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News Link • Philosophy: Libertarianism

Former “Seasteaders” Come Ashore To Start Libertarian Utopias In Honduran Jungle

The seasteader-in-chief is headed ashore. Patri Friedman (that’s Milton Friedman's grandson to you), who stepped down as the chief executive of the Peter Thiel-backed Seasteading Institute in August, has resurfaced as the CEO of a new for-profit enterprise named Future Cities Development Inc., which aims to create new cities from scratch (on land this time) governed by "cutting-edge legal systems." The startup may have found its first taker in Honduras, whose government amended its constitution in January to permit the creation of special autonomous zones exempt from local and federal laws. Future Cities has signed a non-binding memorandum of understanding to build a city in one such zone starting next year.

Seasteading, i.e. the creation of sovereign nations floating offshore, is enshrined in libertarian thought as an end-run around the constraints of stodgy nation-states. The idea has received plenty of (mocking) mainstream coverage, most recently in a Details profile of Thiel, in which Friedman outlined the new startup he had in mind:

One potential model is something Friedman calls Appletopia: A corporation, such as Apple, “starts a country as a business. The more desirable the country, the more valuable the real estate,” Friedman says.

Future Cities follows this approach, describing its mission as bringing “Silicon Valley’s spirit of innovation to the implementation of cutting-edge legal systems in new cities," most likely in the role of the cities’ master developer. Citing laissez-faire entrepots such as Hong Kong and Singapore as examples, the company’s founders believe that strong property rights and business-friendly regulation are key to creating jobs, stimulating investment, and lifting millions out of poverty, a la China’s special economic zones. "The evidence is much stronger," Friedman replies when asked if he’s building another libertarian utopia, "that rule of law, fairness, and a lack of corruption leads to more economic growth than low taxes." (Not that they’re mutually exclusive, as Singapore demonstrates.)

Rule of law, fairness, and a lack of corruption leads to more economic growth than low taxes.

Instead of seasteading, Future Cities is modeling itself on “charter cities.” The brainchild of New York University economist Paul Romer (read his thoughts on FCI here), a charter city combines a host nation’s vacant land (in this case, Honduras) with the legal system and institutions of another (e.g. Canada) and residents drawn from anywhere. Romer’s central insight is that good governance is transplantable--rather than wait for a basket case nation to come around begging, a charter city could help show it the way, as Hong Kong did for Deng Xiaoping.

Romer spent two years jetting across Africa fruitlessly searching for takers before aides to Honduran president Porfirio Lobo stumbled across his idea last fall. In February, the Honduran Congress voted to amend the constitution to create Special Development Regions (called REDs) in order to implement his ideas. But it wasn’t an exclusive deal. Romer says he first heard of FCD a month ago when its proposal was brought before the committee which oversees the REDs (of which Romer is a member).

Future Cities’ marketing materials quote Romer repeatedly and explicitly cites charter cities as “our model.” For his part, Romer emphasizes that he has no involvement with FCD and cites his nonprofit think tank’s strict conflict-of-interest policy. While Romer shares the belief that neoliberal globalization can be harnessed toward humanitarian ends by creating work, skills, and a path out of poverty where there currently is none, he has no intentions of making money while doing it. (Friedman says his company is "inspired" by Romer’s model and didn’t mean to imply there was any relationship between the two.)

It remains to be seen whether FCD’s non-binding agreement with Honduras will proceed, or whether its leaders will elect to stick with Romer’s charter city for now. One thing that seems certain is that the FCD’s interest in Honduras--the recent site of a coup, human rights abuses, and land seizures--will bring a fresh round of criticism to the charter city model. While Romer has been battling unflattering comparisons to colonialism since he first presented the idea, FCD’s sudden interest in Honduras reads like an epilogue to The Shock Doctrine, Naomi Klein’s 2007 book tracing the checkered history of free market reforms in the wake of political crises (think 1970s Chile, 1990s Russia or 2000s Iraq). The Doctrine’s godfathers, in Klein’s telling, are Milton Friedman and his disciples in the University of Chicago’s economics department. Now it appears his grandson is offering to experiment with the legal system of one of Latin America’s poorest countries.

Friedman’s board members include Giancarlo Ibárgüen, president of University Francisco Marroquín in Guatemala City, Guatemala, a hotbed of libertarian thought where the library is named after Austrian economist Ludwig von Mises and busts of Friedrich Hayek and Milton Friedman decorate the campus. Ibárgüen is also a cofounder of the recently announced Free Cities Institute with Michael Strong, an associate (and arch-defender) of Whole Foods CEO John Mackey.

"The real audience that matters most is not the Naomi Kleins of the old," Patri Friedman says defiantly, "but the people of Honduras. If we can create jobs" and build a better city than the ones they have, "they’ll be happy."


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