Honduras is in the process of amending its constitution to authorize a “charter city” insulated from Honduran economic regulation.

Originally, they investigated allowing a foreign country to establish an “embassy” the size of a city, so that the new city could operate under foreign law as a center for investment and development.

The current plan is based upon economist Paul Romer’s idea of creating new Hong Kongs in developing countries with investment-friendly foreign controlled administrations and insulated from potential local political turmoil.

The idea is reminiscent of 19th century treaty ports. It sounds like neo-colonialism, and I do not mean that as a pejorative.

Frankly, I do not like the idea, because I prefer that the protection of individual right that would be instituted in these charter cities be available to everybody in the country. Localizing the protection of rights, reminds me of Jack Kemp’s promotion of enterprise zones, which were simply a temporary removal of the disincentives that government imposes upon production through the violation of individual rights.

However, compared to the status quo and a culture unwilling to respect rights, the ephemeral and local toleration of individual rights is an improvement….as Purgatory might be considered better real estate than Hell.

Would I be willing to invest risk capital in a charter city? Probably. Would I invest my life it one? Not likely.

Charter Cities: New Options for the Bottom Billion” by Paul Romer, Council on Foreign Relations, 1/25/2011

The Quest for a ‘Charter City‘” by David Wessel, Wall Street Journal, 2/3/2011

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