On his Charter Cities blog, Paul Romer captures the why of the Nobel for Elinor Ostrom:
Most economists think that they are building cranes that suspend important theoretical structures from a base that is firmly grounded in first principles. In fact, they almost always invoke a skyhook, some unexplained result without which the entire structure collapses. Elinor Ostrom won the Nobel Prize in Economics because she works from the ground up, building a crane that can support the full range of economic behavior.
BTW, it looks like Paul is having some success in Honduras with adoption of his Charter Cities proposal. No investors yet…
Mr. Romer is undaunted. He’s shopping for a government to serve as guarantor.