A look at Próspera, the charter city taking shape in Honduras

A look at Próspera, the charter city taking shape in Honduras. Astral Codex Ten, Apr 14 2021. https://astralcodexten.substack.com/p/prospectus-on-prospera

                                      Extracts

6. Will Próspera be a libertarian / anarcho-capitalist utopia?

Sort of but not really.

The people behind Próspera are mostly libertarians, but they’re trying to avoid using the word “libertarian” too much when talking about their project. Partly because the libertarian brand scares people. But partly because their vision is more complicated than just small government.

Charter cities fall into an awkward crack in libertarian ideology. Almost every libertarian agrees that you can make rules (even arbitrary rules) about what people can do on your own property, and anyone who wants to stay on your property has to follow your rules. But what’s the difference between that, versus a government “owning” its territory and making rules for its citizens? In practice the difference is that going in someone’s house - or even their golf course - is a choice you made, and they have clear title of ownership. But being in a country happens involuntarily, and the President doesn’t “own” America in the same way an ordinary person might own a house.

But if someone did own an entire city, and you chose to be in that city, theoretically they should be able to make whatever laws they wanted, and not even the most zealous libertarian could protest. The issue hadn’t really come up before. But here we are.

Próspera is erring on the side of small government, because that’s what they expect will work best. But their overriding motive is making their city a nice place to live and work, and when small government conflicts with that, the city usually wins.

So for example, when you buy land in Próspera, you’ll have to sign a Covenant Restricting Vice Industry Uses - ie you can’t turn your house into a joint brothel+casino and do unethical medical experiments in the basement. Even the strictest libertarian has to admit this is fair; if you sign a contract, you’ve got to follow it. But you can tell HPI plans to have the town be ship-shape, well-organized, and family-friendly, instead of the sort of Wild West vibe some people associate libertarianism with.

Also, Próspera remains bound by several Honduran laws that Honduras refuses to exempt them from, including laws against abortion, euthanasia, and most gun ownership.

6.1. But they’ll at least have really low taxes, right?

The lowest in the world.

The Próspera Charter declares that income taxes cannot exceed 10%; anyone who wants to raise taxes above that will have to pass a full constitutional amendment in a system deliberately designed to be hard to change. There are also some other minor taxes, but the Charter says that (after certain conditions are met) total taxes may never exceed 7.5% of GDP, and total debt may not exceed 20% of GDP (with various specifications and caveats). From HPI documentation:

This is a key improvement upon the American system, as unlimited debt can potentially lead to untenable fiscal situations which threaten the economic health, stability, and shared prosperity of the jurisdiction

Where do the taxes go?

- 12% go to Honduras, as their incentive for allowing ZEDEs at all
- 44% go to the General Service Provider, a private company that handles things like sanitation and power. This will probably be an HPI subsidiary which subcontracts out to Jacobs Engineering, the same company that did a lot of the work in Sandy Springs.
- 44% go to the Próspera municipal government, to handle whatever services they can’t subcontract out.

How does HPI make money? They get a cut of the membership fees and the General Service Provider money, but their real cash cow is probably land development. They buy empty land, develop it into a thriving city, then sell it to people who want to live in thriving cities at a huge markup. The more thriving the city, the higher the land value, and the more money HPI makes - which they think puts the incentives in the right place.