Paul Romer: The world's first charter city?

48,092 views ・ 2011-06-09

TED


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In 2007,
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I decided that we needed to reconceptualize
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how we thought about economic development.
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Our new goal should be
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that when every family thinks about where they want to live and work,
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they should be able to choose between
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at least a handful
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of different cities
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that were all competing to attract new residents.
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Now we're a long way away from that goal right now.
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There are billions of people in developing countries
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who don't have even a single city that would be willing to welcome them.
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But the amazing thing about cities
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is they're worth so much more
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than it costs to build them.
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So we could easily supply the world
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with dozens, maybe hundreds,
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of new cities.
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Now this might sound preposterous to you
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if you've never thought about new cities.
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But just substitute apartment building for cities.
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Imagine half the people who wanted to be in apartments already had them;
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the other half aren't there yet.
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You could try and expand the capacity
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by doing additions on all the existing apartments.
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But you know what you'd run into
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is those apartments and the surrounding areas
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have rules to avoid discomfort
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and the distractions of construction.
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So it's extremely hard to do all of those additions.
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But you could go out someplace brand new,
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build a brand new apartment building,
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as long as the rules there
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were ones that facilitated construction
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rather than getting in the way.
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So I proposed
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that governments create new reform zones
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big enough to hold cities
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and gave them a name: charter cities.
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Later I learned that at about this same time,
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Javier and Octavio
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were thinking about the challenge of reform
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in Honduras.
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They knew that about 75,000 Hondurans every year
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would leave to go to the United States,
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and they wanted to ask, what could they do
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to make sure that those people could stay
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and do the same things in Honduras.
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At one point, Javier said to Octavio,
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"What if we took some of our empty land --
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what if we just gave it to an embassy --
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give some to the U.S. embassy; give some to the Canadian embassy --
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and then if people want to go work
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under the rules of Canada or under the rules of the United States,
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they can go get jobs,
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do everything they do on those embassy grounds
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that they would otherwise have to go to Canada or the U.S. to do?"
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In the summer of 2009,
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Honduras went through a wrenching constitutional crisis.
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At the next regularly scheduled election,
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Pepe Lobo won in a landslide
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on a platform that promised reform,
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but reconciliation as well.
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He asked Octavio to be his chief of staff.
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Meanwhile, I was getting ready
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to give a talk at TEDGlobal.
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Through a process of refinement,
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trial and error, a lot of user testing,
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I tried to boil this complicated concept of charter city
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down to the bare essentials.
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The first point was the importance of rules,
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like those rules that say
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you can't come in and disturb all the existing apartment holders.
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We pay a lot of attention to new technologies,
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but it takes technologies and rules to get progress,
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and it's usually the rules that hold us back.
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In the fall of 2010, a friend from Guatemala
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sent Octavio a link to the TEDTalk.
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He showed it to Javier.
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They called me.
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They said, "Let's present this to the leaders of our country."
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So in December we met in Miami,
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in a hotel conference room.
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I tried to explain this point
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about how valuable cities are,
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how much more valuable they are than they cost.
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And I used this slide
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showing how valuable the raw land is
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in a place like New York City:
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notice, land that's worth thousands of dollars, in some cases,
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per square meter.
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But it was a fairly abstract discussion,
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and at some point when there was a pause,
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Octavio said,
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"Paul, maybe we could watch the TEDTalk."
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(Laughing)
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So the TEDTalk laid out in very simple terms,
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a charter city is a place
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where you start with uninhabited land,
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a charter that specifies the rules that will apply there
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and then a chance for people to opt in,
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to go live under those rules or not.
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So I was asked by the president of Honduras
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who said that we need to do this project,
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this is important,
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this could be the way forward for our country.
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I was asked to come to Tegucigalpa
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and talk again on January fourth and fifth.
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So I presented
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another fact-filled lecture
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that included a slide like this,
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which tried to make the point that, if you want to create a lot of value in a city,
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it has to be very big.
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This is a picture of Denver,
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and the outline is the new airport that was built in Denver.
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This airport alone
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covers more than 100 square kilometers.
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So I was trying to persuade the Hondurans,
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if you build a new city,
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you've got to start with a site that's at least 1,000 square kilometers.
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That's more than 250 hundred-thousand acres.
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Everybody applauded politely.
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The faces in the audience
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were very serious and attentive.
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The leader of the congress came up on stage and said,
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"Professor Romer, thank you very much for your lecture,
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but maybe we could watch the TEDTalk.
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I've got it here on my laptop."
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So I sat down, and they played the TEDTalk.
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And it got to the essence,
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which is that a new city could offer new choices for people.
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There would be a choice of a city which you could go to
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which could be in Honduras,
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instead of hundreds of miles away in the North.
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And it also involved new choices for leaders.
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Because the leaders in the government there in Honduras
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would need help from partner countries,
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who could benefit from partner countries
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who help them set up the rules in this charter and the enforcement,
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so everybody can trust
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that the charter really will be enforced.
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And the insight of President Lobo
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was that that assurance of enforcement
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that I was thinking about
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as a way to get the foreign investors to come in and build the city
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could be equally important for all the different parties in Honduras
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who had suffered for so many years
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from fear and distrust.
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We went and looked at a site.
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This picture's from there.
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It easily could hold a thousand square kilometers.
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And shortly thereafter, on January 19th,
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they voted in the congress to amend their constitution
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to have a constitutional provision
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that allows for special development regions.
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In a country which had just gone through this wrenching crisis,
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the vote in the congress in favor of this constitutional amendment
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was 124 to one.
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All parties, all factions in society, backed this.
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To be part of the constitution, you actually have to pass it twice in the congress.
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On February 17th they passed it again
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with another vote of 114 to one.
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Immediately after that vote,
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on February 21st to the 24th,
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a delegation of about 30 Hondurans
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went to the two places in the world
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that are most interested in getting into the city building business.
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One is South Korea.
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This is a picture of a big, new city center
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that's being built in South Korea --
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bigger than downtown Boston.
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Everything you see there was built in four years,
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after they spent four years getting the permits.
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The other place that's very interested in city building is Singapore.
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They've actually built two cities already in China
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and are preparing the third.
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So if you think about this practically,
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here's where we are.
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They've got a site; they're already thinking about this site for the second city.
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They're putting in place a legal system
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that could allow for managers to come in,
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and also an external legal system.
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One country has already volunteered to let its supreme court
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be the court of final appeal for the new judicial system there.
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There's designers and builders of cities
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who are very interested.
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They even can bring with them some financing.
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But the one thing you know they've already solved
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is that there's lots of tenants.
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There's lots of businesses that would like to locate in the Americas,
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especially in a place with a free trade zone,
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and there's lots of people who'd like to go there.
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Around the world, there's 700 million people
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who say they'd like to move permanently someplace else right now.
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There's a million a year
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who leave Latin America to go to the United States.
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Many of these are a father
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who has to leave his family behind to go get a job --
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sometimes a single mother
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who has to get enough money to even pay for food or clothing.
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Sadly, sometimes there are even children
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who are trying to get reunited with their parents
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that they haven't seen, in some cases, for a decade.
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So what kind of an idea is it
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to think about building a brand new city in Honduras?
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Or to build a dozen of these,
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or a hundred of these, around the world?
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What kind of an idea is it
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to think about insisting
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that every family have a choice of several cities
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that are competing to attract new residents?
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This is an idea worth spreading.
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And my friends from Honduras
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asked me to say thank you, TED.
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08:59
(Applause)
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