Central America

Honduran Private City Plan Shot Down by Its Supreme Court


A roadblock on a very interesting plan to create experimental, freedom-friendly governing structures down in Honduras, reported by Associated Press via CBS:

The constitutional chamber of Honduras' Supreme Court ruled Wednesday that privately run cities in the Central American country would be unconstitutional, threatening a project to build "model cities" with their own police, laws, government and tax systems.

The five-judge panel voted 4-to-1 in a ruling that goes against the Honduran government and the country's elite.

Because the decision was not unanimous, the case now goes to the full 15-member Supreme Court, which is expected to take it up within 10 days….

The investment group MGK and the Honduran government last month signed a memorandum of understanding on the construction of three "private" cities that supporters of the project say would bring badly needed economic growth to the poor country.

MGK was expected to invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, authorities said. South Korea has given Honduras $4 million to conduct a feasibility study.

Another city was planned for the Sula Valley in northern Honduras and a third in southern Honduras.

The project is opposed by civic groups as well as the indigenous Garifuna people, who say they don't want their land near Puerto Castilla to be used for the project. Living along Central America's Caribbean coast, the Garifuna are descendants of the Amazon's Arawak Indians, the Caribbean's Caribes and escaped West African slaves.

Authorization for the creation of private cities was passed by the Honduran Congress in January 2011 amid much controversy…

That vote in the Honduran congress had only one vote in opposition, by the by.

Fox News reported on the plan a couple of weeks ago, with some interesting details:

"Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going," Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

"Our goal is to be the most economically free entity on Earth," Strong said.

While this may not sound like a libertarian dream to you, Strong has his eyes on Texas as a model:

The laws in the city will be separate from those in the rest of Honduras. Strong said that the default law that will be enforced in the city will actually be based on Texas state law, which has relatively few regulations.

"It will be Texas law with more freedom of contract. Texas scores well on state economic freedom rankings," he explained.

"Texas law is also very familiar to American business people, and it is very familiar to Hondurans, because a lot of Hondurans have gone there or have family there."…

The rules for immigrating to the city have yet to be finalized, but are expected to be loose.

The bigwig academic associated with a version of this plan, an idea he calls "charter cities," Paul Romer of New York University, dropped out last week, as the New York Times reported. Romer didn't like that the Honduran government went ahead and made a deal with Strong's MKG Group without Romer signing off on it. Details:

"I do feel disappointed on behalf of the people I have gotten to know," said Mr. Romer, an economist at New York University's Stern School of Business and the director of its Urbanization Project. "The Hondurans who hoped this would be a way to escape from business as usual."

The tipping point came with the announcement a few weeks ago that the Honduran agency set up to oversee the project had signed a memorandum of understanding with its first investor group.

The news came as surprise to Mr. Romer. He believed that a temporary transparency commission he had formed with a group of well-known experts should have been consulted. He withdrew from the project….

According to Mr. Strong and others involved in the project, including Mark Klugmann, an American consultant who is working with Mr. Sánchez, the transparency board never legally existed. Mr. [Octavio'] Sánchez [the Honduran government point person on the project] agreed, although he had never disputed the existence of the board in the past.

Mr. Romer said that President [Porfirio] Lobo signed the decree in his presence in December. But he acknowledged that the board was on tenuous legal footing because of the challenges in the Supreme Court. The decree was never published.

Ronald Bailey interviewed Romer for Reason back in December 2001. I wrote here about an earlier attempt, not the one run by Strong, to bring a private city idea to Honduras in December 2011.

The history of attempts to carve more libertarian space in the world through separate governing structures free from existing national laws is long and storied, and talked about some in my July 2009 feature on the idea of "Seasteading," building independent private cities on the ocean.

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  1. Expect their Supreme Court to screw the plan out of existence.

    Strong should just bribe the justices.

  2. I thought the headline said “Honduran Private City Plane Shot Down by Its Supreme Court” and I was both fascinated and confused. Imagine my disappointment.

    1. Schwarzeneggar as SC justice: [Fire missile][Plane explodes] “Decision overturned!”

  3. The project is opposed by civic groups

    No shit. Collectivist busybodies are offended by any refusal to submit to their officious meddling.

    1. I love that Reason.com describes a plan to use eminent domain to seize land from poor people and hand it over to private multinational corporations as “freedom-friendly”

  4. *shocked face*


  5. So wait, Romer’s upset because they didn’t consult him? I can sort of understand him not liking that, but his response is basically, Screw you guys, I’m going home”? That seems pretty petty.

    1. No, he’s merely pulling his name off of a project that isn’t using his input.

      They offered him a position, and then refused to let him do his job. So he’s quitting.

    2. What would you prefer he do after his investment proposal was rejected?

    3. No, petty would be blowing a building up because they compromised your vision. Walking away from a project that is using your name but ignoring your input is a good idea for your reputation.

  6. So, will we be able to marry our cousins in these private cities?

    1. Your cousin, your dog, even your XBox 360!

  7. So much for plan B.

  8. We need Economic Freedom Zones in the US too, but first we need a libertarian congress to debate on what rules the EFZs would have. Come on Reason Magazine, go find the great libertarian thinkers and bring them together!!!

    1. EFZ’s would be great, until the drones bombed us into oblivion, because “fuck you, that’s why.”

  9. Mencius Moldbug explained, with extreme verbosity, why this is an awful idea three years ago.

    The Jedi mind trick is revealed. Professor Romer is digging up ancient chestnuts from the graveyard of history, repainting them slightly, and selling them to Davos Man as his own work. Nice job if you can get it. Would you trust this man with your daughter?

    Thus, the idea of “charter cities” or special economic zones as a cure for bad government in the Third World is inherently a bad one, because bad governments will not tolerate these entities. Good governments will follow reasonable rules, conducive to business, already – as both China and Dubai do.

    Abstractly, a much more reasonable place to put a “charter city” is on First World territory. The US, for instance, has no shortage of uninhabited land. Build a new Guantanamo somewhere in the middle of Montana – call it Montanamo. Residency in Montanamo does not imply residency in the US, and Montanamo has a huge fence around it to make this point clear. Fly in the Haitian helots, bus in the Canadian proconsuls, and you’ve got your city going.

    Of course, this will never happen either. Even First World government dislikes competition, because even First World governments these days have more than a little Third World nature. The First World is the past; the Third World is the future. Hello, California.

  10. will we be able to marry our cousins sheep in these private cities?

  11. Build a new Guantanamo somewhere in the middle of Montana

    This dipshit obviously knows nothing about Montana. If they wanted to reproduce political and economic conditions in the other part of Cuba, they might have a chance.

    1. Are there any deep-water ports or navigable rivers in this unpopulated patch of Montana?

    2. He’s talking about the Cuban city, not the Naval Base.

  12. What about Guyana? They let Jim Jones’ cult run their own show there.

    I think it’s somewhat troubling that this “MKG investment group” is being given the keys to 3 cities without either a solidly tailored plan, or a history of success. Not that anyone has a history of success with such things, but if you’re going to try, how about try 3 different ideas rather than 1 idea 3 different times. If MKG’s “let’s just copy Texas lol” plan doesn’t work, that’s 3 failures in a row, and it will only further convince people any such system is a bad idea. Do you not see the irony of trying to establish a free market by giving to some faceless council a monopoly on law and virtually no means of input? And not to be a smartass but if Texas has an ideal system, why even establish these cities, why not just go to Texas?

    This idea needs people like Romer who have been working out the fine print in their heads for years, not people whose sole interest is profit. Profit’s not a bad motivator, but these people aren’t the idea men, they don’t care if something is new or old, they aren’t focusing on infrastructure.

    I’ve also noticed,there’s virtually no mention of social liberty in this article. It’s entirely geared towards economic liberty.

  13. He’s talking about the Cuban city, not the Naval Base.

    I took that to mean, “Cordoned off bastion of freedom”. Anybody who thinks the average Montanan would stand idly by and allow the existence of some sort of free enterprise corporatocracy to besmirch their delicate state-supported paradise is sadly deluded.

  14. I took that to mean, “Cordoned off bastion of freedom”.

    Perhaps I shouldn’t have cut the first part of that quote so short.

    The Jedi mind trick is revealed. Professor Romer is digging up ancient chestnuts from the graveyard of history, repainting them slightly, and selling them to Davos Man as his own work. Nice job if you can get it. Would you trust this man with your daughter?

    The fundamental observation of colonialism is that non-European societies thrive under normal European administration, at least in comparison to their condition under native rule. This observation was obvious during the colonial period. Since, it has only grown more so – at least, to those who can handle the truth.

    If this observation is “condescending,” so is Professor Romer’s proposal. If it is invalid, so is Professor Romer’s proposal. If it is neither, Professor Romer’s 18 minutes should be invested in introducing, explaining, and defending the original observers – not on passing it off as his own “radical idea.”

  15. According to Mr. Strong the land they were looking at was wasn’t even close to the Garifuna.

    Second, how come no mention of previous successes of such ventures?

    And, why do you say the justices voted against the govt and the elites? Far more lower and middle class benifited from Hong Kong than elites. Wouldn’t it then have been more accurate to say the justices voted against the govt and the lower and middle classes?

  16. If the full court rules against it, what’s the next move? What condition would they need to fulfill to make it constitutional?

  17. You know, there’s no pesky Supreme Court to nix your plans at the bottom of the ocean.

  18. We are posting your informative article at the LIO Friends site, which networks Lib activists in many countries.

    The LIO curator has re-affirms that a libertarian-based eco-charter city would have full common law and jury protections; and LIO fans encourage full human rights discussion and legal process to assure public input and assent. Charter cities, however constructed, should not be the excuse for rights abuses including ecological mayhem.

    To find out more about people worldwide using voluntary approaches, please see the non-partisan Libertarian International Organization @ http://www.LibertarianInternational.org

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