect employment effects were negligible because of the lack of linkages. Plans to use local bauxite never came to fruition because imports were cheaper (Botchie, 1984:48 & 57). In 1990, the latest year for which data are available, there were 2,600 EPZ workers in Ghana. The 1995 Free Zones Act is expected to promote truly export-oriented activities as opposed to those undertaken within the framework of the 1977 Industrial Free Zone Authority Decree. (Romero 1998) The EPZ in Liberia was an export-promotion scheme. However, the zone, on which government had invested USS 15.7 million up to 1981/82, never got off the ground. Of the 14 enterprises that expressed interest in the zone in 1979, only one, a multinational producing agroindustrial equipment and machinery, started operating in 1981 with an all-male workforce of 50. Eighteen months later the number of workers remained unchanged (Botchie, 1984: 33, 45 & 53). Its failure was attributed to limited promotion of the zone overseas and low labour productivity. However, even with adequate advertising and a productive workforce, the intensification of political conflict in subsequent years would have done little to boost investors' confidence. (Romero 1998) Established under Act 74.06 (22 April 1974) and inaugurated in March 1976, the Dakar zone in Senegal has stagnated. Ten years after it became operational there were eight factories with 436 workers. By 1988 the number of enterprises had crept to 14 with a workforce of 500. In 1990 there were only 10 factories employing 600 persons. This poor performance is a source of great disappointment given the huge public investment in that venture -- an estimated six billion CFA francs to launch, with further subsidies amounting to approximately 275 million CFA francs between 1985 and 1989 (UNECA, 1993: 79; Zolty, 1989: 20). Reforms to introduce flexible employment and wage policies are among the measures proposed to give the zone "a shot in the arm". Moreover, an entrepreneur no longer has to agree to invest a minimum of 100 million CFA francs and create at least 100 jobs for locals, before getting approval to set up business. (Romero 1998) Cameroon, Kenya, Nigeria and Togo inaugurated EPZs in the early 1990s. However, FDI inflows are yet to meet annual targets, and where industrial activity already exists, the number of enterprises and jobs are modest (Annex I). Up to mid-1996 there were no plants operating in Nigeria's 308-hectare Calabar EPZ, while the Inga Free Zone in Zaire has been a failure (Marches tropicaux et mediterraneens, 1996b; Weissman, 1996: 16; ILO, 1995a). (Romero 1998) In Zimbabwe and Namibia which passed EPZ laws in 1994 and 1995 respectively, there were no companies operating at the time of writing. (Romero 1998) Prevalence And History "By mid-1996, 24 countries had either announced plans to draft EPZ legislation, passed laws for the setting up of EPZs, or included in their investment codes, EPZ-type incentives for attracting foreign direct investment (FDI) in export-oriented industries. " (Romero 1998) By 1995 there were in excess of 230 EPZs across 70 countries employing nearly 4.5 million workers. Add to these figures China's `special economic zones' end the figure soars to 44 million. The overwhelming majority of these zones were located in the Caribbean (43 per cent) and East Asia (28 per cent). However, over 60 per cent of those employed in EPZs globally are concentrated in Asia, where the majority of such zones are located in Singapore and Hong Kong (see Table below). (Abott) THE EFFECT OF FREEDOM Areas where Freedom/ Low Tax has created wealth apart from Special Zones Britain in the early 19th Century was the largest free trade area in Europe that's why the industrial revolution happened there first (other countries had internal tariffs) Hong Kong brought a nation out of poverty in one generation because it has the lowest taxes/ highest freedom in the world Botwana rates high in Africa on the Economic freedom indexes and has seen success to match over the last thirty years. Other countries in Africa that have switched from socialism to freedom/privatisation/lower taxes have seen much higher economic growth then before : Tanzania, Zambia, Uganda, Mozambique and certainly better growth than those still in more socialist mind sets Namibia, South Africa and especially Zimbabwe. In 1987 the Irish Republic's per capita income hovered at 63 percent of the United Kingdom's. From 1990 to 1995 Ireland's economy grew at more than 5 percent per year and from 1996 to 2000 it raced at more than 9 percent a year. Today, Ireland's $25,500 per capita income bests the United Kingdom's per capita average by $3,200. Why? Corporation tax at 10% . One small change in taxation, big difference to the country. Think if it had dropped all its taxes to 10%. China's switch to free markets on the Eastern seaboard has transformed a formerly moribund communist country into the one where most of the world's development is happening. There are more cranes in Shanghai than anywhere else in the world. There are another 30 or 40 cases like these scattered through "Privatisation for Prosperity". We can see clearly that Freedom does lead to prosperous cities and that it is extremely likely that a city going totally into a free and tax free situation will attract many people and be very successful. Country No. of EPZs Singapore 22 Hong Kong 14 Malaysia 11 Taiwan 4 Philippines 3 South Korea 3 Sri Lanka 3 Indonesia 2 Thailand 1 HISTORY Africa's interest in EPZs is not new. Already in the 1970s, Ghana, Liberia, Mauritius and Senegal had passed laws to introduce them. (Romero 1998) "UNIDO provided technical assistance for developing EPZs and the UN's Economic Commission for Africa argued that EPZs could "...to a certain extent, help some countries, if given the right conditions to attain some of the goals set out in the Second Industrial Development Decade for Africa". Further, EPZs were considered important for "...the integration of the host countries into the world economy, and their development of a broader industrial base as well as of a dynamic modern sector" "(1993:78 & 82). (Romero 1998) "In 1994, 40 per cent of entrepreneurs in Madagascar said that the availability of local raw material was an important consideration for investing in the EPZs" (Razafintsalama, 1996: 997). "Japanese government approves creation of 57 special economic zones" Xinhua (China); 04/17/2003 Labuan Malaysia : "He said after ten years as an IOFC, development in Labuan was impressive and it had attracted more than 2,300 companies comprising 61 banks, 73 insurance companies, 19 unit trust companies, 15 mortgage companies and six fund managers." In South Africa, the Coega Industrial Development Zone : automotive zone In Turkey Izmir is the biggest with 12,500 jobs 360 companies and $3 billion in foreign trade. (Xinhua) - "The Export Processing Zones Authority (EPZA) of Zimbabwe said on Tuesday that since its inception in 1996, it has approved 111 projects worth 100 million US dollars." EPZA General Manager Walter Chidakwa said that the projects, which are already operational, had created 19,593 jobs as of September 2002. A total of 49 companies in the agricultural processing sector with an investment of 2 billion Zimbabwean dollars (about 36.4 million US dollars) had earned 220.9 million US Dollars in exports and created 10,864 jobs while 19 companies in the manufacturing sector with an investment value of 2.7 billion Zimbabwean dollars (about 49 million US dollars) had earned 85 million US dollars and created 1,322 jobs, he said. There were 16 companies in floriculture, four in furniture manufacturing, one in chemicals, seven in leather and footwear, three in timber processing, five in textiles and clothing and seven in the services sector. He said horticulture had great potential to earn foreign exchange for the country. Shannon Free Zone is a 243 hectare Business Park adjacent to Shannon International Airport on the West Coast of Ireland. Since its establishment in 1958, over 120 companies have chosen to invest in Shannon. These companies employ almost 8,000 people and generate exports of €2.5b per annum. China Zones: Corporation Tax 15% in SEZ, two year tax holiday or five year for transport and energy projects (compared with 33% then 40% after 5 yrs outside the zone) . 40% can be repatriated. Tax free importation of equipment, complicated some industries exempt , some not. Labour Laws Some governments specify that minimum wage rates set by EPZ authorities must not be less favourable than the statutory minimum and they set out the normal working hours in the EPZ law (e.g. Egypt). Certain governments state that the negotiation of individual job contracts must be either in line with national laws and regulations (e.g. Cameroon), or consistent with international labour standards (e.g. Ghana). In Mozambique where national labour legislation applies in EPZs, pay, leave, benefits and hours of work are detailed in the EPZ law. In Mauritius, where labour standards in EPZs differ from those that apply outside the zones, normal working hours and the basis for determining wage rates, overtime pay and also sickness, maternity and termination benefits, are stipulated in the EPZ-related provisions of the 1993 Industrial Expansion Act. However, certain countries provide no guidelines concerning labour issues in EPZs, leaving them to be decided by the EPZ authorities or the employers and workers concerned (e.g. Nigeria). (Romero 1998) Up to the mid-1980s low wages and exceedingly long working hours caused discontent among EPZ workers in Mauritius, and the labour relations climate improved only with social dialogue and regulatory reforms which brought minimum wages and working conditions in EPZs closer to those in other sectors. The recruitment of migrant workers is raising concerns about their pay and working conditions, which are found to be lower than those of nationals (Sooklall, 1994). (Romero 1998) Similar stories can be found in the so-called `second-wave' of Newly Industrialising Economies. In Malaysia, for example, during the early phase of industrialisation there were no unions in the Free Trade Zones that were established in order to attract foreign investment. This proved to be `a major plus factor that helped attract large American electronics firms to Malaysia'. Although unionisation has grown throughout the 1980s, the electronics industry to date remains by and large free from unionisation. Indeed while Japanese firms have allowed the creation of in-house unions broadly in line with the situation in mainland Japan, American firms have stubbornly resisted any worker representation, indeed `nine managing directors of American component firms in the . . . FTZs . . . stressed that their presence in Malaysia would be seriously undermined if unions were allowed in their firms' (Rasiah in Jomo K, Industrialising Malaysia, 1993, p.130/1 Similarly in Malaysia EPZs' share of exports rose from 1 per cent in 1972 to 57.5 per cent in 1990, while total foreign investment rose from $94 million to $4,073 million in 1991. (Abott) While in principle this is good, experiences in recent years with some data-entry companies show that there is still a far way to go in accepting the principle of workers' rights, as some companies have moved their operations elsewhere rather than accept a unionised workforce. China's zones have created work for 12% of its workforce, quite a benefit, in China. (Jayanthakumaran, K) Wages inside the zones are a bit higher than wages outside , 30% higher in Malaysia (Jayanthakumaran, K) (also in Dror where examples are given) Very little tax is in any case collected in EPZs even after many years of operation. (Jayanthakumaran, K) Labour Laws are usually the same in an EPZ as the rest of the country. Exceptions are the Pakistan EPZs where many labour laws are relaxed in the zone. Another reason that Vanuatu has not achieved the success its tax policies might suggest is that its minimum wages are exceedingly high. About double the wage rate in China and double the GDP/capita. Rates in the informal economy are a half to a third of the minimum wage rate. It also has a large number of holidays, sick pay, etc. (Haywood 12) EPZ and WTO A very important point was raised in connection with the WTO agreements and whether our Special Economic Zone would comply. It is also noted that the period within which countries needed to comply is now passed. There are differences. The treaties are mostly about subsidies that refer to certain products and not others, which our scheme does not. The text of the agreement can be found at : http://www.wto.org/english/docs_e/legal_e/24-scm.pdf There is also a clear message that direct or indirect taxes can be a form of subsidy: http://www.wto.org/english/res_e/booksp_e/discussion_papers9_e.pdf . Again the problem is when they apply specifically to some kinds of companies and not others. Specific incentives are seen to be distorting: "Thus, it would be useful for El Salvador to increase the predictability of its access to the U.S. and other markets, and to lock in its own reforms through new multilaterally agreed commitments. In due time, it will also be crucial to reconsider the role of EPZs which, although large job generators, distort the structure of incentives between exporters and other producers." This is confirmed in the analysis : http://www.fin.gc.ca/activty/pubs/Sub_e.html Reading through the list in Annex 2 of prohibited activites, they seem to have in mind more export/domestic distinctions than tax concessions as such: Furthermore, we would not be receiving a subsidy if we received tax discounts and didn't receive the government services they would otherwise buy. Also if government did invest in the region, it would have to do so at full market value. The fact the zone would be managed by a private third party, would help to emphasis this arms length arrangement. On the question of whether the zone would be band under the WTO agreements and in particularly the Agreement on Subsidies and Countervailing Measures, the following points can be made: 1. Any zone that was only available to exporters would almost certainly violate this agreement. There is a big emphasis throughout the document on discerning between exporters and those producing for the domestic market. Thus our suggestion that we make the tax free status available to all kinds of businesses would be in fact necessary if we do not want to violate these treaty obligations. 2. Tax cuts are considered an export subsidy, other things being equal. Clearly if a company gets all the benefits of infrastructure, social security, etc then if it isn't paying taxes then this is a subsidy. However in our case Libertonia is both not paying taxes and not receiving government services. Therefore, in our specific case, tax free status would not, we would argue be a subsidy. We would need to be careful therefore, that any services supplied by the government to Libertonia in the set up phase were paid back at market prices. 3. Section 2.2 is the closest the Agreement gets to what we are planning. It says " A subsidy which is limited to certain enterprises located within a designated geographical region within the jurisdiction of the granting authority shall be specific. It is understood that the setting or change of generally applicable tax rates by all levels of government entitled to do so shall not be deemed to be a specific subsidy for the purposes of this Agreement." Here we would argue that the tax applies to all enterprises within the region, not just certain ones. 4. So in summary. Libertonia is not receiving an export subsidy. It is not receiving an export subsidy. It is not receiving it to specific classes of companies but to all enterprises generally. More information about this subject and in particular the requirements of specificity and subsidy can be found at :http://www.wepza.org/article6.html . This is the World Economic Processing Zones Association with whom I have had some correspondence. The author points out that the agreement gives examples of general subsidies that are considered acceptable, such as firms of a certain size, or number of employees. EPZ, WTO and SACU Under SACU, there are already no tariffs between member countries. Within the region then, Libertonia would be automatically be immune from paying import tariffs on any goods made in the region or on any exports sold to the region. Outside the region I do not see any other option but complying with the SACU treaties. Anti Terrorism And Drugs Money We would be happy to comply with international efforts to reduce terrorism and stop the laundering of drugs or terrorism money. We cannot of course, help states whose tax rates are excessive to enforce these policies on their hapless citizens. Capital Flight Firstly, international investors are fickle characters; the slightest change in policy or in the political situation of a developing country can lead to a massive flight of capital to relocate elsewhere. Examples of capital flight serve to illustrate this point: the enacting of the Industrial Co-ordination Act in Malaysia during 1974-5 saw foreign investment fall by nearly 62 per cent; in Sri Lanka a sharp drop in investment in 1983 is attributable to ethnic and civil unrest; or in more recent memory a massive flight of capital out of Mexico followed the Chiapas revolt and subsequent Peso Crisis. (Similarly, it can be argued that the fear of capital flight, as much as anything else, will deter the post-Deng leadership in China from abandoning the reform process.) (Abott) Failure through bureaucracy or complexity Poland : have to submit regular reports, need permit to buy land, complex incentives, rules, tax holidays, (http://www.polandguangzhou.com/en/download/70/ ) This is a good example of how not to do it in terms of ease of use and simplicity. Cook Islands have similar procedures: http://www.ck/invest.htm . In fact the main purpose of their Investment Code seems to be to stop investors investing at least in certain areas! (http://www.cookislandslaw.com/docs/INVESTMENTCODE2003.pdf) Nigeria's code is at http://www.nasarawastate.org/inv-code.htm Philippines http://www.gensantos.gov.ph/investment/investcode.php and http://www.chanrobles.com/default8fia91.htm /. Philippines restricts foreign activity to firms with more than $200,000 in capital. Zanzibarhttp://investzanzibar.org/IPA_Information.asp?hdnGroupId=4&hdnLevelID=6.2&hdnlocaleid=1 . No restrictions on repatriation of profits. Uganda http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr110437e.html Belarus http://www.belarusembassy.org/economic/economy/investment_code.htm http://rru.worldbank.org/InvestmentClimate/ExploreEconomies/Snapshot.aspx?economyid=101&characteristic=Sector Better Than Dubai Because: 1. Not in the Middle East - a dangerous place 2. Even lower taxation 3. Cheaper Labour costs 4. Soon better educated 5. Better weather: Dubai is too hot! 6. Easier to get to stay there, no hastle. 7. Dubai may introduce VAT soon Situation For Local People 1. They are welcome to come and live and work there. 2. Will create lots of jobs for them. Sustainability At the deepest level sustainability means profitability and it means permanent. Many projects fail to be sustainable because they only create short term incentives and once the incentives are gone the businesses will often leave. This policy is fundamentally flawed as you have experienced83. But it is flawed in a second, non obvious way in that not only do some companies come and then go again afterwards, there are a whole class of companies who never come because the costs of relocating are higher for them. Thus if the incentives are not clearly permanent, these companies do not come at all. Permanence of policy is thus the key to sustainable projects. Morris in the book 'Sustainable development' says this in explaining rich countries' success: 'rich countries has for the most part adopted institutions and policies that are sustainable. Broadly speaking that means property rights, the rule of law, free markets, limited government and free speech." In other words that our privatized zone with easy to enforce transfer and registration of property and fast, privatized dispatch of court cases is a very 'sustainable' strategy. CURRENT SITUATIONS IN BOTSWANA OF RELEVANCE 1. Difficult to get permits for skilled foreign people. 2. Current tax: corporation tax 15/ 25% (5% base plus 10% act (withholding set against)), vat 10, income tax 25% over R100,000 3. severance: only after 5yrs: one day for each month: in lieu of pension, 2 days per month thereafter. 4. 15 days holiday for industrial workers + 12 public holidays: unpaid 5. Minimum sick leave. 6. Land Tenure: 3 categories: State/ Tribal/ Freehold. 7. Labour laws more reasonable than SA: can end employment when people on probation: 3 months unskilled, 12 months skilled. 8. Minimum Wage: P3.50 per hour only for construction, security, govt- street cleaners. 9. With permanent employees situation similar to SA disciplinary hearing 10. Currency: to rand 70, euro 30: crawling peg. The Complete Independence Option The proposal in the rest of this document is not a 'state within a state'. It still follows the bulk of The host country law and all its treaties and is not an independent country. However there are certain advantages in making the country completely independent. In some ways much would remain the same but be done in a different form. Instead of regulating the nature of the country by Act of Parliament, almost exactly the same result could be achieved by treaty between the two countries. If it was a more successful arrangement then it would benefit the The host country government more than a non independent arrangement. The advantages of this kind of arrangement are as follows: 1. Investors would have no fear of the country changing the nature of the zone as it would be written into the constitution of the new country. This is a big advantage. 2. It would be possible for the zone to provide completely tarrif free goods which might help it succeed more. 3. There would be no responsibility for The host country to do ongoing supervision or any kind of expenditure. Difference between our Zone and EPZ 1. EPZs involve specific subsidies to specific industries (and are thus now illegal), our zone is based on general levels of zero tax to all industries and individual and are thus legal. 2. EPZs tax policies are temporary, our zone status must be permanent if we are to attract long term investors. Annex I: Workforce in EPZs and enterprises with EPZ status in selected countries (latest year available) Legend for Chart: A - Country B - EPZs and/or no. of enterprises C - Workforce D - Month and year A B C D Bangladesh Chittagong EPZ (66 enterprises) 30,000 Apr. 1996 Dhaka EPZ (16 enterprises) 9,523 Apr. 1996 Cameroon 17 companies 2,419 Dec. 1994 Chile Iquique Free Trade Zone 9,975 Dec. 1994 Colombia 9 zones 10,000(*) Oct. 1995 Costa Rica not specified 48,000 Dec. 1996 Dominican Republic not specified 164,639 Dec. 1996 Egypt 13 industrial cities 90,000(*) July 1995 El Salvador not specified 38,400(*) Dec. 1996 Fiji not specified 11,149 Dec. 1994 Ghana not specified 2,600 Dec. 1990 Guatemala not specified 61,800 Dec. 1996 Haiti 30 enterprises 5,000(*) Mar. 1994 Honduras not specified 65,900 Dec. 1996 India Santacruz Electronics EPZ, 148 firms 16,390 Sep. 1994 Indonesia Nusantara Bonded Zone Corp. 95,000 created in January 1995(Nusantara Bonded Zone formerly owned and managed 3 zones in Jakarta), 145 enterprises Dec. 1994 Ireland Shannon Free Zone, 114 companies 5,641 Dec. 1994 Jamaica Montego Bay, Garmex and Kingston 16,846 June 1995 Kenya 1 zone, 14 companies 2,800 Sameer Industrial Park (9 firms) 1,300 Mar. 1995 June 1996 Korea, Rep. of Masan and Iri Zones 21,910 Dec. 1991 Lesotho 48 finns supported by LNDC 16,000 Dec. 1994 Madagascar 66 enterprises 17,400 Dec. 1994 Malaysia 164 companies surveyed by the 123,204 Malaysian Industrial Development Authority (MIDA) in 1993 Dec. 1993 Mauritius unspecified 80,700 Sept. 1995 Mexico unspecified 890,412 May 1997 Nicaragua not specified 11,000 Dec. 1996 Pakistan 72 finns 5,914 Dec. 1994 Panama Colon Free Zone 14,383 Mar. 1995 Philippines Bataan, Mactan, Baguio 86,265 City and Cavite EPZs Apr. 1995 Senegal 10 factories, Dakar EPZ 600 Dec. 1990 Spain Barcelona Free Zone 40,000 heavy industry (170 enterprises), 50 service Dec. 1994 Sri Lanka 3 zones (Katunayaka, Biyagama and 84,430 Koggala), 138 enterprises Dec. 1994 313 finns with EPZ privileges 50,142 outside the zones. Dec. 1994 St. Lucia 17 enterprises 2,820 Mar. 1993 Thailand 8 EPZs, 267 finns 99,920 Dec. 1994 19 industrial estates, 1,011 firms 205,453 Dec. 1994 Togo 27 enterprises 3,522 Mar. 1996 Trinidad & Tobago 13 companies 550 May 1995 Tunisia 1,500 factories 110,000 Dec. 1994 Turkey not specified 4,000 Apr. 1995 United Arab Jebel Ali Free Zone, Emirates 735 companies 24,000(*) Bibliography Abbott, Jason Export processing zones and the developing world. In Contemporary Review; May97, Vol. 270 Issue 1576, p232, 6p Dror, David M."Aspects of labour law and relations in selected export processing zones."In International Labour Review; 1984, Vol. 123 Issue 6, p705, 18p Firoz, Nadeem M and H Amy Murray "Foreign Investment Opportunites and Custom Zones in China's Special Economic Zones" Jayanthakumaran, K.Benefit-Cost Appraisals of Export Processing Zones: A Survey of the Literature. In Development Policy Review; Jan2003, Vol. 21 Issue 1, p51, 1 Lowe, Leon : from conversation. Lowe was involved in the process of setting up the zone. Proctor, Chris and Markman, Terry "Export Facilitating Mechanisms" Romero, Ana Teresa "Export Processing Zones in Africa: Implications for Labour." In "Competition & Change; Jun98, Vol. 2 Issue 4, p391, 28p" Summerfield, Gale "Shadow Price of Labour" in "Review of Political Economy" Warr, Peter "The Phillipines Batan Export Processing Zone" in Journal of Development Studies; Jan87, Vol. 23 Issue 2, p220, CHAPTER FOUR HIGH DENSITY SMART GROWTH Libertonia is a dense city on the model of Paris with buildings of 5-7 storeys on average.The 20th century on the other hand saw the rise of massive amounts of sprawl. Why do we believe that dense cities are the wave of the future? Sprawl is getting an increasingly bad name. Lewis Mumford called suburbs the 'Anti City" 84in 1970. We also note 95% of suburbanites were white in 1960 while 51% blacks lived in inner cities vs 30% whites 85 The ultimate in (planned) low density is the city of Canberra with only 500 persons per square mile.86 The US suburb is about 3500 per sq mile. At a density of 10,000 we are into two family structures or row houses, though still with gardens. This would include Baltimore, Washington and Chicago. At 35,000 we have Florence and the central areas of most US cities. At this level we have 4-5 storey buildings. From 100,000 persons per square mile we have the most crowded parts of Manhattan, Damascus and the slum of Naples or Ancient Rome.87 However, though intellectuals despised the suburbanisation most people didn't value the cultural vibe. They wanted more space, more privacy and maybe some garden (for the children to play in). Suburbia became identified with owning your own home. Suburbia even happened despite regulatory biases against it in Europe. None of these drivers for suburbia need necessarily be the case however, as we shall see. Why people moved out? Crime People moved out of cities, especially in the United States and in Johannesburg because of high crime in the inner cities. As we discuss in other chapters, with private policing where people can earn money from catching criminals, this will not be a problem. Taxes Another reason is that as people moved out, government property taxes per person increased hugely giving people another reason to move out the city. With a zero tax environment, this issue doesn't arise. Services As people moved out government or regulated companies happily connected people up with sewers, electricity, road networks, public schools, etc all at huge expense when these services are very cheaply provided in a dense environment. People didn't have to pay the actual cost of the choice they were making, otherwise they may not have made it. "Without America's sustained public spending on highways-well over $1 trillion in the past 20 years-the growth of the suburbs would not have been possible. For obvious reasons, spending on roads is disproportionately greater in suburbs than in city centres: almost 50% higher in Philadelphia, according to one study. Maryland's state planning director called the roads programme an "insidious form of entitlement-the idea that state government has an open-ended obligation, regardless of where you choose to build a house or open a business, to be there to build roads, schools, sewers."88 The total number of passenger miles increased from under 1.5 trillion a year in 1980 to 2.4 trillion in 1995. An index that measures road congestion rose 22% over the same period. Children Apart from the crime, families would often want a garden for their children to play in. Libertonia has planned for special floors of apartment blocks to be supervised play areas for children complete with closed circuit TV. This gives parents the freedom to send young children to the play area in other to get peace or to work at any time of the day or evening. This play area is also set up with computers for interactive education. Additionally some blocks are designed in a courtyard like fashion where the whole area in the middle is mass of private children's play areas which compete to provide the best experience for the children. However sad as it may be, the need for outside space for children is less than one might think for the simple reason that they often spend most of their time in doors playing on computers/ play station, gameboy, etc. Planning/Zoning Authorities Part of the reason for sprawl is the responsibility of planning/ zoning authorities that have made it restrictive expensive to build in cities. Building densely in the cities has approximately the same building cost as building less densely in the suburbs. The same amount of space should be the same price. In a free market, prices of houses should be approximately equivalent to building costs. Artificial and unnecessary difficulties created by the planners have been the main cause of escalating costs in the cities that have driven people out to the suburbs. 89 Zoning has been the main factor leading to the 11 times rise in real terms of land in the UK since 1955. This compares to a real rise in property values of 'only' 3.5 times. In the absence of market constraints, one would expect house prices to rise in line with the costs of building materials. 90 Smart Growth Hence then, the smart growth movement.,91 which is the key advocacy movement for high density. The advantages of high density and hence of Libertonia in this respect are: 1. Smaller or zero commute, everything is close by. 2. Cheaper services 3. You can walk. You do not need to drive, saving you money, helping the environment and making people fitter. 4. Children can walk to school, saving time for parents. 5. You do not need to turn large amounts of the environment into houses and roads 6. Encouraging buildings and areas to have mixed use (residential/ retail/ office) rather than each area only to have one use. High Density means the following are cheaper 1. Police patrols 2. Fire services 3. Cell phone networks 4. Other wireless networks 5. Sewer networks (also scales with people) 6. Water supply networks 7. Fixed line networks 8. Any good that needs to be delivered (furniture, mail, parcels, fast food) 9. Electricity networks Larger Markets/ More Variety It means a larger market for every service within range which means services are more varied. The division of labour is limited by the extent of the market. And sometimes that means the market within walking distance! 92 Higher Capacity Utilisation/ Cheaper Prices If you have a printing machine then it costs you less per customer as it runs all day as is likely in a big city. Any capital in fact will be better utilized in a high density environment. Restaurants can charge less per customer if their fixed costs (rent, interior décor, permanent staff) are spread over many people than few. Higher Turnover of Stock/ Cheaper Prices Similarly in discussions with a divisional manager of a large South African clothing store I discovered that they do not take up more space (higher cost) in highly dense environments they just turnover their stock quicker making them more profitable compared to their rent and staff costs, and that means lower prices ultimately or higher quality and more variety for the same cost. Variety is already the way that some industries go when they are enabled to do so by greater spending power. A department store like Edgars might stock in the region of 100 times as many different items as a store like Jet. We see a similar effect in Financial Services where there are more than 8000 different funds, many very similar, rather than prices dropping. Qualifications to Smart Growth Thinking Smart growth people seem sometimes to be at war with the car. We are not. Although in Libertonia it's hugely easier to get around without a car. than it would be in South African or American cities, we design for car use for when that's more convenient. Another qualification is that we have chosen to be high density as an initial position. Economics is clear in understanding that the fewer variable you fix and the more areas you allow to adjust freely, the more successful your economy will be. So if people really want to spread out in Libertonia they can. After a while, they can knock down high rises and build low density housing. We think this is unlikely but people are nevertheless free to do so. Some smart growth advocates rightly point out the damage done by the prohibition on mixed use blocks in many planning codes . They then however want to compel developments to be mixed use in the future. Although we are broadly in favour of mixed use developments (you can stay in the same area or even block as you work which prevents long commutes), we understand we cannot foresee all circumstances and so we must leave developers free in most respects to decide what people want (mixed or single use) based on what sells ie what ordinary people want. Another area where smart growth and others may be slightly off is public transport. Public transport does have attractions, but only when its faster than cars. Public transport does not take off amongst people who have other options when it takes longer. It isn't always a good thing to spend more on public transport. Not if no one is going to use it. Being a privatized city, the decision to build trains etc is really one that we can leave to the owners of the roads. They can if they wish convert their roads in whole or in part to railway. However, there is some evidence that rail is much more expensive than bus : $9 versus $2 per trip. 93 Density and Sprawl According to the Economist: 94"Last November in the US , voters approved 173 local referendums to limit suburban sprawl by, for example, allowing the purchase of farms near cities or by imposing boundaries restricting urban growth to particular spaces. It all seems to confirm a widespread view that sprawl-with its "mushburbs", strip malls and cities 100 miles wide-is wasteful and ugly: "dumb growth", not the smart kind that Messrs Gore and Glendening like. "In 1920, there were roughly ten people per acre in America's cities, suburbs and towns. By 1990, there were only four. In areas built since 1960, there are just over two. So, if people want to spread themselves out, why call it wasteful and ugly? The usual answer is that it damages parts of the American landscape, and that those who benefit from it do not pay its real cost." "Crime rates in many cities have fallen sharply in the 1990s. Lo and behold, the population of many city centres has begun to rise again." Around 70% of American jobs are now in suburbs. More Qualifications 1. The smartgrowth hypothesis only seems to apply to places dense enough so you do not have to have a car. Just being a bit more dense than usual is actually to make things worse. The point is made well at www.demographia.com where we find the case against smart growth95 Note these arguments do not apply to really dense, highly linked up places. One of the main reasons we do not have high density now is the distortions created by government zoning. Even the densest city centers in the world today like Paris or New York cores with densities from 10,000 to 20,000 per hectare are nothing compared to cities in history before cars or public transport. Istanbul historically had a population density of about 45,000 per hectare. This is probably the kind of densities we need to get to in order to have truly walkable communities. Today the same area of Istanbul is still one of the densest core areas in the world with approximately 28,000 people per sq km over an area of approximately 140km296. Smaller areas like the beachfront of Rio have higher densities, suspected to be as high as 80,000. 97 Shanghai's densest districts can go up to 60,000 per km2 over larger areas only exceeded by districts in Cairo 200,000 and of course Hong Kong.98 Hong Kong is according to Wendal Cox, the only place in the world where public transport competes with the automobile. Overall density of the core is 60,000 per km2 . The old walled city of Kowloon has 2 million per km 2 before it was demolished! 2 Smart growth and density is nothing to do with running out of land. That's not the issue. Even in crowded Britain,,the urbanised 80% only take up 10.8% of the land of England and Wales99 (Reynolds 58) The issue is the efficiency with which everything can be provided. 3 The case against smart growth at demographia does not count the cost of utilities infrastructure and so is flawed. 4 Similarly at urban futures.org , though I agree with most of the reasons cited, they do not address the infrastructure issues. 100 It is not in dispute that people prefer suburbs when they do not have to bear the costs thereof and where the cities are high tax and crime ridden. 5 Sprawl is not a conspiracy of big oil and high way makers! It could be because of lack of private policing and subsidised utilities. We are not saying that people are going back to the US cities more but that they would if private policing came in and people paid the full cost of new utilities and roads. Planning constraints and high urban taxes have also driven people out of the city. In the absence of zoning laws, especially restrictions on high rise, and presence of adequate land, housing costs should stay close to building costs. 6 We do not advocate imposing smart growth through planning regulations. In some places such as Oregon smart growth translates into very detailed planning. This kind of interference with the market at the most specific level can only cause harm. In fact we reject the coercive imposition of smart growth in toto. 7 Some argue against high density in terms of light. Light is something of an issue, but one should remember that lack of sunlight is also called shade. Shade is a very important asset in hot countries, in fact, the whole style and history of North African architecture is designed to maximize shade to cool people down as opposed to maximizing light. High density then, is particularly apt in hot places like Africa. The Developing World China has no shanties because it used high rise. The same applies to Hong Kong which has housed one million and Singapore which used a similar approach.101 And this is a developing world issue far more than a Western one. The former has double as many people living in cities and the number is growing six times as fast. 102 Furthermore, poor as the city dwellers might seem, they are much less likely to be poor than the rural people they leave behind.103 New Urbanism New Urbanism is similar to smart growth and to the extent we agree with smart growth (high density/mixed use) we also agree with NU. The Tragedy of the Commons Revisited? We have some problems with common ownership of land. "Public space vs. private space: One New Urbanist concept built into SafeScape is the idea of maximizing common areas to create "a sense of community." While one of SafeScape's principles is "stewardship and ownership," the authors do not want private areas so much as they want to give people a "sense of ownership" in community property. To that end, say the authors, "Communities should include places that support the coming together of people," such as shops, pedestrian paths, parks, and community gardens. While these things are fine if people want them, when planners impose them on neighbourhoods, the results are often disastrous." "Newman took exactly the opposite approach. "The larger the number of people who share a communal space," he found, "the more difficult it is for people to identify it as being in any way theirs or to feel they have a right to control or determine the activity taking place within it." To solve this problem, "'Defensible Space' operates by subdividing large portions of public spaces and assigning them to individuals and small groups to use and control as their own private areas."104 Call yourself wired? Lastly I must, as the director of a technology company answer the question of how I can advocate highly dense cities when 'everyone knows' (or at least every techy) that the internet and low cost communications mean that everyone is soon going to be living in small farms miles from everyone else tapping away on their PCs and talking to people with video conferencing. Now of course I believe that that can happen and that the cost of speaking to people in the rest of the world is dropping dramatically (partly due to that wonderful company Skype105) However that doesn't mean that people will not want to sometimes pop along to see some mates or go to the theatre. It doesn't mean they will prefer to pay what will become three or four times the price for a given standard of living than one can get in the cities. So yes we are seeing the 'Death of Distance' but no, that doesn't mean that we will not end up staying in highly dense 'wired' cities for all the reasons discussed elsewhere in this book. (Not least because its much cheaper to 'wire' cities than the countryside!) Jane Jacobs Jane Jacobs is a very interesting writer. I have found her books fascinating. She correctly fought the 'urban renewal' movement in the 1950s and 60s. She is a major critic of the vast majority of planning regulations arguing that they have hardly changed in 50 years and that they weren't correct to start with. One of her key emphases are that to a large degree cities grow rather than are planned, and so they have to be left flexible to do so. Decentralisation of Ownership "The notion of the shopping center a valid kind of downtown. That's taken over. Its very hard for architects of this generation even to think in terms of a downtown or a center that is owned by all different people, with different ideas." Remaking the world from scratch "What was a really major bad idea about the Garden City was you take a clean slate and you make a new world. That's basically artificial. There is no new world that you make without the old world. And Mumford fell for that and the whole "this is the twentieth century" thing. The notion that you could discard the old world and now make a new one. This is what was so bad about Modernism" Limits to Planning "Healthy cities, Jacobs argued, are organic, messy, spontaneous, and serendipitous. They thrive on economic, architectural, and human diversity, on dense populations and mixed land uses -- not on orderly redevelopment plans that replaced whole neighbourhoods with concrete office parks and plazas in the name of slum clearance or city beautification." "The perfect towns we think of, the kind of towns that New Urbanists are trying to reproduce from on high, were developed 100 years ago all across America with very little official kind of planning. How is it people seemed to be more sensible about how towns were not made, but allowed to grow, 100 or 150 years ago, then lost it? What is the secret they knew then that we have forgotten? Or am I romanticizing?"106 Jacobs emphasizes the need for individuality and self expression. Blocks and flats should not all be the same. CHAPTER LEGAL INNOVATION Restricting Government Libertonia has a constitution that is similar to other constitutions except that it forbids government entities to undertake activities that it's possible for the private sector to do. That encompasses 99% of the current activities of government. That is the main difference between the function of the Libertonia constitution and other constitutions. This allows Libertonia to maximise its economic efficiency. Contract or Statute If the region is an independent state then the constitution and the basic law will operate as they do in other states. If the region is an autonomous region of another state then most of the constitution and basic law with operate as (a) a burden on the land that people buy and (b) a contract that anyone entering into or living in Libertonia agrees to abide by. Some of the most important legal changes (by state or contract/property burden) follow. Multiple Damages If someone intentionally does damage such as by stealing, fraud, vandalism or in some other way, he must pay back double the cost of the thing plus double the cost of police action as the court may moderate and decide. Note if this is by contract he agrees to this on entering Libertonia. He agrees that he may be arrested for such things by private police and that he will be brought to trial and, if he has not cash, he agrees that in that event his wages can be attached to pay this amount back to the victim. He further agrees that if he runs away he may be imprisoned until he has worked off his debt to the victim. This law is hugely important in creating a self funding policing system that grows as the number of criminals grows and shrinks as they shrink. The Expanded Enrichment Action Deregulation All through the world people are realising that most of our laws are actually subtracting rather than adding value. I have written about this extensively in the chapter on Regulation in "Privatisation for Prosperity" Some stand out particularly: Labour Laws One of the most crazy of all regulations is labour laws. Crazy because it hurts the very people that it aims to help. Minimum wage laws for the most part do not make people earn more but simply stop the people whose skill level is low getting any jobs at all. Laws that make it difficult to fire people simply ensure that only the very minimum of people get hired and that people switch to machines. Misunderstand this has created the huge unemployment in South Africa and 28% youth unemployment in France. A recent article in the economist traces the recent riots in France to the existence of labour laws. 107 In talking to potential multi national tenants about the possibility of them coming to Libertonia, the subject of labour law comes up often. Bluntly having labour laws will exclude about 70% of potential investors at least from North America if my conversations so far are anything to go by. So in trying to help people, the jobs end up going elsewhere. Far better then is to eliminate labour laws so that the presence of many companies hiring in Libertonia bids up the price of labour naturally, not through the imposition of laws. Far better if people become more valuable through training and skills transfer. In the last few years South Africa set the price of wages in the clothing sector to R1500 per month. It was a spectacularly stupid and short sighted move. The clothing industry has laid off thousands of workers and virtually everything has now moved to China. We can compete with China, but not if we have minimum wage laws and restrictions on whom a company can dismiss. 108 Another related fallacy is that is creates jobs to stop high value people coming in from other countries. In reality when they come in the people they employ and money they spend is significant. Plus multinationals are much more likely to take a sizable position in a country where they can get their key people in and out easily. Stability of Law As important of having as few laws as possible is the stability of these laws. The company must know that the laws will not change back. Rent Control/ Eviction Proceedings The position of landlord/.tenant is almost exactly analogous to the position of employer/employee. Short sited laws are passed restricting rents and the rate of construction of affected buildings declined. Laws are passed preventing eviction without a court order, and strangely no one seems to want to rent anymore. Horror stories appear on the TV about people's houses being occupied by squatters and yet the law is on the side of the thief and not of the honest citizen. These laws like labor laws, seems to be kind but are actually cruel because all that can result is a lower range of accommodation, rising rents or lower quality. These are not the laws of a modern, free market economy. Neither these laws or labor laws are protective of property rights, indeed property rights are trampled underfoot. Alternatively we can put in laws the seem hard on the tenant, he can be evicted anytime he does not pay his rent. In practice then people will pay their rents. In the few cases where people do not, they can be evicted easily and the house can be used by some needy person that will pay his rent on time. This creates lots of people that want to buy houses and rent them out to others . More landlords do not want the place to be unoccupied so they will not readily throw out their tenants. But it's important that if they want to they can. That's what creates a rapidly growing rental market. If you make it difficult to evict, you will make it difficult for tenants to find adequate housing at a reasonable price. If you allow free eviction you will have hundreds of landlords bidding the price down and the quality up of housing. Clearly the latter is preferable. All this is not to say that there shouldn't be a (private) system for dealing with situations like this. I have in mind a system where people rent relatively cheap and low quality accommodation for people that have been evicted at relatively low rates but payable on a daily basis. Thus the evictee would not literally be on the street. He may be able to raise his rent money whilst staying there and his landlord may allow him to take possession of the flat once again. Alternatively he can move to another flat. Everything here with respect to evicting tenants also applies to people that do not pay for the bond/mortgage on their flat. It must be easy to repossess. The easier it is, the more banks will want to lend to poor people buying small flats and the lower the interest rates and charges will be for the simple reason that more banks will want to compete in the market. Telecoms Call centers will not locate out of Britain or America for 15%, they will start listening at 30%. South Africa struggles in this market because although it is lower on the cost of labour, its high telecoms cost destroy this advantage. That's why it's not even an option to have a regulated telecoms market. If Libertonia is not exempt then we can simply say good bye to literally hundreds of thousands of call center jobs that would otherwise naturally come to Libertonia. 109 Libertonia Limited Libertonia Limited is not a government. It's a private company owned by the people of Libertonia it thus acts in the interests of the people of Libertonia. The purpose of Libertonia Limited is to do things that benefit the whole of Libertonia but that it is impossible or very costly for them to do as individuals. It gets round the problems of high contracting costs. It works by voluntary exchange. Everyone owns a share in the l company which owns any residual rights the founding company sells to it and any further rights that arise. Like any corporation it elects a board, if they dont like decision they sack the board at the AGM. It could be listed on the stock market. It has no coercive powers and people can buy or sell shares in this corporation. Furthermore, it must never get coercive powers. Actions involving coercion must never involve it .It should never be directly involved for example with internalizing externalities The share distribution is just an initial position like any other. The initial position is 1 man 1 vote but this can change. Initial shares go to those who sign up for houses in initial period. Shares can be sold after three years from the establishment of the city. At this point also no further shares will be issued. If people want a stake in Libertonia after that, they would have to buy one or more shares. Early birds hence get certain advantages. The remit of Libertonia Ltd is to engage in activities that it is easier to do in a group than individually. It might promote the whole zone abroad, do diplomatic activities, etc. Noise Rights Each block or flat is sold with certain noise rights based on the noise rights of the land. This means they are able to create a certain level of noise and must also tolerate that level of noise. Flats for late teenagers and flats for old people would have different noise rights. People can trade their noise rights on a short term or long term basis. Noise rights specify the initial value of the right. Payment then will be based on this value, unless otherwise agreed, and the damage for violating the right without permission will be double this value plus double any enforcement costs. The value of a noise right at particular times will be informed by deals done voluntarily between parties to give certain parties110 the right to create more noise or certain parties the right to have more silence. Noise rights at night protect sleep, so sudden loud noises are a violation even if they only last for a few seconds. Continuous sleep preventing noises are more of a violation however. Courts should take these factors into account when awarding damages. Noise rights are to some degree a group right and the 'take over' of an areas rights would work on a take-over process. View Rights It's the legal obligation of the developer to landscape the land around the blocks and keep it aesthetically pleasing. This would be for the It is also desirable for Libertonia Limited to own the rights to the view around Libertonia. Such view rights are purchased from the surrounding farmers or owners before Libertonia is built. If the farm owners do anything to make the view worse then they must compensate Libertonia Limited. On the other hand, Libertonia Limited might contract with the land owners to make the view better. Take Over Process When a person or group of people want to change the rights structure of another group of people, the initiator group must first be identified as must an affected group. An offer must then be made to everyone affected, it is accepted by that group. If its accepted by more than 50% at this price then everyone affected gets that offer. This is best illustrated by examples: Noise: Establishing the Chilled Block 1. A block planned as a young adult disco zone with high noise rights has become 70% occupied by people in their 80s thanks to the establishment of a world class hospital nearby. The older people thus get together and identify everyone who wants the take over and are prepared to fund it. This process is facilitated by internet voting and sign up for the payment. 2. The group of young 20s is then identified111. An offer is made to reduce their noise rights from 'free party level at any time' to 'really low decibel output at any point' for $1000 per identified group member. The party group consider perhaps spending their Friday nights in the trendy bar three blocks down and make careful calculations about exactly how many cocktails that amount of money that can by and decide to vote for the deal. 3. Alternatively they may 'hold out' for a better deal. 112 Noise: Establishing the Party Block 4. The deal of course could be the other way round. Young adults could have bought up a block for some reason (or inherited their flats from their dying grans). They want to play their music more loudly but cannot because the permitted noise level is too low. So they make an offer to the 80 year olds. The old people then consider the utility of $2000 from these new young people given the poor purchasing power of the pension with inflation and all that. They wonder if taking the hearing aid out for Friday night might not be too bad, and goodness, maybe it would be a good excuse to stay over with their son, he's so busy these day, but he'd surely understand.... 5. We have used the example of the block but the affected party could in fact just be a few floors, or it could affect people across the road. If you miss people out from the target group you will soon find out when you turn up the volume and get law suits from people suing for double the value of the rights violation. 6. Eminent domain is available to every private citizen in Libertonia acting in good faith and willing to buy a right for double its market cost. So people not involved in the initial suit or that started exercising their rights afterwards can be forced to sell their rights but for a considerable premium above the market113. Eminent domain is in fact involved in the take over situation. People that didn't want to cede the rights were outvoted by an averaging process. 7. Not also sometimes putting in sound proofing will be cheaper than buying the rights. 114 New Rights Where no rights are established the procedure is that both side bid for the rights and the highest bidder pays the other. For example, a noise right example arose in Hong Kong where residents' desire for peace clashed with the age old practice of musicians playing in a nearby park.115 Apply our model the neighbours would join an online consortium and would have, say, two months to sign up. Similarly the musicians would sign up and for their consortium. Anyone not signing up would be considered judicially not interested in the matter. 116 The total sums of money are compared. Whichever side looses is compensated in proportion to what they were willing to pay to keep the right as those that were willing to pay more to retain the rights clearly valued them higher than those who were willing to pay less. This might in fact be a good way of balancing the issue of inclusion vs. exclusion. In other words, people once they attain wealth may want to live in an area where they are only going to encounter people of their own kind. This is by no means universal amongst the rich, one of the De Beers family regularly sells herbal remedies in street markets.! However for the sake of argument imagine that a zone wanted to seal off their street to through access and other people wanted to pass through rather than make a long round trip. How do we decide this question? Again an auction to balance the desires of each group is key. New Things There is some value, it seems, to people, not just in things that work better but also in being the first. To be the first person to get to the moon has a value to people that is not easily expressed in terms of net present value. It is, to put it simply, more accurately expressed in terms or personal or corporate pride. Levies Levies in Libertonia are very small percentages of the total. Most levies are levied by the block. A few are levied by the central government. This organ does not possess general tax raising powers. Only those things which cannot be provided privately and are not being provided privately anywhere on earth, can be provided centrally with levies. Lastly to raise levies each purpose must be voted on separately by the people, initially and then each year if they need renewed and various actions are available by the people to eliminate any central levies expenditure that can be done in privately or that is simply not desired at the price it costs. Furthermore, central government cannot set up departments to provide goods from central levies but must contract out to competing private companies to provide them. These levies as with block levies are charged 50% per m2 or floor space used and 50% on the value of the unimproved land underneath the block or house. 117 It only applies on land that has been sold from the initial purchase from the host government. Ambassadorial Services Money to be made and commissions paid by a certain really small tax or levy to get more and more people to Libertonia so property values go up and then later to provide diplomatic activity while also selling the products of Libertonian companies abroad. The is no reason why the commercial and diplomatic functions should not be merges, especially for a country like Libertonia that is 99% business and 1% government. And thus no reason why it should be funded by taxation rather than by companies with interests in these countries. Parliament could award the right to represent Libertonia to a business person already operating in the country in question. The following areas are only applicable if the country is or becomes independent of the original host nation: 1. Defence 2. Passports Defence Levies for defence are not needed if the host government provides this service, so this section only becomes operable on independence or if the government in question is unwilling or unable to supply the service. 6% is a typical amount to spend for defence falling by 1% with each million people to live in Libertonia to 3% as the city gets more populated. These funds are paid to private defence companies in proportion to the number of votes they get for those people voting online for their favoured provider. After 3 years of this people can vary their payments in the manner described in the defence chapter of "Privatisation for `Prosperity" Serving Legal Notice This again in the 'good society' should be easily done, so that legal remedies are easy and not inaccessible. So in order to make that a reality, every house is mapped to a corresponding email address. People have a obligation to check it at least once a month. Otherwise the notice is served on the block and further charges are charged at the expense of the person that doesn't check his email at least once a week. The block is, of course, obliged to deliver the notice but against compensation which those who do not check their email are obligated to pay. This is a white list system. No one cane email you on this address unless you have authorized them to do so. CHAPTER FIVE SKYSCRAPERS So if we are agreed that high density is the answer conditional on all our qualifications, then we can go on and discuss skyscrapers and how they work. Skyscrapers are not just an exercise in efficiency. They inspire people! When we think of greatness and success in terms of cities, it is these huge structures that we think of. They are a symbol of success. Their statistics and characteristics impress us. "The Empire State Building's 73 elevators can move 600 to 1,400 feet (183 to 427 meters) per minute. At the maximum speed, you can travel from the lobby to the 80th floor in 45 seconds. Future technology advances could conceivably lead to sky-high cities, many experts say, housing a million people or more. In order to ensure that walls of skyscrapers didn't block all light from reaching the street, the city passed a resolution in 1916 dictating that all skyscrapers would have an overall pyramid shape. The Elevator 118Once you get more than five or six floors, stairs become a fairly inconvenient technology. Skyscrapers would never have worked without the coincident emergence of elevator technology. Ever since the first passenger elevator was installed in New York's Haughwout Department Store in 1857, elevator shafts have been a major part of skyscraper design. In most skyscrapers, the elevator shafts make up the building's central core. Figuring out the elevator structure is a balancing act of sorts. As you add more floors to a building, you increase the building's occupancy. When you have more people, you obviously need more elevators or the lobby will fill up with people waiting in line. But elevator shafts take up a lot of room, so you lose floor space for every elevator you add. To make more room for people, you have to add more floors. Deciding on the right number of floors and elevators is one of the most important parts of designing a building. Building safety is also a major consideration in design. Skyscrapers wouldn't have worked so well without the advent of new fire-resistant building materials in the 1800s. These days, skyscrapers are also outfitted with sophisticated sprinkler equipment that puts out most fires before they spread very far. This is extremely important when you have hundreds of people living and working thousands of feet above a safe exit. Making buildings more rigid also braces them against earthquake damage. Basically, the entire building moves with the horizontal vibrations of the earth, so the steel skeleton isn't twisted and strained. While this helps protect the structure of the skyscraper, it can be pretty rough on the occupants, and it can also cause a lot of damage to loose furniture and equipment. Several companies are developing new technology that will counteract the horizontal movement to dampen the force of vibration.119 Architects also pay careful attention to the comfort of the building's occupants. The Empire State Building, for example, was designed so its occupants would always be within 30 feet (ft) of a window. The Commerzbank building in Frankfurt, Germany has tranquil indoor garden areas built opposite the building's office areas, in a climbing spiral structure. A building is only successful when the architects have focused not only on structural stability, but also usability and occupant satisfaction. Some buildings already use advanced wind-compensating dampers. The Citicorp Center in New York, for example, uses a tuned mass damper. In this complex system, oil hydraulic systems push a 400-ton concrete weight back and forth on one of the top floors, shifting the weight of the entire building from side to side. A sophisticated computer system carefully monitors how the wind is shifting the building and moves the weight accordingly. Some similar systems shift the building's weight based on the movement of giant pendulums. Traditionally, the architectural community defines a building as an enclosed structure built primarily for occupancy. This excludes a lot of extremely tall freestanding structures, such as Toronto's 1,815-foot (ft) CN Tower, from the running. Even within "traditional buildings," there has been controversy. For example, if you include rooftop antennas in the total height measure, the Sears Tower stands 1,730 feet tall. Without the antenna, it's only 1,450 feet tall. But, conventionally, decorative structures count toward height, but antennas do not. So who currently has the lead? That honor goes to Taipei 101 in Taipei, Taiwan. Although it has nine fewer stories than the Sears Tower -- Taipei 101 has 101 stories and the Sears Tower boasts 110 floors -- Taipei 101 is taller. It stands at an amazing 1,670 feet -- that's 220 feet taller than the Sears Tower and 187 feet taller than the previous winner, the Petronas Towers. Fighting Gravity The main obstacle in building upward is the downward pull of gravity. Imagine carrying a friend on your shoulders. If the person is fairly light, you can support them pretty well by yourself. But if you were to put another person on your friend's shoulders (build your tower higher), the weight would probably be too much for you to carry alone. To make a tower that is "multiple-people high," you need more people on the bottom to support the weight of everybody above. This is how "cheerleader pyramids" work, and it's also how real pyramids and other stone buildings work. There has to be more material at the bottom to support the combined weight of all the material above. Every time you add a new vertical layer, the total force on every point below that layer increases. If you kept increasing the base of a pyramid, you could build it up indefinitely. This becomes infeasible very quickly, of course, since the bottom base takes up too much available land. The twin towers in New York were only 110-story towers rising more than 1,360 feet (415 meters) http://www.wbcsd.ch/web/publications/mobility/mobility-appendix.pdf Property Tokyo property was for a while the most expensive in the world. Even now, rental rates for high-end office space are around $55 per square foot, compared to around $40 in Manhattan. But some of the factors that have limited development in Tokyo-and therefore kept rents high-no longer apply. The city has just 412 high-rises, less than a tenth of the number in New York, thanks in large part to the threat of earthquakes. But new technology has allowed skyscrapers to be constructed where only sprawling low-rises were considered safe in the past. As a result, 23m square feet are due to come on the market next year, three times as much as in 2000. One of the most striking new buildings is the 54-storey Mori Tower. Its developer, Minoru Mori, believes it to be so swish that "people from around the world will say they'd like to see this before they die". Blocks 5 million households is 20 million people. I highrise at 20 stories and 20 h/h per floor is 400 households per block. 100 x 100 blocks at 33 x 33 m is 1000m2 per block which is 50 m2 per apartment . Say offices need 6ms per person. Residential blocks are smaller than office blocks because individual windows rather than one per floor. So may have enclosed areas in side? Stories of People moving with their employees. http://www.joelkotkin.com/Urban_Affairs/INC_Best_Places_I.pdf Economies of Scale for Cities When do they stop? security/ community, every suburb sealed off aesthetics : historical theme for each suburb green space: shared between houses? Most countries spend about 10% of GDP on construction. For SA that's R12 billion which would be 3 million m2 per year. CHAPTER SIX INVESTORS, OUTSOURCING AND GLOBALISATION So far so good, but why would global investors want to invest in such a zone either by putting up the buildings and infrastructure or by being the tenants. Why particularly would they want to do so in Africa? Africa to many Western investors does not come to mind when thinking of places to invest. Its is thought of a somewhere that 'needs help' rather than somewhere that can provide a good location for business. This has be reinforced by prime time TV footage of socialist Robert Mugabe's confiscation of properties. Who is going to put $20 billion of infrastructure into a region that seems to have no respect for property rights? Yet for anyone who knows Africa this is a misleading picture. Mugabe is the last of the first generation of African leaders who were socialists to the core and kept Africa poor for 30 years. The new leaders realise that socialism doesn't work and have embraced the market. I, and others in my company, have met with more than five hundred of these leaders, government ministers and director generals of departments. They are more inclined to free market thinking than most Western leaders. That's why Libertonia is happening in Africa and not in Europe or the US, because Africa has changed. Furthermore, the annual return on US foreign direct investment in Africa is 28%, much higher than any region in the world. Returns have been competed down elsewhere, but not in Africa, as yet. There is an opportunity here that companies cannot afford their competitors to take. Of course many US companies are active in Africa. Apart from mining houses , there are Coca Cola, Pepsi, Exxon, Chevron, General Motors, Caterpillar, Monsanto and many others. European companies are also increasing their business in Africa. Some are manufacturing and providing services to the West from here. Others are selling their existing services to an emerging middle class bigger than that of India and growing considerably faster in many countries. 120 The fact that other companies aren't investing so quickly then is an advantage for the fast movers that can take advantage of the situation before everyone starts to move in this direction. So Africa as a whole, is a better place to invest than most people realise, but some countries are better than others. Botswana where we currently propose the zone should be has been stable for 30 years or more. It is built on low tax, respect for private property, stable government, sound money. Its economic policy record is in fact, much better than that of most European countries! Its been voted the most incorrupt country in Africa even compared to neighbouring South Africa. The proximity to South Africa is also helpful, a large pool of unemployed labour desperate for jobs, and a smaller but equally key pool of high value skills especially in IT.121 Libertonia is different from other zones, nothing like this has been done before. Furthermore, the zone has several advantages over the rest of The host country and over other locations in the world: Benefits to Investors 1. It will deliver to many companies the most cost effective production/service environment in the world. 2. Infrastructure is world class in the zones 3. Labour is extremely cheap especially since companies do not need to pay income tax on the salaries of their staff. As cheap as China for the low end, and as good as US/UK at a third of the price in the case of highly educated labour locally or from nearby South Africa. The minimum wage in all Sub-Saharan African countries except Senegal are under US$50 a month122 Cleaners in 2003 were paid the minimum wage of P2.40 per hour = $0.30c. 123 4. Education (degrees/high school/practical business) can be downloaded in whatever quantity reasonably desired for virtually nothing, leading to a very educated workforce. (See the chapter on IT). 5. The zones are highly deregulated making telecoms and utilities also relatively cheap. 6. The tax free status extends to income tax, corporation tax, sales tax and all other taxes. 7. The zones are not mere Export Processing Zones, but fully integrated tax free urban economies of at least 10 km x 10km in size. 8. Effective legal independence from the host government hence the most business friendly legal environment in the world. 9. Banking compliance with anti terrorism but not anti tax laws. 10. IT software infrastructure in the city makes it very easy to do business/ buy property/ trade shares/ transfer funds. 11. All these benefits are permanent, guaranteed and insured (so any changes that affect your business negatively may generate a pay out) 12. Businesses who support the zone are helping create a business friendly global environment as other countries have to get rid of anti business legislation and taxation in order to compete. Hence there are beneficial knock on effects to businesses in their other jurisdictions from supporting the zones. 13. Living conditions for executives are world class 14. Overall costs can be 30 to 80% lower in the zone compared to operating in other jurisdictions. For many companies cheaper than China, with considerably less red tape. 15. The zones as they grow to major cities will be major markets as well as production centres124. 16. Extremely strong protection of patents and copyright. 17. No immigration laws: move your own people in and out at will, access to large pool of labour from all over Africa 18. Private sector management of most previously 'government' activities 19. Huge unskilled unemployed English or French speaking labour pool roundabout (250 million) 20. Skilled, cost effective labour pool concentrated in South Africa. 21. Cheaper rentals. With building costs of R4000 per m2, and interest rates of 10%, rentals around R40/ m2/month are achievable. 125 Why better than China? 22. Less admin, controls and regulations. 23. No transport bottleneck 24. Everyone speaks English (this is a huge advantage over China according to McKinsey. Language barriers have also made Germany lose out in outsourcing .)126 "The offshoring business remains predominantly English-speaking."127 25. It isn't in the right time zone for European call centers 26. China has massive structural weaknesses due to its communist past. Its banking sector particularly is highly unstable. 27. Amazingly, China is having labour shortages 128 Some cities are reporting 120,000 and 200,000 workers shortages respectively. 129 28. A closer location from which to serve European markets Why better than Dubai 29. Cheaper labour 30. No taxes (Dubai is introducing some) 31. Dubai is becoming expensive in many ways 32. The Middle East is dangerous, particularly for Western people and companies Why better than India 33. India is one of the most high regulated countries in the world. The cost of compliance is huge. 34. Indian prices are getting expensive and tax is higher, a software programmer earns $26,000 pa now in India. Paying the developer the same after tax wage in Libertonia would cost about $15,000130 35. It isn't in the right time zone for European call centers 36. A closer location from which to serve European markets Why better than Mexico for US, E. Europe for W. Europe 37. This is a completely different business 'near shoring' more suitable for products with high transport costs but not nearly as cheap or cost effective as Libertonia. Tax Strategies Companies domiciled in Libertonia will pay no tax. But they will still pay tax on their UK or SA operations if they have a company registered there on all profits generated there. On the other hand if they deregister there and simply run their businesses from Libertonia selling into SA and UK then its easier to get round paying tax. This is particularly true if the rewards of their overseas labours are taken as salaries (since there is no income tax in Libertonia) rather than profits. Its also possible for companies with staff in various European countries (including the UK and we could add SA) ,to send staff there for half the year (during the winter) and thus get tax exemption for the whole year for income tax. Residency based tax means if your do not stay in a country more than 183 days, you do not pay their tax. Thus we should not two offshoring strategies, one to move your existing staff there, and two to set up with new local staff. Of course a combination is possible such as moving existing staff and then using them to train people to replace them when they want to go back to their country of origin. Offshoring This is no new suggestion "Economists estimate that roughly 100,000 white-collar jobs "move" offshore annually" and "from 1991 to 2001, 2,500 U.S. multinational corporations added 2.8 million foreign jobs" 131 This is simply the extension of the decades old shift of agricultural workers from the West to other countries. According to the Economist: "Global demand for offshoring from American and British firms alone is forecast to rise from $10 billion now to maybe $60 billion by 2008, 40% of which is likely to be in banking and insurance. That is more than countries such as India, China and the Philippines-which meet much of the demand today-are likely to be able to handle. So newcomers such as South Africa are after a piece of the offshoring pie. " And indeed Libertonia. The numbers are quite astounding "The McKinsey Global Institute estimates that the volume of offshore outsourcing will increase by 30 to 40 percent a year for the next five years. Forrester Research estimates that 3.3 million white-collar jobs will move overseas by 2015. According to projections, the hardest hit sectors will be financial services and information technology (IT). In one May 2003 survey of chief information officers, 68 percent of IT executives said that their offshore contracts would grow in the subsequent year. The Gartner research firm has estimated that by the end of this year, 1 out of every 10 IT jobs will be outsourced overseas. Deloitte Research predicts the outsourcing of 2 million financial-sector jobs by 2009."132 "By 2015, America is expected to have lost 74,642 legal jobs to poorer countries." "Extrapolating from a study of eight industrial sectors, the institute calculated that in 2003 there were 1.5m service jobs outsourced abroad from developed countries. By 2008, it reckons that number will have risen to 4.1m."133 Offshoring In looking at offshoring in general, its useful to look at outsourcing in general of which offshoring is a sub category. We should keep in mind the distinction between offshoring which is when a company moves a function overseas and offshore outsourcing when a company contracts with an overseas firm to provide the service. The history of Offshoring has been historically seen as manufacturing to China's Special Development Zones and trade in services to India (more recently). 134 Manufacturing that has gone to the East but which could possibly be done cheaper in Libertonia include semi conductors, consumer goods and some toys. High bulk/ low value items such as clothes may be less suitable. India has done similar things with services. Its it industry did $16 billion in sales with 75% from abroad. "By 2008, says NASSCOM, annual sales are likely to surpass $50 billion." India's BPO industry is younger and smaller, but growing even faster. Last year its sales were $3.6 billion; by 2008 they are expected to reach $21 billion-24 billion, says NASSCOM. About 70% of the BPO industry's revenue comes from call-centres; 20% from high-volume, low-value data work, such as transcribing health-insurance claims; and the remaining 10% from higher-value information work, such as dealing with insurance claims." 135 "EXL Service carries out a broad range of insurance work for British and American firms, from finding customers to underwriting policies, administering claims, changing policies and providing customer services. The company is a licensed insurance underwriter in 45 American states, with applications for the remaining states pending. "These are very high-end jobs," says EXL" There are currently more than 300,000 call center workers in India! 136 Botwana is in that respect in a unique positin as French (from DCR et al) and German (from Namibia) speaking people are available for two of Europes largest markets. Plus Portuguese (Angola/Mozambique) and Dutch (Afrikaans people find it easy to switch to Dutch). Africa is an ideal location for multi lingual call centers. What kind of jobs? Jobs that can be easily outsourced/offshored and are in fact often are: customers support137/call center, data entry, claims processing138, accounting, manufacturing, engineering, procurement. Human Resources and Security although often local outsourced, do not lend themselves to offshore outsourcing as they need people physically present to delivery. Companies need to ask themselves if they are world class in customer service or accounting or manufacturing. If not then a tight contract with an offshore supplier might increase quality as well as lower costs. With voice over IP allowing very cheap telephone calls139 to anywhere in the world even outbound telesales calls are feasible from Africa and some companies have found that debts formally too costly to collect are now collectable if they collectors are cost effective employees in developing countries. 140 Quality has also be improved in some cases because its economical to spend more time on each query and a higher percentage of problems have been resolved. Other companies have been able to open services formerly only feasible for high end customers to lower down the chain.141 Even some highly skilled jobs like Fund Management and Investment Banking can be easily outsourced. Nowadays one can plant ones Reuters screen anywhere in the world and have access to the same information and markets. Top legal people and other consultants such as medical or business can fly in to meet clients and spend the rest of time offshore. They can also use tele conferencing, especially after the first meeting. These skills benefit the most from the zero tax environment in Libertonia. Indian doctors are already diagnosing conditions in the West over teleconferencing. General criteria for jobs that can be offshored according to Wikipedia are: 1. The job doesn't involve direct customer contact 2. It can be telework 3. It has a high information content 4. It is easy to set up 5. It can be transmitted over the internet 6. The work is repeatable 7. There is a high wage differential between the two countries. An example of the full range of services that can be provided offshore to onshore is at http://www.contractedwork.com/frntpge.cfm?af=43 And in terms of Outsourcing in General the benefits are:142 1. You do not need to be continually upgrading your infrastructure (be in IT, HR, Accounting or Call center). The outsourcing partner is doing that and the cost is shared over all its clients. 2. Very cost effective in the zone 3. Leaves you able to focus on core business issues. "Ton Heijman, head of PwC's BPO practice says "Ask a chief financial officer how much time he spends on personnel issues, and he will say 50-60%." Outsourcing these saves that lost time."143 4. Can allow more rapid time to market. 5. You do not add to your pension liabilities. 6. If your competitors save money from it and you do not you could loose market share Lots of companies already outsource. Delta Airlines144 outsourced 1,000 call-center jobs to India in 2003, and made $25 million in savings. IBM reinforces this lesson: although critics highlight the offshore outsourcing of 3,000 IT jobs. "A recent survey by Bain & Co, a firm of consultants, found that a hefty 82% of large firms in Europe, Asia and North America are today using outsourcing firms, and 51% are outsourcing offshore."145 " In late October,[2003] the HSBC banking group announced that it is taking 4,000 jobs from Britain to India, and earlier... Aviva (the Norwich Union insurance group) said it is transferring 2,350 jobs, also to India."146 Nevertheless many are not entirely happy with their service, making it possible for other parties to get into the market by offering better service. Alternatively the companies themselves can have their own staff overseas which is the Chinese model. Few Western companies outsource their manufacturing to the Chinese, they have their own factories. Alternatively, companies can place their simple operations offshore and more complex onshore such as in call centres or tech support where the hardest 5% of questions come back to the company. But most outsourcing that doesn't work simply hasn't been thought through property at the outset. While large savings can be made by moving processes as they are to developing economies as most companies do, much more value can be created by re-engineering. Many roles automated in the West can be done considerably cheaper by local labour. Additionally, with lower wage environment, running 24 hour shifts makes more sense, especially if that means making better use of capital equipment either in the developed or developing nation. In Europe outsourcing relatively new making it a good market for outsourcing companies at the current time. According to the Economist, although the market started with Financial Services "There is demand from automobile and aerospace manufacturers to outsource engineering and design work"147 IT remains however one of the core outsourced resources and cost factors can be dramatic "Cost, however, remains the big factor. One HCL Comnet client is Extreme Networks, a California-based switching-technology firm. Paul Hooper, one of its vice-presidents, estimates that outsourcing the management of part of his computer infrastructure has cut the "total cost of ownership" of it by an average of 40%"148 Even share price can benefit. "A study published ... by LogicaCMG, an Anglo-Dutch outsourcing firm, says that the shares of British quoted firms, after announcing outsourcing deals, outperformed comparable firms without such a deal by an average of 1.7% in the month after the announcement. Studies in America report even bigger gains. LogicaCMG says that, if British firms increase their outsourcing by half by the end of the decade, an extra £10 billion ($18 billion) will be added to their stockmarket value."149 Dubai and Outsourcing "The emirate recently announced the Dubai Outsource Zone (DOZ) --a 70-acre commercial park in the southeastern corner of the city that will be designated as a tax-free zone for the next 50 years. The idea is that a combination of cheap labor and modern infrastructure will help Dubai lure hundreds of companies looking to outsource IT-intensive operations from call centers to financial research houses. By way of royal decree, the DOZ is authorized to do everything from incorporating foreign subsidiaries (in a speedy 48 hours) to issuing visas (24 hours) to making sure the water cooler is full in the new office. (The DOZ building managers furnish and prepare offices.)" "The DOZ has compelling precedents: Dubai's first outreach program was Internet City--a similarly tax-free technology park for everything from sales to engineering teams. Launched in 2000, Internet City, which is now full, has attracted more than 700 multinationals, including IBM, Microsoft, Oracle, and Cisco. Along with another "media" zone, it has attracted more than 25,000 employees representing 200-plus nationalities. The increased consumer spending from new businesses has already helped shopping, dining, and real estate eclipse oil revenues. (Oil, which made up 33% of Dubai's GDP in 1990, has dwindled to a mere 5%.)" "To make the latest expansion work, Sheikh Mohammed is playing up Dubai's moderate labor cost (an entry-level call-center operator commands about $550 a month, vs. $350 in India and $1,500 in the U.S.), a soon-to-open university campus next door, customer service, and a glamorous Gulf-coast image--things that, according to Peter Rae, a spokesperson for Oracle's office in Internet City, make Dubai a "logical place for a lot of Western companies to set up shop." Oracle moved its Middle East and Africa sales staff from Ireland to Dubai three years ago, both for the central location and the Arabic-speaking labor pool." "So will businesses take the bait? India faces 12% annual wage inflation, Ireland's labor pool is drying up, and the only serious competition for technology outsourcing in the Middle East is Israel, says Cliff Justice of outsourcing consultancy EquaTerra. The DOZ will have its first test this winter when it hopes to announce its five anchor tenants. "They will have to have a multinational like Motorola or Citibank," Justice says. "If they do not, they'll never be a destination--they'll be an 'also.' " Outsourcing in Africa Outsourcing has become big in South Africa, with a number of listed companies involved in long term contracts. One of the advantages in IT related: information from the field in 1 minute which means quicker decisions The company we spoke to deals in a number of areas: 1 Call center 2 Back office function: 3 CRM:Training management 4 Database management 5 HRM 6 Merchandising/POS: Africa (where their 20 representatives can see 20-25 shops per day) 7 Franchise agreement compliance 8 Red flag CHAPTER SEVEN FINANCING AND THE DEAL Tenants Drive Development Tenants are the key factor that need to be in place before a building is built. Before a bank will lend a developer money to build a building around about 80-90% of the tenants need to be in place before they will approve the finance to build the building. So most buildings, be they office blocks or residential are sold or leased off plan. Ten year leases from blue chip companies are of course valued more highly compared to two year ones to 'Mom n Pop' operations. For residential land mostly the potential buyer only puts down a deposit of perhaps $1,000 -$2000.150 Furthermore, no one wants to lend on vacant land in the countryside, especially in Africa but really anywhere. The market to resell it is just not that liquid. They may however lend against vacant land with services if some of the plots have been sold to developers off plan. The developers of course, in order to buy the land or at least raise the building finances have had to find tenants. Land is usually about 15-30% of total development costs. Developers then fund the buildings and take the risk of not getting a return. If they are successful and the building fills with tenants then most of the income stream from the tenants will go to pay off the debt for the first ten years or so. In fact the banks usually insist that all revenue goes to servicing the debt in the first instance. If things go well then the building will appreciate in value and the developers will capture this profit. Sometimes developers do not see any profit for ten years or more. Banks look at incomes streams ie rents minus operating costs. Everything then is driven by tenants for office space and to a lesser extent buyers of flats in the area. Office space tenants are more important because of the 'rule of ten'. That is simply that whenever a cluster of multinationals rent some office space in a new are and employ a number of people, there will be ten times that number of jobs created. The other nine are people that work in shops and restaurants, doctors, dentists, lawyers, car repair people, hairdressers and any number of the other multitudes of jobs that appear based on the size of a settlement. That is why these key 'anchor' tenants are so important. You attract these tenants by providing an environment that is radically better than what they are experiencing in the rest of the world. We talked about this in depth in another chapter. But just to refresh, some of the key aspects are 1. No labour law (one of the areas US companies most often raise) 2. No capital controls 3. No tax 4. Few immigration controls 5. Cheap infrastructure through privatisation and deregulation of utilities inter allia esp first class telecoms. 6. Cheap labour 7. Little government interference in the market 8. Closeness to ports or airports. 9. Security of tenure: preferably free hold and constancy of the above factors above So one of the key activities in setting up a zone is to (a) find these multinationals and (b) have something worthwhile to talk to them about. An 'me too' zone that only does what other zones round the world do, is not interesting to investors. This takes time. Every single one of them needs to be approached, the right person found and a proposal sent to them. At some stage they would have to be visited before they would actually sign a lease agreement and it would usually be conditional on all or some of the factors above. In one zone in Kenya, the average number of employees was about 500 per investor,but we will use 200 to be conservative, which would use about 3000m2 151of office space. So to fill an initial 4 skyscrapers of 80,000 m2 152each, using the rule of ten would take only two and a half anchor tenants per building. However its more likely that to create critical mass you would fill one building completely with anchor tenants first and then the other buildings would slowly fill up with the individuals, retail outlets and SMEs that make up the other 90%. Office Space Construction companies estimate building costs at about R4000- R5000 per m2153. Rents in Sandton CBD are about R65 per m2 per month. That's about a 14% annual return on investment. So we can work out our stages in terms of our tenants: Stage Tenants Space Used Additional154 Skyscrapers 1 10 +30,000m2 600,000m2 7 2 30 100,000 21 3 50 500,000 45 4 200 2 million 140 5 3000 30 million 2100 At the highest point on our graph that would be a population of 6 million people. Infrastructure Infrastructure is usually funded separately from the buildings by people like McQuarrie, an Australian investment bank that specialises in this area. Their property fund is the second biggest in that country with more than US $20 billion under management. Their market cap is equivalent to about R75 million (round about that of the big banks in SA. They employ 6500 people in 23 countries. Their profits come 75% from Australia however. In Southern Africa they operate an infrastructure fund of R2 billion. R800 million is already invested. They invest in airports, ports, power, water, gas, toll roads and similar areas. Minimum deal sizes tends to be about R500 million. McQuarrie then supply the finance and other companies operate. In power for example, it would usually be large international companies like Siemens, International Power, CDC Globlek, etc. We need to create various competing entities ultimately. This is the point of Libertonia. But there is nothing to stop the funding for each one of them to be supplied by McQuarrie. This way regardless of which companies do well, McQuarrie still gets a return on equity. The blocks can guarantee to buy a minimum amount of electricity from one particular company or simply from any power company that McQuarrie has invested in within a certain time. Other services can work in a similar way. CHAPTER EIGHT THE POSSIBILITIES OF IT Internet Systems 1. Rapid Transfer of Property even for the poor 2. Connection between business and consumers 3. Anti Crime systems 4. Bank Accounts for All 5. Easy contacts and meeting people 6. Cheap, effective online education Introduction Over the last two years our company has developed several computer programs that make easier life, business and the activities formerly known as 'government'. Most of the systems then that we describe are already written. We aim to provide commodity systems whereby we provide a basic service. Other programming companies can come behind and add more value. Catching up With the Private Sector Some of the IT innovations that we talk about in this sector are additions to sectors of the economy that have up until now been run by the state. Presumably if they had been private then they would already now be working on the internet. This would include the deeds registry systems and the system for receiving court cases. We provide these systems to make these systems better, faster and cheaper. In Detail Deeds Registry This is a system where property can be transferred at the click of a button without the need for lawyers or a physical deeds office. The process of applying for a mortgage is integrated into this process and the banks do the actual transfer. The way it works is that you go the bank and apply for your mortgage bond. If you are paying cash or putting down a deposit then you put your money in an account with the bank. The bank then goes into our system on the internet and checks who currently owns the property and who else has interests in the property in terms of bonds and burdens. They then take the money they are lending you and/or the money in your account and pay the owner and all the bondholders listed on our (deeds registry) site. They then go into another page that only they have authorisation to and enter the buyer, the seller, the purchase price, themselves as bond holder and the amount and press one button. This then transfers everything and costs about 0.2% of the purchase price or R100 whichever is less. No estate agency costs, no lawyers, no tax duty, no deeds office fees. And more importantly, no waiting for months for all these people to do their work. That's not to say there will not be occasions where you will want the sales skills of a professional real estate agent to sell your house. You may even need a lawyer if your deal is complex. However 999 times out of a thousand its get your bond approved then click your transfer takes place. Most importantly this means for a 10% deposit the poorest of people can afford to buy a starting house at R5000 to R20,000 which will appreciate in value allowing him to become property owning. At the moment they are kept out of the market by the prohibitive costs of lawyers and the prohibitive complexity of the deeds registry system. For a (very) small flat or share in one then R500 is sufficient deposit which competes well with the much higher cost to build a make shift shack in a squatter camp. As well as allowing the poor to enter the market, this system of course makes all form of property buying and selling more efficient. Anti Crime All crimes, suspicious incidents, suspicious people etc can be registered online so that police time can be spent efficiently analyzing this and other data rather than filling in forms. More Title Systems Most places have title systems for houses in order to more clearly establish ownership but there are other products that would benefit from similar systems. The benefit of these systems is to reduce crime. When one considers crime there are actually only very few types of items that get stolen. Burglars seldom take your kitchen table and chairs. What is stolen are cars ,for resale or parts, and electronic goods. With an online title system it would be illegal to buy any car, or any of its parts, or any electronic goods if the online system (visible to all) did not identify you as the owner. This could hugely cut down on the profitability of crime. The shop would simply transfer title on the online system for that particular product when you bought it. You could then transfer title to someone else if you sold it, say to a pawn shop or second hand dealer. Car breaker/scrap yard could take a car off the system and input the parts into the parts system. If more than one engine was sold for each car taken off the system, it would start to look quite suspicious. Bank Accounts Everyone automatically has an online bank account so no one has to wait in bank queues to transfer money. This would include debit order systems and invoicing systems. Cheap effective banking. Contacts and Networking Special systems for linking people with other people who they might like to meet for interesting conversation, business potential or romantic interest. Special Interest Clubs can also work this way making Libertonia an interesting place to be culturally. Education The network will allow people to download educational audio or video content in various forms to anyone. This would be school level, university level or to do with learning job applicable skills. Internet systems would test people (multiple choice) on this in an invigilated environment where identities are checked. Cheap, effective education. Courts We have systems where people file cases which send to people's official email address and then (if they do not respond) to the block where they stay. Some cases can be processed online. Judges can also record their decisions online in terms of what rule. Contracts can be lodged and agreed online in order for easy proving. Police companies can disclose arrest (for civil liberty reasons). Licensing and Registration All licenses are issued automatically by the computer system on registration of the appropriate business and all registrations take place this way. Reasons to Register Anyone not registered on the Libertonia Law site is not entitled to the share of any gains made from selling rights or to be able to vote on the issues locally (like buying parks, which telecom company etc) Yellow Pages Every business is registered on the system for free so all businesses are constantly available. If they have prices, you can compare them without going anywhere or phoning anyone. Further Possibilities 1. Find flatmates program. INFRASTRUCTURE Telecoms/Internet Access Current plans include the burden on Developers that all buildings will be wired with a particular voice over IP technology so that phones can be plugged in for pretty cheap within the city itself. This adds a very small amount to the cost of office space or flats in a skyscraper but adds huge value . A modern VOIP network has many interesting features. You can of course keep track of people usage so that you can bill them but the capacity of the system is such that for a flat rate of about $10/R70 per month you can use the phone as much as you like locally and also browse the internet as fast speeds until your hearts content. Only perhaps 5% of the population will get a bill if they are downloading constantly large files. This system supports video phoning so you can see the person you are talking to, or even conference with several people in different locations by video or audio in the city or outside. Of course it tells you if you are on the phone and you have another call waiting, it allows you to transfer a call to anyone else in the city, you can forward your calls to another number if you are working from somewhere else. And what's more your number need never change. If you move house or offices, you just plug your existing phone in at your new and the system will know to direct any calls from your existing number to this new location. Your customers and friends will dial the same number and get you. They will not even know you've moved! This of course applies equally if you just want to swap desks. Alternatively you can call the system as many times per day as you like to tell it to redirect your calls to any number of different office or mobile numbers. If someone's line is engaged you can 'camp on' so that when the line becomes free it rings them and rings you. Each company or home can set up different messages for different times of the day (office hours/ nighttime). You can set up a call routing system for offices or even families: press 1 for gran or 2 for granddad. That also means you know when to answer the phone because its for you and when its for someone else in the home or office. For businesses, of course, this is usually sale, admin, technical support, etc. Even the smallest businesses now have this system. Furthermore, a person calling a number in Europe or the US can be automatically routed to personnel in Libertonia seamlessly to give 24 hour support. The system can be customized for particular businesses so call centers can order specific features. Faxes can be sent to your phone and then redirected to any nearby fax, wherever you are. All this technology will be included in the rentals of every home from the lowliest maid or garden to the most The cost of such a system is about R1500/ $200 per point. There would be one point for a house and one for each person in an office. Of course if people are teleworking from an office there could be less than one per person, saving money155 The system would be installed as one, consisting of the equipment of only one supplier and funded by the blocks. However, as with the general competitive philosophy of the zone, the system which would be run by seven or more servers would be ultimately managed by seven or more different companies that would interconnect. Each block and perhaps even each floor of a building could ultimately decide which of the seven it would go with. The basic service would be as we have described but the companies could sell extra services as technology develops. A telephone call takes up bandwidth of 25k maximum, that means a 1 gigabyte cable can take 40,000 telephone conversations simultaneously. Cell phone Networks A GSM base station156 costs about R600,000157 and Libertonia would need about 12 based158 on the area or about R8,000,000. Between all the people there, that is a completely negligible cost. Even for an initial stage of 40,000 people, it's only R200 per person for the equipment. Thus the high density counts twice here, firstly because you do not need so much equipment to cover the area and secondly because the cost is divided over a large number of people. 159 If we want we can make it even cheaper by using CDSM (450 mhz) an older technology which costs half as much and which only used 60-70% of the base stations. Wi-max160, is an emerging technology at even lower frequencies that might be still cheaper. Lower frequencies also have advantages in built up areas because they go round corners 161more easily, penetrating into buildings. 162 Wi max phones however are a few years away. Cell phone networks often need to use 'leaky feeders' or micro cells on each ceiling of a tall building163 in order to get coverage inside. Arguably more suitable for very built up areas like Libertonia is Wi-fi. Wi fi covers a lot smaller areas than the technologies we have talked about but is also much cheaper. At R2200 per device, one would be needed for every floor of a building. So a 20 storey skyscraper with 10,000 resident or employees would work out at R44 per person. 164 Wi fi could be plugged into the fixed line fibre network. The switching then would be done by this network removing the need to have a different switching system for fixed and mobile communication. International Gateways Fixed line exit to the outside world is either through the local Telecoms Company or Telkom SA. Alternatively satellite services is available for about R85,000 per month, not much divided by the population. VOIP solutions through Skypeout is also available, in other words, talking through your computer. Even better you can route your international voice traffic over the internet connections between continent. For large volumes, you might pay R150,000 -R400,000 per month for 34 megabytes in an undersea cable. A call takes up about 15-24 kbs, so you can 2000 on that line at any given time. So if the line was fully used with international telephone calls then the cost per call is about a tenth of a US cent per minute165, a small proportion of the price charged by most telcos. The problem with this approach is that the quality is not guaranteed so its likely that instead or as well as this system there would be a quality system that guarantees termination into a quality network with VOIP or even gives connectivity into the normal not VOIP network (for the usual much higher rates that telcos charge). Skywalks Its possible that to connect buildings at a higher level may be necessary to reduce pedestrian traffic at the lower level or simply to reduce the need to move to the bottom of the building to get anywhere. Skywalks have been used in many US cities particularly Minneapolis/ St Paul where they are privately done and tend to link high quality/price facilities. Dubai If we look at Dubai's example, we can clearly see why the zone must be free to employ any telecoms technology and service from any provider. "The Digiport has a 15-foot satellite station with related equipment and services, that provides telecommunications services to companies engaged exclusively in the business of telemarketing, reservation services, data entry, and information processing. The Digiport provides links to North America and Europe as well as offering employment in the following applications: data entry and processing, data conversion, software programming and development, geographic information services, image processing, indexing, automated mapping, electronic publishing, medical transcription, and video conferencing." "Intellectual property, brands and copyright are the latest buzzwords in the UAE. In the past year, the UAK, and Dubai specifically, has witnessed an explosion of the creative industries. From a whole proliferation of production companies, studios and broadcasters to the setting up of large international events and projects such as the Dubai International Film Festival, Studio City and the A1 Grand Prix, Dubai has finally put itself on the international scene as the Middle Eastern media hub and a haven for all the creative " "Developments in the TV and film sector are also happening fast. In the last year or so, over 25 new TV companies have been set up with over 120 channels now operated by over 40 broadcast companies based in Dubai Media City. The film industry is developing too. We acted for the production company involved in the first big Hollywood movie shot in Dubai, 'Syriana', starring George Clooney and Matt Damon. Dubai also launched its first International Film Festival in December 2004 featuring regional and international filmmakers and stars. This project took two years to complete and, after a very successful launch, will become an annual event." Centralised Software Yet another way to save costs is to buy software from major world providers and then lease it to companies in the zone for a much lower cost than it would cost to own it. Email for the zone would probably run on an instance of Microsoft Exchange running in Joburg. Similarly its possible to access the best software in the world: Oracle, Siebel, SAP, etc by accessing it over the internet from other places in the world. We also will have access to the software that enables us to run education is such a cost effective yet effective way. See www.ireach.co.za. 166 This system can take up to 600 simultaneous users for a tutorial or interactive conference with video on a 100 meg copper network. The video takes a maximum of 120k 167 This type of education in one study increased distance learning completions from 55% to 94%. This software also involves a knowledge management system that for us would be where all education material for school, university and business training would be kept. This material is paid for by $2 per person per month fee from everyone in Libertonia. This fee first pays for the software licenses and is then distributed to education content providers proportionately to how much their material is downloaded and used. This clearly gives incentives to content providers to improve their materials and also for specialized markets to be provided for. Apart from academic progress this can be used to provide commercial training. Call center providers constantly deal with the problem of spending R60,000 on training only to have the trainee leave after 2 weeks. How much easier would it be to attract call centers to Libertonia if they only needed to interview people that already had passed their training at their own expense. The same applies to many jobs. Unemployed people need no longer lead hopeless lives but can learn a number of different jobs by download and apply with much more confidence. Experienced professional of any jobs or bosses of the same can make extra money by providing this kind of training being remunerated by how often it is downloaded. People will make a name as the best trainers. Employers will express a preference for employees who have done this training. How much more would call centres want to come to Libertonia if they only interview people that have already done the training (as opposed to gambling R60,000 to train someone that may decide it two week they do not like the job and leave the company with a huge loss!) CHAPTER CHEAPER BUSINESS COSTS = CHEAPER PRODUCTS Firstly, its important to have the economic understanding of what happens when costs become lower in a competitive economy. What happens is that prices fall. People often wrongly conclude that lower costs will simply be kept by big business. Although business would do this if it could, all that will happen is that someone else will drop costs and take market share. Capitalism is a system of consumer sovereignty. Business can only offer products, its ordinary people in their buying decisions that determine what ultimately gets sold long term. So what's cheaper in Libertonia? There are a few categories. Costs saved through 1. Privatisation 2. Deregulation 3. High Density 4. Programming 5. Bulk buying High Density There are massive cost savings in terms of the lower cost of services in a high density environment. Installing telecoms is about a 15%-25% of the cost of installing in a low density environment, this means total phone calls per week (home and office) can be supplied for less than R100 per month , about a tenth of the average bill across home and business today. This service is also better than current phone service having all the features of a modern PBX system. This all facilitates calls that you do pay for. Not to a telecoms company but to someone that is supplying advice over the phone. Similarly telesales companies will not pay for calls but will pay every person they phone an amount of money for annoying them. Some people will choose never to be called. Others will take the money and take the calls. Sewerage connection for an average US home costs about $2000/R12,000. The cost per household of connecting a skyscraper is almost zero. The same applies to electricity. Roads are about 20 times cheaper (because there are 20 times less for a given population) and much better utilised. Traffic moves six times faster on average because there are no junctions (see relevant chapter) and you do not have 90% of your roads (non main roads in suburbs and the roads people stay on, having about 10% utilisation as is the case today). The Uk government spends 23 million pounds per year on roads or roughly 1000 pounds per household. High density Libertonia can supply a very high quality road network for much less. 168 Knowledge Workers The trusted advisor/ knowledge worker role has to go beyond one thing like accounts or financial services or law. He must be an expert on 10 or 20 different areas and be constantly learning. Perhaps specialised more on a particular type of customer than a particular subject. Only seeing the customer once a year but constantly employed. No tax, simplified law, makes this role easier. Reducing Insurance Costs In Libertonia, insurance is cheap because people can reduce the risks and claim half the gain from the insurance company. Crime would be negligible because high penalties and private police. Its also difficult to burgle due to high incidence of patrols and because dense housing is more 'defensible space' is its properly designed. There would be reduced road accidents because of the no traffic light design. You never cross traffic. Also because high density means lower traveling distances that in itself reduces the opportunity for accidents. Better surfaces that reduce aquaplaning would reduce accidents but the underground nature of the roads makes this unnecessary. Risk reduction entities169 would bring up due to the legal ability of such companies to claim improvements back from insurance companies through an expanded enrichment action. This is no small innovation, but one of the most important areas of modern life. In the United States 40,000 lives are claimed every year by road accidents, about the equivalent to all the soldiers that died in Vietnam. Americans spend over $100 billion per year in insurance premiums and bear $250 billion in uninsured losses.170 Conceptual Inventions Its even possible that lower damages may result due to cars with spring bumpers, and also roads with crash barriers that absorb strain and then stay absorbed, that is, do not bounce back. Automatic systems that speed up/ slow down to avoid crashes that take into account the other cars on the road with GPS and maybe constant video monitoring of the roads by computer. Higher Turnover Shops in higher density areas do not use more floor space, they simply enjoy a higher turn over of goods.171 This is more sales at no extra costs. This in a competitive economy translates into more goods In conventional situations clothing companies like Jet with turn over of stock of about 9 times a year and Edgars itself at about 6.5 times per year.172 This is from delivery to the distribution center (sorting function) to the shop floor (about five days) to sale. Sometimes they also keep stock in warehouses close to the store but this is reducing due to pressure for just in time delivery (JIT). Note that for companies like Edgars that import 70% of its goods from abroad (mostly China), they need to buy some local stuff as well as order take a long time to arrive from aborad, local content is about 30%. So having strong retail presence due to being a shopping Mecca also creates some jobs in the local industry at least in the fast moving world of fashion. This doesn't apply to all retailers, Boardmans, a shop for upmarket household goods, is almost 100% imported. As many phone calls as you could reasonably want to make for $10/R60 per month. All your email free. Video conferencing if you want that. Up to 10 gigs per month total Power Power generation costs about $800,000 per MW (Iraq). It then runs through cables that cost R1 million per mile in South Africa and transmits at 66,000, 132,000 or 330,000 volts and comes to a substation owned by the power provider. The power distributor also has a sub station to which the provider conveys the electricity at 11,000 volts usually. The distributor then usually doesn't transform the power to a lower voltage at this point but conveys it to mini substations. A substations costs R2-5 million and mini stations R130,000 to R300,000. Mini stations then transform the power to 380 volts in three phases which translates to 240 volts in one phase. Libertonia skyscrapers at 100,000m2 need a full sub station to handle the likely 11mva that such block would use in power. Usually a fairly poor person will use 5-10 amps and a middle class family 25. If we average that to 2500 flats at 10 amps then the calculation becomes 380 volts x 25,000 amps x 0.9(losses) = 8.5 mva. Mini subs can only take 1 mva at the very most. A R2 million sub station for 2500 flats is only R800 per flat, which is an insignificant difference to the construction costs. The cost of power itself as generated by Eskom is 6 to 9c and they sell it for about 20c to which municipalities add their 50% margin. If we can buy in at about the Eskom price173 and pass it on to customers with only a small deduction for maintenance of the substations then the price of electricity will be one of the cheapest in the world, if not the cheapest. Eskom already generates at one of the cheapest rates (partly due to the cheap price of coal). Like our bulk buying situation most of the cost is in the distribution and being highly dense we save greatly here. Furthermore, skyscrapers while using a lot of power, use less per person than individual housing and a bit of creative building can save a lot more. The new Swiss Re building in London, affectionately known as 'The Gherkin", is designed for efficient energy usage The Economist tells us: "Thanks to its artful design and some fancy technology, it is expected to consume up to 50% less energy than a comparable conventional office building."174 . "In America, buildings account for 65% of electricity consumption, 36% of total energy use and 30% of greenhouse-gas emissions" it continues. So clearly to live in such a building halves your electricity bill. This is mostly through heating and cooling which use far more electricity than household appliances. The latter are also, for the most part, not on all the time. Solar power can generate 20% of a buildings power needs 175 Solar power however is most efficiently used to heat water directly rather than converting the solar energy to electrical. Similarly there is considerable potential to use the heat exchange principle to rap warm pipes that you want to be cold (e.g. fridge cooling) with cold pipes that you want to be warm (e.g. water before being solar heated). This means you spend less cooling fridge coolant and heating water. Examples of strategies from the same article across various buildings that lower energy usage include: 1. Special glass allows daylight in to reduce the need for interior lighting, keeps heat and ultraviolet rays out, and minimises heat loss in winter. 2. Two natural-gas-powered fuel cells provide 400 kilowatts of power, enough to provide all the electricity needed at night, and 5% of the building's needs during the day.[That's 8 Mega Watts] 3. The hot-water exhaust produced by the fuel cells is used to help heat the building and provide hot water. 4. The heating and cooling systems, located on the roof, are gas-powered rather than electric, which reduces energy losses associated with electrical power transmission. 5. Photovoltaic panels on the building's exterior provide up to an additional 15 kilowatts of power. 6. Inside the building, motion sensors control fans and switch off lights in seldom-occupied areas such as stairwells. 7. Exit signs are illuminated by low-power light-emitting diodes. 8. The result is that the building's energy consumption is 35-40% lower than that of a comparable conventional building. 9. Using natural lighting and ventilation wherever possible. 10. The façade consists of two layers of glass (the outer one double-glazed) enclosing a ventilated cavity with computer-controlled blinds. 11. A system of weather sensors on the outside of the building monitors the temperature, wind speed and level of sunlight, closing blinds and opening window panels as necessary. 12. The building's shape maximises the use of natural daylight, reducing the need for artificial lighting and providing impressive long-distance views even from deep inside the building. 13. a wind farm, the turbines of which are expected to deliver around one megawatt of power, enough to provide up to 20% of the building's expected demand. Like other green buildings, it will rely on natural light and ventilation, and energy-efficient lighting. [5 Mega watts total usage for a 600m building] 176 "A survey of 99 green buildings in America found that on average, they use 30% less energy than comparable conventional buildings. So any additional building costs can be recovered quickly: according to the USGBC, the 2% increase in construction costs required to achieve a LEED gold rating typically pays for itself in lower running costs within two years.... Lockheed Martin, an aerospace firm, found that absenteeism fell by 15% after it moved 2,500 employees into a new green building in Sunnyvale, California. The increase in productivity paid for the building's higher construction costs within a year."177 Water Saving A lot of water is saved by pumping water for sinks and basins back up to be used for flushing toilets. The installation of low usage toilets and flush free urinals also help. 178 On average an appartnment will use 100 liters of water per day. An office will use 30 litres per day (people do not soak in their offices as a rule). Similarly a 4 litre flush well engineered can be better than a 6 litre flush with less thought. A shower can release 100 liters per minute, but with the right shower head only 6 litres per minute. Since the average shower takes about 5 minutes that could be the difference between 500 litres and 30 liters. With ariation of the water the same shower can seem so much better with so much less water! Modern sewage works of course can purify water to a purer grade than that of a country stream and so most countries return this water back to people's houses. London for example recycles its water seven times. This then also reduces the need for new water from the The host country system once the system has been filled once. Sewage can contain much more for a lower diameter of cable if it moves faster. Like roads, the faster the transport the less infrastructure you need. One in 60 or even 1 in 150 , depending on the volume is meaningful for establisging flow. With roads underground there is less need for washing car. On the other hand golf course use at least 1.5 million litres per day, 179and only 25% of people living on golf estates actually play golf! Environment in General This is part of course of a general trend in our societies towards integrated thinking. We want non destructive paradigms. We want building that maximise health. We want to look at the effects of radiation and suchlike. We want clean and nutritious! Other Infrastructure Possibilities If Libertonia become established there will be much greater interest in private funding of other infrastructure schemes that will serve Botswana too, such as: 1. Rail Link from Airport to Libertonia 2. Upgrade of Gabs to Lobatse Road. CHAPTER NINE INNOVATIONS Although its not always possible to hermetically seal the categories, its important to realise that cost saving is only half the value, the other half is in quality improvement. Something may cost more, but if it provides more value that's fine, particularly as consumers become more affluent. Automatic Delivery New Urbanists are very keen on a walkable communities. Jane Jacobs points out that most journeys aren't commutes but errands and that if communities are dense enough, you can walk. However you're not going to carry a trolley full of shopping back to your house no matter how close it is! In a highly dense city though, it makes sense to link up the skyscrapers with tunnels through which packages can be transmitted in standardised packages. The idea would be that the box of the trolley itself could be the bottom half of the box or at least that the trolley box could fit within the box. So once you have made all your purchases within the shopping center, you go to a place in the shopping center and check in our shopping, lock the box, give them your address. The box then goes down in the lift to the subterranean level of the block where it is loaded onto a conveyor and transmitted through the city to a place close to your house. The costs of such a conveyors is about R2000 per m180. To have them connecting every single block is going to cost R440,000 per block.181 Divided amongst 2500 flats/offices would be less than R2000 per person. Another way to make it cheaper is to only run one conveyor per 5 blocks and have people employed with wheeled trolleys to take a number of boxes to the two blocks on either side of the conveyor . This also gets rid of the trolleys going in the sideways direction. That would mean for a whole city of 20 x 20 skycrapers you would only need one NS conveyor and 4 conveyors goings east west. That would cost only R10 each 182 in capital costs. Apart from the obvious job benefit of using labour instead of capital its also probably better to try out the system to see how many people use it before installing large amounts of capital. The companies running the system could decide at a later date if they want to put in conveyors instead of employing people with trolleys. Additionally if a conveyor becomes overloaded its possible and necessary to bring in people with trolleys to process the extra business. In extreme circumstance one could even take some of the boxes to a van and run them across the city by road! Mail and parcels could also travel in this manner. To make it easier people could post their letters and small parcels up to a certain size in one of 20 post boxes in the zone (with another for international) and the boxes would be sent to sorting centers in that area of the city which would then only have to sort them into boxes for their part of the zone simplifying sorting considerably. A different set of boxes would apply to parcels under a certain size but not in the letter category with perhaps 8 boxes for different regions of the city (the boxes have to be bigger). Parcels big enough to take up a whole box would get a whole box to themselves. The capacity of such a systems depend on the average distance that a box was the conveyor. But if each box averaged 500mm by 300mm and the conveyor is 600mm and the speed is 6 km/ hr. Then the total capacity per km is 3000 boxes roughly and they would take 20 mins to make a 2km journey resulting in 9000 boxes per hour. If there were conveyors leaving major shopping areas in 4 directions then that would be 36,000 boxes per hour183. On a Saturday, with 10 to 6 shopping that could be 300,000 boxes altogether. So capacity would seem to be adequate. Shoppers with only a few things would carry a bag home with them and others might only be in the center to socialise. Week days would see more deliveries from manufacturers and importers and less shopping carts. Electricity cost on such a conveyor are about 5kw per 100km section which is 250kw for our 5km stretch. Running 24 hours for a month is about 180,000 kwhrs. At SA current retail rate of 33c that's R60,000 per month. At an average wage of R1000m, that would be 60 people you could employ month at the same cost. This perhaps suggests a more labour intensive model would be more feasible. 184 In some ways we are simply doing for intra city transport what containerisation did for inter city and inter country transport. Containerisation led to massive falls in transport costs between different countries. These tunnels may be used for other things than conveyors and utility pipes however. If we leave the system free there may be many innovations in this area that we have not yet thought of. Everything on Tap Sol Kersner has drinks piped to the rooms in one of his resorts. Which makes me think why all liquids should not be piped into homes and offices. In Libertonia in at least most houses, you can get gin, whisky, vodka and rum in the lounge along with coke, lemonade, tonic or soda for mixing. In the bathroom liquid soap and shampoo are available. In the kitchen fabric conditioner and dish washing liquid in one corner and cooking oil, vinegar, milk, mineral water, and so on in another. As large quantities can be bought in bulk from branded or unbranded suppliers the cost per unit should be sufficiently less. Consumers save carrying heavy bottles (or save space in their automatically delivered boxes). Suppliers also save on the costs of labels and containers as well as saving the retail margin. Measuring usage can be done by various means (eddy current/ paddle wheels)and charging can be pay as you go or contract depending on the household. Security would need to be tight around the places where the vats of alcohol were stored! The cost of piping is minimal. Plumbing for a whole building will be 5-12% of the build cost and that includes the baths, sinks, toilets etc. So the cost of such a system will mostly be in the measuring. Privatised Education I've covered elsewhere in detail the argument for private education and particularly why there is every reason why completely private education will work in Africa. Even for the poor a private education is realistic. This is mostly because in poorer countries the salary of teachers is also cheaper and for a number of other reasons. Technological Education We can also however include the benefits of technology in the equation. There is absolutely no point for teachers to convey the same content to children as they conveyed to the previous class the year before and that thousands of other teachers convey across the world every day. Rather the children watch the content together with other classes the same age in large cinema type rooms. The high density of Libertonia makes this work as many children will be in close proximity to one another. This facility can be used as a cinema at night or at the weekend or alternatively for evening classes for adults. Different solutions will emerge. Another service in Libertonia is interactive learning185 which is included in the levies and which the children can use to learn without the need for teachers. Ideally this facility would be owned and maintained by a third party and used as an internet café for other people at night and at the weekend. This software works when you are on your own with worksheets and questions and tests etc all in a very graphic format that it very children friendly. The same software can be used to ask a teacher questions even if you are in a different part of the city. This allows children to work at their own pace. Smart children do not get held back and slow ones not left behind. The same software can be used by business to collaborate on documents without leaving their desks. For this reason children only need to be with the teacher about a third of the time. A structured program could thus accommodate 3 times as many pupils per teacher. There are two ways to use this. Firstly, from an increased quality point of view, schools for more well off people can become much more effective by having smaller class sizes of 8-15 and it might possibly be cheaper too. Secondly, and more importantly from an African context it makes the schools a third of the price. So even private schools with no subsidies cost per pupil, paying teacher R4000 pm (normal for South Africa), with 33 pupils in her class times in three shifts would be R4000/ 100 =R400 per month. Clearly there may be other costs but staff costs are usually the main one. Plus this technological education may even be better quality. Pre recorded material that schools choose to use would usually be of the best teachers whereas there is no guarantee a teacher in a traditional school is the best. Similarly with interactive education, its easier to develop excellent material once than repeatedly by thousands of teachers. The role of teachers when they are with the children then is not just conveying information but the much more enlightened role of asking questions, making pupils think, teaching them to be creative and helping them with particular difficulties. Frequently asked questions should of course be incorporated in upgrades to the material. So the content is taught by videos/dvds and the teachers are there to 'teach the children to think'. Analytically, creatively, inductively, critically, and in every other way. Note that even in this, the content of how to think creatively can be taught by video. Its just the application that can benefit from teachers. Children can also do exercises in groups without teacher support while teachers deal with other pupils, which also maximises teacher time. There is no reason why tests should not also be done on a regular basis on the content of educational TV (National Geographical, Discovery, History Channel etc.) or on the content of the latest best selling business books. The difficulty level would have to be standardised then it would be up to employers to decide how much they valued a general all round continuing education in their line of work. On DVD Other solutions are to record audio content on video or audio. A single DVD can take 2100 mins (30 hrs+) of mp3 files. That's about the length of many university courses. If lectures to popular degrees were recorded onto a number of DVDs and copied cheaply this would dramatically reduce the cost of the content part of a university education to the price of a few DVDs. Perhaps R500 for a whole degree. Exams would be multiple choice marked online automatically. There is no question that this is not as good as getting interaction with lecturers and answering written questions in an exam but for those who cannot yet afford this kind of education, it's a great start. Plus, like high schools, there is always the option for getting people to learn the content without lecturers and lecturers time being spent in more high value activity of questioning and thinking rather than conveying standard content. At Home Both the DVDs and the interactive material is available from home. Every home will be sold with a PC included in the price. For those with limited income it will be a very basic PC 186(what they call a 'thin client') which will be all set up to make it easy to use the educational material for either adults or children. All the material is always available, stored on the central server. Content providers are paid depending on how many times their material is downloaded compared to other people. This is how the levies for education are divided. Privatised Roads Roads would initially be owned by the blocks or by outside investors. At a certain point ,when there area enough drivers and roads to make it feasible, these initial owners are obligated to sell the roads to competing companies to run so as to create the maximum amount of innovation and competition. The road companies as with the previous owners can set the rules of their roads. They can choose the speed limit, the penalties for people who break the rules and if the road should also/instead be used for public transport. They can also charge pedestrians who wander onto busy streets. They decide in what way they will deal will buses and taxes and if they will permit only cars (lower road maintenance) or also permit trucks (possibly more revenue). They are not allowed as a condition of title to own two roads on either side of each other. This creates more competition. Continuing Input It is suggested that those who work on developing this optimised legal system maintain a role in the law making process for a perhaps about five years until the principles are established in the light of cases and the general experience of actual situations. CHAPTER TEN POSITIVE SOCIAL CONSEQUENCES "All that they asked is that we remembered the poor, the very thing we were eager to do" Galatians 2 10 So what is the result of all this for the people of Africa? There are many positive social consequences to such a program. The strategy in poverty alleviation must always be jobs and training which bring people out of poverty as against handouts and 'protection' which keep people in poverty. The poverty reduction benefits of Libertonia are massive. Firstly job creation which must be at the center of any job creation program. If we are successful in Libertonia then there will be no involuntary unemployment in The host country and other countries around about will also see significant benefits. Even the most 'unskilled' and illiterate sector of the economy will find jobs as maids, nannies, cleaners, delivery people, drivers, security guards, etc. More skilled will find jobs as gardeners, police, shop assistants, and so on. These jobs are the inevitable result of economic growth. The very fact of Libertonia means many jobs in the construction industry. Building will be an omnipresent fact in Libertonia for at least ten years and maybe always, creating thousands of jobs. Construction is about 10% of the economy in most countries and probably more than that in jobs. We are even creating new classes of unskilled jobs. Our subterranean delivery system can be run with electronic conveyor belts and few people or with many people with low tech trolleys. Only time will tell which is most efficient. In the short time its lots of new jobs. Similarly because our policing works on market principles, more criminals means more police, so their could be vast numbers of jobs for informants and arrestors as the industry takes off. Another aspect is educating Western business, used as it is to capital intensive processes to realise in a place where labour is cheap, labour intensive processes can often save costs. The most service orientated economy in the world can be created, maximising time for those whose time is precious and so creating jobs for those with lots of it on their hands. Flexible Labour Markets The last thing that Libertonia would do to "help" the poor is create barriers to employment. This kind of policy gives the illusion of helping the poor while actually preventing the most needy, most unskilled people from getting a start in life. This is most unfortunate. Restrictions on firing employees only stop people being hired in the first place, stop the new person who replaces the fired person from getting a job, and often ends up only being used by the lazy and dishonest. Many investors have asked me questions about labour laws, making it clear that they wouldn't come to a country with any labour laws. Partly that's economice, these laws makes employees a contingent liability rather than an asset. Partly its personal, entrepreneurs feels stolen from when employees are able to charge them for deciding to let them go. Its not coincidence that the most successful economies in the world including the US, with the highest employment rates have no or very minimal labour laws. Getting rid of them helps the poor by creating more jobs and more investment. Instead of erroneously trying to help the poor with labour market regulation, we help them by making everything cheaper for them. If you can buy more with your money, it's the same as earning more. In Libertonia, everyone has access to the things only the rich formerly enjoyed. Bulk buying increases the range and quality of things that all workers can buy, cheap telephone services and internet give them a higher standard of living. Walkable communities save them on taxis and save the huge time cost they endure walking huge distances elsewhere. Investment When we bring jobs from elsewhere, we create far more jobs than just the ones we bring. In development this is called the rule of ten. These are the support people, the shop workers, restaurant workers, dentists, doctors, lawyers, nurses, school teachers, car mechanics, beauticians, etc that come to a place when there is a certain number of people there. These are usually about ten times the number as those that work for the companies that invest initially. This presumes that the incentives look reasonably permanent. If they only last a few years then people will know the companies will disappear again. The program together with the absence of constraining labour legislation allows industries to spring up that otherwise would not. These include Delivery and sourcing Not suggesting we artificial create industries artifically. All we can do is start up this kind of industry and see if it works. If it competes and succeeds great, otherwise it will not and should not continue. Its not sustainable. Globalisable Industries China's187 wage rates are 40c an hour. That's about $70 a month/ $100 in manufacturing.. A lot of unskilled, unemployed Africans would work for that, if they were given a chance. In Industries that are globalised or globalisable. Yet there is little point in participating if it is illegal to work for this wage due to minimum wage laws. China will simply be more competitive otherwise. China makes 60% of the worlds bikes. Clothes, shoes, semi conductors , toys, furniture all industries that will be produced mostly by the countries with the lower total costs and in these industries, much of that cost is labour. The globalisation of the world must be seen as a good thing for developing countries contrasting with the 1960s central-dependent model of the world that went before. In-Person Servers 188 A lot of labour intensive industries however are not globalisable. Our delivery system is a good example. You need to be there to push the trolleys in the subterranean delivery system or to respond to people wanting deliveries on a more personal basis, flat to flat. Urbanisation Medieval European cities had about 3.5% of the population exclusively working in cities. By 1500 Italy had 29 cities over 10,000 in population more than England(4), France (12) and Netherlands (13) put together. By 1700, Italy had 45 vs 22 in the other 3 countries despite the growth of their capitals to hundreds of thousands. 189In 1800 by which time cities had a 6000 year history, 10% lived in cites.190 By 1900, 25% were urbanised and by 2030 66% is projected.191 However the novelty of this should not be overestimated, according to Reader, 4000 years ago 90% of the population of Mesopotomia were living in cities.192 This was supported by crop yield of 76 times the seeds sown compared to as low as 2 times in feudal Europe.193 To the Romans furthermore urban meant civilised, not only in terms of their view and culture, but in the meaning of the world. Civil in civilised is a reference to the Civic in other word the city.194 According to one senator "Let the wild beasts live in woods and fields, men ought to draw together in cities"195 Development is an Urbanisation process. Rich countries are usually highly urbanised, poor countries usually not. People coming to the city has been such a huge phenomena that cities have been unable to cope. This however, is because it's a government process. In the modern, Libertonian privatised environment, new people is new business and services expand to fill the gap. London's populaiton multiplied by 10 between 1551 and 1801 to 850,000 despite the fact that more people died in cities in that era than were born in them. 196 Labour Intensive in the Home A lot of people in developing countries build their own home. There is no reason why even in a skyscraper environment that should not be the case. Finishings are often half the cost of the flat. If certain flats were left in concrete for half the cost, many of the poorer people would be happy to finish them in their own way, in their own time if the rent or mortgage was half the usual. Roads http://www.fias.net/ifcext/fias.nsf/AttachmentsByTitle/FIAS_Resources_Conferences_EcoZonesIndia_MWaithaka.pdf/$FILE/FIAS_Resources_Conferences_EcoZonesIndia_MWaithaka.pdf CHAPTER ELEVEN THE NUMBERS Infrastructure Summary Construction:R200,000 per family (4 people 30 m2 house, 20 m2 offices/school) Infrastucture: Water/Sewer: R24,000 per family Electricity Sub: R5000 per family Roads: R500 per family Total R230,000 per family For 10,000 people or 2,500 families total cost is R600 million. Construction: R4000 per m2, half for factories, up to double for high quality residential. Very low cost housing with no ceilings or plaster can be R600 per m2. Parking : R3000 per m2. Skytrain $10 million per mile = $6 mill per km = R36 mil per km. Roads: R1.3 million per km. (Ultimately 200 km, for 5 mil ie R1.3 *200 /1 = People: 50m2 per family, 100 blocks 100x100m with av numb floors 35 = <1,000,000 families or say about 5 mill people) Golf Courses: R500,000 per green which is R9 million per golf course. Sewer Lines: $300,000 per mile in the US, Electricity Sub Station: $5 million. CPS in St Antonia serves 600,000 people with about 90 substations counting ones under construction etc. That's one per 6000 people roughly making the cost per person about $900 per customer (not per capita). Sewage local:Using Bangcok for construction prices and Osaka for capacity needs. $300-$500 per head of population in constructing sewage works, including Sewers I think. Which is about $2000 per family on the high end estimate, similar to below. Cost per km of sewers about $250,000 http://www.ci.des-moines.ia.us/departments/FIN/04%20Budget%20Files/SanitarySewers%20CIP%20Corrections.pdf Cost of constructing sewers is most of the cost, later operation and cost of equipment are much less. http://www.cityofkingston.ca/pdf/environment/5_SewerOverflowsAnalysisOfAlternatives.pdf Alternative Costs Estimates based on costs per Dwelling Unit are: Land Clearing $300-$700 Paths/Trails/Sidewalk $900 Roads $5000 Water $2000 Sewer $2000 http://www.csc.noaa.gov/cgi-bin/id/alternatives/indicators.cgi CELL PHONE Mobile phone networks: $20,000 per base station 4000 needed to cover the whole country of Nigeria that's $80 million . Over 10 million customers though its only $8 per person. There is some indication that 220 base stations will cater for 100,000 subscribers., or about 500 per station. 178,000 cell sites in the US and its territories (Im not sure if this includes Iraq) which processed 675 billion minutes of airtime in the first 6 months of 2005. That means 500 minutes per cell per hour or an average of 100 minutes per minute or 10 simultaneous phone calls on average 197at each cell site. 198 Total Revenue was about $55 billion for the 6 months meaning annualized revenue of $200,000 per cell. Against total capital investment of $174 million cumulative. With almost 200 million subscribers, the number of cells per subscriber seems to be about 1000. Some US cities charge $20,000 per home to link up to the sewer system. Per capital replacement values at $2400 per citizen. A Chinese city of 60,000 people installed a 30,000 tonnes a day sewer system. Capital costs of sewage treatment costs somewhere between $2500 and $6000 per house http://www.cmit.csiro.au/innovation/2000-12/septic_tank.htm Construction costs of simplified sewage : US $30 per person (connection cost to the main sewers) in Brasilia http://www.sanicon.net/titles/topicintro.php3?topicId=8 York Region operates 164 kilometres of trunk sewer lines. In the south urban area (York-Durham sewer system) the Region operates five major pumping stations. Most of the south urban collection system was constructed in the early 1970s. In the North, the Region operates smaller works. (this is York Durham Ontario not UK! 850,000 residents, 25,000 businesses and 395, 000 employees. (That's $640 million to install ie $1000 per person in trunk sewer lines, which are 15 to 24 inches ie 0.4 -0.6 m), over 800,000 litres per day in another definition) ( US $84 per linear foot of 24'' pipe is 250,000 per km, for smaller sewers, say 8'' the cost is 23 , or about 80,000 per km. So we can assume Osaka with 47,000 km of sewers would cost at least $4 billion to do from scratch. Maintenance is about 10%). http://www.epa.gov/owm/mtb/force_main_sewers.pdf ) Relative costs of sewage for Tokyo http://www.gesui.metro.tokyo.jp/english/rr27.htm In terms of pipes width needed. A 36 inch (almost a m can take 3 million gallons per day ie 12 million litres. At 1m3/ day per person that's enough for. 1200 people. Another article suggests 35,000 people generating 10-12 million gallons (50 million litres = 50,000 m3) a day can be served with a 42 inch (1m) diameter pipe. So for a 10km street of skyscrapers hosting 250,000 people, you would need 7 such pipes which would stretch 7m. http://www.insituform.com/resourceroom/resource_article29.html Sanitary Sewer System: Whitby is serviced by approximately 170.6 miles (273.2 km), excluding Brooklin, of gravity sewers which discharge to the two water pollution control plants. Sanitary sewers have recently been constructed in Brooklin to replace existing private septic tanks in the community and provide capacity for new development. The population of the Town is currently 92,000, Osaka city has 12 sewage plants for a Population: 2,500,000 for sewers but greater Osaka 8,815,757 (2nd), 2,844,000 m3 per day., 47000 km of sewers. http://nett21.gec.jp/GESAP/themes/themes4_3.html So you need about 1 m3 per day processed for each person. (200 km in Libertonia, ie 1/200th of it) Pemberton's population is around 1,700. If the Village's request makes the grade for the next round of grants, construction on the proposed $6.98 million plant would begin almost immediately and be in operation in six to eight months. The plant would have a capacity of approximately 3,300 residents, with the possibility of expanding to 6,900 if necessary Si Phraya Wastewater Treatment Project The catchment area is about 2.7 km2 consists of Pom-Prap, Sumpanthawong and Bang-Rak districts. The plant capacity is 30,000 m3/day. The construction cost is about 450.4 million baht. ($10 million) The plant has been operated successfully since January 1994. That's $300 per m3 per day. 2. Rattanakosin Wastewater Treatment Project The catchment area is about 4.1 km2 of Phra-Nakhon district. The capacity of the plant is 40,000 m3/day. The total length of sewers is about 16.5 km. And the pipe diameter varies from 0.25 to 1.50 m. .The construction cost is about 883 million baht and the consulting services is 15.2 million baht. ($20 million) That's $500 per m3 per day 4. Yannawa Wastewater Treatment Project The catchment area is about 28.5 km2 consists of Bang-Rak Yannawa, sathon and Bang-Kho-Laem district. The capacity of its plant is 200,000 m3/day The construction cost of this project is 4,552 million baht and consulting services of 155 million baht.$100 million. That's $500 per m3 per day. Then BMA has operated the plant since December 2000. http://www.bma.go.th/bmaeng/body_project21.html Egypt had installed generating capacity of 17.6 gigawatts (GW) as of 2002, with plans to add 4.5 GW of additional generating capacity by 2007. Average Yearly Per-Capita Highway Construction and Maintenance Costs 1990-2000 Shelby County Crittenden County DeSoto County Construction $81.85 $144.80 $259.75 Maintenance $15.60 $32.89 $8.57 Note: These averages come from 10 years of data for Shelby and Crittenden and nine years for DeSoto. Shelby data are interpolated from total expenditure data using 1997 breakdowns for maintenance and construction. Population estimates are based on the 1990 Census. Roads take up about 20% of the average city area. For a city that is say 23,000 sq km like Dallas/Fort Worth, that's 4,600 sq km for 5 million people. For Libertonia for the same amount of people we are talking about 40x2 x 10 km = 800 km of roads 20m wide = 13 km out of 10 x 10 km area. So roads cost per person would be approximately 200 times cheaper. Same will probably apply to sewers, water links, electricity lines (of course the processing plants will be the same cost for a given volume) but the cost of the sewers and water pipes themselves. Telecoms infrastructure To fit a skyscraper with a modern VOIP telephone systems including the cable, the labour and the servers to run it costs about R1500/$200 per point, only R750 of this would be the cabling. A point is one person in an office situation but also connects a household in a domestic situation. This compares with a low density sprawl situation where you need to run a copper cable for the 'last mile' to someone's house where is becomes uneconomical. This connection is generally said to cost $500 or R3500 per point, not counting the equipment. This is at least 4 times as expensive as in the high density situation. Of course in the sprawl situation laying down cables also involves lifting roads and buying property which can make it a lot more expensive. In the high density situation, all your cables are preinstalled under the floor for easy access. It's a rule of thumb in the industry that it costs roughly double to wire anything when its already inhabited Security Police on every block on patrol is only 22,500 people for 20 million ie one per 1000. New York has 36,000 police but private police are better incentivised and may be able to do the job better with less. In any event in a market the number will increase when there are lots of criminals and decrease when the numbers tail off. London Security Tips .75cm shaterproof glass: will resist bullets, is used in many buildings now. nuclear magnetic biological defence Underneath some coporations is a Telehouse with sliding walls instead of doors and the servers for the company. Servers are whats important Tele-Links on separate corners going on different cables. Cut any three and it goes elsewhere.There is thus built in redundancy, each is heavily secured In Libertonia this means a telcom hub sitting at each corner of city, seperate physical infrastrure Similarly we dont want to be able to park explosives close to foundations 21st Century Infrastructure Infrastructure nowadays is more than bricks and mortar. Telecoms infrastructure for example is very important. Telecoms companies throughout the world have paid for their equipment many times over yet due to lack of competition prices remain high. The only real costs that still exist are eliminated in Libertonia. These are the costs of a workman having to come specially to a house to connect one person (eliminated by installing all the cables when the building is built) and of having to link up out of the way places. This is eliminated because Libertonia is a dense city. If a Pbx (switchboard) for the 12,000 people that inhabit one skyscraper costs about 180,000 pounds then per person that's a once off cost of 15 pounds a person (R150). Throw it in with the first months rent and phone calls are free for life! Of course to prevent abuse Summary The area is 10km x 10km. At a population density of 800 per km 2, that would be 400 houses per km2 or 3000 houses roughly per themed area. Land cost per house, about R100,000. Average 100m2 = R1.2 billion These figures are very rough. Themes Italian/Montecasino. French Chinese or Japanese historic US historic C18th Libertarian (no theme, no restrictive covenants, very little planning) Two or three African of various kinds. Some of these are to draw particular buyers. We have a lot of interest from the Libertarian community because of the tax free nature of the zone. We are targeting also Americans nostalgic for their freer past. You can give us an opinion on this, but it also seems (esp if Joburg is anything to go by) that many modern buyers seem to enjoy living in Italianesque buildings. Stages Zero People lives and work in temporary buildings until the permanent buildings are built. One The first stage is four skyscrapers each 50x 30m and 26 storeys. That works out to 150,000 m2 in total @ R4000/m2 would cost R600 million to build. One substation would cost R2 million. When you start you would start about 4 streets in from what would eventually the edge. Firstly because the conveyor delivery system would not reach to the edge. Secondly because land at the edge would be prime because everyone would get a view, so it pays to wait until the values increase. Two Stage two is as we expand down the street. One street of 5 km can contain 30 skyscrapers on either side 150 x 30. That's R36 billion to build. 60 substations would cost R120 million. The road would be R6.5 million in total. Three Adding more streets in the same manner as stage two. CHAPTER TWELVE MARKETING THE ZONE There's no use being good at marketing if what you are drawing people's attention to is not going to interest them. Nor is there any use in having the perfect product if nobody wants it. Libertonia must be well marketed and we need to think through what will draw tourist and what they can visit when they come. The theme of Libertonia must of course be freedom. Tourism Draws Libertonia with its zero taxes and cheap utilities will be a shopping tourism destination like Dubai. Some shops will be tourist attractions on their own as am higher Hamlyns or Harrods are in London This is often because they are the biggest or the best. Venice draws numbers of up to 60,000 a day, occasionally 100,000 for a city with a capacity for 21,000. 199 Its permanent population then, is about the same as its daily visitor total! 200 Consider the average tourist going to Paris or London. They visit sites, so Libertonia has to have sights to see. One artistic piece we would commission is 'The Catapult" which is a huge contraption which is explained as being for anyone in the city that voices the opinion that the state should return to the more socialist models of the past. Such symbols are extremely important in human society. Another would be a statue of a large woman at the gate of the city with arms outstretched representing the free immigration policy similar to that of New York in the nineteenth century. It also needs 'things to do'. This covers conventional leisure activities but also the unconventional that people will actually talk about like Dubai's indoor ski slope or their residential development shaped like a palm tree. One suggestion for thrills appropriate for Libertonia is having a clear water slide that winds its way down the outside of a skyscraper on the fortieth floor and then back into a swimming pool many floors below or even in another skyscraper. The concrete type of slides on sledges can do the same thing. There's no reason why these tubes should not wind in and out of the buildings themselves or why a clear lift should not go through the aquarium itself. A tax free airport where the rental space was owned competitively and therefore the shops could compete on price would be a new thing for the planet. With no tax on goods, passengers or aircraft fuel it could soon become a hub. One idea for The host country would be to give away diamonds for every X tourists that pass through. Other countries would them such offers differently. Attractions that take advantage of the height of Libertonian buildings would go down well. Rope bridges between the skyscrapers and restaurants build in between and perhaps a life sized chess board on top of a building visible from the air. Other things are educational, particularly for children. This is where Libertonia's themed historical or geographical areas need to be designed to function as tourist attractions. Rituals and Special Days Countries have rituals and tourists ritually go to see them or still better participate in them. The changing of the guard in London, a certain drink at Raffles in Singapore, the daily fireworks at Disneyland. Countries also have special days. The Bastille Day celebrations in France, St Patrick's day in Ireland (or even more in New York). Tax freedom day on the 3rd of January would be one such special occasions, other festivals could be thought up around the freedom theme. Libertonia draws people out of poverty so "Freedom and Antipoverty" weekend could be a party where every 20 minutes for two minutes in bars and restaurants round the city people stand up and give a testimony of how since they came to Libertonia they have been raised out of poverty. Other significant freedom enhancing events in history could be celebrated from different countries. This could well draw people from these counties as tourists to these events. It also emphasises that our ideology is not nationalism but a global way of thinking. We do not just celebrate events that happened in our own country. Dubai has various festivals. Edinburgh has an arts festival. India has various 'religious' festivals where people throw red water over one another all day. Trade shows and exhibitions also bring in people from abroad. Better, Faster, Taller, Bigger Technology can also be a draw, in so far as we can showcase the city of the future. Anything extreme is good: most luxurious, most convenient, most wired, etc. Tourism: look for the spectacular, exotic, entertaining.201 Environmental awareness is a draw in itself in this day and age. Blocks that use 50% as much energy202, In Africa of course a big draw is game and in some of the streets it might be possible to have impala and springbok actually in a large fenced off area on the street. The key things is that you do things that people will talk about hence the reason why the Libertarian constitution votes money for that kind of thing. Sol Kitsner was very clever in his marketing of Sun City in that he ran a international golf competition with a $1 million prize. That got the cameras of the world on his creation far more effectively than the same money spent in advertising. In a city of this density you would of course get all the usual tourist/local attractions: aviaries, animal kingdoms, game parks, and probably some more unusual ones like artificial beaches such as those in Sun City and on a larger scale in Japan. There is no reason why aquariums should not be vertical rather than horizontal so that you see the fish as you go up in a (transparent) lift or why transparent tubes enclosing tropical fish should not criss-cross public swimming pools in a place like Libertonia. Hundreds of educational tourist centres will be viable with material from history, geography, free market economics. This would sometimes have African themes and sometimes others. African rondavels, Socratic Athens, Iron Age forts, ancient Jerusalem, medieval China, Tuscany the US in1789, Cromwellian Britain, French chateau and cobbled streets, other castles, Shaka Zulu's court, and more are all great potential theme areas for a learning city. Hundreds of themes from history and geography are possible. The very fact that every roof has a view and a public bar or restaurant, and possibly a swimming pool is itself a tourist attraction. If they are connected in certain cases by permanent walkways or with cable cars then it makes for interesting pub crawls... Rope bridge restaurants between skyscrapers (with the appropriate safety nets would be an interesting feature. Clubs and People One of the main factors that make a place interesting in the places where people meet, the clubs and societies. IT co ordination of this makes it more feasible. Libertonia would also encourage special societies in areas advantageous to the city such as inventors clubs or entrepreneur centres. Fundamentally however, tourism is best when its a look at people who live differently. When Paris cafe's are not French people sharing a culture but tourists looking for instant gratification then its lost 203 CHAPTER THIRTEEN ACKNOWLEDGEMENTS/ THE TEAM Some of the people below we include simply to thanks them for their advice and input, some will be deeply involved in delivering the product. Architects: 3 of the most prestigious skyscraper firms in Africa: Clive Shepherd of Shepherd Ridley Lowe Extensive skyscrapers and Hotels in South Africa and Dubai. Franco Pellegrini of TPC Designed Gallagher estate, Rosebank hotel, Melrose Arch hotel, Dubai Mall hotel, new domestic terminal at the airport, Dimension Data campus, JSE building. Gapp John Reilly (interior spaces) 110 vodashops designed and installed R50 milllion Quantity Surveyors: Tim of Hamlyn Gebhart Urban Design: Erky Woods of Gapp Widely regarded as the leading expert on the subject in Africa., Barry also from Gapp Legal/Economic: Leon Lowe Regularly give evidence in SA parliament, creator of Transkei zone, speaker globally and locally on economic issues Financing: Owen of McQuarrie the Investment Bank, Louis Deppe of Standard Bank Africa Manager Property Finance Africa Anton Borkum of Standard Bank Manager Structured Finance Absa Bank, Rand Merchant Bank Technology/Telecoms: Ester Wallace BEng MBA of Dimension Data Business Analyst Stuart Dunsmuir of Internet Solutions Hosted software, internet connectivity for cities Barry Herman of Dimension Data Account Director Customer Advocacy Sharon van Aswegen MD of Infinite Reach Education delivery over the internet Michelle Lissous, Education delivery over the internet (content) Engineering Electrical Mechanical (Delivery System) Norman Nieuwenhuizen of Interface Experts in conveyor systems Construction: Peter Sherwen Group 5 Grinekar LTA Murray and Roberts Time (Botswana) Site selection: 3 companies: two in the US one in Europe Appendix One Possible New Businesses Libertonia has unique features that many people do not take into account when thinking about what kind of business they want to run. Many activities provided by the state are private in Libertonia. Ggre are some ideas for businesses. Need some capital 1. Libraries which charge by membership fees/ per book charges 2. Court companies to adjudicate cases both high value companies for high value cases and cheap and cheerful ones for less valuable cases. 3. Road companies to run roads Do not need as much capital 1. Criminal catching/Detective work 2. Education companies to provide the educational content public good by recording visual and audio versions of lectures for university and school content. 3. People to run schools across the spectrum of income. Bibliography Almandoz , Arturo "The garden city in early twentieth-century Latin America" in Urban History, 31, 3 (2004) Burton, Andrew 'Brothers By Day':Colonial Policing In Dar Es Salaam Under British Rule, 1919-61 Urban History, 30, 1 (2003) Hazareesingh, Sandip" Colonial modernism and the flawed paradigms of urban renewal: uneven development in Bombay, 1900-25" in Urban History, 28, 2 (2001) Lynch, Kevin "City Sense, City Design" Cambridge: MIT Press 1990 Morris R . J . Urban biography: Scotland, 1700-2000 Urban History, 29, 2 (2002) Simmonds, Allan G.V "Conservative Governments and the new town housing question in the 1950s" in Urban History 28,1 (2001) MORE BOOKS BY THE SAME AUTHOR Nine books from Douglas Shaw the CEO of freedom14.com are available now: You can order any of them at www.freedom14.com/books for delivery by mail. IN BRIEF Four short novels that will entertain, amuse and educate. A Question of Freedom (R100 or equivalent) Force and Freedom (R100 or equivalent) City of Freedom (R100 or equivalent) Prince of Freedom (R100 or equivalent) Four books to help you understand economics, law and the world we live in Rebels without a Clue? (R150) 100 short answer on topics like globalisation, poverty and free markets Privatisation for Prosperity.(R200) The way to a tax free society: how everything now done by government can be practically and beneficially done by competing private businesses (400+ pp) Future Law (R200) The constitution and law of a free country. How should it be? Christian Law and Government (R150) - The Bible teaches free markets not socialism. One book on Dougie's four year trip round the world to more than 25 countries Global Citizen: (R150) An entertaining and educating look at lots of places and people. IN DETAIL A QUESTION OF FREEDOM In 2015, little Libertonia in South East Africa is a dynamic economic powerhouse with everything privatized and no taxation. Seen as a threat it must defend itself against the European Union and invading Zimbabwe. Intrepid Andrew Melville must win against the odds while trying to win the heart of education entrepreneur Yvonne Sisulu. Full of Insight and an exploration of relationship issues and an economic education are just two of the unexpected consequences of reading this unique fast moving thriller. FORCE AND FREEDOM Libertonia, a country without tax or government is again under military attack. This time from an Islamic coalition. Can its system of private military companies defend it ? A vigilante is killing crime lords in the South African townships and Laurence Laurien is fleeing the French authorities after shooting a burglar that threatens his granddaughter. Will they find justice? Charlotte and Jonathon are trying to manage the merger of two internet dating agencies on the stock market. Will they find love? CITY OF FREEDOM What would happen to Western Europe if the business people who are perpetually taxed and regulated and harassed were suddenly to leave? What if they were to form their own city state in Africa with no taxation or regulation? How could that happen in reality and what would it look like? That is the scenario that develops while the murder mystery unfolds and the characters discover what it means to date and be dated in the 2000s. " PRINCE OF FREEDOM "What would it be like if Jesus had come to a high tech city state called Libertonia? This account puts the gospel story in 2015. How does the new world order react to threats to the status quo? How do freedom and Christianity dovetail? How can spirituality work for freedom-seeking people. A deeper kind of thriller for people that like to think a bit below the surface." REBELS WITHOUT A CLUE? Today, the world is undergoing an exciting transition away from the deadweight of inefficient governments to a dynamic world that will break the chains of poverty for billions of people. Nevertheless there are still the Luddites that are visibly protesting against the march of history. The book collects their arguments and refutes them concisely one by one. Its a summary of about 25 books for and against free markets. If you'd rather read one book than 25 then this is the one you should read. PRIVATIZATION FOR PROSPERITY In this remarkable book, the author shows in practical, numerical ways how and why a free market system can be implemented in the real world. Includes: 1. Why the complete privatization of Education, Health, Roads, Police and the Judiciary are inevitable, desirable and feasible 2. How much each household will gain from the coming privatization's 3. A hundred reasons why the free market is the superior economic system 4. How to solve inflation permanently and without continual government intervention and what we stand to gain from it 5. Why democracy will be replaced next century by an even freer system of government and how that system will be structured. 6. How externalities can be solved without government intervention. Plus; you can interact with the author on the Internet to discuss points with him and provide further material for future editions. This is the book that is being used in consultancy with governments round the world to put the free market case by the author's consultancy company. With creativity and insight, the author looks penetratingly ahead to the next decade when virtually everything currently run by government will be privatized and comes to some startling conclusions. GLOBAL CITIZEN Why never to fly Iberia. How to do hash in Malaysia without taking drugs How (legally) not pay tax for four years. The weirdest pizza buying experience yet. The truth about Dracula (He got a bad press) Is tolerance in India too much of a good thing? What happens when you miss planes? What a tourist (now resident) first thought of South Africa. How to know if you are a Jedi redneck. Why the end of the world is not nigh What happens at a Mensa meeting "Do not give to beggars and create dependency" is a billboard in which city? How much can you get from writing a Mills and Boon Novel? FUTURE LAW If you were to design a legal system to maximize the welfare of the population and its economic growth, to minimize crime, bureaucracy and environmental damage, what would it look like? Can you simplify contract, tort/delict, property and criminal law into one system ? What rules should you use for determining if a rule is good or bad? Predictable? Efficient? Simple? Fair? Consistent? How do you restrain government; separate its powers; privatize its delivery to the maximum possible degree? How to deal with externalities, omissions and continuous damages? How to use insurance, markets and auctions as alternatives to law. How technology and the internet will change the way law works. Should law continue to convergence into rules that apply to all areas of law? This handbook to a fully fledged alternative constitution (enclosed) for the 21st century is a must for everyone that wants to know where the legal order is going in the next twenty years. 1 That is, even when, as in defence you need to raise money corporately rather than individually, you never then get a Ministry of Defence who buys the equipment and trains the individuals. Rather you get a host of competing private companies. There is no economic justification for government delivery of a service even when there are free rider or externality effects that justify the intervention of government or pseudo government mechanisms to provide the funds for the service. (More on defence on the chapter thereon in Privatisation for Prosperity- see back of book) 2 Look it up on www.dictionary.com 3 The unrealistic idea that government can often make things better. 4 The idea that everyone should abandon cities and technology and go back to agricultural living. 5 Yes I know adding an "s" isn't the way ones makes plurals in Ancient Greek but a lot more of my readers know English than Greek. 6 If you want to know why we still need fixed line when everyone is talking wireless, the reason is this: wireless networks have a 20m range and carry 54 megs (and even this is an exaggeration in most circumstances). Copper wires carry 100 megabytes to 400 megabytes and fiber 1000 megabytes. And they do so more reliably. 7 http://www.cyburbia.org/node/365 8 Morris 9 http://www.stanford.edu/~mgorman/essays/Fred/ComparisionCity.html 10 http://etext.lib.virginia.edu/cgi-local/DHI/dhi.cgi?id=dv1-52 11 http://etext.lib.virginia.edu/cgi-local/DHI/dhi.cgi?id=dv1-52 12Hazareesingh 239 13 Corden 17 14 Hazareesingh 244 15 Simmonds 66 16 Simmonds 67 17 Simmonds 72 18 Simmonds 76 At only 2500 GBP when wages in the area were about 1500 per year and 800 pa in the rest of England and Wales 19 Simmonds 77,78 20 Hazareesingh 248 21 Simmonds 83 22 NIMBY= Not in my back yard 23 MIMBY= Maybe in my back yard ( yes, I made that one up). 24 Lynch 41 25 http://www.cr.nps.gov/nr/travel/amana/utopia.htm 26 ibid 27 http://www.cr.nps.gov/nr/travel/amana/utopia.htm 28 http://www.stanford.edu/~mgorman/essays/Fred/ComparisionCity.html 29 www.economist.com/agenda/ displayStory.cfm?story_id=3100713 30 Slums in the 19th century were criticised because they were 'row after row of all the same with no space for children to play. "Principles of Mass Housing" Calderwood 1964 p27 quoting Mumford 31 http://www.economsit.com/agenda/displayStory.cfm?Story_id=S%26(X8)RA%2F*%0A&tranMode=none 32 This first section you have read is not original material but a collage of worthwhile sources to give you a feel of the background of city thinking in historic and geographical perspective. 33 http://www.univercity.ca/bmcp/geog-449/apx-4.html flat roof space for gardens http://www.mcgill.ca/mchg/student/settlement/chapter4/ 34 Visit June 2006 35 City as Place 36 Reader p123 quoting Vance quoting Rasmussen 37 Still visible in Cordoba, Nimes and York (Reader p84) 38 Insight from Tim of QS 39 Insight from Erky Woods of Gapp Architects, Johannesburg 40 This is a huge boon to parents but its freeing affects on teenagers should also not be underestimated. In high sprawl communities teenagers are prisoners in their own homes until they get driving licenses. Old people can have the same problem. 41 Walking speed is about 8km per hour , so our 5 x 5 km core is eminently walkable. The average walk from any one place to another would be about 2.5 km, or about 20 minutes walk. Most commonly used shops would be much closer than that. Some sources say 5km/hr is more realistic for people but the principle applies 42 Its even possible once one gets to the center of the city to continue the heights upwards instead of going down on the other side if there is strong demand for space. Similarly the high rise can extend beyond the 5 x 5 area to the areas south of the city. 43 Basement parking bays cost R50,000 each, R40,000 for sub basement and R30,000 for above ground. That's why we want to minimize the need. Above ground parking only costs R1000 but used up huge amount of space which defeats our objective to be high density. Minimum really is 6m x 3m per car and you need one per apartment generally as opposed to one per person. 44 For example Dimension date complex contains 75,000m2 of office space and 4000 parking bays (120,000 m2 all in one would calculate). Similarly, the 25,000m2 JSE building contains space for 1000 cars. 45 60m2 min for 2 people sharing is possible for middle class: open plan (means you need to use less space). 30m2 when everything folds away. 100m2 would be normal for a family and it would normally have more closed space. Generally space per person decreses from 30 to 15m2 per person as number of people per house increase. In some places, floor area per person 9 m2 in low income families in SA (probably 40m but for 4 people, or 54 /6) 46 Generally speaking land use if 70/15/5 residential/office/retail. 47 For comparison Middle classs norwood is 15 houses per ha . 60 per ha. Bulk is measured by FAR: floor area/ land area 4-7 20 is manhattan. Occupancy floor space ratio is floor area per person. Compare Hillbrow Vs Park Av (NY), 5-10 m2 per person, 50 30m2 per person. The minimum in the UK including public stairs etc for two people is 25m2 or 12.5m2 per person. 48 This is more of a problem in the UK where such private goods are provided by the state. Where they were privately purchased the price would go up as they become too crowded leading the problem to reduce and the price of the other facilities would go down drawing in the relevant type of people. 49 One always has to say when talking about this subject that of course you cannot understand people entirely from their MBTI. You also have to take into account a person's history and character (moral characteristics). Plus everyone has certain unique, individual traits that cannot be categorised. It is nevertheless an extremely powerful tool for understanding people. "Please Understand Me" by David Keirsey is in my view the best book to buy on the subject. 50 NTs particularly NTPs 51 ISFPs 52 All J types vs all P types. 53 For example if he hypothetically assume Sewer length in Libertonia along each road of 10km and 200 roads that would be 2000 km for 100km2 city (10km x 10km) For an area of 100 km x100 km instead then that would be = 10,000 km2 = 100 x20,000 = 2 million or 1000 times the cost for what could be the same number of people. 54 http://www.economist.com/displaystory.cfm?story_id=1572413 55 Buildings costs in the UK are the equivlanet of R16,000 per m2 which along with much higher land costs can only translated into higher rents. Another competitive advantage for Libertonia. 56 Note these prices do include all the elements our R4000/$280 price does not . But with these costs final costs would not be more than double (R8000 in this case) and usually considerably less. 57 25% for foundations for skyscrapers is normal. Electrics can be 15% and plumbing 11%. 58 City as Place p44 59 City as Place p58 60 For example the new Michelangelo flats in Sandton. 61 Reader p148 62 http://www.economist.com/displaystory.cfm?story_id=150142 63 That's a density of about 500 people per km2. Atlanta has only 855 people per km2. These are examples of some of the lowest population densities in the world. Hong Kong on the other hand has almost 50,000 people per km2.. http://en.wikipedia.org/wiki/Urban_sprawl . One part of Hong Kong however, Kowloon Walled City once reached a population density of 2 million people per km2. http://en.wikipedia.org/wiki/Kowloon_Walled_City The figures per km2 are roughly 18,000, 16,000, 13,000, 12,500 ; 10,000 ;8,000 for Barcelona,Tokyo,Paris, New York, Los Angeles respectiverly for their most dense 10% of the city. The core of Istanbul has about 30,000 per acre. http://www.demographia.com/db-latorprofile.htm . Total population densities of citis at http://www.demographia.com/db-worldua-pop.pdf . 64 "Knowledge and Decisions" Thomas Sowell , Basic Books, these casual taxis were known at jitneys. 65 "Privatisation for Prosperity" by Douglas J Shaw Global Press 2000 66 Assumes on average 2500 flats in a block 150 x 30m and 35 storeys high (average). 67 http://www.reason.com/0502/fe.st.crime.shtml , this is contra Zelinka and Brennan who wrote Safe Scape. 68 At about $1000 per finger print reader, this is about 3 times the cost of smart cards. 69 Some of the more sophisticated software is $1500 per camera per function so for 8 cameras on the streets round the blocks and say 10 in reception, lifts, car parks, children's play floors etc could easily be $30,000. 70 By the time you count the intelligence behind the system as well, the cost can be about $2000 per house. 71 4 small blocks at 50,000 m2= 200,000 m2, build cost = R800 million . One 10 km road at 1.3 million per km is R13 million or 2% roughly. 72 On a 5km road, with 150m x 30m blocks this would be 60 roughly 73 Probably but not necessarily, the provider of sewage works facilities would also maintain these pipes on contract. 74 Its possible of course that the owner of a bar on top of the block would be responsible also for the maintenance of the roof garden as part of the lease. 75 Its possible, and indeed likely, that subsidised industries become so inefficient in some cases that it won't actually be cheaper in all cases to buy there even with the subsidy. 76 This of course one of F A Hayek's core insights. 77 Reference from Dennis Peacocke in his "Strategic Thinking" tape series. 78 There are a few minor exceptions to this rule in terms of externalities and some others. These exceptions are a tiny part of the economy however. 79 Individual examples are Erickson moving from Sweden to the UK for tax reasons and German companies moving to the American South. National examples are the success of ong Kong 80 "Memes" are messages that are analogous to 'genes' and these books look at how one message 'survives' and other messages die out. 81 Tax experts in the Botswana government. 82 There are of course a few exceptions like people controlling nuclear waste or armaments. 83 Like the Zone 80 km north of Gaberone where the incentives stopped in 1985 84 Kotkin The City 2005 p118 85 Kotkin 119 86 Lynch 37 87 Lynch 38 88 http://www.economist.com/displaystory.cfm?story_id=233253 89 Part of this is the prohibition of mulitple use which came form Swiss architect Corbusier who separated the functions into commercial/residential/industrial and incidentally wanted all the historic buildings destroyed as in Moscow (Kotkin 119) 90 Cheshire and Sheppard (2004) 91 www.smartgrowth.org 92 Walking speed is between 3 and 5 miles per hour ie a mile (1.6 km) should take about 20 minutes. 93 http://www.rppi.org/ps244.html#Heading5 94 http://www.economist.com/displaystory.cfm?story_id=233253 95 http://www.demographia.com/db-qualif.htm 96 Central Paris (within the pereferique) just over 75 km2. Outside this ring road, Paris is not particularly dense. http://www.rentalcartours.net/rac-paris.pdf (Wendal Cox) 97 http://www.rentalcartours.net/rac-rio.pdf 98 http://www.rentalcartours.net/rac-shanghai.pdf 99 This may have increased a bit since the time of writing but the point remains. 100 http://www.urbanfutures.org/abstract.cfm?ID=29) 101 City as Place p56 102 Reader p162 103 Reader p164 104 http://www.reason.com/0502/fe.st.crime.shtml 105 Download the software at www.skype.com and get free (or very cheap) calls for life to anywhere in the world. 106 http://reason.com/0106/fe.bs.city.shtml 107 http://www.economist.com/opinion/displaystory.cfm?story_id=5135795 108 Clothes from China now cost 25% less than South African ones even after paying for the sea transport, duty etc. 109 Advise from Dimension Date who run large call centers in South Africa for Western companies and would be our key partner to deliver them in Libertonia. 110 Parties being the operative word 111 Note, there is a free rider effect. Some of the young people may actually be quiet souls who also want to get rid of the parties because the loud music frightens their cats. However unless this is identified, they may also feign 'party animal' status and get paid out. If the older group is aware of this they may exclude this person from the transaction. This leaves this person with her rights still at the higher level and she might then change and take to playing "Morning has broken" and certain songs by "The Cure" at high volumes into the small hours of the morning out of spite at not getting her payment. 112 Hold out is a problem with any take over situation. By which we mean that shareholders may continuing refusing to budge simply because they expect a better offer rather than because the shares are worth more to them. They will not get more than the buyer is willing to pay of course and they will not part with the shares (or the noise rights) for less than they are worth to them. Really then, all parties benefit from the transaction as in any trade, we are just discussing who benefits the most. 113 Yes, I know, this is also a holdout situation, people may pretend to be peaceful and then change. A way round it is to identify the whole block as the affected group, then even the people that are paying for the action are also receiving some of the money for their rights to change also. Alternatively those wanting peace could voluntary covenant to change their rights to a lower amount as well if the deal goes through. This is ultimately a strategic process, but better than no process at all. 114 The management would like to apologize for the dreadful stereo-typing in this section. 115 Economist City Guides ong Kong Briefing. Nov 2005 116 This system does to some degree get rid of the holdout dilemma as those who do not offer to pay do not get the payout. 117 Although I don't consider myself a fully fledged "Georgist", I find the argument sufficiently compelling to tax is this manner. The advantage is that its very simple to collect and that it prevents land lying idle 118 Most of this material from howstuffworks.com under skyscrapers 119 http://science.howstuffworks.com/smart-structure.htm ( the rest of the article also from this website) 120 Mozambique, Tanzania, Uganda, Botswana, Zambia, Mauritius are growing often at 6-10%, often faster than China, and more with more transparent figures!, certainly than India. This growth has being going on for more than 15 years in many cases, and no one knows about it. 10% growth for 15 years will quadruple the size of an economy and thus average incomes. 121 http://www.economist.com/displaystory.cfm?story_id=4324938 122 http://www.ilo.org/public/english/employment/strat/publ/ep01-13.htm 123 http://www.gov.bw/cgi-bin/news.cgi?d=20030403 This is $48 for 160 hr month. Cheaper than China. Minimum wages in any case only apply to certain sectors of the economy and we may be exempt from them in the zone. There is some evidence the rate is now P2.90. 124 Britain has 150,000 new immigrants every year and clearly doesn't let everyone in so a successful city that actually wanted more immigrants could probably expand by 500,000 people or more per annum. 125 As compared to R2000 -R4000 in the East end of London and R7000 per m2 in Mayfair. 126 http://www.mckinsey.com/mgi/publications/chinatalent.asp and http://www.mckinsey.com/mgi/publications/germanoffshoring.asp 127 http://www.economist.com/displaystory.cfm?story_id=2282381 128 http://www.economist.com/displaystory.cfm?story_id=3271677 129 Due to : rising food prices making agriculture more attractive, rural workers need permission to stay in the cities, lots of workers getting injured at work (10%), lack of wage increases. So the infinite pool of labour at low prices is a myth. 130 Ibid. (As a result of there being no income tax in Libertonia) 131 http://capmag.com/article.asp?ID=3812 132 Daniel Demsetz in "The Outsourcing Bogeyman" in Foreign Affairs May/June 20004 (available online at http://www.foreignaffairs.org/) 133 http://www.economist.com/displaystory.cfm?story_id=4135319 134 Factory work was once 40% of US employees in 1940s, now its much less, much has moved abroad. Similarly farm work went from 70% to 43% 1820 to 1890, its now 1.9%. Some of this is increases in technology, some outsourcing to developing nations. 135 http://www.economist.com/displaystory.cfm?story_id=3351503 136 Ibid 137 This seems to be one of the main areas. India has 9% share of the global IT market in this area compared to 2.3% of business process outsourcing and 0.5% of infrastructure management. http://www.economist.com/displaystory.cfm?story_id=3177136 138 Claims processing is often outsourced at home so its a small step to outsource is offshore (ibid) It also happens in India and Barbaddos. 139 For example skypeout available at www.skype.com 140 http://www.mckinseyquarterly.com/article_page.aspx?ar=1367&L2=21&L3=33 141 Ibid 142 Henry DeVries at http://ezinearticles.com/ 143 http://www.economist.com/displaystory.cfm?story_id=886635 144 By the way, the savings from each of these examples enabled them to add more domestic jobs as well so it's a win win situation. (Drezner op cit) 145 http://www.economist.com/displaystory.cfm?story_id=3730372` 146 http://www.economist.com/displaystory.cfm?story_id=2282381 147 ibid 148 http://www.economist.com/displaystory.cfm?story_id=3177136 149 http://www.economist.com/displaystory.cfm?story_id=4135319 150 These are South African Rands figures converted 151 Assuming 15m2 each gross (each employee using about 6m2, the rest being lifts, toilets, corridors,etc). According to OfficeFinder.com, in typical office scenarios, you can estimate 175-250 square feet per employee Typical "presidential" offices range from 150-400 square feet. Secretarial and administrative space, on the other hand, will range from 60-110 square feet. http://money.howstuffworks.com/office-space3.htm 152 40m x 100m x 20 floors 153 Translates into R7500 including development profit, capitalisation of interest, etc 154 For everyone one person that works for a multinational there will be another 9 jobs. Each of these will use the same amount of office/retail space when working and about 15m2 per person in residential space on average. Some sharing, some living in very small apartments if they are unskilled labourers. So we can multiply the original number by 20 (half for office space, half for residential). 155 . That cost is for each building roughly R2.5 million in equipment, R1.5 million in fibre and R1 million in copper. Divided by 3-4000 flats /office points. According to other companies R900 is the pure wiring cost not around for the computer hardware, for Cat 6, coax only costs R300. Counting meters rather than points, fiber is R30 per m vs R9 for copper. This is not bad though considering 1 gig fiber takes 1 megabyte per second whereas copper only 100 kps (this can be incrfeased). Fibre to each floor seems therefore ideal, with copper thereafter. Fibre to every 50 people might even be cost effective. The constraint is really the end of line terminator for fibre with is R2500 much more expensive than the copper terminator. 156 A base station like the one at Buccleugh/Woodmead in Joburg is considered very high capacity because it has 18 transceivers and makes the network R1 million per day. This is however only 50 calls at any given second. 157 Stand alone base stations for busy areas like train stations only cost about R150,000 158 The limitation is mostly the tranceivers. You would have perhaps 6 in most base stations which means 48 simultaneous calls. 159 Due to higher teledensity however some think that as many as 30 base stations might be needed and that switching technology might cost the same again. That would be R36 million amongst 2 million people or R18 per person, so again a negligible cost. 160 Wi max is IP, where as 3G only supports IP. Wi max costs about R200,000 per base station. 161 Perfectly flat, a base station can see for 35 km, but in built up areas this can be very different. 162 Recent evidence suggests this advantage may be exaggerated 163 This can be R200,000 per floor ! (used at Investec, Johannesberg) 164 R440,000 /10,000 165 R300,000 per month is R10,000 per day, or about R600 per waking hour ie R10 per minute for 2000 calls which is R0.005 per minute. Or say, R0.3 for an hour call to London from Libertonia. Of course, this is the most optimistic scenarios given the assumption of full capacity usage and no allowance for profits or problems. It tells us however the general area we are working in. 166 This is a good example of what we get by aggregating for the whole zone. For this software the server component costs R400,000 ($30,000 for collaboration $20,000 for knowledge center) for 10 concurrent users then $2900 per user. However it only costs $390,000 for 10,000 named users or $39 per user. 167 100,000 divided by 120 is about 600. 168 R1.3 million per km, 10km in each direction , 169 These might in fact not all be independent entities but departments of those companies in a position to reduce risks: roads companies, hospitals, medical researchers, factories in dangerous industries. 170 Cohen and Deheja "The Effect of Automobile Insurance and Accident Liability laws on Traffic Fatalities" in Journal of Law and Economics October 2004 171 Roughly speaking according to conversations with Edgars 172 Note Edgars may stock 100 times as many different items as Jet. So range varies greatly between store types. 173 Price for electricity generated by diesel is estimated to be 60-70% more though some of this is tax which wouldn't be paid in Libertonia. 174 http://www.economist.com/displaystory.cfm?story_id=3422965 175 Toyota building Torrance, California. Our blocks however will mostly only have their top parts exposed to the sun and their lower parts in the shade of other blocks. Blocks on the outside must have their whole outside sun-facing surface covered in solar panels for warming water. They might even have enough to sell to other blocks. 176 Ibid economist story above 177 Ibid 178 Low water use facilities http://www.facilitiesnet.com/bom/article.asp?id=2734 179 If the average size is about 40 hectares then that's 40,000 liters per hectare or 4 liters per m2. 180 Assumes motors every 50m. The conveyor goes at a slow walking pace (about 3km/.hr). 600-700m wide. Carrying shopping is considered a relatively light weight application requiring only light gauge, PVC belt (Some estimate that this price is expensive and it could be about half that per m) 181 If each block pays to the midpoint of the next block and the blocks are 150m x 30 m and 20m apart then that's 75+10 = 85 *2sides =170 plus 15+10=25*2 =50 ie total of 220 m per block times R2000 is R440,000 182 150m x20 =3000 in one direction and 30m x 20 =600 in the other , so make the longest one where the one conveyor goes and the shortest where the 4 go makes 5400m =R10 million between 400 blocks of 2500 flats each equals 1 million flats ie R10 each . 183 A baggage handler: Invision ctx, l3 examiner does 300 bags per hr, whereas osi 1200 bags per hour. However I suspect it is doing some sorting as well. 184 The idea that maglev (magnetic levitation) technology would be cheaper than this at present does not seem likely: http://english.people.com.cn/200411/04/eng20041104_162788.html 185 Ethiopia are installing this system (Centra) across 40,000 schools for an approximate price of $400,000 but this includes the equipment also. 186 This costs about R2000/$140. With a bedsit room of 4m x 3m costing at least R24,000 with no finishings at all, the max this could add to the cost of a flat is about 10%. 187 The Economist 2003 40c (garments) and 60c (manufacturing) an hour respectively. http://www.economist.com/displaystory.cfm?story_id=1576567 188 Phrase from Michael Porter. 189 Reader p91 in 1300 (in fact only 9 cities in Europe had more than 25,000 inhabitants!) 190 By which time there were 16 cities with over 100,000 population and 56 with more than 40,000 in Europe. Reader p126 191 Reader p7 192 Reader p25 193 Reader p30 194 Reader p83 195 Reader p83 196 Reader p138 197 Clearly this would vary hugely from daytime to the middle of the night. 198 http://files.ctia.org/pdf/Wireless_Quick_Facts_October_05.pdf 199 Reader p6 200 Reader note to plate 4 201 Sudjik p286 202 The Swiss Re building in London is in this category (also called the 'Gherkin' ! 203 Sudjic p292 ?? ?? ?? ?? Topias Douglas J Shaw Topias Douglas J Shaw