Excellent discussion between Romer and Russ Roberts.

Romer is quite aware that informal norms matter. In terms of my earlier discussion of law and order, he understands that order and law are different things. The question I would like to have asked would be whether a brand new city would be orderly. If one assumes that formal laws are only a small percent of the influence on human behavior, and you bring people from all sorts of backgrounds into a new city, it seems to me that the what will emerge may have very little to do with the formal rules of the city and much more to do with the habits and norms that people bring to the city.

When William Penn comes to Pennsylvania with his charter, he brings with him settlers with particular norms and backgrounds. As David Hackett-Fischer has shown, those particularities gave the region a distinctive culture that persists even to this day. If you create a charter city in Brazil and move Haitians there, will the interaction between Haitian culture and, say, Hong-Kong laws produce a result that looks more like Haiti or more like Hong Kong? I would predict the former.