'The Freeman' Interviews Rod Lockwood

Mackinac Center board member discusses Belle Isle

(Editor’s Note: An interview with Rodney Lockwood, Mackinac Center board member, about his plan to revitalize Detroit by privatizing Belle Isle is featured in The Freeman, a publication of the Foundation for Economic Education. The text of the interview is below.)

The Freeman: What is the Belle Isle concept and what motivated you to undertake it?

Lockwood: Belle Isle is a 982-acre island in the Detroit River, located between mainland Detroit and Windsor, Ontario. It is owned by the City of Detroit, [and] has historically been a beautiful public park, but has fallen into disrepair due to Detroit’s financial troubles. 

My vision is that it be developed into a vibrant community of 50,000 residents, borrowing ideas from Singapore, Monaco, and Liechtenstein; Singapore for its free and business-friendly markets, Monaco for its hosting a Formula One race, and Liechtenstein for its transparent, effective, and accountable government.

In my book Belle Isle: Detroit’s Game Changer, investors purchase the island from the City of Detroit for $1.0 billion and create with U.S. concurrence a commonwealth of the U.S. It will be similar to the Northern Mariana Islands and Puerto Rico, with its own tax system and laws. Over 29 years, the vision becomes reality. The purchase of the island and the infrastructure required would be funded by charging residents a one-time fee of about $300,000.

As Belle Isle is quite small, I propose it be a walking community to be served by a monorail. By having car parking off-island at a transportation center on the Detroit side of the river, more green space can be accommodated while achieving good population density. The monorail will both circulate the island and travel across the river to the parking. The main road feature will be the Formula One racetrack, which for most of the year will be used by pedestrians and bicyclists, but annually will host the Belle Isle Grand Prix. The race will attract journalists and spectators from all over the world, thus accelerating the turnaround of Detroit’s reputation.

The Freeman: So what will life be like and how will things work? 

Lockwood: Service vehicles, such as [those for] food delivery, construction supplies and trash removal, will operate in the middle of the night, with tight noise restrictions so as to not disturb the residents’ slumber. During the day, the only sounds will be the friendly chatter of humans.

Planning and architecture will be paramount. Belle Isle will be one of the most beautiful communities built, as the wealth and the tax system will enable that outcome. 

Belle Isle will have homes, condominiums, offices, retail, restaurants, shopping, schools, a hospital, a sports center, performing arts—everything a community needs to be self-sufficient. I estimate about 100 coffee shops, restaurants, and bars will be there, based on the final population.

The culture will be dynamic. In addition to the Formula One race (there may be other car races too), we will continue the existing Gold Cup hydroplane races, the Red Bull air pylon race, the Detroit Free Press Marathon, plus have a winter ice festival. My wacky favorite will be the 12-hour overnight Sled Dog Marathon, where all the bars stay open to cheer on the contestants. As we have four seasons, we have to make them all enjoyable.

Many will consider Belle Isle’s government to be its best feature. [It will be] efficient, effective, transparent, trustworthy, and “at your service.” In fact, in the book Belle Isle, the word “government” is not used. The main public building is called the Service Center.

The Freeman: People often mistake projects like this as being somehow Utopian. But in many ways they are a pragmatic response to conditions. Is Belle Isle a pragmatic vision?

Lockwood: Very much so. The vision addresses many of the real government and social issues of today. Polls have shown a decrease since WWII of the approval ratings of virtually every government in the western world. In this country, the approval rating of the U.S. Congress is extremely low. Entitlements are eating up our budgets. Public debt is outrageously high. The courts are slow and outcomes are uncertain. Often buildings—public and private—are made of the cheapest materials without concern to the aesthetics. Every one of these issues and more would be addressed, but on a manageable scale.

The Freeman: To your mind what are the biggest reasons why Detroit is failing?

Lockwood: The short answer is crime, schools, taxes, and corruption. Overlay that with heavy public unionism and a lot of racism. Detroit needs to be integrated; right now it is highly segregated. Honestly, the city needs to get white people to move back. I think that is possible with changes to improve upon the four factors first mentioned above. Belle Isle will enable it to happen within our lifetime. Otherwise it will take a very long time.

The Freeman: The Belle Isle concept is similar to start-up cities, charter cities and special economic zones. The differences may lie mainly in the degree of political feasibility for such experiments—especially with respect to their proposed contexts. How politically feasible is Belle Isle?

Lockwood: Belle Isle is politically feasible. I was born and spent my childhood living in Detroit and my adult life nearby. During my lifetime, Detroit has lost nearly two-thirds of its population and has gone from America’s richest city to its poorest. Detroit’s problems are the national discussion—whether it is the auto bailouts, the crime rate, the legal troubles of a recent mayor, or the city’s likely bankruptcy. We need a game-changer to turn this around. Belle Isle will attract an incredible amount of wealth from all over the world, people who will seek an environment that is welcoming to money and capital, that doesn’t tax work or investment, and has a low-cost government that leaves you alone as long as you’re not harming others. I estimate $1/4 trillion will come there. Much of that will spill over and be either spent or invested in Detroit. Belle Isle will become a model for the world and its reputation for both political and physical innovation will put Detroit on the map again in a positive way. The political challenge is to inform and persuade the decision makers, Michigan and the federal government, of the benefits to Detroit of Belle Isle. But I think it has a very good chance. Belle Isle will help clean the stain of Detroit on the national psyche.

The Freeman: People who appreciate the rule of law also appreciate the idea of equality before the law—the ideas that the rules should apply to everyone equally in some jurisdiction. Is there a sense in which an “opt-out” city is an affront to the rule of law? Or would it be a distinct jurisdiction from the state of Michigan?

Lockwood: The concept that rules and laws apply equally to everyone within a jurisdiction is important. That is why my vision is Belle Isle will form its own jurisdiction, in order to allow its social and economic experiment to be tried. In doing so, it takes nothing from Michigan or the rest of the U.S.; in fact, [it] will pay for the entire value it receives from the U.S. military defending its citizens’ lives and property—about $2,000 per year per person.

The rest of the U.S. will be the real beneficiary, as it can observe whether or not the experiment works, and can do so without risking change on a much larger scale.

The Freeman: What would be the minimum conditions you think you would need for Belle Isle to work?

Lockwood: Belle Isle would work if it could have its own system of taxation and government, with freedom of travel between it and the mainland. It would not need its own currency, as is predicted in the book’s story due to the dollar losing world reserve currency status.

The Freeman: How would you make the rules? What would they look like? (Give any details you like, including taxes, fees, courts, or what have you.)

Lockwood: A model constitution will have to be established. I like Liechtenstein as a starting point. Its Crown Prince Hans-Adam II has outlined its constitution in a recent book, The State in the Third Millennium. Many of the concepts for Belle Isle come from his book.

The monorail will have a user fee, but most of the general budget will be based on a modest consumption tax of less than 10 percent and a real estate tax on land-only. The basic tenet concerning taxation on Belle Isle is “Never tax that which you want to encourage, and taxes must be transparent.” Thus there will be no tax on labor income, no tax on investment income, no taxes at death (on moral principles), and no tax on corporations (doesn’t meet the transparency requirement). Building improvements will not be taxed either, as we want to encourage high quality architecture and construction.

Spending will be limited to 10 percent of GDP, as opposed to the current 42 percent spent in the U.S. by local, state, and federal governments. This is possible as there will be no entitlements, with the private sector picking up the funding required for the needy and less fortunate.

The island government will have a governing Council, an Executive, and a system of courts quite similar to [that of] the U.S. and most states. It will also have an independent and sophisticated Anti-Corruption Group whose sole purpose is to keep government clean (as Singapore has implemented). This is a different approach to the current system where we try to catch government corruption after the fact, rather than have systems in place to prevent it. 

The criminal system will be similar to [that of] the U.S., although I envision it will be simpler. The civil liability system will be different, in that complex or technical torts will be tried before a jury of three experts in that field, rather than a lay jury. Judges will be rated annually by the attorneys who appear in front of them and will be offered bonuses on their caseload and rate of overturns of decisions on appeal.

The Freeman: You’ve put a lot of thought into this. Is there a vital element in your mind?

Lockwood: Perhaps the most important aspect of the Belle Isle system will be its charity-based safety net. The government will initially take on the role of issuing ratings on charities that desire to be rated. The amount of money spent on fundraising and overhead, as opposed to that spent on the mission itself, will be considered. Citizens of Belle Isle will be free to donate to any cause they wish, but highly rated charities will be viewed more favorably. And 1 percent of GDP will be included in the Belle Isle budget to be spent on charities, as selected by the residents through an online voting system, similar to how 401(k) plan allocations are done today. I view the success of this charity system to be the most important element in Belle Isle’s social experiment. I believe it will work and become the model for good governance in other locations.

There are many more ideas outlined in the book, even though it is a quick two- to three-hour read. If only half of them are implemented, people will see a big difference in their lives.

The Freeman: Rod Lockwood, thank you so much for your time.

Lockwood: My pleasure.

 

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