DISGUSTED by an increasingly invasive
state, America’s most capable entrepreneurs retreat to Galt’s Gulch, a
libertarian commune. That was the theme of Ayn Rand’s magnum opus,
“Atlas Shrugged”, a sacred text for libertarians ever since it was
published in 1957. Actually creating such an enclave has been the dream
of many fans of small government (or of none at all). Several have had a
try at it, but their efforts have always ended in disaster (see table).
Now, for the first time, libertarians
have a real chance to implement their ideas. In addition to a big
special development region, the Honduran government intends to approve
two smaller zones. And two libertarian-leaning start-ups have already
signed a preliminary memorandum of understanding with the Honduran
government to develop them.
One firm goes by the name of Future Cities Development Corporation. It was co-founded by Patri Friedman, a grandson of Milton Friedman, a Nobel laureate in economics, and until recently executive director of the Seasteading Institute, a group producing research on how to build ocean-based communes. The other is called Grupo Ciudades Libres (Free Cities Group) and is the brainchild of Michael Strong and Kevin Lyons, two entrepreneurs and libertarian activists.
Both share a purpose: to build “free cities”. Last April all three spoke at a conference organised by Universidad Francisco Marroquín, a libertarian outfit in Guatemala. In September they and Giancarlo Ibárgüen, the university’s president, launched the Free Cities Institute, a think-tank, to foster the cause.
As so often with enthusiasts, divisions
within the cause run deep. The two firms hail from different parts of
the libertarian spectrum. Mr Friedman is an outspoken critic of
democracy. It is “ill-suited for a libertarian state”, he wrote in an essay in 2009—because
it is “rigged against libertarians” (they would always lose) and
inefficient. Rather than giving its citizens a voice, he argues, they
should be free to exit; cities should compete for them by offering the
best services.
The second firm’s backers appear to be
less radical. A founder of several charter schools, Mr Strong is now the
force behind FLOW, a movement that claims to combine libertarian
thinking “with love, compassion, social and environmental
consciousness”, says its website.
He too prefers exit over voice (meaning that he thinks that leaving and
joining are better constraints on executive power than the ballot box).
But he also believes that democratic consent is needed in certain
areas, such as criminal justice. His goal in Honduras is less to
implement libertarian ideals than to reduce poverty and to speed up
economic development.
Some in the Honduran government have
libertarian leanings, which is one reason why the authorities have moved
so quickly. But when the master developers for the new zones are
selected next year, strong political credentials will not be enough—and
may even prove to be a drawback. Mr Friedman is stressing a difference
between his political beliefs and his firm. “Ideology makes bad
business,” he says, adding that Future Cities Development wants to focus
on the needs of the people who live in the city.
Yet the biggest hurdle for the
libertarian start-ups may be that the transparency commission, which
will oversee the development regions, is unlikely to give them free
rein. The “constitutional statute”
for the development zones, which the Honduran national congress passed
in August, does not leave much wiggle room in key areas, not least when
it comes to democracy: ultimately their citizens will vote.
Both firms, however, have links to
prominent libertarians with deep pockets. Mr Strong is close to John
Mackey, the co-founder and chief executive of Whole Foods, a high-end
supermarket chain—though Mr Strong says that Mr Mackey already has too
many other things on his plate. Mr Friedman’s contacts seem more
promising: the Seasteading Institute received lots of cash from Peter
Thiel, a Silicon Valley billionaire who founded the internet payment
service PayPal and was an early investor in Facebook, the world’s
biggest social network.
Mr Thiel’s ambitions go far beyond
scouting out the next big thing in technology. “I no longer believe that
freedom and democracy are compatible,” he wrote in an essay in 2009.
This is why libertarians should find an escape from politics, he added.
“Because there are no truly free places left in our world, I suspect
that the mode of escape must involve some sort of new and hitherto
untried process that leads us to some undiscovered country.” Back then
he had the ocean or space in mind. Honduras would certainly be more
convenient.
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