Sunday, September 23, 2012

Model city to use laws of Texas

Some supporters of a plan to build private cities in Honduras have described it as creating "a little Canada" in the country.
It turns out the backers of the first city to win government approval want to create a "little Texas" on the country's Caribbean coast.
I've written about the model city plan here and here. The notion is that the private cities would be a chance to start from scratch, with the rules made by technocrats and the investors. Instead of fixing Honduras' problems, you create new states within the country with different laws, policing, education and health systems and tax structures. Crime and corruption would be banished. The constitution would apply, but basically the owners would have something close to their own country to run.
That raises obvious concerns. The interests of the owners and investors might best be served in ways that are bad for Hondurans living in the new cities.
But the idea is appealing in a country facing widespread poverty and weak institutions of all kinds. 
The first developer - owner? - is off to bad start. 
MKG Group hasn't offered many details in Honduran news reports or on its website.
But CEO Michael Strong was more forthcoming with, which presented this report.
 “Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” he said.
And the new legal system, separate from laws on the rest of Honduras, would be based on Texas state law, because it has few regulations.
“It will be Texas law with more freedom of contract," Strong told Fox News. "Texas scores well on state economic freedom rankings,” he explained.
Our goal is to be the most economically free entity on Earth,” he said.
Music to libertarians' ears. But does that mean no minimum wage, no employment standards, no health and safety rules?
Strong also said the new city would have no income, sales or capital gains taxes. (Honduras' existing factory zones offer foreign business investors 10 years of no taxes, although income taxes still apply.)
Which raises questions about who will pay for the vision of better health care, education and policing. 
The biggest problem might be where MKG has chosen to share its plans for the new city.
The private city plan is controversial and facing political and legal challenges in Honduras.
Yet the report is in English and available on the Internet. Few Hondurans speak English, and about 85 per cent don't have Internet access.
The concerns about private cities are, in part, that the owners won't care about the interests of Hondurans, or will at least put the interests of foreign investors first.
MKG's decision to share details with Fox News and an English-speaking audience, before informing Hondurans, will add to those concerns.