Next for Honduras: “charter city” neocolonialism?

A startling article in the New York Times May 8 noted that Honduras in late 2010 passed a constitutional amendment drawn up by the administration of President Porfirio Lobo that allows the creation of a separately ruled “Special Development Region” within the country—where the national state would have limited, if any, authority. The article, entitled “Who Wants to Buy Honduras?,” portrays a vision for privately run islands of order and security amid the squalor and violence of the impecunious Central American country. This was apparently the brainchild of a young Lobo aide, Octavio RubĂ©n Sánchez Barrientos, who was taken with the ideas of US economist Paul Romer, theorist of “economic zones founded on the land of poor countries but governed with the legal and political system of, often, rich ones.”

Citing accounts in the Honduran press, the Honduras Culture and Politics blog notes that the new measure gives “the government the right to expropriate any contiguous region of land for the use of ‘Special Administrative Regions’ which will be owned in full by the government, but have their own fully autonomous court system, not answerable to the Supreme Court.”

The Charter Cities blog, devoted to Romer’s concept, feels the need to weigh in on the Times story, which appeared in reporter Adam Davidson‘s “It’s the Economy” column:

Q: Is the Honduran government putting land in the Special Development Region up for sale to foreigners?
No. Though attention-grabbing, the headline that the editors chose for Adam’s piece—”Who wants to buy Honduras?”—in no way reflects the actual specifics of the Honduran proposal for a Special Development Region (known locally as la RED). If and when the Honduran Congress approves a physical boundary for the RED, the responsibility for managing the land within it will be given to an autonomous RED government. The land itself will remain part of sovereign Honduran territory, albeit under the different system of rules in the RED. In managing the land, the RED government will lease parcels to private developers, all of whom will be subject to the authority of the independent RED government. What the Hondurans envision is a fiscal arrangement in which land leases help to finance the provision of public goods in the RED, much as they do in Singapore or Hong Kong.

But the “concept” page on the Charter Cities website makes clear the agenda:

The Role for Rules
In too many places, weak or outdated rules hold people back. Some rules limit who can sell power, so electricity is expensive. Others fail to contain crime. Others make it difficult to start a business or open a plant. Because of this, firms build new factories not in places where the need for work is highest, but in places where electricity is inexpensive, people and property are safe, and doing business is relatively easy. The few workers who manage to migrate from places with inefficient rules to places with better rules end up earning wages that are many times higher than what they can earn in the places they leave behind.

The world’s poor know that better rules prevail elsewhere. Gallup reports that 630 million people would like to move permanently to another country. If they could, more would surely follow, but they cannot because voters in the countries where they want to go, the countries with the best rules, will not let them in.

The world needn’t choose between forcing migration on countries that do not want it and shutting out those who want to escape inefficient rules. Charter cities offer a third option. By copying rules that work, new cities can quickly give millions of people the chance to move to places that start with better rules.

Of course, the law is too burdensome (“outdated”) for corporations, yet too “weak” when it comes to “containing [street] crime.” Funny, New York City’s exorbitant electricity rates haven’t gone down since the Con Ed monopoly was broken up and deregulation instated more than 15 years ago. And are immigrants trying to get into the United States because they admire our “rules”—the very “rules” which in many states deny them basic rights? Or are they coming here because corporate land-grabbing and free-trade (“neoliberal”) economics have made life untenable in their own countries?

Dawn Paley on Upside Down World notes a report plugging the Charter Cities concept by Romer and fellow NYU urbanization academic Brandon Fuller for Canada’s Macdonald Laurier Institute. The report sees a role for security forces from foreign countries in policing the REDs:

The RCMP, perhaps in partnership with another respected policing authority such as the Carabineros de Chile, could greatly enhance security and quality of life in the RED by establishing a presence in the zone—training police officers and holding officers accountable for modern standards of service and conduct in policing.

Paley can’t resist adding: “Yea, you read that right. Sorry if you just lost your lunch. The idea here is to bring in two national police forces whose origins are in the decimation and repression of Indigenous peoples and put them to work in a new colony.” We recently noted Carabineros’ repression of indigenous peoples in Chile (and, less recently, the RCMP’s essentially similar if less bloody actions in Mohawk country). This has particularly ominous implications in light of the land expropriations seen in the RED proposal.

Acknowledging the growing vogue for neocolonialism even while attempting to downplay it, Foreign Policy blog on June 5 thusly answered a reader’s question, “Why don’t countries buy territory like they used to?”:

The closest thing that happens like this today are deals like China’s state-run Heilongjiang Beidahuang Nongken Group’s purchase of 800,000 acres of Argentina to grow crops for export to China. Or South Korea’s Daewoo Logistics’ lease of 3.2 million acres of farmland in Madagascar, half the island’s arable land. Neither were quite the Louisiana Purchase and no borders have technically been redrawn, but these megadeals raised controversial questions about national sovereignty in the host countries. (Madagascar’s new leaders backed out of the Daewoo deal in 2009.)

Davidson’s Times story also noted the abortive Madagascar deal, which was shelved after the country’s 2009 popular revolution that ousted the Lobo-type neoliberal regime of Marc Ravalomanana.

On May 11, GRAIN, an NGO “that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems,” responded to a UN statement on the fast-growing phenomenon of corporate “land-grabbing” in the developing world. Civil society groups issued a “Declaration of Buenos Aries” denouncing the findings of a study by the UN’s Food and Agriculture Organization (FAO) on land-grabbing in Latin America, “Dynamics of the Land Market in Latin America and the Caribbean,” writes GRAIN:

FAO’s claim…that “the land grabbing phenomenon is in its early stages and only found in two large countries: Argentina and Brazil” set off alarm bells for conference participants and provoked a highly critical analysis of the FAO’s position…

Taking control of large extents of land, territories and related rights is a problem regardless of whether we are talking about Beidahuang Group (a state enterprise of the Heioljiang Province of China), Hassad Food (formed by the Qatari government), a company like CalyxAgro (a subsidiary of the French group Louis Dreyfus Commodities) or Adecoagro (directed by the Hungarian-American investor George Soros).

Global agribusiness’ brutal expansion in Latin America is one of the main factors driving land grabbing in the region. Other important causes include mining in countries such as Argentina, Chile, Peru, Ecuador, Costa Rica, Mexico and Guatemala, as well as the mega hydroelectric projects and the large tourism businesses that usurp common land. It is also important to note that false solutions to Climate Change such as those represented by REDD+ and the planting of monocultures for biomass production for energy purposes are further conducive factors to land grabbing in Latin America.

We have already noted land-grabbing under the UN’s Reduction of Emissions from Deforestation and Degradation (REDD) mechanism. RED and REDD seem to be urban and backcountry exponents of the same phenomenon. China getting in on the neocolonial act (in Argentina, where expansion of the soy economy has seen much oppression and unrest) is perversely ironic—resentment of the “international settlements” in Shanghai and other Chinese cities, and “extraterritoriality” (the principle that foreign nationals on Chinese soil were not subject to Chinese law), were instrumental in the rise of China’s revolutionary movement in the first half of the 20th century.

See our last posts on Honduras, China in Latin America, the mineral cartel‘s regional operations, and corporate rule.

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  1. Charter cities and competitive governance
    You’re rightly concerned about the many ways in which states and corporations can and do injure vulnerable people. But I think you’ve overlooked the potential for competitive governance—an alternative political order, radically distinct from the cartel of segregated states that has presently balkanized our world, in which interested developers compete with one another to attract residents to their territories—to shield us from these attacks. In a competitive marketplace of free cities, those city developers who were most successful at designing institutions to protect their residents against aggression and exploitation would, ceteris paribus, attract more residents than would their less-successful rivals. Their cities would therefore grow and multiply, thus absorbing an ever-larger fraction of the world’s population into havens of liberty, security, and prosperity.

    The centralized state, which only lately made its entrance upon the world stage, will soon enough say the last of its lines and leave the scene. What comes next will not be paradise. The sea will not turn to lemonade, and the human condition will not be reformed. We will need practical political institutions by which to solve, as best we can, the problems of ordinary social life. The project of competitive governance is one attempt to design and build these institutions. I invite you to try your own hand at this work—but when you do, I believe you will find that your designs bear a greater likeness to those of Paul Romer and Patri Friedman than you would have predicted.

    1. “competitive governance”? No thanks…
      Where did you get that terrifying phrase? That’s a real two-fer, congratulations. The word “governance” is bad enough—it sounds almost like “government,” without actually implying the rights, responsibilities, participatory nature and notions of self-determination and soveriegnty imparted by the word “government.” But then you go one better by adding the word “competitive”—implying that “governance” is just another marketplace commodity; good “governance” is presumably for those who can afford it, a privilege of the rich. Pretty chilling.

      Try my own hand? I already published my vision for an alternative urban future almost 15 years ago. It is online at the Interactivist website. It is the precise antithesis of the Romer-Friedman dystopia. Happy reading.

      1. Thanks.
        I agree that “competitive governance” is an ugly phrase. I wish I could think of a better one. The concept it tries to capture dates back to Spencer Heath, an obscure American philosopher who proposed a kind of anarchy based on the continuous migration of individuals among multitudes of private cities. It was later picked up, in a slightly different form, by Robert Nozick, who called it the “utopia of utopias.”

        I like secession and radical federalism as much as you do, but I do not think that they are an adequate response to the moral failure of our civilization. The billions of people who are presently mired in a miasma of poverty and insecurity do not need libraries of enlightened political philosophies; they simply need billions of plane tickets to liberal and prosperous cities where they can earn a real wage and have their rights enforced by competent police and just courts.

        We could discuss how the incentives created by migration would, over time, inexorably transform a world of radical federalism into a world of competitive governance, and why such a change would be for the better. This claim rests on some interesting arguments. But today’s problems really are enough for today. If Paul Romer and his menagerie of allies can somehow engineer the success of a few charter cities, they will set off a social avalanche that will put an end to poverty and tyranny in less than twenty years. I know that you can make persuasive arguments that no such outcome could ever take place. I can live with long odds. I’m doing what I can to shorten them.

        1. Thanks but no thanks
          So private “governance” is “an adequate response to the moral failure of our civilization”? Get outta here.

          The oppressed assuredly do not need plane tickets to your free-market utopian outposts. They need land and freedom. Freedom from those who would usurp their land to build free-market utopian outposts…

          1. From land and freedom to norms and institutions
            I think you’re introducing an unwise level of abstraction when you put forward the concept of “land and freedom” as the necessary condition of human flourishing. If “land and freedom” is a metonym for your personal rights, somehow understood, then you must face the reality that these rights are only operative to the extent that they are recognized and respected by the people with whom you associate, and that this condition, in turn, depends upon the existence of a sophisticated body of social norms and institutions that valorize your rights and subject anyone who might infringe them to opprobrium and punishment.

            In Toronto, for example, these norms and institutions are well developed. Residents of Toronto therefore live in a society where they can be confident that a wide array of their personal rights will be recognized and respected by their fellows. In Port-au-Prince, on the other hand, these norms and institutions are not well developed. Residents of Port-au-Prince therefore live in a society where they cannot at all be confident that their personal rights will be recognized and respected by their fellows.

            This inequity is what I take to be the central moral failure of our civilization. It could be ended tomorrow, simply by opening the borders of today’s most liberal and prosperous societies. But racism stands in the way of this solution, and it shows no signs of stepping aside any time soon.

            You would like see those unlucky Haitians don the garland of “land and freedom.” So would I. But developing autochthonous rights-defining and rights-enforcing social norms and institutions takes hundreds of years. Transplanting developed norms and institutions from one culture to another takes decades. And both of these projects more often than not end in failure.

            I don’t beat the drum for charter cities because I’m a libertarian who wants to set up shop in a “free-market utopian outpost.” I’m not a libertarian, and, in fact, the overwhelming majority of charter cities will not be very libertarian, either. I beat the drum because I believe that it is only by building new cities that we stand a chance, for the first time in our history, to give everyone in the world access to the norms and institutions that make civilized life possible.

            1. land and freedom necessary for “norms and institutions”
              Wow, you don’t quit, do you?

              “Land and freedom” is no more “abstract” than “norms and institutions.”

              Now, why do you think that “norms and institutions” are more “well developed” in Toronto than Port-au-Prince? Do you think maybe it has something to do with the fact that Haiti has suffered under one oppressive US-backed regime after another since the Marine Corps intervention of 1915, propping up a small, oppressive oligarchy? Base determines superstructure, dude. Go read some Marx.

              1. Even more norms and institutions
                Our civilization would be in a much better state if it had not so often been laid low by the crimes of aggressive states. But we can’t turn back the clock, and neither are we likely to persuade the multitudes of people who have been variously advantaged by such crimes to make just reparations.

                The distinction between abstract statements of political principle and concrete descriptions of the social conditions that realize those principles is sharper and more significant than you have admitted. Contrast, for example, the statement: “Women need freedom from sexual harassment in their workplace!,” with the (admittedly less memorable) statement: “When a woman is in her workplace, she is unlikely to experience sexual harassment if: (a) her coworkers recognize that certain acts and attitudes constitute sexual harassment; (b) they largely recognize that sexual harassment is odious and dishonorable; and (c) to whatever extent they may yet be inclined, whether through malice or negligence, to engage in sexual harassment, they are nonetheless deterred by their knowledge that they will be shamed and punished if they do so.”

                When I go on about norms and institutions, I’m not parroting some shibboleth that Professor Romer scribbled out with a purple crayon in his office last year. If we believe, for example, that the prevalence of sexual harassment has nothing do to with the norms and institutions that ignore, tolerate, or condone acts of sexual harassment, or if we believe that it is beyond our power to reform these norms and institutions, then we have submitted to a very bleak doctrine of social fatalism. I do not think that this capitulation is justified by reason and evidence. That norms and institutions serve the interests of those who create them is true, but it is also innocuous. Our interests are not wholly mercenary. We are deeply interested in our own material welfare, but we are also deeply interested in other ends, such as the cultivation of our virtue and generosity. And when we make an effort to give sustained attention to these ends, and to develop in ourselves a love for them, we thereby change our interests, and thence the norms and institutions that reflect our interests.

                1. “deeply interested in our own material welfare”
                  We had a hunch.

                  Virtue and generosity and love, as long as you can make a mint, eh?

                  So Toronto’s “norms” on sexual harassment can be simply imported to Honduras in privately run urban enclaves? And the general populace will be invited in? Who are you kidding? These will be enclaves for the country’s tiny bourgeois class and foreign investors and adventurers, with the general populace allowed in only as exploited labor, probably to wield guns to keep out the rest (e.g. when they try to take back their lands “expropriated” for your cities). This is a recipe for apartheid if we ever saw one. We’ll keep fighting for agrarian reform (land) and democratic rights (freedom), thank you.

                  Who is your “we,” by the way? You suddenly switched to the first-person plural, without identifying any institution that you are affiliated with.

                  1. I suppose it’s the royal “we.”
                    I’m not affiliated with anyone. I’ve been privately interested for many years in the idea of advancing the cause of liberty and prosperity by building innovative new cities, and I’m presently developing a suite of technologies for ordering social intercourse within and among such cities with more power, grace, and efficiency than would otherwise be possible. I hope to have them in a deliverable state by the time that the first charter cities open for business.

                    I’ll be happy to advance arguments to back up my claim that the developers of charter cities will, in fact, be able to earn large profits only by producing economical public goods for large numbers of residents, just as the private, self-interested producers of other goods, such as beer and motor vehicles, must also serve the needs of the many if they intend to make it big in the marketplace. But I’m not going to insist upon convincing you of this. These arguments are technical and they admit all sorts of reasonable objections, which I could never hope to answer to your satisfaction.

                    People accept and embrace the social norms of the jurisdictions to which they migrate all the time. And in a world of many different charter cities, in which many different permutations of these norms are on offer, prospective residents would be all the more likely to do well in their chosen jurisdiction.

                    In any case, I’m glad that you’re working to reform our political institutions. I wish you great success.

                    1. “reform our political institutions”
                      It would be more accurate to say I’m working to overthrow them. But thanks.

  2. ‘Privatized cities’ in China
    It seems that the notion of “privatized cities” has advanced further in “communist” (sic!) China than just about anywhere in the world. A chilling BBC report on Nov. 26 provides an in-depth look at the “ocean-themed” planned community of 400,000 (actually in land-locked Sichuan province), which is owned outright by one man—dubbed Chairman Huang. BBC calls it “a paradigm-shattering model of Chinese urbanism. In this city, utilities, and land are operated by a private individual…” Further quotes: “Huang says was inspired by Dubai and Disneyland… They took all the peasant lands in the area to build it…. There are no government cadres doing any planning here….”

    And fools still think the People’s Republic of China is “socialist”—both left-wing fools who love it and right-wing fools who hate it. You fools! It is more capitalist than the goddam USA!