Gurgaon in India is a libertarian wet dream, a high-tech private city that grew from nothing, knows little or no regulation and has no infrastructure. You want your sewage taken away? Hire a firm to do it. You want to start a business? Don’t worry about pesky rules. You want roads to drive on? Not so much. You’re worried about environmental protection? Wait, what? It’s the free market extrapolated to an extreme.

On the latest EconTalk episode, Russ Roberts and fellow economist Alex Tabarrok have a lively discussion about this private city and other ones which favor “voluntary action.” While the guest is enthusiastic about Gurgaon as something of a model for the next global cities, he acknowledges its faults (“The roads situation is terrible, a disaster”), though he often waves these shortcomings away by saying they’re no worse than in other parts of India. The idea of using some sort of Disneyland approach to building private cities on a large scale, which Tabarrok seriously suggests, seems a little cuckoo to me. An excerpt:

Alex Tabarrok:

Between just 2015 and 2030, in India, the urban population is expected to increase by over a quarter of a billion people. So, just think about that. What that means is that during the next 15 years, even taking into account the reduced infrastructure in India, India is going to need on the order of a new Chicago every single year for the next 15 years. At least. And then continuing on into the future. So we have, around the world, massive increases in the urban population. And most of this is happening in the developing world. And the developing world, of course, is struggling with corruption and with poor governments and with a lack of information. And you know, we just can’t expect governments to work very well in these countries. So how are we going to plan? We can hope, right, that cities will be planned and laid out and the sewage lines will be planned for the future and everything will be divided neatly. You know, the way an urban planner in theory would do it. But that’s just not realistic. So, what can we expect? Are there other ways of doing this? And Gurgaon is one possible alternative route, which involves, you know, leaving a whole lot to the private sector.

Russ Roberts:

When you talk about that increasing urbanization, say, in India, the most likely way that’s going to happen is that the existing cities in India are going to get larger. And they are going to have increasing stress on their current infrastructure systems, which are not very effective, from what I understand, already. And so, the likely result of this urbanization and population growth is going to be muddling through with a big set of imperfections. It seems to me China is taking a different approach. China is saying: We need a bunch of new cities. So they are just building them. They are building cities out in the middle of relatively nowhere, from scratch. With lots of buildings, lots of infrastructure, from the top down. And I did read today–I didn’t get to click through on the tweet, but somebody tweeted that the Chinese, some Chinese officials were bidding in auctions to keep land prices high in some of the cities that they are worried about. This is not likely to be a successful strategy for creating value. But China has taken a different approach. It might be a lot better.

Alex Tabarrok:

So, current urban areas are certainly going to grow. But there’s also no question that we’re going to need entirely new cities–both in India and China and elsewhere. And you just look at the United States. Even in the United States, which has long been majority-urbanized, we’ve seen growth, really essentially new cities. Like Houston, has grown in the past 50 years from 100,000 to, you know, several million people. And so forth. You think about the Industrial Revolution in Great Britain: the creation of new cities like Birmingham and so forth. It’s not just London getting bigger, in other words. Although that happened as well. So, I want to put China aside for a minute, and maybe come back and talk about that. But I want to keep on, on Gurgaon, for a little bit longer, because I want to talk about what has worked, and what hasn’t.

Russ Roberts:

Yeah, go ahead.

Alex Tabarrok:

So, fire prevention in Gurgaon works really well. So, what has happened is these private developers buy a chunk of land. And within that chunk of land you have excellent infrastructure; you have excellent delivery of services. So, the developers will build office parks. And within the office parks, you have sewage. But the sewage doesn’t go anywhere. It just–once it leaves the office park–well, sometimes it will go to a small treatment plant. You’ll also have electricity–electricity 24 hours, but funded with diesel, provided with diesel. Which is inefficient. You don’t get all the economies of scale. You do get excellent fire protection. It’s pretty interesting: Gurgaon has India’s only private fire department. And it’s the only fire department really in all of India which has equipment which can reach the top of these skyscrapers.

Russ Roberts:

Good idea.

Alex Tabarrok:

Yeah, exactly. The public system is a complete disaster. You also have delivery of transportation. So, these private firms hire taxis, sort of like Uber but a totally private system to bring their workers, ferry their workers, all over the city.

Russ Roberts:

Yeah. By the way, it’s important to mention: we’ve had some discussions of private busses here, in Chile with Mike Munger. But of course many firms in Silicon Valley outside of San Francisco bus workers into their companies and have major, significant private bus companies.

Alex Tabarrok:

Exactly. It’s very similar.

Russ Roberts:

They are running them themselves. I don’t think they are hiring them out. But they are not public.

Alex Tabarrok:

Exactly. It’s very similar to that.•