A look at Próspera, the charter city taking shape in Honduras
Fyre Fest, or just The Free Town Project 2.0?
>So for example, when you buy land in Próspera, you’ll have to sign a Covenant Restricting Vice Industry Uses - ie you can’t turn your house into a joint brothel+casino and do unethical medical experiments in the basement. Even the strictest libertarian has to admit this is fair; if you sign a contract, you’ve got to follow it.
What about slavery contracts?
> You could tell similar stories about the success of Hong Kong and Singapore, two other polities with little to recommend themselves other than a different and more competent regime than the surrounding regions.
I had to stop to comment here - I think both have something very important to recommend them. They're both Alpha+ gateway cities which control massive trade flows. Singapore is at the tip of the Malacca straits, which means absolutely massive shipping volumes flow past it, from which it can derive huge amounts of wealth. Hong Kong is at the mouth of the Pearl River delta and sees a similar dynamic. They were both already extremely important cities long before they had interestingly different governance regimes. I think the arrow of causality is pointing the wrong way here - it's not that interesting governance allowed these uniquely important cities to spring up ex nihilo, it's that when your city has such a massive natural advantage, it ends up with interesting political structures.
Yes, I was about to say - how is this not simply a tax haven? Of course 10% won't be enough to fund any sort of health or education system, say, and of course people in high income brackets in Central America wouldn't be caught dead using state-provided services in either categories. But what happens to lower-income people living in Próspera? And how is this system supposed to scale up at all? If the best argument is that, as you say, the wealthy in Honduras are extremely successful at tax evasion anyhow...
Prediction: this will be a great success on its own terms, and a bad thing for Honduras. It is pretty much the reference implementation of a tax haven, will all the obvious negative externalities it employs, and it will also drag down Honduran wages and labour standards through competition.
12.0.1 - Did they consider naming it something that doesn't sound like a brand name prescription drug? "Ask your economist if Próspera is right for you."
Outside of medical tourism or possibly finance, I don't see how they're going to generate income or jobs.
“ In the original plan, charter cities would be governed by some respected and competent foreign power like Switzerland.”
Or maybe you could get the UK to do it? Huh...that sounds vaguely familiar.
Micro-focused comment on the home prices:
These home prices are astonishingly expensive by US standards (which in general has a fairly low cost of construction). $3750/m2 is about $350 per square foot. For reference, outside of very expensive metro areas, typical single family home construction in the US comes in around $110-$150 per square foot, and apartment construction is even cheaper, perhaps $90-$100. A mobile home comes in even cheaper, at maybe $40-$60 a square foot.
Even their "affordable" beta residency comes in shockingly expensive - they look like they can't be more than 200 square feet or so, which isn't a great deal for $40,000.
This isn't exactly a ringing endorsement for the removal of overly strict building codes as a mechanism ushering in low-cost construction.
(the obvious caveat here is that the US makes it hard to build really small homes, which is true to some extent).
Regardless of whether the city's COVID restrictions were dumb or pretextual, the CEO flouting them does not bode well for Próspera's outlook as Honduran Sovereignty Respecters. You yourself seem to be seeding this in the article rather ham-fistedly at the end of 10.2 with some "if they do, it's not that bad!" hand-waving. You are ultimately trusting their judgment to only flout the bad laws and not the good ones. This trust does not seem to have been earned.
Also, there is a big contradiction between 10.1 and 10.4. It sounds to me like if workers are being abused, they CAN'T just walk 500 feet and be back in regular Honduras, since as you point out regular Honduras isn't made up of five-star resorts or golf courses. Suppose an employer pays a domestic worker to move to their house under false pretenses and then refuses to return their passport (a situation which I imagine was pretty rare in Irvine but happens every single day in Dubai). How long to get to regular-regular Honduras?
I had intended to cover the white paper myself, but here I am scooped.
Full disclosure, I know a bunch of people invested in the project for a while now, and am personally quite excited by it. This is all close to the mark from what I recall from older papers and presentations, though i'm not fully caught up at the moment.
The pitch back then focused explicitly on attracting industry by providing a lot of freedom and looser restrictions on pharmaceutical and biotech research. Some of the people involved are closer to Friedman anarchists, for whom Prospera is a stepping stone to more ambitious projects like private law. They would certainly be okay with your house being in Prospera and your neighbor being in regular old Honduras.
I can't say for sure, not having spoken to most of the investors, but I do sense a strong idealistic streak out of the project, and the earnest belief that it will improve lives. I'm admittedly hopeful.
Yeah, the missing ingredients are rich natural resources/trade routes/a huge tax base (Hong Kong, Singapore, Dubai) and a huge injection of tax money from the government (Shenzen, pretty much all the Chinese special zones, NEOM, the USSR if you want to get historical). Próspera has neither of these things and so I predict it will be another one of the many failures or mediocrities. The truth is such projects are huge drains on national resources and most electorates simply don't have the stomach for it, which is why this strategy is almost exclusively in less than democratic regimes. The Chinese could spend 70% of their entire budget developing three provinces because the other provinces didn't get a vote. And they certainly didn't have anything as pedestrian as "human rights concerns."
Democracies can grow rich, stable, and prosperous. In fact, they do so more commonly than dictatorships. But they can't use the same tools as dictatorships, which closes off those paths to them. Which, to be clear, is a good thing. Most of those examples include massive humans rights abuses! But you can't imitate dictatorial models without having dictatorial powers or an electorate willing to vote for policies that have historically proven hugely unpopular.
Is this at sea level? If so, won't it be underwater in a decade or two? Or is this another case of say one thing in public and do another in private?
"So for example, when you buy land in Próspera, you’ll have to sign a Covenant Restricting Vice Industry Uses - ie you can’t turn your house into a joint brothel+casino and do unethical medical experiments in the basement. Even the strictest libertarian has to admit this is fair; if you sign a contract, you’ve got to follow it. But you can tell HPI plans to have the town be ship-shape, well-organized, and family-friendly, instead of the sort of Wild West vibe some people associate libertarianism with."
My emi-serious suggestion. Democratic governments should just claim all land in their jurisdiction as their property, and make it clear that it not owned, just leased out on conditions. The governments themselves should claim to be cooperatives jointly owned by their citizens. Then functionally equivalent rules to the property and tax laws that currently exist would count as a libertarian utopia.
You can object that if they were to do this now, they would be stealing the land from its current owners, and sure this would offend the libertarian ethic- but all the land in the world has been stolen at some point, and after a while, Libertarians seem content to let the claims of those the land was stolen from be extinguished.
So presumably, if the US were to declare itself a kind of corporation owned by its citizens and expropriate all the land, in a hundred years it would count as a libertarian utopia.
Perhaps this tells us that the libertarian concept of freedom is excessively formal/procedural and not substantiative enough.
This seems like an interesting idea, but it feels like it won't scale up very well to its stated goals. They're specifically looking for professionals and remote workers to move in, and seem to have relatively high land costs (for Honduras). This may very well turn out great, but it'll just be a city of tech workers. I don't really see a good way for those in poverty to get a foot in the door.
I'm also curious how the education system will work. They have guidelines for how it should be run, but the schools will also be private? Is the government going to create some schools, and are they going to set the price or leave it up to the market? For that matter, almost half the taxes go to handling sanitation and power and similar, does that mean those will be subsidized in some way?
So Prospera says it will offer Honduras's poor a better life in neighborhoods untouched by violence and poverty... and I get the impression that anyone who breaks Prospera's social contract gets kicked out? Is that correct?
Somehow this reminds me of the charter schools that expel disruptive students and brag about their high test scores.
In other words, it sounds like Prospera will filter out anyone who doesn't function well in Prospera, which unfortunately might be a lot of poor Honduran applicants whose violence-afflicted lives have left them with all the flaws you would expect to see in people who bear the burdens of trauma and low education. This kind of dilutes my enthusiasm with Prospera's "win-win" claims that it's offering poor Hondurans a better life. Instead, I imagine cities like Prospera skimming the high-performing people (probably coming from good neighborhoods) and concentrating the ill and the troubled outside its walls.
I mean, considering the existence of cities that kind of parallel Prospera in some ways, is there another way to see this side of the issue? A counterargument, if you please?
A system that actually benefits the average Honduran (not just the high-performing Honduran from a good family in a good neighborhood) might, I imagine, offer services that would allow immigrants to learn new skills and repair the damage done to their mental health by growing up in one of the world's murder capitals. But who would put up the money for that?
Shadowrun universe! Shadowrun universe!
I really like Shenzhen and its green fields in 1980 better than the city in 2018. I don't understand what's good in big cities with noise, pollution and crowds? I hope that Prospera will never be like that.
>Próspera is well versed on the myriad environmental, climate, and humanitarian concerns with automobile traffic. As such, Próspera hopes to enable the creation of the world's first truly affordable and safe air taxi system between its various Prosperity Hubs through the use of VTOL drones.
And they expect VTOL drones will be better for the environment? Powered flight uses much more energy than ground vehicles.
For me, this is a big signal that they haven't thought things through.
Thanks for posting this! I need to read this in-depth some other day (it's past midnight in my timezone), but from a skim I have to say that regardless of the specific government shape in Próspera, I hope this'll work out better for Honduras Próspera Inc than the French Polynesia prototype seastead deal worked out for The Seasteading Institute.
My understanding is that some Honduran economists came up with the idea independently of Romer, then after they heard of Romer's charter cities they recruited him to provide prestige-by-affiliation. When that failed it struck me that there's an obvious conundrum for this approach: it's supposed to be most useful in countries with terrible governance, but you can't expect a terrible government to tolerate your charter city rather than screw it up like they do everything else.
So are charter cities = trying to install Liechtenstein in part of your country?
Is there any way to invest in prospera?
The sections on education and health care are both numbered 7.2
I was going to quibble over some details, but first: This is an excellent case for the moral urgency of new jurisdictions. The fact that Scott captured this aspect so powerfully is the most important aspect of this post.
1. Everyone gives Romer credit for coming up with the idea. But I knew dozens of people who were talking about new jurisdictions with higher quality law and governance long before Romer. Octavio Sanchez, the primary architect of this legislation within Honduras, gets some credit in this for having his own vision separate from Romer in this NPR piece,
In addition to Sanchez and several of his colleagues, who had worked on Hernando de Soto land titling issues in an earlier administration, Mark Klugmann, an American advisor to the Honduran government, was also involved in the early design of the project,
The story I got from Sanchez, Klugmann, and others when I was involved (I led Grupo MGK, the entity that signed the first agreement that led to Romer pulling out), was that they had pretty much had the idea developed when Romer did his TED talk and they then realized he would be a powerful external advocate to push the project across the finish line. Everyone else involved had always envisioned a partnership between Honduras and a private entity - Romer's one innovation was to promote an external government as guarantor, which everyone regarded as way too neocolonial.
Milton Friedman was discussing the idea of a "Hong Kong" in Mexico back in the 1990s with Ricardo Valenzuela, a Mexican banker, who was scouting sites along the US-Mexico border back then. Mark Frazier, a free zone industry consultant, sold me on this concept around 2003. Bob Haywood, former ED of the World Economic Processing Zones Association, was promoting a similar concept much earlier. Giancarlo Ibuerguen, deceased former president of UFM, had this idea much earlier as well. I'm missing dozens of people with whom I discussed these ideas prior to Romer. Once one realizes that poverty is caused by dysfunctional governments, it is not a big imaginative leap to realize that a jurisdiction with higher quality law and governance is the next move. Zone 2.0 had been in the air for a long time - without the neocolonial aspect of Romer's version.
2. Scott's other ahistorical comment is here, "But if someone did own an entire city, and you chose to be in that city, theoretically they should be able to make whatever laws they wanted, and not even the most zealous libertarian could protest. The issue hadn’t really come up before. But here we are."
There is a large libertarian literature on proprietary communities that has been discussing these issues for many decades. Spencer MacCallum and his grandfather Spencer Heath were early figures, but for those following this literature this is an old issue. Anyone familiar with HOAs gets the basic idea.
3. The most accurate description of both the origins of the Honduran legislation as well as the dispute between Romer and the Honduran government is this article,
We had the Honduran government sign a formal statement saying that the Transparency Commission did not exist before signing an MOU with them. Romer's vision was for a $5 billion city with a foreign nation as a guarantor. I spoke with a leading industrial park owner in Honduras who had met with Romer. When Romer told him that was trying to raise $5 billion, the businessman asked, "Do you have your first billion raised?" Romer said, "No." The businessman replied, "It is not going to happen."
While I give Romer credit for promoting arguably the most morally important idea of our time, his version of the project was never going to happen. Small, quick start, privately run projects are far more realistic than are grand, state-managed megaprojects. The Hondurans were smart to go with a framework that allows countless such small scale experiments.
Re 3D property rights - yeah New York has a hackish system of "air rights" that formed organically when somebody wrote a deed for the part of Blackacre above the rooftop of the building currently standing there, and the deed registry said "sure, why not?" I know of only one example of this actually being used to put a building on top of another, that being Madison Square Garden (owned by the Dolan family) above the underground Penn Station (owned by Amtrak). More often this is used to transfer zoning rights from a lot with a short building to one where a taller one is going to be built, either by actually deeding the airspace over or by declaring two lots to be a single one for zoning purposes without an explicit transfer. A full explanation would require diving into NYC's convoluted zoning rules, beyond the scope of this post, but suffice it to say it increases the already big economic incentive to leave the current rules in place as opposed to my preference for ripping them up and letting a thousand Equitable Buildings bloom.
There are also two common ways that ownership of parts of an individual building can be transferred, without all this voxel nonsense. One, mostly unique to New York, is cooperative ownership, in which the leases on units of the building are tied to shares in the corporation that owns and manages the whole thing. The other, which exists nationwide, is the condominium, where each unit is a separate transferable parcel and the "common elements" are managed by an association of the owners. Condos are much more common in new construction, while co-ops are generally buildings that predate the condominium act of [looks it up] 1964 or to former rental buildings that converted to common ownership. I'm in the process of buying a co-op unit, which unlike a condo requires board approval for the sale, and let's just say I can see why condos are the norm everywhere else.
Given that condominiums have existed for over half a century, I'm sure there's plenty of precedent on what to do when 99 out of 100 units want to tear it down and build something new and the 100th stubbornly refuses. (Checking the New York condo law - dissolving a condominium requires 80% approval, though the condo's own rules may require a higher proportion, perhaps even unanimity.)
I might have read your post too quickly, but I must have missed the part that keeps Próspera from having the same murder rate as the rest of Honduras, especially given that they are obliged to use Honduras's criminal justice system.
Given that it's located within a country with such a high crime rate, what stops the crime spilling over into Prospera? I guess the individual corporate and residential buildings will have private security, but people considering moving to Prospera will want to walk safely through the streets at night without being attacked by criminal gangs from the next town.
A city, measuring roughly a square mile in area that's highly autonomous and is exempt from many laws that apply to the sourrounding country. Where have I heard that before? (https://www.youtube.com/watch?v=LrObZ_HZZUc)
I wonder whether, like The City, Prospera will grow until it becomes the CBD of a much larger urban area, with more people commuting in from normal Honduras than there are residents. (note that 80% of votes for the Common Council of the City of London Corporation are cast by commuting employees rather than residents)
In that case, I hope they've worked out how to provide interfaces between prospero and the rest of honduras for services like public transport.
"Próspera wants to give these people a better option by bringing American-style institutions to Honduras."
But these are not American-style institutions, at least not when it comes to political institutions. Próspera, as you note, is not a democracy, what with the (unelected) 4 HPI council members; my understanding of American (and Western) institutions is that one of their most fundamental advantages is democracy itself. And the institutions are also different on what might be considered the "positive" side, like the weeklong referendum possibility and the like.
I think there are a host of other issues related to charter cities, but this seems the most fundamental: it is not trying to give the native population the same rights (in particular, political representation) that those in Western democracies have, but seem to suggest that those rights can be looked after by benevolent Westerners. Which seems to be anathema to the very institutions on which Western countries pride themselves.
What am I missing?
"If you got all the laws and values just right, maybe you could prevent poverty and corruption from finding their first footholds. Do the "liberty and justice for all" thing, but for real."
Well, yeah, that's lovely. Except - until we get actual robots who can do all this stuff, and we're probably getting there - there will be the need for people to sweep floors and empty bins and do that kind of manual labor/lower level white, pink and blue collar jobs.
And they're going to be housed in places that are not near where the rich people live, and they are not going to be the same as rich people houses, and they won't have access to the same levels of entertainment and service as the rich people, because of course not. This is not to say they won't have (reasonably) nice houses and the possibility of a health service and all the rest of it, but you are going to have inequality built in to your nice, shiny new city.
And out of inequality does come poverty and corruption, because after a while... well, the rich and smart people are the productive ones, right? The ones who make things happen? While the poorer people - you can get them three for a pound. They can come from anywhere. Giving them relatively nice things costs money, and that may be money they don't make up. So you have to take it from your rich, smart people and why do they have to pay more than their fair share to support the non-productive who don't make things happen and who don't create value and who will probably be replaced by the robot flying cars anyway within a couple of years?
So the poorer places get that bit less nice. You build the housing that bit cheaper, pack them in a bit more densely. The rich, smart people get first pick of the nicest things going - because they're worth it! and they genuinely are!
And then we get the "well, do the street sweepers really *have* to live in Prospera itself? Can't they just, like, come in on buses from outside to their jobs, then go back home on those buses in the evenings?" and here we go round the mulberry bush again.
"But they’re also interested in poorer Hondurans looking for construction and service jobs, and expats after a slice of paradise on a tropical beach."
Uh-feckin'- huh, I bet they are. Because expat and immigrant labour works so beautifully and non-abusively in the Emirates https://en.wikipedia.org/wiki/Treatment_of_South_Asian_labourers_in_the_Gulf_Cooperation_Council_region or the German gastarbeiters https://en.wikipedia.org/wiki/Gastarbeiter or that thing with the Windrush generation in Britain a couple of years back when Caribbean immigrants who had been enticed to work in the UK due to a labour shortage and had been in the country for decades were suddenly told "you may be deported as an illegal immigrant" https://www.bbc.com/news/uk-43782241
"They included Ronald Reagan’s adopted son, the foreign minister of Oman, US low tax campaigner Grover Norquist, and - in case there was a single conspiracy theorist anywhere in the world not already on high alert - a member of the Habsburg family. I would say this raises a lot of questions, but really the only question anyone had at the time was “what?”
Out of that entire project, my feeling that the *least* problematic element was the Hapsburg 😀 If you're going to build a fantasy kingdom, why not have a genuine Imperial head of state?
The *idea* is lovely and I really would like to think it could work, but my fear is that it would either be a boondoggle, or end up some kind of combination tax haven/investment dumping ground where rich foreign nationals sink money into buying up expensive apartments etc. as a means of getting their fortunes out of the claws of their own government.
> This is no different than what everyone on the outskirts of every city in the world has had to experience as those cities grow, but it’s another possible bad thing. At least if you’re a renter there. If you own property there, I guess you’re now super-rich.
Theoretically super-rich, maybe, because of increasing land values, but in practice suddenly everything got super-expensive around you, your lifestyle is threatened, and you're basically forced to give up on your home and village and community. And even these theoretical riches are not guaranteed, as people in such places are often taken advantage of and driven away from their lands for a pittance by real estate companies, because they're not used to large land transactions like this especially under such dramatic changes and the Fear, Uncertainty, and Doubt that these companies create in them for this reason.
Not saying anything about the project overall, but I've seen this particular story of expanding cities or otherwise increased land values play out too many times to believe that it's going to be a net positive for the current owners of the land or make them "super-rich".
"The idea behind charter cities is: Shenzhen, Dubai, Hong Kong, Singapore, and the rest of the rich world aren’t rich because their citizens are morally superior to those of their poorer neighbors. They’re rich because they have better legal systems, less corruption, stronger rule of law, and more competent administrators."
I think this misses the fundamental reason why these places succeed. It's culture. All of the laws, respect for laws and competence flow from the norms and behaviors embedded in the culture. This means a culture that emphasizes strong nuclear families, delayed gratification, an aversion to violence, an affinity for high social trust, education etc.
It is why immigrants from these types of cultures can move anywhere in the world and thrive, whereas people from cultures that lack these attributes often arrive in competent systems and don't thrive.
Unfortunately, culture is a lot harder to fix than a corrupt parliament or incompetent politician.
I’m shocked at the negativity in these comments. Prospera sounds awesome!
The whole prospectus here about what marvellous things will be built reminds me of the Sunday Friend who works for the Moralintern in the game "Disco Elysium". All the wonderful jargon about the wonderful progress that is going to happen someday, just you wait, if everyone is good and obedient and follows the plan, meanwhile Revachol (the Martinaise district) is deliberately left as a slum hellhole to remind everyone of what the Coalition did in the past and can still do if anyone gets any pesky ideas about not being 100% down with the technocratic business industrial city re-invention.
And I'm a Moralist/Centrist in the game myself! But I really disliked this guy:
I maintain that VTOLs are a stupid idea that will never work (for noise pollution reasons if nothing else), but aside from that this sounds potentially exciting. Unlikely to actually work, but also the sort of long shot like SpaceX that could be pretty big if it did.
Has anyone else done things like this? Yes. Seasteading and the Chilean Galt's Gulch were failures.If this is the libertarian experiment that works, it will be because the libertarians aren't having everything their own way.
Is there a good way to invest in this, or make a financial bet on its success or failure?
Look at where financiers live. Do any of those places look like Prospera?
Perhaps I'm missing something, but it's unclear to me what prevents an unworkable number of Próspera's underprivileged neighbours from flooding into the city and bringing their problems with them. In the same way that Próspera's residents can easily leave if they would prefer to live elsewhere ('Honduras is 500ft away'), why wouldn't almost every local Honduran seek the vastly higher quality of life offered next door? I understand that - to some extent - this is the very purpose of the ZEDE's existence, but there inevitably comes a point where the city can no longer support more residents on its limited acreage. In this situation, I don't see any reason to think Próspera would escape the same kind of immigration issues which most rich territories bordering poor territories tend to face, while also lacking - as far as I can tell - the kind of security measures usually in place to counter such demand. This being the case, it seems probable to me that Próspera will either not become a large-scale success, or its success will precipitate a decrease in the standard of living which it can provide.
Both Irvine and a lot of the other places mentioned have actual or planned architecture that seems soulless or silly, with some of it in Roatan making me think that the architect grew up watching "The Jetsons" and always dreamed of building something just like it. Irvine looks dreadful. Maybe if you grew up in a place where the landscape was dominated by steel and glass rectangular shapes, this looks cool. If you actually want a human life, it's horrifying. Take a look at traditional architecture that has lasted and that people like, after centuries, and you'll see something much more attractive. There's a problem with architects. They mostly grew up in awful places. If you go to Bali, where most people grew up in a lovely place, almost any house or small hotel is more attractive than almost anything in the horrorshow modern cities that blight the world. We should learn from them and from the beautiful towns of Greece, Italy, and Spain. This stuff is all going to look weirdly like the Seattle World's Fair of 1960, if it is ever built. "What hicks thought the future would be like."
"I don’t envy the PAC if they have adjudicate disputes involving, say, a doctor who has chosen to be regulated by the medical code of Norway suing her office building regulated by the laws of Houston, Texas."
Yes indeed, this was the main thing occupying my thoughts as I read through this article. One can't help but imagine that it will be very expensive to resolve legal disputes in Próspera, and I worry then about access to justice for the cleaners and cooks who live there. I don't know that much about modern libertarianism but I can't picture Próspera providing good free legal representation?
I... I want this to be possible. I want this to work. I want the world to be a place where a bunch of visionaries can set up something like this and it becomes the envy of the world.
I will bet at 10 to 1 odds that it won't work. I really wish I was invested enough to come up with reasonable and testable metrics for "won't work", so that I can be systemically virtuous about that claim. Instead I'll just sound out my reasoning. They have a golf course and three buildings. Most golf courses with three buildings do not go on to revolutionize city government. Technically, they have a golf course with three buildings, a website, some very nice pictures, and three thousand pages of totally untested legal codes.
You might object that they have top tier talent, wealthy backers, resources. They have had those for years, and what they have produced with those resources is a golf course, three buildings, a website, and three thousand pages of totally untested legal codes.
I will not be shocked if this succeeds, I will be confused. I will suspect foul play.
This seems like it might actually be somewhere I'd want to live if I worked remotely, and they competently execute their vision. There's some small but important stuff they'd need to get right in order to make it really attractive though:
- Low latency high bandwidth internet. StarLink might help a lot here.
- Reasonably fast shipping of random consumer goods available in first-world countries. Ideally this might look like having a US address where you can ship anything to and then having some kind of air freight deal that forwards all packages that arrive at that address to Prospera within a day or two via the hold of a regular flight. This would also presumably help them a lot with latency on getting things like schools and businesses built and set up.
- Not-unreasonable air travel to US destinations. Hopefully this is mostly sorted by it already being a vacation destination.
- Ensure someone has a business doing short-term furnished AirBnB rentals so you can try out living there for a month without committing to a big move.
If they nail execution on getting the actual buildings built, and get those things right, I can see it being a pretty nice place to live.
The case for being bored here is that the path of least resistance for Prospera is to become a hub for some high tech industries that feature particularly low labor intensity. Think data centres and finance.
Why? Prospera has a population of basically zero right now. All of the examples of special economic zone success had populations to begin with. Labor already lived there, so the lowest friction option was for those people to live under the new system. Living under the more liberal system an ecosystem of businesses emerged at different levels of capital and labor intensity because of the range of people and bank accounts that were there. For Prospera, we should ask who is most likely to want to be there.
The answer seems to be those with the most capital. The costs to move to Prospera and to live there are fairly static, but the benefits should scale well with earning potential due to the low taxes ans strong property right. Since no businesses currently exist there the benefits actually scale with capital to create earning potential.
So in a place with no labor and high earning potential for capital, what should we expect to see? Capital intensive business that requires little labor. That's the boring take. Propera will succeed at becoming a regional business hub, but will fail at all the interesting things it wants to do like becoming a model for how poor people can become rich people.
Links post a few days ago: "Here's an article about problems in the planned city of Songdo."
Today: "One of the people who worked on Songdo is also working on this project, so it seems like they've got the right sort of expertise."
Sure, Songdo is probably doing better than anywhere in Honduras, but it does make me wonder if this guy is going to learn from his mistakes...
So one major concern that I didn't see addressed here is that large parts of Honduras are basically controlled by a couple of criminal networks. The biggest ones are Mara Salvatrucha and the 18th Street Gang (both started in Los Angeles, which is a longer story). These groups are treated as normal street gangs by the American media, but in Honduras and El Salvador they are more akin to what Isis is in Afghanistan. They are more powerful than the government in a lot of the country, and they operate kidnapping and extortion networks. They also commit a lot of murders. That is a big part of the reason that the US sees many more refugees from Honduras and El Salvador than from Guatemala or Nicaragua (which are comparably poor countries, but the criminal networks aren't as widespread there).
So won't the foreigners who move to Prospera be really good targets for kidnapping by these groups? Won't Prospera inevitably become part of the extortion/shakedown economy, unless the Honduran government somehow becomes more effective at cracking down on these groups? Honduras would seem to be one of the worst places in the world to start a planned city for digital nomads with lots of beautiful architecture.
I love this post, and I love the idea of Próspera. I think it could probably make hondurans 5-10x richer and much freer, and probably better off than any other system I know could make them. But not to the level of singapore (probably not even to the level of Mexico). I have to nitpick on some depressing IQ related themes because truth is a very high priority terminal value.
Perhaps it was wise to not comment on IQ stuff the OP -- it could perhaps alienate some leftists that you were trying to convince. But I'd prefer you left it out entirely instead of actively denying that intelligence is one of the causes of utility differences between countries: "America is a better place to live than Honduras. This isn't because Americans are smarter, or harder-working, or morally superior. It's because Honduras has bad institutions."
Honduras has bad institutions indeed, but it also has people with an average IQ of 81, and some of the highest criminality in the world, either ignorantly or willfully voting for corrupt and horrible politicians. The people collectively bear some of the blame for the institutions they created.
Singapore doesn't just have better government than its neighbors. It has an IQ of 108 compared to Malaysia's 93. That's about the same size as the US black-white IQ gap or the Finland-Turkey IQ gap. It is populated mostly by overseas Chinese (descended from a self-selected sample of Chinese who were a bit smarter and more enterprising than the average Chinese because they chose to migrate out of China).
Honduras has an IQ of 81. That's almost as much dumber than Malaysia as Malaysia is dumber than Singapore. With even the best institutions in the world, they're not going to rise that high in international rankings.
If Honduras' GDP per capita ever got to $60k+ like Singapore is now (in current dollars adjusted for inflation, anytime in the next 30 years, without strong AI or genetic engineering or a natural resource windfall or a huge in-migration of higher IQ peoples) that'd falsify my views of race and IQ.
It'd be like finding rabbits in the precambrian. If it happens, I will donate half my net worth to malaria prevention.
I would be even willing to generalize it to cover any Singapore-isomorphic transformation occuring in any country with an IQ below 90. Fifty years to 80x GDP per capita, ending up richer than the US, without strong AI or massive oil or massive eugenic migration or massive genetic engineering. If It happens anywhere, I donate half my net worth to malaria prevention.
Related graph. Y axis is GDP per capita, X axis is a composite of standardized test scores. The only dumb countries that got really *rich* are the ones whose economies are mostly oil. https://imgur.com/a/j6JgLOa
One more thing: if you don't have a problem with a ZEDE having admissions criteria and enforcing them, then you shouldn't have a problem with a regular state having admissions criteria and enforcing them. The US is a good place to live partly because of its ability to deny entry to the 5 billion people who'd rather live here than wherever they're currently living. There isn't anything magical about the dirt over here. The people create the institutions.
If they're selling it as a libertarian do-what-you-want-with-your-land scenario, what mechanism is going to make people hire Zaha Hadid to design their apartment buildings and not Zombie Le Corbusier?
Prediction: Próspera will have fewer than half of its projected 10,000 residents by 2025. 80% confidence.
Reasoning: My impression is that projects like this tend to sputter out, often for seemingly stupid reasons. In particular I'm concerned about changing political conditions in Honduras. It's easy to say "we commit to do X" and "X is in our long-term self-interest" but if a state like Honduras were capable of consistently honoring its commitments or acting in its long-term self-interest, it wouldn't be in this mess to begin with.
There's also the danger of loss of support among the project's funders / leaders, either organically or because Vice-style ideological actors are putting political pressure on them. For similar reasons it's possible that there just won't be a critical mass of people from developed countries (because let's face it, the project's funding is premised on attracting them) who actually want to move there.
>Almost every libertarian agrees that you can make rules (even arbitrary rules) about what people can do on your own property, and anyone who wants to stay on your property has to follow your rules. But what’s the difference between that, versus a government “owning” its territory and making rules for its citizens?
I often joke that the UK is a Libertarian society run by its owner Elizabeth Windsor.
This is sort of like how Eastern European kings used to invite German settlers to settle in their special towns with German-based law. In the grand scheme of things that didn't end well (World War II), but my understanding is that it was a moderately successful public policy for first 100 years or so
This is the first stage of Terra Ignota (https://www.goodreads.com/book/show/26114545-too-like-the-lightning?from_search=true&from_srp=true&qid=87YaOTgndi&rank=1). Basically in the novel series one can choose one's own government regardless of physical location. Over time the number of viable governments coalesces to seven or so (it's been a while since I read these). Interesting concept, and I hope it works out for them.
How much were you paid to write this drivel lol
Of course, you have to pick the country that is current being governed by a coup/stolen election combo in order to implement your libertarian-fascist (but I repeat myself) dystopia. No functioning democracy would tolerate it.
My favorite part is where you repeat talking points that you already yourself debunked in the anti-libertarian FAQ back in the day. So are you actively getting dumber? Or do the social democratic takes just not rake in the cash like the billionaire boot-licking ones?
Amazing article, the immense gap to the typical media coverage shows again how bad journalism has become and how it is saved by independent writers. We at the Free Private Cities Foundation (freeprivatecities.com) in Switzerland support projects like Próspera and the many more currently in development. We would love to republish your article (linking back here, of course) if that is possible! Can also provide much more information on this "industry" or "movement" (depends on how you look at it), if needed.
Regarding your questions about the kuwait-honduras investment treaty: This seems to be a standard Bilateral Investment treaty. They are very common nowadays, most nations have negotiated at least a few, industrial Nation often have a ton of them. Their purpose is to give foreign companies (in this case: those from Kuwait) some protection from the state they are investing in, guaranteeing certain rights and often providing for an arbitration clause in case of disputes, so that the private investor does not have to sue the state before its own courts.
My spanish is horrible, but this particular treaty seems to include such an arbitration clause providing for an ad hoc arbitration Tribunal, meaning if Honduras were to decide to simply expropriate Prospera, the Company could sue them before such a tribunal for damages. Kuwait itself would likely not get involved, and these types of Investor-state proceedings tend to be a mess because they take forever to resolve and enforcement of awards can be tricky. They are not uncommon however, and this does give the project at least some protection. If you want to see some examples of these types of proceedings, check out this database: https://arbitration.org/awards/icsid
Looking through the comments, even the average snarky critical comment here is so much more insightful than any mainstream media article on the subject I have come across so far. If you attribute a high chance of failure to Próspera, bear in mind that it is only one project and the initial notion of a Hong Kong or Singapore in the Carribean was misleading or mistaken because it does not fit this specific project (for a number of reasons, some of them various critical commenters have pointed out). Still, it has done some pioneering work in a very difficult industry which has a lot of potential.
Long-time lurker here but, unexpectedly, I am an expert on one of the key items in that post: the Honduras-Kuwait Treaty for the Reciprocal Protection of Investments. I didn't expect such a treaty to figure here, especially since I think the argument made by Prospera is bogus. Let me explain.
That's a Bilateral Investment Treaty (BIT), of which there are thousands in force around the world. The typical story of BITs is that most of them were signed in the 80s and 90s whenever two states were meeting and sought a pretext to sign or do anything. The texts of these treaties are therefore rarely negotiated - it revolves around a few models, mostly imposed by powerful, Northern states, with boilerplate standards of protection that come down to "don't mistreat foreign investors, come on". Importantly, most BITs provide for what's called investor-state dispute-settlement (ISDS): if an investor from one of the two states is mad about something the other state did, they can sue before an international tribunal. This is a controversial, yet highly-lucrative part of modern international law (lucrative for the lawyers who act as counsel and/or arbitrators, I mean - it's very expensive for states, but the theory is that it spurs investments in return).
I can't find that particular treaty in the main databases of BITs, or in the UN Treaty Series, but the fact that it was published in the Official Gazette would indicate it has been ratified by Honduras; I found Arabic news online saying it was also ratified by Kuwait's National Assembly, so I think it's genuine.
The first thing to realise here is that the fact they provided for ZEDE in the text of the treaty indicates that the concept of ZEDE has permeated deep enough in the Honduran government that their foreign policy has been impacted. This shows a very deliberate intent to showcase this experiment as, again, typically diplomats would not negotiate this kind of treaty, and apart from the provisions relating to ZEDEs, the treaty text is the usual boilerplate I see everywhere. (It does seem, however, that this is the only BIT they signed in this respect, but states have relatively cooled in signing new BITs for the past ten years so this is unsurprising.)
But the second thing is that it does not provide any protection or "guarantee" to Prospera itself. Article 16 BIT only says that the legal framework for ZEDEs would be guaranteed for 50-years, but for Kuwaiti investors only. Only them can benefit from this guarantee, not anyone who put trust on Prospera, or who moved there.
Now, I read from Prospera's material that they refer then to "most-favoured nation" (MFN) legal concept: the idea is that other treaties with a MFN clause could benefit from that guarantee. But that depends on the particular language of the MFN clause (in BITs, they typically cover "treatment", not this kind of long-term guarantees), and you still need to qualify under another treaty to invoke that clause. Apart from investment treaties (which would protect only investors), I am hard-pressed to think of any treaty with an MFN clause that could extend to this 50-year guarantee. And Honduras has actually but a few BITs: while they include the US, UK, France and other wealthy countries, this remains limited, and investors from most of the world wouldn't be covered.
Finally, what would happen under international law if Honduras renege on that guarantee ? Well, not much. To be sure, Honduras can't just abolish ZEDEs at will, but the consequences under international law would depend on the existence of an aggrieved party that can sue - and few can. (Having "rights without a remedy" is a common, if not the main situation, under international law). Investors covered by a BIT (from Kuwait, or elsewewhere if there is BIT with an adequate MFN clause and an ISDS mechanism) could start arbitral proceedings, and try to show that the abolition of the ZEDE framework caused them harm. If they win, they would receive damages (or, more accurately, an award against Honduras, which they will then struggle to enforce if Honduras refuses to pay). End of the story.
So, in conclusion, and while I understand why they are excited about this treaty, the ZEDE proponents are overstating their case here, whatever it is: this treaty does not bring much to the table, except as evidence that Honduras takes ZEDEs seriously enough to protect ... future, hypothetical Kuwaiti investors.
Since you mentioned a couple of times a possibility that Switzerland could somehow help manage Prospera, I would like to note that Switzerland doesn't really have any entities that would be appropriate for managing an organization like Prospera.
Switzerland is very federated and self-governed. The kind of questions that Prospera is likely to face are usually decided on the local level, often by the referendum. Social services like education and healthcare are managed on the cantonal level, while city services are managed locally on the level of municipality. For example a municipality may run a referendum to decide whether to increase the building height limit or whether to develop a new commercial district. In some places you can still vote by raising your family sword (https://www.swissinfo.ch/eng/democracy-at-its-most-direct-in-appenzell/245320).
So it would sound very weird if a Swiss canton or a municipality with its self-government tradition would decide to manage a foreign piece of land thousands of kilometers away.
Nice article Scott, I appreciate the richness of the history. You describe what the optimistic vision of Próspera will look like, but I don't have a very good sense of how likely you think it is to 'succeed' versus it either fizzling out or being implemented but not being transformative. Metaculus currently assigns a 20% chance to a successful seasteading venture with at least 100 participants before 2035 (https://www.metaculus.com/questions/6721/successful-seasteading-by-2035/). How about some probabilistic predictions for Próspera? Some examples below, but feel free to change the numbers/dates or propose totally different ones:
1. Próspera will have at least 50,000 residents by 2035.
2. Conditional on having 50,000 residents, the median income in Próspera will be 20% greater than the median income in Honduras by 2035
3. Honduras doesn't eliminate ZEDEs by 2064
4. Another Latin American country introduces ZEDEs by 2064
(I'd be pretty keen to see a variant on 2 that doesn't resolve positively if all Próspera does is cream skim the most productive Hondurans but nothing immediately comes to mind)
To me it seems, like it has the same problems all these projects have. Namely they are designed and not grown. A designer simply can't see or reproduce everything you need. Switzerland is like it is, because it grew this way. It's debatable if you could transplant its system, even to its very similar neighbor Germany. The people, mindset, traditions, inertia, expectations, conception of oneself, matter of course all play a role, and all can't be designed.
I really hope that they're not relying too heavily on the perceived benefits of the "air-taxi" thing. Having worked as part of a team trying to design one, the idea suggested here that the plan is to rummage around for a set of regulations and insurers that will let them put one in the air is a little bit worrying. They are certain to be expensive, likely to be dangerous, and the level of traffic required for them to be the primary solution to connect different city hubs into a unfied whole would be stunningly expensive and really quite frightening.
I like the sound of this project a lot, but I would put good money on this part being shelved or dropped entirely.
corporate cities are nice but this is not a corporate city, this has hints of jonestown, fyre festival and some other awful stuff in it
For anybody wanting more juicy content I'd heartily recommend the Charter Cities Podcast interview with the founder: https://www.chartercitiesinstitute.org/post/charter-cities-podcast-episode-12-erick-brimen
I definitely agree that it's a moonshot and quite unlikely to reach their vision - but god damn I find this incredibly exciting and would love to see it succeed! Innovation in governance has the potential for huge positive spillover effects.
"Ciudad Morazán offers freedom of fear..."
Turns their statement into a halfway decent villainous monologue.
It seems almost grotesquely overambitious compared to the actual backing. I expect either a whimper as it never gets properly going, or a glorious train-wreck. In the latter case, at least we will be able to learn from it.
"Unlike anywhere else in the world, it also displaces the rest of the jurisdictions’ provision of services in that area. So if an intrepid individual wants to create a better community with better rules and administration than we have, we invite them to come do it! Test drive your Marxist commune in Próspera! Maybe it will work this time. If it does, then people can move out of the rest of Próspera and into your little community, and the ZEDE will have to adapt its meta institutions accordingly."
If Trey read Marx he would see that Marx argued against this kind of arrangement.
Re US Infrastructure vs China . . . . The US electorate wouldn't tolerate the amount of eminent domain seizures a government high-speed rail system would require. China doesn't have a meaningful electorate.
The US also wouldn't tolerate the accident rate and fundamental design flaw of the Chinese rail system that allows the driver to ignore a "Track Blocked" signal and continue at 300kph.
When I lived there, I rode it, it was great, much nicer than flying similar routes. But "railway telescope" is a rather nasty sort of wreck.
"Libertarian Co-op Collective" doesn't have the same ring to it as 'Prospera' which implies this fantastical utopia where none of the real-world problems of running a city-state exist. On paper, it sounds great but upon further reading, it really begins to sound like the libertarian utopian fantasy that it is where a bunch of "really smart", "smarty smart", "tech-genius-smart", and "smart" people can opt-out of the actual society they currently participate in, to live in Prospera where they can pretend real-world issues stop existing.
I do think it's ironic that a bunch of libertarians are going to live in co-op buildings with a bunch of other libertarians where the stratification of humanity still occurs and the individual foibles of living next to an obnoxious neighbor will still apply. Anyone who thinks NIMBYs won't pop up in Prospera has never had to work with high-worth individuals who think the world is supposed to bend to their will. I don't find it too surprising that Patrik Schumaker (ZHA) would throw his hat into this proposal considering his long-standing opinions that building regulations, zoning, publics spaces, and community engagement are feckless endeavors. Prospera also affords Shumaker to pursue his dream of creating a city from nothing without having to work for the authoritarian regimes that normally give him carte blanche.
It's great that these people are thinking of not-new-ways to deliver the not-new-idea of modular, pre-fabricated housing/buildings to a charter city with no resources or infrastructure. Where everything is imported and negative impacts externalized/socialized into the wider Guatemalan landscape. But hey, it's not like we haven't seen the Captains of Industry do these types of things before in new places that gave them carte blanche to do "whatever' and then get miffed when the impacts of doing what they want then lead to people wanting regulations. This is how we got exclusive communities with a catalog of covenants that one must abide by lest you build your luxury trophy home with the wrong pediment and capitals.
I do think the ideas on the healthcare system offer an interesting take as well into how libertarians perceive the U.S. healthcare system working vs. how it works. I mean I get that taking the anecdotal evidence of my Uber driver not being able to do surgery in the US at face-value is a way to confirm a bias. The shortage of doctors in the US isn't a problem caused by hospitals, it is an artificial shortage created by the licensing boards run by doctors specifically to create a shortage and keep doctor salaries inflated. But the Prospera model takes the idea of healthcare as service one step further and turns the already existing model of concierge medical services and injects steroids where high-worth individuals will fly to Prospera to be catered to because they don't want to sit in the waiting area of their current selective-clientele doctor. This won't drive prices down, nor would it lead to medical breath-throughs that could have broader social impacts because the Prospera model isn't designed to do that.
I think the problem with Prospera is that it really does come off as a bunch of wealthy, smart people (not just wealthy, smart John Galts) taking their ball and going home because they've been asked too often to engage with other people in the game of life. It's a great way to further economic stratification and class bias by removing everyone else and living in a bubble.
I can't help thinking it will end up with a bunch of affluent professionals (programmers, analysts, architects, marketers) who work from home either way moving to Prospera because of much lower taxes (and these people are mostly hired by big foreign companies, so there's little tax evasion). It will show on paper that people living in Prospera are making lot of many, are happy, the crime is much lower, etc. and it will be tooted a great succes, even though average Honduran has since drop in public funds (it will be however completely unattributable to Prospera due to its small size)
I like their approach to medical law though (and I have personal interest, given that I've gone through almost every psychiatric drug allowed in my country and am still far from being well).
So in short: once it has been called up, it can still be put down? Okay, that's nice. But even if it SHOULD be put down, WILL it be put down? I'm sure entrenched interests will find some way to keep it alive even if it becomes increasingly clear that it has a net negative effect on the region. Sometimes I don't understand why tax havens are still around, why doesn't the USA just occupy all those Caribbean islands and demand those ultra-rich people actually pay their taxes? Support our troops!
So how will the legality of children born in Prospera work? Will they be Honduran citizens even if their parents are only legal residents? How about for purposes of the Prospera social contract? Will their parents basically sign in their name until they come of age? Will they need to resign the contract as adults?
Surprised that no comments (so far) have talked about the fact that abortion is banned in Prospera under Honduran law!
That would be a complete deal-breaker for me to move there. Surely it'd be a similar concern for (many? most?) people with a uterus who currently live in a place where abortion is legal - especially the kind of libertarians who would be most interested in Prospera.
When you say that people don't like it when their local government starts murdering people and stealing things, I think you underestimate the demand suburbanites have for police brutality against the poor. Particularly in areas that are considered high crime. I'm thinking that the Prospera business model sounds just like the other one, but with prettier words and pictures. It's a private security agency for upper middle class Hondurans that want to live next to a golf course and be able to sic the private police on anyone poorer than them.
Also, any time anyone talks about air taxis, I tend to assume that they're from Silicon Valley and have just given up on fixing group traffic, and haven't thought about how unpleasant it'll be when even the outdoor cafes in the middle of big plots of land will have just as much traffic next to them as the sidewalk cafes on El Camino Real.
to Steelman the Critics i wonder if we have to go historical and take in some Chomskian perspective on U.S. - Honduran relations, i.e. long U.S. suppression of democratic will in the lower Americas, justified by a Containment policy that enabled rapacious capitalist expansion, backed by death squads trained by the C.I.A.
not to make the Próspera folks guilty-by-association, but to give context for skepticism about insweeping capitalism that doesn't seem to acknowledge that the very thing it is putatively trying to fix - the misery of life many miles south of Silicon Valley - was partly caused by prior versions of insweeping capitalism, or whatever you want to call it.
but i'm not the one to do it, having piddly knowledge of the Region. probably mostly from Chomsky, so there's that bias.
The renderings of the buildings look beautiful. But in the United States, if anyone tried to build something like that, they'd say "what about fire trucks, ambulances, and deliveries?" Most places in the developed world assume motorized vehicle access on big roads to every single building, even though that is fundamentally anti-human. Maybe there are delivery entrances in the rear of these pedestrian-oriented buildings? Or maybe all services will be provided by flying taxis?
It seems to me that the legal system here doesn't work. You can't just arbitrate -- there has to be something to backstop it. And if the backstop is ultimately the Honduran courts and the Honduran police, then this is functionally just as corrupt and problematic as those institutions.
On the arbitration, who exactly is enforcing these rulings? As in what, happens when I refuse to honor the ruling in the convoluted arbitration of my dispute adjudicated under Norwegian law? In the US, I can easily go to a (more or less) competent court system to enforce a judgment. Where do I go in Prospera? If I'm just headed off to Honduran court to enforce a judgment, then the arbitration is just the lengthy buildup to a process that's exactly as flawed as a Honduran court proceeding. I guess you try to find a way jurisdictionally to squeeze this into the courts of a developed country with strong rule of law, but how exactly? It seems fundamentally broken.
And in corrupt countries, one of the biggest problems is corruption in the police. What's going to stop corrupt Honduran police from coming into Prospera and shaking people down? Surely, the answer can't be physical resistance by Prosperan security forces without causing an experiment-ending incident.
Even if the police don't come into to shake someone down, what happens when Honduran gangs do? I guess Prospera is hiring Blackwater or something for security, but what happens once one of those mercenaries shoots a gang member. Now he goes on trial for murder in the Honduran courts, right? I don't see how a security force can function in a high threat environment under those circumstances.
I think the steel man critique is that any successful version of Prospera will be a massive target for criminal activity. That will bring Prospera into daily contact with the Honduran police and justice system with all the attendant problems. That probably won't work out, so the rational response for Prospera is to work to *corrupt* Honduran law enforcement to either stay out of their way or respond to their wishes through bribery and so on, ultimately degrading the overall quality of governance in both Prospera and Honduras.
Wonderful post. I couldn't stop thinking about "Oath of Fealty" by Niven and Pournelle. I love and fear this idea. The fear part is; what about the dumb f's that get left behind?
(flying cars are silly and scary.)
There's nothing about law enforcement in the article. Having lived through a transition to capitalism in Eastern Europe, I feel this may be a huge problem. How is it the enforcement going to work? What happens when narco-gangs start moving into the city? Is the city going to rely on the Honduran police? And if so, how likely is it that Honduran police is corrupt and quickly turns into a gang-like structure, if it is not one yet? Wouldn't the new and untested law offer a plenty of loopholes which the criminals would exploit faster than they could be fixed - even more so given that political structure seems to be designed in such a way as to make it hard to change anything?
This is one of the most important learning experiments of the 21st century. If it fails miserably, we will learn something important (even if just not to try this again). If it works modestly, we can refine and adapt it for human well-being and prosperity. If it works well, we can expand it and scale it for human progress.
The Prospera Governing and Social Contract structures could provide a foundation for Biden’s Build Central America Better goal. It’s management of satellites could be of use.
The concept should be applied to a much larger region within Honduras; or, a series of smaller regions. The focus, unlike Prospera’s, would be on the lowest earners, bringing stability to their villages and towns. Under this umbrella, using Joe’s billions, vetted NGO’s would scale up, harness LT volunteer efforts in housing, education, agriculture, health, water projects....
Beyond the life quality goal is the preparation for investment by corporations. Trying to persuade US corporations to invest in Honduras today is a fool’s errand. The nation is not ready for the maquiladoras supply chain integration that NAFTA brought to Mexico. If attempted, it will only foster the unrest that comes with the rural > urban shift, with the unrest of those left out.
Scott, did any money exchange hands between you and Prospera people?
Do we know what is planned for 2nd generation Prosperans? This issue was eventually detrimental to the Kibbutzim in Israel - the first generation is mostly people aligned with the ideology, but 2nd and 3rd generations had thoughts of their own regarding the way of life, eventually replacing many of the original ideology which led to the collapse of the Kibbutzim project
My guess is that Prospera will end up hosting a bunch of wealthy nutcase expats and a handful of server farms running complicated cryptocurrency projects and borderline-scam financial schemes.
But what are they going to do when the Tongan Navy shows up?
If this project is to benefit Hondurans, one would expect the efforts to be focused on providing employment opportunities to Hondurans. Given their level of economic development, this would most likely in the form of low wage manufacturing (sweatshops). That's how SEZs elsewhere have clawed their way to prosperity. Instead, most of the activity appears to be geared toward land speculation and second houses for rich expats.
Thank you Scott Alexander for such of a well-written, comprehensive and extensive recounting of where Próspera came from and where it aims to go. Subsequent analysis here has been entertaining and as one might predict your disclosure has overwhelmingly elicited attention by naysayers. Most are a sad commentary on how intelligent and educated minds cower before the threat of men of action. I’m a pragmatic person, old enough to recognize a project, which by most standards, would be inconceivable or considered too lofty for success. In most cases, it would never become more than a dream, never get off the ground, simply a wasted desire. Who would dare? Only a handful would put themselves out there and work like madmen to congeal such a dream.
I have known Erick Brimen since he was a young man in High School. Way back then the ambition and desire to help create wealth in nations where systems failed their people, such as the Venezuela he came from, was a seed planted in his brain and growing. A test he could hardly wait to meet. The magnitude of Próspera, in the impoverished country of Honduras, with its thousand and one challenges is what that seed matured for. He has shown brilliance and deliberate patience while moving from one thought-out step to the next. The correct path was set early when he reached out to find the most talented minds and experienced individuals from around the globe. You see, Brimen, believes in what he is doing. If you think this is about plopping fancy homes next to a golf course, go back and read the article. This is much more complex and deeper than that shallow task. These unconventional concepts could be transformative for an impoverished nation and in many ways, what is being proposed has not been tried before. If successful this forward motion to create a socio-political system yielding well-being for all socioeconomic levels could be emulated in other impoverished nations. Why not? As conceived, where are the losers? So the question is: Who can stop a person determined to succeed? None of the naysayers here, with their cynical mantra of; “it will fail or it can’t be done”, that’s for sure! So easy to tear down the work of others but the world owes everything to those who believed, were honest, worked hard and were unafraid. That’s Erick Brimen. By the way “First Poster,” no money has exchanged hands between me and Próspera people!
Really enjoyed this piece. Have been interested in this subject for awhile and learned a lot about this example. Fingers crossed we’ll see more experiments like this come to fruition.
Gamaliel's defense works great for charter cities. Either they are going to work or they're not.
They might work better than existing institutions. In this case, people are going to voluntarily move to them. They will have a better economy than the rest of their host country. This will encourage reforms that improves the quality of life for more people in the host country. If this happens, then we should support charter cities because they are a good thing.
They might not work better than existing institutions. In this case, people are not going to voluntarily move to them. They will not have a better economy than the rest of their host country. If this happens, then we shouldn't care. The rich people who bought the land next door decided to turn it into a golf course, and that didn't help the locals much either.
The only cause for concern is if they both don't work and are persuasive enough to convince people to impose their reforms on people who can't leave. I don't think that this will be too big of a problem. They have picked a very visible and difficult criterion for success: a significant number of people voluntarily choose to move there. If they can't do this, then they're left with three buildings next to a golf course, which doesn't seem particularly persuasive.
I don't see how you avoid all the problems with corruption as long as you are reliant on the Honduran criminal justice system.
Fundamentally, that means any problems with bribing Honduran judges or investigators will affect Prospera residents and eliminate the supposed advantages of lower corruption and better management.
"Wouldn’t it be hard to run a single polity on so many unconnected islands and enclaves?"
I'd be concerned that poor governance from the surrounding areas would leak into the enclaves, e.g. drug lords assuming de facto rulership of an enclave. The fact that they're using the Honduran criminal justice system seems especially worrisome. I'd assume it already has severe issues given Honduras' high murder rate.
"If I get in trouble, any disputes between me and my patients will be settled by Norwegian law."
Will a Norwegian judge be contracted to adjudicate?
"For example, if the general population disagree with a law passed by the Council, they can overturn it in a referendum with a simple 50% majority. But the offer only applies within seven days of the law being passed (Trey insists that Próspera’s e-governance platform will be so good that it will be easy to know what’s going on, start a referendum, and finish voting within a seven day period). Even after the seven days, the public can repeal any law. But now it requires a 66% majority, and also this process can only repeal laws, not add them."
50% majority of all eligible voters, or 50% majority of those who show up? If the latter, there's the risk that a small vocal group (on social media say) would collaborate to overturn a law that others weren't paying attention to? I don't like the idea of living in a place where I have to monitor social media continuously to ensure that small vocal groups don't hijack the governance process.
Also if the law is overturned, can the Council retry the same law with a small tweak? Are they limited in the number of times they can do this?
There is no way a project like this could succeed long term in a country like Honduras without the threat of military force from another country. Without a military, or military backing of another country, the project is subject to the whims of future political environments (10 year guarantees are worthless when you have a weak government and weak rule of law). If this project ends up being successful, and the inhabitants materially richer than the rest of Honduras, then populist politicians will eventually end up extracting its wealth through taxation or nationalization. Even scarier, the project could end up subject to the whims of criminal enterprises more powerful than (or working with) the Honduran government/military. And if there is ever a coup, it would not be entirely surprising for the inhabitants to be targets of execution.
> speaking of suing people, the law code seems to cap damages from medical malpractice lawsuits at $250,000, which is a defensible choice, but sure not the direction that the US has gone here.
Not sure, Look at the case of neurosurgeon Christopher Duntsch. He managed to hop from hospital to hospital maiming patients in part because malpractice lawsuits were capped in Texas.
A well written and interesting read that brings forward many good questions.
The mention of off shore establishment seems to highlight a medium position where policy assurances will be at the most stretched to find coherent workability.
The real life fantasy painted here is very well depicted.
Thank you for the privilege of reading this insight.
Eh, a bit too much like colonialism with extra steps. Sovereignty is nothing to scoff about.
Modular construction is not at all a new idea. Several millions of units were built decades ago in various parts of Europe (primarily in the Eastern Bloc and in the UK). They mostly went out of fashion due to inherent shortcomings of the principle.
https://en.wikipedia.org/wiki/Plattenbau (for some reason, there are separate English-language pages for the corresponding terms in multiple languages; at least they are all there in the see also section.)
As for aerial taxis, noise pollution goes whirrrr.
Their conception of education system is disappointingly unimaginative. If they're starting from scratch, they can do... good. Not slightly tweak the standard system.
They should separate "minor-care" and "education". Doing pre-school and early education the usual way may be sensible; once children learn to read and use the tech, it should be nearly-free-to-run system with few very well qualified people to handle things it can't handle. Not "mediocre teachers explaining things to 20 kids at a time".
I've recently wrote what I mean more comprehensively, I'll paste it below. Warning > 2k words, some content not-quite-about education, and it's still stream-of-consciousness comment not a fully-thought-out plan.
By investing a certain amount at the beginning, perhaps a multiple of the normal cost, one could create a system that works better (educates better) and costs almost nothing once created. The books may not have been enough as far as education is concerned, so ok, maybe it wasn't possible before. But since the '90s or '00s - it's obvious.
I'll elaborate on the concepts. In years 0-III of elementary school, more or less, we have teaching as it is now. At a minimum, a child must learn to read, use a computer (write, etc.), operate the system described below, perhaps arithmetic.
In the "higher" classes, IV-VI or until the end of primary school (although this is a gross exaggeration) the child is still "taken care of" so that the parents can work (after that child is 12 years old - being concerned about it being home alone is a bit ridiculous). But this care is not for the purpose of education; it's for child supervision in a shared space. It serves only that purpose - it provides an environment.
To solve the problem of 'children will have no way to socialize' which also appears as an objection - older children and maybe even adults can also use these 'centers'. Perhaps they can even offload some of the demand for dedicated 'nannies' with their presence.
In theory, the school buildings remain, sort-of, as these shared spaces. Teachers disappear; nannies don't need elaborate education and not as many are needed. Plus, the space is more efficiently used once that's the explicit purpose. Obviously, the education system already serves this purpose implicitly: nannying children so they don't get in the way and "allowing socialization with other kids". In addition, even for adults such places should potentially exist in some way, maybe. And as a bonus, the secularization will leave some existing physical "community centers" which could be repurposed.
So, we resolved the non-educational objections (apart from one covered separately, later). IMO the costs would come out very favorably and we are getting extra bonuses with it anyway.
Now, strictly about education. Convert all knowledge in the current 'core curriculum' into a tree of atomic facts, concepts, data or procedures (like 'how to divide numbers') linked by dependencies / proximity relationships. Add to it the knowledge that is completely missing in the current system. Add metadata about practical importance of knowing this 'knowledge atom'. The tree can be multimodal: text, narrated text, animated explanations, speaking teacher (the best available), diagrams, pictures, photos, 3D models, simulation settings in simulation programs, educational mini-games -> sky is the limit, everything can be improved and developed at any time.
The tree is open, free (made with public money, after all). Despite its sophistication and awesomeness it will end up cheaper for the society than buying school books for a number of years, for each kid. Also, the whole EU+US+anyone_else can work on it together. And it'd be all open-source (although we don't have to exclude the use of non-free software and resources within it, maybe). So in fact volunteers will contribute for free too. Especially since it could be a global system with translations. Which mostly generate themselves from ML - the cost, the actual translation work drops dramatically and will continue to drop.
<<actually, this comment is a translation; I originally wrote it in Polish, I'm mostly leaving the output as-is with some minor fixes, most not even due to translation issues but because I changed my mind on a particular wording>>>.
The knowledge tree is a fairly 'static' object, through. Yes, that in itself may not be enough for providing education. Though the 'dependencies' are already encoded. That is, you can start with any of the 'basic' knowledge-atoms and work your way up. But ultimately an active teacher may indeed have some advantage. Like, a student doesn't understand one relationship somewhere deep and doesn't know it. They may not be able to move on. Or something. I don't know, I myself learned everything actually useful without such a problem but ok, maybe not everyone can.
We need to have have a way of verifying knowledge. Both for the process of learning itself and to get kids to learn if they won't quite comply.
(continuing in next comment)
But Scott, these buildings are *incredibly ugly*! How can you have read Seeing Like a State and come away with the impression that all disgusting modernism needed to become human and beautiful was a spline curve here and there? This is thoroughly un-human, ugly, disgusting Brasília architecture and impossible to defend.
nice writeup! and maybe a nice city until the narcos move in.
My guess is that the most likely failure mode here isn't some kind of ideologically pleasing thing where we see the libertarians or utopians or someone get their comeuppance, it's mundane stuff like not being able to keep their private security forces honest given the culture of corruption they're used to, or some business failure where they get the development half built and then run out of money.
I also think they'd be smart to spend less time being visionary and more time being incremental. Yes, there's a lot broken with first-world medical and building regulation, and I'm sure there are big improvements possible. But the stuff that's going to guarantee failure with this kind of project is mostly a lot earlier in the chain than this. Why will their private security guards or administrators be willing to refuse the traditional "plata o plomo" offer from some ruthless drug gang, especially when those guards and their families are probably living in the normal corruptly-and-ineptly-policed rest of the country? How will they ensure that their provided infrastructure works, when a lot of it will depend on the surrounding infrastructure provided and managed by Honduras? Their size and position seems like it will make them vulnerable to having concessions/tribute/donations extracted from them by the officials in control of surrounding infrastructure like roads and power systems, and those officials are presumably as corrupt as ever. (Probably the answer there involves lining some local officials' pockets--something that might be pretty familiar to people doing property development in NYC as well.)
Interesting at the very least.
I wonder about the literal signing of the social contract, what of children born in Próspera - sign the contract on your Bat Mitzvah? (What happens if you don't?)
Reminds me of an article I read years ago about Gaviotas, Colombia, a sort of unintentional utopia. Not sure if this is the original article or not but it's a jumping off point: https://www.motherjones.com/politics/1998/03/nothing-wasted-everything-gained/
Personally, I found the Prospera thing to be mainly hot air when I did try speaking with them about half a year ago.
I found the pricing for their homes to be outrageous, like, comparable to other nicely designed homes on tax-free paradise islands... except for the fact that those islands are actually tax-free, and the homes exist, and they are no surrounded by a 3rd world violent military dictatorship known for the care-free murdering of dozens of thousands and contested by cartels and foreign interests.
Second, my take was that you would probably have to pay taxes *outside* of Prospera for anything but money circulating inside of Prospera. As in, yes, your business can operate with low tax, but you the individual would need to pay Honduran tax rates on any income that they want to draw from those businesses. Though I might be wrong on this point?
On the whole, my experience as someone with the money and freedom to move into a charter city is that they seem restrictive as hell compared to other options.
Probably better if you're a local though, and that might be what's important, and maybe foreign investors that can throw large chunks of cash would get something out of it. Overall I wish them the best of luck but I see no reason why any normal person with a US/AU/EU residency would choose any of the existing "semi-independent" charter city projects to live in.
How long until southern Europe is broke enough for ZEDEs? Just imagine: low taxes, pan con tomate, smelly cheeses, Mediterranean climate, no guns...
I will withhold judgement until I learn how much the surrounding 5 star resorts pay in protection fees (on top of official taxes) to keep away men in pickups with Kalashnikovs who enjoy kidnapping people for ransom.
It's interesting to me that they are trying to be more family friendly Disneyland less wild west.
The real wild west's of the world seem like countries like China ten years ago or cambodia where on paper there are so many rules nobody ever follows them.
Of course this situation heavily reduces foreign investment, and western multinationals seem to be the key to development. If this works and especially if there turns out to be enough productivity growth to skim off some money and give it to the ruling Corp AND line corrupt political pockets I see no reason why this couldn't take off everywhere that is corrupt
Sometimes I think we just all agree to have Norway or Sweden rule or Singapore rule everybody.
There are some City-States and Special Economic Zones that went from Third World to First with a different legal system from its former mainland: Singapore vs. Malaysia, Hong Kong, Macao and Shenzen vs. China, P.R.C. Should we add Taiwan to this list?
However, there are also superstar cities who have become greatly rich with the same legal system as the mainland through agglomeration effects: Sillicon Valley, USA. London, UK.
Certainly institutions (both legal and cultural) play a key role on growth, but also agglomeration effects. One of the reasons why they are important are economies of Scale.
I'm completely convinced that this thing is never going to have the same economies of scale than the Special Economic Zones it aspires to be.
Perhaps if it has the entirety of Roatan with 80 km2, close to Macao's area. But that would mean expropiating land, which is what the people fear and what they've promised not to do.
People migrate away from Honduras to ran away from gangs, and they migrate to America for the wages and because their American family lives there.
If Prospera manages to keep the crime away, it won't be enough to help with migration because the American family of the Hondurans don't live in Prospera. Even if it doubles the real income per capita of Honduras, it would only be like Costa Rica or Mexico, and it won't get close to America's who is like 5 times the real income per capita of Honduras.
Another of the comments above me is critical:
Those Special Economic Zones already had people. This doesn't, so it will likely attract more capital than labor, making it a very different beast than the rest of Honduras. Likely focusing on finance ("high skilled" labor), turism and casinos ("low skilled" labor), like Macao.
At least "laws against ... most gun ownership" means I don't have to care any more.
I'm an economist. Acemoglu and Robinson say that institutions are the ultimate cause of development. All that sounds pretty neat. But they could be wrong. Maybe Shenzhen, Dubai, and the United States got rich because they have good institutions AND some other factors, such as access to large markets, some network externalities that lead to high rates or technological adoption... I mean you can take your pick! If I knew the answer I would be claiming my Nobel. So, being agnostic about the causes of the wealth of nations, I think this is an experiment on which percentage of the variance of GDP is explained by institutions. That's probably a number between 10 and 40% (my personal prior). So, if my prior is right Prospera is gonna get anywhere from 10 to 40% of the way to rich country status. That's not nothing, but its not gonna get you 100% of the way to riches. Thats basically what China did. So, even if this ZEDE thing is a success, its not gonna bring Star Trek post-scarcity to the world. Also, beats almost all of the RCT-approved programs development economists work on. I really look forward to it as a Latin American economist.
End of 2022? At least we won't have to wait long to point and laugh when it inevitably falls through. But it is an admirable effort at least.
"They just want to give people who have been ill-served by statism and nationalism a choice other than traveling three thousand miles and scrambling over barbed wire fences."
But Prospera has a membership fee. $260/year for Hondurans. What happens if Hondurans decide they want to live there, but don't want to pay $260/year and cross the border without permission. Will Prospera have barbed-wire fences? Since Honduras isn't exempting Prosperans from the country's gun control laws, what will security look like? Will Prosperans be trying to defend their security from narco-gangs or bandits with pointy sticks, or will Honduran security forces be guaranteeing its territorial integrity?
Some interesting ideas, but I'm skeptical:
* Why a flat tax? This is just begging for the rise of robber barons. If 1% own 90% of the assets, they should be paying 90% of the taxes. This is how insurance works, you pay proportional to the value of the asset and the risk of loss. Presumably, a society means we all share the same risk of loss, which means the only dial available is the value of the asset. Taxes are partly social stability insurance by ensuring some basic level of equality.
* Doctors choose the laws under which they operate, but doesn't that mean they can't presrcribe treatments that aren't approved by those countries' regulatory bodies, contra claims that patients can access any drugs approved in any country?
* Capping damages is dumb unless it's constantly adjusted for inflation.
* I don't get circular architecture. Looks nice, but wastes space.
* Re: voxels, interesting, but problematic. At what vertical limit do voxels end? Do they extend to outer space? Also, the Earth is a sphere so there are strictly more voxels directly above a particular voxel than there are below. Also, how do VTOL drones navigate all of these voxels? Finally, buying voxels to ensure your view isn't trivial; it means you'd have to buy every voxel extending out to the horizon (or whatever view you want).
>America is a better place to live than Honduras. This isn't because Americans are smarter, or harder-working, or morally superior. It's because Honduras has bad institutions.
Citation needed. The average Honduran has an IQ of ~80. If you replaced the entire population with Japanese or Germans, and left the institutions intact, it would turn into a successful country overnight.
Do a blog on Liberia.
Ideally they'll use modern voting methods like approval voting, score voting, or STAR voting. This would hugely improve their odds of success.
https://hondurasnacionymundo.blogspot.com/2021/06/zedes-una-mirada-prospera-en-honduras.html I needed it in Spanish for my country Honduras, there are your credits and the corresponding links. I hope not to cause inconvenience and in advance thank you very much it is an excellent article
Nice try, yet I would still need citation.
Here is one that is not that relevant:
It has 3 buildings in a distant country and the leftist press is already raving mad about them. There is no way they can possibly be sucessful.
I took part in a few calls with the management.
They seemed to me focused mostly on real estate investment, and I thought they're lacking a way to attract people to come there and create businesses.
I took it on myself together with an entrepreneur from California to set up a little trip and invite other entrepreneurs to see what we can build there: https://www.buildprospera.com/
We're calling on entrepreneurs interested in Prospera to join us!
(Sorry for the promotion, but Scott seemed to me to explicitly allow it: "Some people have requested guidance for when you can advertise your own blog/website/etc in the comments here. I would say: on regular posts, only if it’s something very relevant, so relevant you would post it even if it wasn’t yours." https://astralcodexten.substack.com/p/open-thread-208?token=eyJ1c2VyX2lkIjozNzg1NTkzLCJwb3N0X2lkIjo0NzYwNTQyNCwiXyI6InN1UVRLIiwiaWF0IjoxNjQzMDI3MzkwLCJleHAiOjE2NDMwMzA5OTAsImlzcyI6InB1Yi04OTEyMCIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.nn3t7Rvr85cMkveEzd-IqWl1DBTWufHLgeEcC_7FCFM)