For Ghoti, Wild_Cat : A Privately Run City To Create Development In Developing World

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Geriatrix

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http://www.fastcoexist.com/1680512/...-to-combat-government-corruption-and-weakness
A group of businessmen are building a city from scratch in Honduras to overcome the country’s corruption and poor infrastructure. Does it make sense to let money hungry investors take over the government’s job?

Honduras is set to play SimCity for real, albeit without the economist who devised the rules of the game. Last Tuesday, the government signed an agreement with private investors led by Michael Strong--a libertarian entrepreneur and close associate of Whole Foods co-founder and CEO John Mackey--to construct a city-from-scratch in one of at least three special development regions (“las Regiones Especiales de Desarrollo” or “REDs”) scattered around the country.

REDs possess the legal right to establish--or outsource to foreign governments and companies as necessary--their own hospitals, schools, judges, and even police, all independent of Honduran law. The first is for profit, and if its founders have their way, it will look and feel a little like the Mosquito Coast’s answer to Austin.

The REDs are the brainchild of Paul Romer, the New York University economist who has proposed building “charter cities” as a solution to endemic poverty. Romer believes that importing sound laws and policies into small corners of badly run countries will help leaders reform their governments from the inside-out. Honduras certainly qualifies--the original banana republic is still grappling with the political fallout of a 2009 coup while cocaine traffickers have pushed its murder rate to the highest in the world.

In early 2011, aides to Honduran president Porfirio Lobo invited Romer to the capital of Tegucigalpa to make his case to Congress. Within weeks, Congress passed a constitutional amendment granting Lobo’s government the power to create and administer the REDs.

They won’t be built in Romer’s image, however. The Lobo government has instead signed a deal with the MKG Group, a consortium of investors led by Strong that intends to spend $15 million to begin building basic infrastructure on a city near Trujillo on the Caribbean coast. It appears Romer was never consulted.

On Friday night, he published an open letter to Lobo asking that he not proceed with the formal appointment of a five-person “transparency commission” to oversee the RED, of which Romer would be chairman. In effect, he is asking for permission to resign from his own creation. Lobo’s aides told The Guardian that Romer is overreacting, and that nothing can go ahead until the Honduran Supreme Court rules on the project’s constitutionality--which may take anywhere from a week to a decade.

With Romer having second thoughts, the spotlight shifts to Michael Strong, who I met with in February to discuss what his version of a RED would look like if it were actually built. At the time, it seemed unlikely--a few weeks later, Lobo’s chief of staff Octavio Sanchez told me point-blank in the presence of Romer’s deputy that Strong would never receive the legal right to run a RED--but he was optimistic.

Prior to starting MKG, Strong co-founded a movement named FLOW (“Freedom Lights Our World”) and wrote an entrepreneurial manifesto with Whole Foods’ John Mackey. More recently, he joined the board of the Seasteading Institute (whose founder, Patri Friedman, has started his own for-profit company with the stated aim of building cities in Honduras) and co-founded the Free Cities Institute, a think tank based at the Universidad Francisco Marroquín in Guatemala. (UFM, which I visited last spring, has a library named after Austrian economist Ludwig von Mises and a bas-relief of Atlas shrugging at the entrance to its business school.)

While Romer imagined his charter cities as Hong Kong circa 1950--filled with sweatshops beginning the long, hard climb to cleaner work and better pay--Strong envisions something closer to Bangalore-meets-Austin, with locals working in Spanish-language call centers and business-process-outsourcing (BPO) shops while jump-starting a local software industry with an influx of Americans.

“I’ve spent a lot of my life in places like Austin and San Francisco--cultural and creative hotbeds,” Strong said. “One of the people I know is a Honduran software entrepreneur who would love to have a much more robust ecosystem for software companies in Honduras. But in order to get software guys to go down to there, you need cool restaurants and music places. They’re not going to go if it’s factories and so forth.”

While Strong readily conceded this aim was “aspirational,” he insisted that locals were much more receptive to clean work for good pay than a wholesale expansion of the maquiladora sweatshops, which mainly produce textiles. He also plans to recruit a number of educational institutions--including vocational and charter schools (which he has founded in the past)--to create “an education enclave.” “Good education institutions increase land value, and they’re a huge attractor,” he said.

In the short run, however, MKG will focus its efforts on building affordable housing and attracting employers to the first half-square mile of the city, which will begin construction sometime in the next six months. Strong told the AP last Wednesday that tenants have yet to sign on, but that he and his [undisclosed] investors hope to have two or three within 18 months.

While MKG may have been awarded the first RED, it certainly won’t be the last project of its kind. Congressional president Juan Hernandez told the AP that two other sites have already been chosen--one in the Sula Valley in northern Honduras, and another in the south--but the agency tasked with implementing the RED has at least 10 potential sites under consideration. The question now is: Who’s next?
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So basically they are making libertarian style cities to experiment with? Sweet.
 
Geriatrix said:
Sure, um, let's see...

Time to put up or shut up for Libertarianism.

Think that's it.
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I secretly hope they get it right. I would prefer a better system than what we have, but I think your posting here, will be the last we hear of this experiment.

They should make a BLUE system as well to compare. One built on a strong welfare model like Canada has. Then after 20 years compare the two :D
 
ghoti said:
So basically they are making libertarian style cities to experiment with? Sweet.
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You mean like the Hong Kong?

"Special Economic Zones" have been around for ages. The FreeMarketFoundation even sent ANC people over to China to research and see some of China's very successful Special Economic Zones, unfortunately the ANC cadre's believe that if you call something special, that makes it special.

It's an old concept. Often they are far from libertarian and prone to failure. Lot's of research on this has been done by the very-libertarian FMF.

Here is their submission to parliament in March 2012: I have posted some excerpts below:
http://www.freemarketfoundation.com/DynamicData/Event_56.pdf

The successes are the the SEZ's in China:
" What we found is of considerable importance for policy makers. Firstly, China cannot be thought of as a
single economy or even as a single country as far as its economy is concerned. The diversity of economic
systems within China, from one province to another, is bigger than the diversity of economic systems
internationally. Secondly, almost all its growth (industrialisation, investment, etc) is not only confined to
provinces with high scores on the „marketisation index‟, but to a few special zones. Thirdly, these zones
have the freest economies on earth, if not the freest economies the world has ever known.

These are dramatic statements. We do not make them lightly, and took great care to check our facts.

Given the extreme multiplicity of economic systems within China, it can be thought of as the world‟s
most federal country, that is, as the country with most internal diversity and devolution of power. Given these extreme differences, China is, for present purposes, close to a controlled experiment in social
science. It is possible to see how diverse systems compare within a single country with most potential
confounding variables constant. Reliable data is notoriously difficult to obtain in China, but to the ext
that it is available, economic performance varies as widely as and in sympathy with economic diversi

China‟s freest province (Guandong) is nearly as free as the world‟s freest economy, Hong Kong, and
least free province (Qinghai) is less free than the world‟s least free indexed country, Myanmar. In oth
words, China has a bigger range of economic systems internally than the world has internationally.

The great diversity of systems within provinces explains only half the story. Almost all China‟s
prosperity, especially capital formation (investment,) is in a wide variety of special zones in the South
East. The most important of these are five Special Economic Zones (SEZs), followed by three Key
Economic Hubs (KEHs), and thirteen Economic and Technical Development Hubs (ETDH). The SEZ
are probably the freest economies on earth, and may be the freest economies that have ever existed. T
have extended tax-free holidays and, for practical purposes, no labour, competition, consumer, licensi
or minimum standards laws. There are no trade barriers or foreign currency controls, not even reportin
requirements. In the absence of accurate data, there is no needless anguishing about the “balance of
payments” or “foreign debt”.

Other special zones and special status attaching to individual enterprises include Open Cities, Free Po
Export Processing Zones and Special Economic Status, each of which has distinctive characteristics.

Not surprisingly, variations in living standards, and in regional or geographic product (GGP), are
extreme, ranging from areas with annual growth rates often exceeding 20% to backward areas in the
hinterland and north-west where people live in primitive conditions. Encouraged by the fact that weal
has been doubling every three to four years in the most successful areas (since the concept was introd
in 1979), the government has been increasing the number and diversity of zones throughout the count
to the point where practically all workers will be able to access new jobs with rapidly rising incomes
improving working conditions.

The evidence is compelling that China‟s extraordinary success is explained by its extreme internal
diversity combined with the dramatic increase of economic freedom in selected areas (especially in th
South-East). By virtue of localised increases in economic freedom, the country as a whole is, on avera
more free, its marketisation index having increased from 4.87 in 1999 to 5.98 in 2002.

China‟s policy reforms predict its rapid progress towards modernisation."

Failures of SEZ's:

"1. Most SEZs – there are thousands – are failures
“SEZ” is used here to connote all kinds of special zone and status intended to create especially
attractive conditions that are distinguished from what otherwise applies in a host country.

2. This includes South Africa’s failed attempts at SEZs over the past half century
South Africa has had many SEZs such as apartheid “growth points”, “border industries”, industry-
specific “export incentives”, “temporary removal of restrictions” zones, and Industrial
Development Zones (IDZs). Recent variations on the theme include Koega, Richard‟s Bay, East
London and OR Tambo. These are all failures in that none have (a) attracted substantial profitable
investment, and (b) most have consumed more wealth in the form of infrastructure, subsidies and
concessions than they have produced in the form of genuine and sustainable profit.

3. SEZs must be thought of as ―offshore‖, that is, for relevant purposes, as not being in the host
country
For SEZs to be taken seriously, both by those who create them and those who invest in them, they
must be informed by an unambiguous acceptance that they are “offshore”, which means that they
should not be subjected to laws, policies and taxes that discourage, in the country as a whole, the
kind of investment envisaged for SEZs. This is the most difficult reality for a government in any
country to come to terms with. It is especially difficult in democracies to get popular support for
the fact that foreign exchange controls, labour laws, taxes, immigration controls, minimum
standards, and the like, cannot be applied in SEZs if they are to be successful.

4. SEZs are not necessarily a geographic concept; it should be thought of as a status that can
be conferred on any enterprise, whether in or out of a physical ―zone‖
Once the essential nature and purpose of SEZs is properly understood, it becomes clear that the
crude concept of a physical place with fences and border controls, and teams of bureaucrats and
consultants, is misplaced. All necessary controls to facilitate that from which SEZs are exempt,
can quite adequately be achieved administratively at minimal cost by, for example, the
requirement of specialised audits.

SEZ administration and management is best outsourced or left to private competitive enterprise.
There is every reason to believe that officialdom and bureaucracies are unlikely to be good at
either identifying the ideal locations for SEZs or running them efficiently. Even if, as is typical in
South Africa, they are run by government structures, many or most of the administrative and
managerial functions can and should be outsourced. Needless to say, allowing private businesses
to establish and administer SEZs, or undertake specified SEZ functions, entail ideal BEE and
B-BBEE opportunities.

5. New SEZs are at a conspicuous disadvantage being preceded by thousands of others, some
of which have impressive track records and have gained the confidence of local and
international investors
Only a small proportion of SEZs established in modern times have been successful in any
meaningful sense. Most have been forgotten or abandoned. More seriously, most have been a
Here is the FMF's submission parliament substantial drain on the host country‟s resources because (a) a considerable initial investment in
infrastructure, administration and marketing is required, and (b) there is a reluctance to accept
failure, which induces governments to make increasingly wasteful investments in a desperate
attempt not to lose face. This has been a singular characteristic of South Africa‟s experience from
apartheid “growth points” to Koega.

We appreciate that enormous investments have been made in South Africa‟s failed SEZs from
homelands to harbours and that current policy will be heavily influenced by a desire for these
investments to be vindicated. If it is at all possible, policymakers need to liberate themselves from
this constraint, stand back, and look at the big picture with political will and vision. This may
involve swallowing some bitter pills and locating SEZs in places that make objective and business
sense, on one hand, and providing for SEZ status anywhere in the country, on the other. This is
not to say that existing initiatives need to be abandoned. They may well, on purely objective
grounds, be ideal. The point is that policymakers should be free from an assumption that they
must be successful regardless of cost or other rational considerations.
 
Both you guys are REALLY slow... these have been tried and tested. The data is there. Hell here is some DATA and EMPIRICAL RESEARCH on Sweden and why it is successful. (Hint: It is not because of it's welfare model.)

Empirically, economic freedom in the libertarian sense is the greatest predictor of the success and prosperity of a country. The empirical data which Ghoti loves, but ignores since it doesn't suit his argument, clearly points to this.

Even countries labelled as ambassadors of the "welfare system" such as the Scandinavian countries, are successful because of their free market policies not their socialist ones. Extensive, non-austrian empirical research has been done on this as well. But again, it doesn't make the Front Page of "left-wing" media or John Stewart so it's ignored by the so called "science" loving left (They don't love science, just science that argues they are right)

Here is the paper by The Institute of Economic Affairs based in London (a non-specific pro-market thinktank - there are many like it with roots from all spheres of pro-freedom/liberty ideas in economics and philosophy. Has some ties to the Hayek (He taught in London and was very prominent in England so it makes sense) but mostly it seems to be made up of just general pro-market thinkers, regardless of specific boxes or catagories.)

http://www.iea.org.uk/sites/default/files/publications/files/Sweden Paper- revised.pdf

I'm sure Ghoti will ad hominem attack the author or the Institute for some association of theirs rather than the research, data and findings but that's his style.
 
ghoti said:
Hong Kong have some wonderful welfare programs going. They are considered one of the 5 welfare states in South East ASia.

http://www.swd.gov.hk/en/index/ <=--- Their social welfare government website
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ROFL. Perfect example. Ghoti now argues that, a free market success story is successful because of socialism!

That's why I don't bother pointing to any research, Ghoti simply ignores it.

The data, CLEARLY shows a strong positive correlation between ECONOMIC FREEDOM, as measured. Go find one of your prosperity, happiness or index's (You know the ones that take into account mortality and education etc. etc.) and compare those with high scores on that index to any economic freedom index such as Heritage.

If a so called "balanced" system is the best one, you would get a bell curve and the correlation would be 0.5 or 50%. You don't, the best countries are "high and too the right" (Graphed with prosperity and economic freedom)

[video=youtube;v1U1Jzdghjk]http://www.youtube.com/watch?v=v1U1Jzdghjk&playnext=1&list=PLF83BEA0D8CB1EF08&feature=results_video[/video]
 
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ghoti said:
http://www.scientificamerican.com/article.cfm?id=the-social-welfare-state
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ROFL.

I just posted research which debunks that, research that specifically looks at the link and variation within Sweden between socialism and capitalism and clearly demonstrates the causal link between prosperity and economic freedom and that regardless of what catagory you prejudice puts Sweden into (Capital/Welfare/Communist), the successes are a result of economic liberalisation and NOT state intervention.

You simply like to put which ever country is "successful" in the "Welfare" box and which country isn't succesful in the Capitalist or Communist box.

Fact, every country is a mix of market and state economies.
Fact, the difference between countries is the degree of market vs state intervention.
Fact, YOU DO NOT FIND A BELL SHAPED CURVE which the data would show if you were right, I.E the data would show those countries with the right "balance" being the highest, and countries with too much intervention (North Korea) and too little (Hong Kong, Singapore, Canada etc.) would lower outside the "high" middle part of the bell curve.

Guess what. You don't see that. Tough takkies bud.
 
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The best example to illustrate you approach (Simply claim which country is a success is a socialist one) is your claim about some of the most free-market orientated societies on the planet, those regarded by all index's which seek to measure economic freedom, such as Canada, Hong Kong and Singapore are socialist models.

They aren't. I've never heard anyone else EVEN flat out commies argue Canada is a socialist/welfarist model.

And if you are talking about Canadian healthcare, I'll take South Africa's current private healthcare any day. Much better quality of care and no 5 hours waits at the local clinic (If you are lucky)!
 
[video=youtube;awKbjoGTXb8]http://www.youtube.com/watch?v=awKbjoGTXb8[/video]
 
&

[video=youtube;cGsLhyNJBh8]http://www.youtube.com/watch?v=cGsLhyNJBh8&feature=related[/video]

Good scenes from the Newsroom.
 
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