Charter cities in Honduras update

by on August 13, 2017 at 12:07 am in Current Affairs, Economics, Law, Political Science | Permalink

The Economist has a lengthy and very informative article on this, here is one bit:

Another candidate to be the first ZEDE is a public-private partnership with Canadian investors to create an “energy district” in Olancho department, where wood would be harvested for fuel. The ZEDE itself would be confined at first to a 1.6 square km (0.6 square mile) patch, which will be occupied by a power station. But it could eventually expand to an area covering 8% of Honduras’s territory and including 380,000 people. HOI, a Christian NGO based in the United States, is to provide health care and education from the outset in this “area of influence”.

…Even now, just how ZEDEs will work is a matter of argument among their supporters. The law places effective control in the hands of investors and a “technical secretary” who will administer each zone (and must be a Honduran citizen). They are answerable to an independent “commission for best practices” (CAMP). Civil and criminal cases will be adjudicated by special ZEDE courts, though it is not clear whether each zone will have its own or whether they will join a single parallel system. They could employ foreign judges to hear civil and criminal cases, just as Honduran football teams hire foreign players, suggests Mr Díaz. A “tribunal of individual rights”, guided by international conventions, will protect residents. Its decisions can be appealed to international courts.

But this governance structure is not settled; participants do not agree on what has been decided or even on who is part of it. The original CAMP, appointed by Mr Lobo, had 21 members, including Grover Norquist, an American anti-tax campaigner, Richard Rahn, then of the libertarian Cato Institute in Washington, DC, and Mark Klugmann, a former speechwriter for Ronald Reagan. This body met just once, in March 2015, on the resort island of Roatán.

In short, the prognosis is still unclear, which I take to be bad news.  In any case, there is much more at the link.

1 Steve Sailer August 13, 2017 at 12:26 am

Honduras is a horrible country with a long tradition of gangster governments. It makes Mexico look like Norway.

Do you really think you can morally insulate yourself from the power structure? Why have anything to do with Honduras if you weren’t born there?

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2 Massimo August 13, 2017 at 3:56 am

Because, as Romer told me at the beginnings, only desperate countries do desperate things. Obviously, everybody would feel much more secure if they could install a Zede in a small, uninhabitated piece of Canada, Australia or Finland. But those countries do not have the need to do it (yet), even with their relatively low nationalism, the experiment would simply not justify the political backlash. Unfortunately, those of us who want to find a small piece of land to create a real free community, based on market and not politics, have to look to more exotic (and dangerous) places.

And I don’t understand the reference of “insulating ourselves from the political structure”. In my case, if I could, I would forbid the entrance to the Zede to any politicians, Hondureñan or from other countries. Unfortunately, the Zede law prevents me to do it with Hondureñans, but at the very minimum they will have to follow the rules of the Zede as everybody.

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3 Steve Sailer August 13, 2017 at 4:53 am

And who enjoys the theoretical monopoly of violence within the Zede?

(In Honduras in reality of course there’s little in the way of a monopoly on violence, but help me understand how it is supposed to work just in theory, much less in reality.)

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4 Massimo August 13, 2017 at 5:33 am

Here I talk about the private Zedes, I don’t know much about those sponsored by governmental entities. The framework legislation should be the same, but I am sure a lot of special exceptions would apply to those.

Hondureñan police cannot enter the Zede territory. Security has to be provided by the owner of the Zede. Only defense against foreign aggression is supposed to be provided by the State of Honduras, and for the service the Zede has to pay to the central government 12% of total tax take (this is the only fee the sedes pay to the government). The legislative framework is chosen by the owner of the Zede, provided the Constitution and Honduras international treaties are respected. In civil issues most are choosing Anglo Saxon customary law, with Delaware legislation for commercial aspects. Also the penal code could be changed. The judiciary is chosen by the owner of the Zede, although the persons must be ratified by Honduras Supreme Court. In theory, also the prison system should be managed by the owners, although most want to find a way to outsource the service, either to specialized agency in a specific Zede, or even, who knows, with an agreement with the state of Honduras.

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5 Steve Sailer August 13, 2017 at 6:27 am

So, an unarmed Honduran teen, Trayvono Martino, wanders into your Zede and appears to be casing houses. Your hired security, Jorge Zimmermano, confronts him. They grapple desperately. Trayvano is winning. Your guy shoots the Honduran kid.

A mob of his friends and relatives from the village of Los Fergusones assembles and tries to force their way in to your Zede, demanding justice.

Do you order your hired guns to open fire?

Do you call your special business partner, the Honduran Minister of the Interior, and ask him to have his goons disperse the mob from the other side of the border, and that there will be a special extra in his monthly envelope?

Or something else? How does this work?

6 Massimo August 13, 2017 at 7:51 am

What you are sarcastically describing is what happens today. In the case of the Zede, of course it depends on a bunch of variables, like the location, the target residents, the owner, the size… in my case, for example, I am trying to set one up in a pristine and isolated area of the island of Roatan, this problem would not apply.

But let’s use as an example the potentially most attractive project, that of the “maquiladoras” (labour intensive manufacturing around San Pedro Sula). It is important, because if these guys move, they could immediately put in a Zede tens or even hundreds of thousands of jobs. The first thing that you are missing (probably because you never lived in poor and dangerous countries) is that walls matter, this is why rich people tend to live in closed communities. Crime hits the poor much more than the rich. I move around with an armoured car and two bodyguards: not being a narco, I am afraid only of police, not assault by usual criminals. But if a family with a 400-500$ monthly salary (emerging middle class) starts to have problem with a marero or a police (the daughter turns 15 and gets unwanted attention from some of those guys, let’s say), they have nowhere to go. They have to change city, or even country. A place with walls, where the residents are screened by a private landlord, that can kick troublemakers away whenever he thinks their presence is making his Zede less attractive to his customers (the 500$ family, customer for once, not simply citizen-cattle), would be considered a paradise. Also, poor people tend to be fair, because they live criminality on their skin every day, it is not a funny and fashionable issue in college for them. If a 16 years old jumps a 3 meters walls and it is found in someone else’s garage where he is killed by a guard, they would congratulate the guard, because most likely the kid was a troublemaker also outside.

Your Ferguson scenario might happen for political reasons, though. Some (likely) left populist politicians like Zelaya want to attack the government to obtain something in exchange, and the Zedes make for the perfect target. They rally against “the sell-out of the holy motherland to neo-liberal, new-colonialist rich foreigners that are exploiting the water and other natural resources given by God to all the Hondureñans”, organize 30.000 thugs of some government employees union (likely the teachers), and make them to descend like Mongols armed of Che Guevara T-shirts, drums, sticks, stones, the occasional ak-47, and food and booze provided by the politicians for the day. Even if legally in theory you can do it (and I often dream to do it myself), politically you can’t call the Pinkerton and shoot the bastards, unfortunately. The parasites of NGOs and international press would crucify you and the government would intervene and find a way to kick you out of the country. But if the fight is between two bunch of poor people (as described by the international media, in reality both groups would be made of privileged people), it is not easy to tell who’s the bad guy in the fantasy news. This is why the first Zedes must be conventional enterprises that can create almost immediately a big number of jobs.

7 The Anti-Gnostic August 13, 2017 at 8:16 am

“The first thing that you are missing (probably because you never lived in poor and dangerous countries) is that walls matter, this is why rich people tend to live in closed communities. Crime hits the poor much more than the rich. I move around with an armoured car and two bodyguards: not being a narco, I am afraid only of police, not assault by usual criminals.”

Wait, what?! I am repeatedly assured by many wealthy, intelligent people that walls don’t work!

I can see where this whole “wall” thing might catch on. Like-minded people, many of whom aren’t individually wealthy enough to afford a gated community, two bodyguards, and an armored car, could pool their resources and pay some agency to build a wall, say, a “Border” and hire some guys, say, a “Border Patrol” to keep out all the people who can out-thug, out-breed and out-vote them and take their stuff.

It’s like, you either have a single public wall for your community of culturally-similar people who trust each other, or you have hundreds of private walls reserved for those wealthy enough to afford them. Intriguing.

8 prior_test3 August 13, 2017 at 8:31 am

‘I am repeatedly assured by many wealthy, intelligent people that walls don’t work!’

They don’t – you need armed guards (dogs, automatically triggered weapons, and landmines optional) to keep a wall from being less than useful. Just ask the DDR – their border wall was quite effective, at a cost of easily under 200 lives.

Of course, that may not be the best example – the Berlin Wall no longer exists, after all. Apparently with the full blessing of many wealthy, intelligent people.

9 The Anti-Gnostic August 13, 2017 at 8:49 am

@prior – How is Israel’s border wall working out? Are all the Israelis crying out over the oppression and risking life and limb to scale the wall and escape the oppressive rule of their countrymen? Apparently, the totalitarian government of Israel is helping Saudi Arabia build a wall to keep in all the Saudis. The US is helping Jordan build a wall.

Kurdistan doesn’t have a wall, but I’ve heard they take their imaginary line in the dirt pretty seriously.

You should recite your Berlin Wall example to all your Israeli, Saudi and Jordanian friends. Let us know what they say.

10 prior_test3 August 13, 2017 at 1:53 pm

‘How is Israel’s border wall working out?’

I don’t know – why don’t you ask the IDF, which provides the guards? Or do you think that the intrusion detection systems are there for no purpose?

‘Are all the Israelis crying out over the oppression and risking life and limb to scale the wall and escape the oppressive rule of their countrymen?’

The wall is designed to keep the Palestinians in – or if you prefer, out of Israel. Which was the point of the Berlin Wall, to keep East Germans in – or if you prefer, out of West Germany.

‘Apparently, the totalitarian government of Israel is helping Saudi Arabia build a wall to keep in all the Saudis.’

???? So I checked – yep, guards. ‘ The border zone now includes five layers of fencing with watch towers, night-vision cameras and radar cameras.

Riyadh also sent an extra 30,000 troops to the area.’ http://www.telegraph.co.uk/news/worldnews/middleeast/saudiarabia/11344116/Revealed-Saudi-Arabias-Great-Wall-to-keep-out-Isil.html

‘Kurdistan doesn’t have a wall, but I’ve heard they take their imaginary line in the dirt pretty seriously.’

Well, apart from the fact that Kurdistan does not actually exist, the armed soldiers are the one ensuring that the imaginary line in the dirt is taken seriously.

‘You should recite your Berlin Wall example to all your Israeli, Saudi and Jordanian friends’

I don’t currently known anyone from Jordan or KSA. As for the Israeli Arab, well, he does not seem to have a problem with the comparison, actually. But then, he has lived in Germany for several decades.

11 mulp August 13, 2017 at 1:59 pm

“this is why rich people tend to live in closed communities. Crime hits the poor much more than the rich.”

The walls are to keep the rich penned in and unable to rob the poor?

12 JWatts August 14, 2017 at 11:02 am

“And who enjoys the theoretical monopoly of violence within the Zede?”

It seems to me that if the Zede’s ever become successful, that the existing Honduran government will change the rules and raise the taxes. It’s doubtful that a country suffering from a weak rule of law, will be fixed by a new law.

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13 Massimo August 13, 2017 at 3:41 am

The big difference that the article does not make clear, is between the Zedes promoted by the government (or, unlikely, by municipalities) and those promoted by privates on private land. In the first case there are people already living in the land that can suddenly find themselves in another jurisdiction and might conceivably being exploited. But if the Zede is built on private land by privates, it only adds another option to the beleaguered citizens of Honduras. Nobody lives there anyway now, they will go only voluntarily, if they think they will be better off than in Honduras proper. Which is, by the way, a very low bar.

Also, the article might mislead people into thinking that Barbara Kolm is some type of white supremacist. She is absolutely not. She is the head of the Hayek Institute in Wien and a traditional classical-liberal, meaning that, contrary to TE, she is not Keynesian, interventionist and prohibitionist. I would guess that she could define herself as a bleeding-heart libertarian, in today political lingo.

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14 prior_test3 August 13, 2017 at 4:20 am

‘I would guess that she could define herself as a bleeding-heart libertarian, in today political lingo.’

I’m sorry, but a member of the FPÖ does not generally fit your description. https://www.fpoe.at/artikel/barbara-kolm-ist-die-idealbesetzung-fuer-das-amt-des-rechnungshofpraesidenten/

I recognize that this web site is oriented to Americans, and that the distinctions of European politics is not something generally understood here. So no, I have absolutely no idea if Kolm is a white supremacist – however, she belongs to a party that is extremely comfortable being considered a welcoming political environment for people who are. https://en.wikipedia.org/wiki/Freedom_Party_of_Austria#Heimat provides a bit of specific background (the article provides good information in general), though again, Americans are unlikely to pick up on how these terms are used in German speaking politics, and who identifies with them. Even the ‘an-Germanism’ aspect is difficult to get across, though one can note that one of the most famous pan-Germanists in the 20th century is still extremely well known.

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15 Massimo August 13, 2017 at 5:18 am

I can’t read German, Prior, so I do not know what the fpoe piece says on Barbara. I am also too ignorant of politics in Austria to judge the FPO, apart from noting that it is becoming a mainstream party, in terms of voters.

I have the privilege to know Barbara, and in our discussions I never heard anything that could be interpreted as racist or statist. She has always been against the EU, but not as a reactionary answer to the increased competition of globalization, on the contrary, she sees (as I do) the EU as a supranational government that stifles competition in the most important of goods, governance.

Also, here is the link to the blog page of the Austrian economics center, one of the two think tanks that Barbara chairs: http://www.austriancenter.com. I frankly doubt that people like Alberto Mingardi or Robert Higgs would associate themselves with somebody with fascist ideology.

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16 prior_test3 August 13, 2017 at 8:25 am

‘I have the privilege to know Barbara, and in our discussions I never heard anything that could be interpreted as racist or statist.’

Fair enough. The German text relates to the FPÖ wanting her to have a position in the government if they were to win, merely to demonstrate that she is definitely a part of that party.

Parties include multitudes, of course, and not a single person. Nonetheless, the current leader of the FPÖ, Heinz-Christian Strache, has at least in the past had no problem at all being involved with those who can be considered to be those having a fascist ideology.

Just pointing out that the FPÖ is less liberal (in European terms) than it used to be – ‘In 1993, after a controversial proposal on immigration issues, the adherents of a position closer to classical liberalism broke away from the FPÖ and formed the Liberal Forum (LiF), which took over the FPÖ’s membership in the LI (since the FPÖ considered itself forced to leave) and would later eventually merge into NEOS.’ from the wikipedia link above.

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17 Albert August 13, 2017 at 10:31 am

The big difference that the article does not make clear, is between the Zedes promoted by the government (or, unlikely, by municipalities) and those promoted by privates on private land. In the first case there are people already living in the land that can suddenly find themselves in another jurisdiction and might conceivably being exploited. But if the Zede is built on private land by privates, it only adds another option to the beleaguered citizens of Honduras. Nobody lives there anyway now, they will go only voluntarily, if they think they will be better off than in Honduras proper. Which is, by the way, a very low bar.

According to the article, these Zedes are the first type (it says there are already people living there and they will have no choice in the matter).

But the plan to correct the country’s faults one ZEDE at a time is causing alarm. The zones can be created in thinly populated areas without the consent of the locals. Hondurans inside them will lose some rights. Under the law creating ZEDEs, just six of the constitution’s 379 articles must apply within them, points out Fernando García, a lawyer in Tegucigalpa, the capital.

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18 prior_test3 August 13, 2017 at 4:07 am

‘But it could eventually expand to an area covering 8% of Honduras’s territory and including 380,000 people.’

So, the Canadians have now decided that the term gringo should apply to them too?

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19 The Anti-Gnostic August 13, 2017 at 8:00 am

This sounds promising. Instead of refugees streaming into the US and Canada from all those parts of the world which are, as usual, failing, wealthy and influential Anglo-Europeans can leave the US and Canada and give the natives the benefit of their enlightened rule there.

Has this ever been tried before? Any historical precedent? How did things turn out?

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20 allyn71 August 14, 2017 at 3:01 pm

It worked out well for European nations in the past. They made money, spread the faith, and built infrastructure. No reason why it can’t work well in the future. White people will figure things out like we always do. What are you worried about?

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21 The Anti-Gnostic August 14, 2017 at 9:42 pm

That they’ll go the way of all empires: broke, socialist, and populated by their enemies?

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22 allyn71 August 16, 2017 at 3:19 pm

“That they’ll go the way of all empires: broke, socialist, and populated by their enemies?”

We live in different times. The old empire paradigm ship has long sailed. The Chinese are recolonizing Africa to get free stuff. America and the rest of the free world will get on board. It is in the DNA of white people in particular to build things.

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23 Anon. August 13, 2017 at 9:33 am

Yarvin’s essay on charter cities, “From Cromer to Romer and back again: colonialism for the 21st century”, is always worth revisiting.

>Colonialism cannot be restored by any mere subterfuge of rebranding. Its death was part of the slow decline of Western government, in which all institutions become larger and weaker. The postcolonial Third World state is a colony – in the sense of its political, military and/or economic dependency. It is just a very bad colony. It is bound no less closely to the West. All that has changed is that it is run as inefficiently as possible, which may cause some heartburn for its burgeoning army of Western managers – but certainly does not produce any hardship for them. The worse the business, the more managers it needs.

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24 Massimo August 13, 2017 at 11:43 am

I do not understand why applying to the possible creation of the Zedes categories that do not add anything to the discussion or even the comprehension of what we are talking about. And again, I am talking about the private Zedes, not areas imposed with force, being by the central government or a municipality.

The Zede project, if implemented how it is supposed to be, includes two revolutionary concepts.

The first is competition among different systems of governance. By law, no Zedes can exclude any Hondureñan, provided the Hondureñan abides to the rules of the Zede. This is something that has not been around since maybe 120 years. Until the end of XIX century emigration and, especially immigration, was mostly free. Today it is not, only rich people can go to live where they want, the others are tied to where they were born, like medieval serfs. Think about that, we can choose among 200 type of soaps, 1000 types of cars, etc., but most of us do not have even a single alternative about the system of governance he wants to live under, which not only consume on average 40% of the GDP, but it also includes very sensitive products like security and law.

The second is the introduction in governance of entrepreneurial logics. Systems of governance managed as a business, a business specialized in producing environment. Forget all the problems of Public Choice. There is no democracy here (unless the owner decides so). There is the use of common sense instead of fixed rules, because if the Zede does not result attractive for the prospective clients, it goes bankrupt.

What has colonialism to see with all this? There is no coercion in the process of acquisition of the land (again, I am talking about the private Zedes, I do not care nor intend to defend those pushed by the dead hand of the State). There is no coercion in going to live there. If you like the rules good, if not you do not you don’t go to live there. It is just the way you rent your condo today, with the difference that your menu does not include only architectural options, but also different alternatives in security, taxation, public services, currency and to some extent even law. People is finally treated as customers, the real bosses of any business, not as a captive resource to bamboozle and take advantage of.

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25 Albert August 13, 2017 at 12:41 pm

the Hondurans who live there don’t have a choice. They are making Zedes where people already live (without consulting them), not in uninhabited land. That’s in the article you’re commenting on.

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26 Slugger August 13, 2017 at 11:29 am

Please indulge an old man’s memory. I recall a proposal to create a private libertarian community in Idaho that was discussed on this site. Whatever happened to it? It had a million dollar buy-in, and at that time I thought that with a million I’d buy a place in Sun Valley-Ketchum rather than take a chance on development of raw land.

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27 RW Force August 13, 2017 at 3:28 pm

This one? http://iiicitadel.com/index.html The Website is still up, but nothing on the ground, AFAIK. The whole thing was so far-fetched it had to be a scam. You could have bought into Bo Gritz’s “Almost Heaven” back in the 90’s. That’s gone, too.

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28 jorod August 14, 2017 at 9:30 pm

Nothing creates pollution like wood. Government hypocrisy. Bring back the Soviet Union.

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29 Jer August 14, 2017 at 9:54 pm

Not convinced that this would work:
The issues that no one appears to want to discuss are the quality of the people and opportunities involved.
1.The Workers:
A system like this needs people with a work ethic, a self-interested desire to succeed, dis-interest in ‘group work dynamics’, and those who crave to learn and develop. This is not typically part of the equator-belt value system. This is not about those who will work 60 hours a week in a monotonous and menial job, unmotivated and without ambition. This is not about those who seek relief from work in family, community, and religion, but see work as part of a complete and fulfilling life.
2.The Opportunities:
There has to be choice and opportunity for work and development within the same industry so that workers, customers, and suppliers are not constrained into a monopoly. A ‘company town’ is the worst example of this. Fine when there is much work, money, and opportunity, but little better than a prison when there is scarcity.
3.Corruption:
This is not as significant as people think when you have the first two ingredients. Scarcity and rebelliousness exacerbate this. Most first-world municipalities, companies, and institutions have some kind of cronyism, so this type of behaviour cannot be expected to be completely eradicated in a less developed system. Minimizing hassle and interference with workers will keep the work flowing – few people care about how the wheels are greased if daily routines seem fair.

In my mind, the key to making this function is to be flexible with work commitments from the locals. Ideally, they do not live within the walls, but commute for part- and full-time work, being allowed to return to their non-work culture daily, ultimately deciding how much of these ZEDEs are to be integrated into their lives. As comfort with the system grows, people will work longer hours, accept greater exposure of this culture to their family and community. Allow people to choose their hours, spend outside of the ZEDE, and move between various businesses within the same industry. Individuality and self-interested ambition are an under-developed commodity in areas like this. Flexibility and success transparency, at least at the lowest 50% of work, will spawn trust, cooperation, and loyalty. The first steps to a successful work environment.

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