Monthly Archives: January 2014

The liberal dilemma on sex-selective abortion

The revelation of extensive sex-selective abortion in Britain has again pitched cultural relativism against the idea of gender equality, argues James Mumford.

The controversy over sex-selection abortions, which hit the front pages again this month, pits two deep egalitarian impulses – a commitment to gender equality on the one hand, a commitment to cultural diversity on the other – against each other. It can leave politically correct people looking as if they might internally combust.

The Crown Prosecution Service (CPS) has decided it is not in the public interest to prosecute doctors offering abortions on the grounds of gender alone. Evidence this is happening was first publicised in 2012 when Daily Telegraph reporters accompanied pregnant women to different abortion clinics around Britain. After the women had explicitly stated they were unhappy their foetuses were female, the doctors proceeded to falsify the paperwork. Said one: ‘I’ll put too young for pregnancy, yeah?’

The CPS’s decision not to punish this practice has provoked outrage. From pro-lifers, predictably. But also from people, otherwise pro-choice, who’ve spent their lives campaigning for gender equality. So, Conservative MP Sarah Wollaston has said that selective abortion of baby girls ‘harms all women by reinforcing misogynist attitudes.’ While Shadow Attorney General Emily Thornberry told the Director of Public Prosecutions that any progress in dealing with violence against women and against girls ‘will be completely undermined if the [CPS] is seen to wash its hands of alleged abortion on grounds of sex selection.’

Problem is, there is also evidence that in some of these circumstances sex-selection abortions are an expression of deeply held cultural preferences, not just individual choices. Some of the pregnant women in the Telegraph sting were from ethnic minorities, while the former medical director of the UK’s largest abortion provider, British Pregnancy Advisory Service (bpas), has alleged that not only is abortion of female fetuses widespread in the UK, but that the phenomenon is also ‘more common among some ethnic communities’. And then, in January 2014, The Independent’s analysis of the 2011 National Census revealed the ‘widespread discrepancy’ in the sex ratio of children in some immigrant families, a fact which ‘can only be explained’ by sex-selective abortion.

We know that in the developing world the increasing availability of ultrasound technology has led to the abortion of millions of female fetuses. Indian economist Amartya Sen was the first to draw this to the attention of the West. In 1990 he arrived at an estimate of 100 million missing women, a number revised to 163 million by French demographer Christophe Guilmoto in 2005.1 In her powerful book, Unnatural Selection: Choosing Boys over Girls, And the Consequences of a World Full of Men, Mara Hvistendahl tells the story of the fateful pairing of ‘old traditions and new technologies’ across Asia. In India, she shows, there are now 112 boys born for every 100 girls; in China, 121.

The existence of this practice in the UK, however, has come as news to us. If, as critics say, the whole episode has thrown a beam of light across the reality of abortion on demand, it has also raised the question of exactly whose demand we are talking about. The individual’s or the group’s? The couple’s or the culture’s?

And so respect for the particular mores of minority groups comes up against a foundational concern about the place of women in the world. An appreciation of diversity, our making peace with pluralism, and a belief that culture ‘goes all the way down’ – those convictions might lead us to reason that here is a distinct cultural practice which, though we might personally disagree with it, we are nevertheless obliged to tolerate (particularly if abortion is legal otherwise). Or we might think that certain rights simply trump others, and women’s rights are among those.

The horns of a dilemma indeed. What are we to make of it? How should we respond? Over the course of the debate there have been so many old rogue philosophies surfacing it is difficult to know where to start. For example, who dares to call out the unashamed Utilitarianism of bpas’s Ann Furedi when they admit the assumption that aborting girls is okay if the detrimental consequences of having those girls outweigh the benefits? (As G.K. Chesterton countered, when there aren’t enough hats to go around the problem isn’t solved by lopping off some heads.) Here, though, as we try to understand what’s at stake, it is worth bearing in mind historical context.

There is in fact a direct precedent for this most emotive of issues. In the nineteenth century there was another practice involving female sacrifice which appalled white Westerners. That practice also on the face of it seemed voluntary, something women were not physically forced to do. It too was rooted in an ancient religion and its transcendent ideals, in a culture far older than that with which it came into conflict. It too was legitimated by people’s forward-looking concerns about what kind of lives the ‘candidates’ in question would live if spared. And – to make the quandary even more acute –that practice emanated from an indigenous rather than immigrant culture, i.e. one the British encountered away from home.

Sati was the Hindu practice whereby a widow would absolve herself of her sins, and show her utmost devotion to her dead husband, by throwing herself on his funeral pyre. So when the British banned it from Bengal in 1829, was that an unforgivable imposition, an exercise of immense cultural power? Or was it the best thing the British ever did in India? A victory for gender equality? A cause for celebration? That it was the latter is suggested by the fact that the campaign against Sati was not just carried forward by the usual suspects in England – Wilberforce et al. In Bengal itself Raja Rammohan Roy led the charge, thus demonstrating that perhaps certain moral principles may prove more foundational than the deepest of cultures.

http://quarterly.demos.co.uk/article/why-sex-selective-abortion-is-a-problem-for-liberals/

Erik Prince: Out of Blackwater and Into China

Erik Prince —ex-Navy SEAL, ex-CIA spy, ex-CEO of private-security firm Blackwater —calls himself an “accidental tourist” whose modest business boomed after 9/11, expanded into Iraq and Afghanistan, and then was “blowtorched by politics.” To critics and conspiracy theorists, he is a mercenary war-profiteer. To admirers, he’s a patriot who has repeatedly answered America’s call with bravery and creativity.

Now, sitting in a boardroom above Hong Kong’s Victoria Harbour, he explains his newest title, acquired this month: chairman of Frontier Services Group, an Africa-focused security and logistics company with intimate ties to China’s largest state-owned conglomerate, Citic Group. Beijing has titanic ambitions to tap Africa’s resources—including $1 trillion in planned spending on roads, railways and airports by 2025—and Mr. Prince wants in.

With a public listing in Hong Kong, and with Citic as its second-largest shareholder (a 15% stake) and Citic executives sitting on its board, Frontier Services Group is a long way from Blackwater’s CIA ties and $2 billion in U.S. government contracts. For that, Mr. Prince is relieved.

“I would rather deal with the vagaries of investing in Africa than in figuring out what the hell else Washington is going to do to the entrepreneur next,” says the crew-cut 44-year-old.

Having launched Blackwater in 1997 as a rural North Carolina training facility for U.S. soldiers and police, Mr. Prince says he “kept saying ‘yes’ as the demand curve called—Columbine, the USS Cole and then 9/11.” In 100,000 missions in Iraq and Afghanistan, he says, Blackwater contractors never lost a U.S. official under their protection. But the company gained a trigger-happy reputation, especially after a September 2007 shootout that left 17 civilians dead in Baghdad’s Nisour Square.

At that point, charges Mr. Prince, Blackwater was “completely thrown under the bus by a fickle customer”—the U.S. government, and especially the State Department. He says Washington opted to “churn up the entire federal bureaucracy” and sic it on Blackwater “like a bunch of rabid dogs.” According to Mr. Prince, IRS auditors told his colleagues that they had “never been under so much pressure to get someone as to get Erik Prince,” and congressional staffers promised, “We’re going to ride you till you’re out of business.”

Amid several federal prosecutions involving Blackwater employees, most of which fizzled, Mr. Prince resigned as CEO in 2009 and now feels “absolutely total regret in every way, shape and form for ever saying ‘yes’ ” to a State Department contract.

Which brings him to Hong Kong and his new firm. “This is not a patriotic endeavor of ours—we’re here to build a great business and make some money doing it,” he says. Asia, and especially China, “has the appetite to take frontier risk, that expeditionary risk of going to those less-certain, less-normal markets and figuring out how to make it happen.” Mr. Prince says “critics can throw stones all they want” but he is quick to point out that he has “a lot of experience in dealing in uncertainties in difficult places,” and says “this is a very rational decision—made, I guess, emotionless.”

Mr. Prince aims to provide “end-to-end” services to companies in the “big extractive, big infrastructure and big energy” industries. Initially focused on building a Pan-African fleet of aircraft, his firm will expand into barging, trucking and shipping, along with “remote-area construction” as needed for reliable transport. A company—Chinese, Russian, American or otherwise—may have “an extremely rich hydrocarbon or mining asset,” he explains, “but it’s worth nothing unless you can get it to where someone will pay you for it.” His investor prospectus notes that with today’s transportation infrastructure, “it costs more to ship a ton of wheat from Mombasa, Kenya to Kampala, Uganda than from Chicago to Mombasa.”

Such high costs also reflect the dangers of piracy and civil conflict, but Mr. Prince plays down his firm’s plans in the security realm. “We are not there to provide military training. We are not there to provide security per se. Most of that security”—say, if an oil pipeline or mining camp needs protection—”would be done by whatever local services are there,” including police and private firms. “We don’t envision setting up a whole bunch of local guard services around the continent.”

So the former Blackwater chief won’t employ guys with guns? Well, he says, “that would be the exception, certainly not the rule.”

He says his attention is on “expeditionary logistics” and “asset management.” If a company needs to build a dam, he muses by way of example, “how do you deliver an extremely high-dollar turbine into a very remote part of the world? . . . Do you sling it with a helicopter? There’s all sorts of interesting challenges like that that we’ll be endeavoring to face.”

Mr. Prince won’t share any revenue projections, but his prospectus notes that “China is Africa’s largest trading partner,” with annual flows of $125 billion. Most estimates put that figure closer to $200 billion, a meteoric increase from $10 billion in 2000 and $1 billion in 1980. The U.S., which was Africa’s top trade partner until 2009, registered $100 billion in annual African exchange at last count. China-Africa trade could reach $385 billion by 2015, according to Standard Chartered Bank.

“The U.S. has been fixated on terrorism the last 10 or 15 years,” says Mr. Prince, “and American companies by and large haven’t had the appetite for Africa.” In 2010 the African Development Bank found that Chinese firms signed 20 contracts in Africa for every one signed by an American firm. But does post-9/11 distraction really explain this discrepancy?

A better explanation would begin with China’s state-directed investment strategy, which funds opaque state-owned firms to operate across Africa with little regard for trifles such as financial transparency, environmental degradation or human rights. When a tyrant like Sudan’s Omar al- Bashir can’t get Western financing for a mega-dam across the Nile River, China arrives with an easy loan, some state-owned firms to build the dam and some others to claim oil or mineral concessions elsewhere in the country. Beijing’s approach has helped boost African economic growth—projected at 6% this year by the International Monetary Fund—but it has also helped entrench some of the world’s most oppressive governments.

Mr. Prince prefers to look on the bright side. “Developing good investments in Africa is by and large the best for the people of Africa that have a job, that have electricity, that might have clean water, that might have those things that we in the West take horribly for granted.”

It’s Capitalism 101, he argues. “When someone needs copper, or wood or an ag product, and they invest capital somewhere to make that happen, and people get jobs from that, and that good gets introduced to the world stage and it gets traded and moved, the whole world benefits.”

As for Chinese patronage of presidents-for-life like Sudan’s Bashir, Mr. Prince’s CEO, Gregg Smith —a former U.S. Marine and Deloitte executive—offers this observation: “There’s thousands of tribal conflicts in Africa every decade that have nothing to do with anyone from the outside. It has everything to do with tribal conflicts that have been going on for centuries, and the fact that the economies cause folks not to have jobs,” says Mr. Smith. “It’s not about who backs Omar al-Bashir.”

Nor, adds Mr. Prince, does China’s expanding commercial empire come at the expense of American interests. “The United States and China are among each other’s largest trading partners,” he notes, “and I think countries that trade goods together tend not to trade lead,” meaning to shoot at each other.

This historically questionable reassurance notwithstanding, Mr. Prince certainly isn’t complacent about America’s global standing. U.S. policy in Africa, he says, “is just nonexistent. It’s about as coherent as U.S. Middle East policy—incoherent.”

Americans, he says, “are at a competitive disadvantage because of their government. . . . It’s amazing how many countries run their embassies as commercial outposts to promote businessmen from their country. I think the U.S. has forgotten about that one.”

At this point in the interview, Mr. Prince begins speaking more sharply, even bitterly, not simply as a critic of Washington policy but as a man betrayed. Which he was, in 2009, when he was outed publicly as a CIA asset.

For years while running Blackwater, it turns out, Mr. Prince was also using his personal wealth and expertise to recruit and deploy a world-wide network of spies tracking al Qaeda operatives in “hard target” locations where even the CIA couldn’t reliably operate. This work remained secret until June 2009, when then-CIA Director Leon Panetta mentioned it in classified testimony to Congress. Within weeks, leaks hit the front pages.

“The one job I loved more than any other was ripped away from me thanks to gross acts of professional negligence at the CIA,” Mr. Prince wrote in his memoir, “Civilian Warriors,” published in November.

This background comes to mind as Mr. Prince makes the surprising claim that “there’s very little advantage to being an American citizen anymore. They tax you anywhere in the world you are, they regulate you, and they certainly don’t help you, at all.”

His advice for Washington: “Stop committing suicide.” Lawmakers should “get out of their heads this idea that they can recklessly spend money that they don’t have,” he says. “The United States government is too big in all areas. . . . It’s time to make the entire thing a lot smaller.” That would include doing everything from allowing Americans to buy incandescent light bulbs to reining in domestic surveillance by the National Security Agency.

At no point does Mr. Prince address the irony of making these arguments days after going into business with a state-owned firm founded as part of Communist China’s Ministry of State Security.

“Look,” he says, grasping to end our talk on an optimistic note, “America can pull its head out at any time. That happens at the ballot box. Ballot boxes have consequences still in America.” He continues: “But the American electorate has to actually pay attention, has to turn off the Xbox long enough to pay attention. Otherwise they’re going to continue to elect the government they deserve.”

Mr. Feith is an editorial-page writer at The Wall Street Journal Asia.

http://online.wsj.com/news/articles/SB10001424052702303465004579324650302912522?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303465004579324650302912522.html

Why This European Is Bullish on America

THE SATURDAY INTERVIEW

The billionaire founder of Ineos says the shale revolution is making the U.S. a world-beater again. It would be ‘unbeatable’ with a lower corporate tax rate.

By

BRIAN M. CARNEY
Jan. 10, 2014 6:28 p.m. ET
LondonAmerica’s energy boom is spurring a new British invasion, this one headed by Jim Ratcliffe, chairman and CEO of Ineos Group Holdings, the multinational petrochemical giant he founded in 1998. “The United States from our point of view,” Mr. Ratcliffe says, “presents lots of opportunities for investment and growth.”

In the U.S., where the economic discussion is often dominated by hand-wringing about “secular stagnation” and declinism, growth remains subpar and unemployment stubbornly high. Yet the explosion in shale gas and oil production made possible by hydraulic fracturing and horizontal drilling are, the Ineos founder says, set to reinvigorate the U.S. economy. Mr. Ratcliffe sees an America in which a boom, driven by cheap energy, is already well under way.

A chemical engineer turned industrialist, Mr. Ratcliffe left Exxon XOM -2.75% for the private-equity firm Advent in the late 1980s. Some four years later, he got back into running a chemicals company when he helped lead the buyout of a BP BP.LN -1.12%chemical plant in Hythe. He took the resulting company, Inspec, public before leaving again to buy out Inspec’s Antwerp plant, which formed the starting point of what has become Ineos. Much of its growth into today’s $43 billion a year behemoth has come through acquisitions, the biggest of which was its purchase of BP’s chemicals business in 2005.

But for all the deal-making, Mr. Ratcliffe insists he is “a manufacturer at heart,” born and reared in Manchester, England—where, he notes, “the whole Industrial Revolution began.” These days he is one of Britain’s richest citizens, owning about two-thirds of the privately held Ineos.

Neil Davies

Most people think of oil and gas as fuels, but to Ineos they’re “feedstocks” for making things. Ineos turns petrochemicals into plastics and related materials in massive plants known in the business as “crackers.” Cracking is the chemical process by which natural gas and crude oil are broken down into ethylene. From ethylene, Mr. Ratcliffe says, “you produce polyethylene, polyester, PVC—all the world’s biggest plastics,” which make up the stuff of modern life. Everything from soda bottles and fleece jackets to car bumpers and computer cases comes ultimately from the natural gas or oil that petroleum companies pull out of the ground.

There are two kinds of crackers, one for oil and one for natural gas. For a long time in most places, the two “had similar economics,” Mr. Ratcliffe says. But now “what’s happened in the United States with shale gas is that the price of gas has dislocated from the price of oil. If you have a gas cracker it becomes very, very profitable.” Ineos owns the second-largest gas cracker in the U.S., outside Houston, and so suddenly it also has “access to lots of cheap shale gas.” It’s good to own a gas cracker in America right now.

Mr. Ratcliffe, a tall, trim 61-year-old with a gravelly voice and something of a mop-top, is holding court in a conference room in a boutique hotel near Hyde Park in West London. Until recently, Ineos Group Director Tom Crotty notes, Ineos liked to call itself “the largest company you’d never heard of.” That changed, at least in Britain, last October when Mr. Ratcliffe threatened to shut down Scotland’s only crude-oil refinery, which Ineos owns, in the midst of a labor dispute.

The price of keeping it open, Mr. Ratcliffe told the union, was to accept salary freezes, an end to final-salary pensions, and greater freedom for the company to set work rules. When the union balked, Mr. Ratcliffe said he was prepared to walk away, prompting a political and economic panic from Edinburgh to London. Within days, the union capitulated. Now he’s proposing to spend millions of pounds to export American shale gas to Scotland, where Ineos will crack it at the same plant he nearly closed two months ago—the refining complex at Grangemouth also sports one of Europe’s four gas crackers.

Ineos is already building a similar project at its other European gas cracker in Norway. Shale gas has made the feedstocks Ineos needs so cheap in the U.S.—”a lot less than half the price of European feedstocks,” Mr. Ratcliffe says—that suddenly it makes sense to build a natural-gas liquefaction plant and export terminal in the U.S., buy specialized tankers to ship liquefied natural gas across the Atlantic and re-gasify it in Europe, all to feed ethane into Ineos’s gas crackers in Norway and Scotland.

This is a radical transformation of the petroleum business. As recently as 2011, the U.S. was a net importer of petrochemicals. In the middle of the previous decade, oil companies were clamoring for new liquefied natural gas import terminals to address the high price and shortage of gas. Today there are “10 new world-scale crackers being built” in the U.S. “on the back of all the shale gas you’ve found,” Mr. Ratcliffe says. He foresees net petrochemicals exports from the U.S. “to the tune of $30 billion by 2018-2020.”

His bullishness on America is a recurring theme. “The markets generally seem to be doing quite well in the United States, raw materials are plentiful, energy is cheap, skills are great,” Mr. Ratcliffe says. As a result, Ineos is “more and more turning its attention to the United States.” Seven or eight years ago in his industry, “people were shutting things down” in America “because it wasn’t competitive. Now it’s become immensely competitive.”

And most of that is because of shale gas and hydraulic fracturing. “I’m not sure we could spell ‘shale’ in 2008,” Mr. Ratcliffe jokes. “People hadn’t heard of it. We’re pretty big in chemicals in the United States, and we’re a big gas consumer, and nobody was talking about it.”

He has a different view of his native Continent. “Generally,” he says, “I’m quite bearish about Europe. There’s lots of debt kicking around all over the place, they’re all running trade deficits apart from Germany. There is no growth. We don’t have great competitive economics, certainly in things like energy and feedstocks.” On the contrary, Europe has “the most expensive energy in the world.” The Continent has been very slow to move on shale gas, and the U.K. has only lately, and somewhat reluctantly, started to embrace fracking. Older oil and gas fields in the North Sea are in decline, and any new sources from fracking are years away at best.

“There’s lots of shale gas around” in the U.K. and elsewhere, Mr. Ratcliffe says. But “in Texas there are 280,000 active shale wells at the moment. . . . And I think a million wells in the United States” as a whole. By contrast, “I think we have one, at the most two, in the U.K., and I don’t think there are any in France.” The French made fracking illegal in 2011, and the country’s highest court upheld the ban in October.

Today, Mr. Ratcliffe says, two-thirds of Ineos’s assets are in Europe, and one-third are in the U.S. But “from 2010-2013, our profits in Europe have more than halved,” while at the same time, Ineos’s “profits in America since 2010 have tripled. So our profits in America now are double, from a third of assets, our profits in Europe from two-thirds of our assets.” Much of this shift is due to the costs of energy and raw materials, but Mr. Ratcliffe points to an additional, more subtle factor.

Social protections in Europe make it much more expensive to shut down underperforming plants. Many Europeans will say, “Yes, that’s the idea. To protect jobs.” And indeed Mr. Ratcliffe was excoriated in certain circles for his threat to close the Grangemouth refinery.

But Mr. Ratcliffe argues that European-style social protections lead to under-investment that ultimately benefits no one. He offers an example: “In Spain we have a small unit which wasn’t successful and it was too small, making ABS [a plastic].” But to close it would have cost “a minimum of three years’ salary for every employee. So what you do is, you try to find ways of just sort of continuing for a few more years. And what you find of course is you lose a bit more money, and you lose a bit more money and you lose a bit more money. And eventually you do have to close it down. But by the time you close it down, it costs you a fortune and also you’ve lost money for eight years while you were fiddling about.”

By contrast, he says, in America “you’d just shut it down.” Which is why, he adds, “in America all our assets are good assets, they all make money.” That may sound like a European social democrat’s nightmare, but Mr. Ratcliffe takes a longer view, explaining that if the lost money had instead been invested in new capacity, the company would be healthier, employees’ jobs more secure and better-paying because the plant would be profitable. This logic is unlikely to persuade Europe’s trade unions, but Mr. Ratcliffe says that the difficulty and expense of restructuring is one of the things holding back Europe—and its workers.

America, he acknowledges, “is not without its issues,” citing federal debt and trade and budget deficits. But Mr. Ratcliffe’s “only gripe” about the U.S.—”you have to have a gripe,” he says—is that America “has the highest corporate tax rates in the world: “They’re too high in my view, nearly 40%. And that’s a pity because in most other parts of the world corporate tax rates are about 25%.”

‘America’s got quite reasonable tax rates from an employee point of view,” Mr. Ratcliffe says, speaking in a country that only recently lowered its top marginal rate to 45% from 50%, “but the corporate tax rate is too high. Because what you want to do is reinvest. If you weren’t paying all that tax, what you’d do is, you’d invest more. And we’d probably spend the money better than the government would.”

His suggestion for Washington on corporate taxes: “I think they should bring that down to about 30% or so. Then they’d be unbeatable. For investment, they’d be unbeatable, the United States.”

Mr. Carney is editorial page editor of The Wall Street Journal Europe and coauthor of “Freedom, Inc.,” (Crown Business, 2009).

How to Save Detroit. Why Not Turn it into Hong Kong?

The Motor City needs help. Why not turn it into Hong Kong?
By

P. J. O’ROURKE
Jan. 9, 2014 1:12 p.m. ET

The Motor City needs help. Why not turn it into Hong Kong? Reuters

Detroit is beautiful—though you probably have to be a child of the industrial Midwest, like me, to see it. As you may have heard, the city is in trouble. At the end of the 2013 fiscal year, Detroit had a balance sheet with liabilities of $9.05 billion. The city’s emergency manager, Kevyn Orr, estimates long-term debt at $18 billion.

But I know how to fix Detroit, because it reminds me of another favorite place, Hong Kong—two things so opposite that they evoke each other the way any Kardashian is a reminder that you love home and mother.

Hong Kong’s per capita GDP is among the highest in the world. But it was once a worse mess than Detroit. Devastated by Japanese occupation, the British colony’s population had declined from 1.6 million in 1941 to 600,000 by 1945. Then, after the 1949 communist victory on the mainland, a million refugees arrived. Most of them were penniless. Britain’s Labor government was penniless, too. Maybe Hong Kong could have gone into Chapter 9. But who would have been the bankruptcy judge? Chairman Mao?

Instead Hong Kong had the good fortune to get John (later Sir John) Cowperthwaite, a young official sent out to push the colony’s economy toward recovery. “I did very little,” he once said. “All I did was to try to prevent some of the things that might undo it.”

Such as taxes. Even now, Hong Kong has no sales tax; no VAT; no taxes on capital gains, interest income or earnings outside Hong Kong; no import or export duties; and a top personal income-tax rate of 15%.

Cowperthwaite was financial secretary from 1961 to 1971, Hong Kong’s period of fastest economic growth. Sir John, however, wouldn’t allow collection of economic statistics for fear they’d lead to political meddling. Some statistics nonetheless: During Cowperthwaite’s tenure, Hong Kong’s exports grew by an average of 13.8% a year, industrial wages doubled and the number of households in extreme poverty shrank from half to 16%.

With that in mind, I was talking to a friend in Michigan. We discussed Detroit’s poverty, crime, depopulation and insolvency.

“Make it into Hong Kong,” I said, “with polite Canadians next door instead of a scary Politburo.”

“Someone’s way ahead of you,” he told me.

Ross MacDonald

Real-estate developer Rod Lockwood wants investors to buy Detroit’s derelict 982-acre Belle Isle Park and persuade the U.S. to allow Belle Isle a territorial status like Guam and all the tax benefits of Hong Kong—with easier access to Red Wings games.

Belle Isle has room for only about 50,000 people and just one bridge to the city. It might seem more of a gated community than an overseas possession. So Mr. Lockwood has expanded his proposal to include 15 square miles of Detroit’s distressed east side. I think Mr. Lockwood should try for the city’s entire 143 square miles.

Could it really work? Mr. Lockwood took me on a city tour with Larry Mongo, owner of Café D’Mongo’s Speakeasy, a popular hangout for Detroit’s hipsters. (Hipster scenes tend to spring up anywhere cheap real estate abuts young people, and just up Woodward Avenue, at Wayne State, there are 31,000 of them.)

Detroit’s industrial ruins are picturesque, like crumbling Rome in an 18th-century etching. The tragedy is the desert of blue-collar neighborhoods. Almost every home is burned, a crack house, a cellar hole or stripped of all that’s salvageable.

Hong Kong economics would mean curtailing U.S. welfare and benefit programs, but Detroiters seem to have found the holes in the social safety net already. Forty-four percent are living below poverty level. They could, however, benefit from the jobs and commerce in a vibrant, tax-free Hong Kong economy.

Amid the desolation, we came across a tidy bungalow—lawn mowed, sidewalk swept, flower beds planted, and bars on every downstairs door and window. Mr. Mongo said, “The old folks are still living there.” A lifetime was spent paying the mortgage and making improvements on a place that now isn’t worth the $8,500 it costs to demolish a house in Detroit.

Christopher Brooks, senior pastor at the 1,500-member Evangelical Ministries Church in Detroit, said a concept like Belle Isle “would initially be greeted with hostility because of the widespread suffering in Detroit. A ‘Wealth Haven’ would cause a war on the middle class.” However, he said, “If you’re talking about the whole city…If Belle Isle is the start of a plan, I’d support it. A lot of clergy would get behind it.” Pastor Brooks said, “If there were a real plan to encourage jobs and wealth, the welfare problem would solve itself.”

Granted, turning Detroit into Hong Kong wouldn’t be simple. I talked to Chris Crosby, a municipal bond analyst at Raymond James. He listened patiently as I explained the advantages of a city that would actually be worth something to prospective municipal bondholders. Here is the main part of the rest of our conversation.

Me: “Is this feasible?

Mr. Crosby: “No.”

The political barriers are too high—politicians don’t like to give up power. Of course, politicians also give up power in a bankruptcy, which is why Mr. Crosby likes Detroit’s bankruptcy. It will be so politically painful that other big cities won’t try it.

Detroit’s politics are already painful. Former Mayor Kwame Kilpatrick is serving 28 years in prison. Local joke: “What’s the difference between Chicago and Detroit?”

“Chicago got Michael Corleone. Detroit got Fredo.”

Plus introducing Hong Kong’s sharp-clawed wolverine species of capitalism into the Wolverine State would require a bold stroke from Washington. It’s hard to imagine anything bold from this Congress of head-butting pro-wrestler wannabes.

But something needs to be done. Sen. Rand Paul weighed in with a Dec. 6 speech at the Detroit Economic Club. (The economy may be gone, but we Midwesterners are “joiners,” so there’s still a club.) He said he’d introduce legislation creating “Economic Freedom Zones” with personal and business tax rates of 5%.

Anyway, Detroit is broke. And so was Hong Kong. In 1949 the colony had just one asset. Hong Kong owned Hong Kong—all the land except what was under the Anglican cathedral. Hong Kong sold leaseholds, first for a little, then for a lot.

And Detroit owns Detroit, or a very large chunk of it. In 2011 more than half the owners of Detroit’s 305,000 properties failed to pay property taxes. Detroit has approximately 40 square miles of vacant land.

If people cannot be convinced by reason, maybe they can be convinced by greed. Forty square miles equals 1.1 billion square feet. One recent estimate put Hong Kong land prices at more than $1,300 per square foot. Translated into Detroit, that’s $1.4 trillion.

So my investment advice: go short on Manhattan penthouses and long on empty lots in Detroit.

—Mr. O’Rourke is the author of 16 books, most recently, “The Baby Boom: How It Got That Way…And It Wasn’t My Fault…And I’ll Never Do It Again.”