Tuesday, January 22, 2013

Private Cities & Public Morality: Are Non-State Founded Communities Wrong?

Private Cities & Public Morality: Are Non-State Founded Communities Wrong?

- Kelly OConnell (Bio and Archives)  

In Honduras, a novel undertaking has been constructed—private cities whose purpose is to maximize safety and happiness (Also referred to as “Free Cities”, “Charter Cities”, “Model Cities”, or in Spanish, “RED—Regiones Especiales de Desarollo”, and “Ciudades Modelo”.). This idea is a capitalist’s dream, but a liberal’s nightmare. And in a most fascinating manner, the idea of a privately owned commons has brought to the surface the multifarious contradictions of the modern age—with our continual demand for “liberty” while the deified state grows into a malignant colossus.

While the charter for building three private cities in Honduras has been ruled unconstitutional, the idea is not yet dead as the full 18-member Honduran Supreme Court must still rule on President Lorbo’s agreement. But even if the idea does die in Honduras, private cities—like those modeled in early colonial America, Singapore and India’s old British empire, are still an option for virtuous, libertarian minded souls. In fact, Paul Johnson, in the Foreward to The Voluntary City, gives a rich history of the development of government growth slowly taking over self-governance in the West.
The real questions raised by the rise of private cities is what is the nature of the city, man, law and moral authority. Specifically, what is the meaning of law and the state? Further, what gives a country moral authority in which to erect statutes, establish courts, prisons and pass and enforce sentences? And how do the powers of the state intersect with religious ideals of justice and higher law? All these questions interested America’s Founders, and in a day of increasingly arbitrary leadership—we are still struggling to answer them.

I. Hope for Honduras via Private Cities

A. Honduras, Failed State

Honduras is the murder capital of the world. For a populace living in deep fear, and global business people disinterested in committing Foreign Direct Investment (FDI), a new notion was proposed. Given the failure of government to address the most basic needs of a society—safety for the populace created by a rule of law regime, and civil rights, someone proposed solution, explained here:
Honduras has the highest homicide rate in the entire world, according to the United Nations. In fact, in Jan. 2012, the Peace Corps suspended its programs in Honduras because of the threat of safety and security. Visitors to Honduras are encouraged to take extreme caution when visiting because of their implied wealth. All too often, North American and European visitors become the victims of rape, kidnapping, homicide, robbery, and assault in Honduras. As a result, the Honduran president, Porfirio Lobo, has suggested the creation of three so-called “model cities” to combat Honduras’s extreme crime rates, poverty, and corruption. As a result of Honduras’s extreme instability, building “model cities” seems like a good solution to combat crime and poverty.

B. Model Cities—Answer to Collapse & Chaos?

The idea—a city built by private funds, with rules not derived from a state legislature, but the settlement’s founders. Add to that a private security force and strong walls. And so a libertarian entrepreneur answered the call for action:
Last Tuesday, the government signed an agreement with private investors led by Michael Strong—a libertarian entrepreneur and close associate of Whole Foods co-founder and CEO John Mackey—to construct a city-from-scratch in one of at least three special development regions (“las Regiones Especiales de Desarrollo” or “REDs”) scattered around the country. REDs possess the legal right to establish—or outsource to foreign governments and companies as necessary—their own hospitals, schools, judges, and even police, all independent of Honduran law. The first is for profit, and if its founders have their way, it will look and feel a little like the Mosquito Coast’s answer to Austin.
REDs possess the legal right to establish their own hospitals, schools, judges, and even police. The REDs are the brainchild of Paul Romer, the New York University economist who has proposed building “charter cities” as a solution to endemic poverty. Romer believes that importing sound laws and policies into small corners of badly run countries will help leaders reform their governments from the inside-out. Honduras certainly qualifies—the original banana republic is still grappling with the political fallout of a 2009 coup while cocaine traffickers have pushed its murder rate to the highest in the world.
In early 2011, aides to Honduran president Porfirio Lobo invited Romer to the capital of Tegucigalpa to make his case to Congress. Within weeks, Congress passed a constitutional amendment granting Lobo’s government the power to create and administer the REDs.

C. Honduran Legislation for Model Cities

Support for this idea was given in the Honduran constitution—Article 304 of the Constitution of the Republic (authorizing establishment of an independent jurisdiction or the Special Development Regions (SDR’s).
The legislation’s text describes the warrant and intent of these model cities:
Chapter I—General Principles
Article 1
The Special Development Regions, hereinafter referred to as SDR’s, are an inalienable part of the State of Honduras, are subject to the Constitution of the Republic and the national government on issues related to sovereignty, territory, national defense, foreign affairs, elections, issuance of identity documents and passports.
Article 2
The SDR’s are entities created by the Republic of Honduras to accelerate the implementation of technologies that will lead to high added value production, in a stable environment, with transparent rules that attract the domestic and foreign investment needed to grow rapidly, create the jobs needed to reduce social inequalities, provide the population with education, health, public safety and the infrastructure necessary to permit an improvement in the lives of Hondurans.
Article 3
The SDR’s are urban in nature. The SDR’s can contract for the use and tenancy of land under its management without restrictions of nationality.
Article 4
The SDR’s are autonomous legal entities that have their own system of administration, promulgate their own rules and have their own judicial entities. Fundamental rights of individuals living in an SDR’s shall be protected by the constitutional guarantees safeguarded by the SDR’s Constitutional Councils. The judicial system will consist of a two-tiered court system with a right of remedy before the SDR’s Constitutional Councils
Article 5
The SDR’s are authorized to administer their own budget, have the right to collect and administer their own taxes, can determine the rates they charge for the services they provide, execute all types of contracts, and leverage their own internal or external debts provided they are executed without the endorsement of the State of Honduras. The authorities of the SDR’s must explicitly declare in the agreements or contracts referred to in this Article that the State of Honduras is not responsible in any way for the SDRs’ debts or financial commitments.
Article 8
The SDR’s have to establish their own police force and are authorized to perform the said function on their own or through proxy. Therefore, for this purpose the SDR’s may enter into cooperative agreements with other countries or regions.

D. Texas Law for Private Cities

One of the private cities plans on employing a modified form of Texas law for their charter. An explanation for why Honduras is considering such ideas as private cities is as follows:
An international group of investors and government representatives signed the memorandum Tuesday for the project that some say will bring badly needed economic growth to this small Central American country and that at least one detractor describes as “a catastrophe.” The project’s aim is to strengthen Honduras’ weak government and failing infrastructure, overwhelmed by corruption, drug-related crime and lingering political instability after a 2009 coup. The project “has the potential to turn Honduras into an engine of wealth,” said Carlos Pineda, president of the Commission for the Promotion of Public-Private Partnerships. It can be “a development instrument typical of first world countries.”

II. Historic Private City-States: Plymouth Colony

The idea of a private city undoubtedly seems like a lawless anomaly to most liberal-minded people. Yet, without privately funded foreign colonies, it is arguable America would never have come into being in the manner it did. The Virginia Company held an exclusive right to establish colonies on the American continent which were private cities under British franchise:
VIRGINIA COMPANY OF LONDON was a commercial enterprise established April 10, 1606 governing the Virginia Colony from 1609 - 1624. The Society of Adventurers, or investors, was patented to Sir Thomas Gates and Sir George Somers. This London company was a body of stockholders who acquired interest in the company by paying money, rendering service, or settling on land in Virginia. Investors had to raise funds, furnish supplies, and send out expeditions. The company was presided over by a treasurer and conducted all of its business through its regularly elected officers or through special committees. The governing council in England was subordinate to the king regarding affairs in Virginia. Each colony was to be governed by a council in London and in day-to-day matters by a local council.
In 1609, a second charter was granted to the company, converting it to a corporation and permitting public sale of stock. The entrepreneurs, with Sir Thomas Smith as treasurer, retained commercial responsibilities, assumed governmental functions, and reduced royal supervision. This new charter allowed the company to appoint a governor for the colony and the council in Virginia became an advisory body. The council of the company in London was chosen by the investors to act as a standing committee.

III. Debating Authority: Private Versus Public Cities

A. Are Private Cities Immoral?

Is it inherently immoral for private citizens to buy land, recruit residents, write their own laws, and then begin operating as a franchise community? If so, why? After all, what is it that makes a city, state or country legitimate? On the alternative, given the socialist direction many countries in the West are following, is it possible that only a self-derived city could chart a course against the political grain here? Or does mankind have to bow and scrape at the feet of the modern government colossus irrespective of whether it is just, moral, or effective—simply because it is called “government”? If so, what of the leadership of WWII Germany and the USSR?
If private cities are inherently illegal, what about the foundations of America, which were done along these same lines? Interestingly enough, the debate in the American colonies was over whether an immoral government had the right to dictate to men how to act. The Founders decided it did not. So the question raised is whether immoral modern governments can derail moral private communities? After all, what is a government in the first place?

B. Private-Property Anarchists

A group of writers calling themselves Private-Property Anarchists have taken on the theory that only the state possesses the inherent ability to organize a government or police its citizens. In a most obvious way this makes perfect sense since government will always be assembled from some group of residents who then decide upon rules, structure and powers of government. Why must we assume one group of freely assembled persons are more acceptable than another? Further, with the failure of much of modern government to address basic needs, how can anyone help but try to find a better way to manage the affairs of men?
In Anarchy and the Law, much criticism of government is laid at the feet of the failure of the justice system to create an acceptable outcome. Several aspects of law should be mentioned on this issue. The first is that it is a fairly recent development for the state to own all official policing powers. According to Bruce Benson’s The Enterprise of Law, Justice Without the State—the Anglo-Saxon law was fixated upon protecting property. Further, with the development of English lex mercatoria, ie mercantile law, much enforcement and many remedies to this day were created for enforcement by private parties.
In fact, even the criminal code was mainly enforced by private parties in the history of Anglo-Saxon law. It is a relatively recent development which was highly resisted by the population. Benson writes,
Englishmen also resisted public prosecution because “a private prosecutorial system was necessary to check the powers of the Crown. If not so limited the power of criminal prosecution could be used for politically oppressive purposes.”

C. Libertarian Leadership

The great fear in the liberal establishment is that a private system of government and law will be antinomian, that is—lawless and a mere tool for the use of greedy capitalists and megalomaniacs. Yet, the opposite is true. In fact, people allowed to build their own justice systems for their own small city-states are apt to be more motivated to create justice and order than those presiding over the legislatures of far-flung empires.
American citizens are certainly not pleased with the state of our justice system. For example, Edward P. Stringham in Anarchy and the Law argues—if the American legal system and police powers are so successful, and in effect—the only game in town—why do private police, i.e. ¬†security guards, outnumber official state police?
Benson points out that the American justice system is wildly inefficient and its results quite often unfair. For instance, 1982’s Figgie Report claims that any drop in crime is seen by the public as temporary. Also, while crime statistics are overall tending upwards, the number of actual crimes reported versus those committed by criminals has fallen. Fifty percent of assaults go unreported, as well as 60% of larceny cases. Further, about 80% of people surveyed believed that sentencing was not harsh enough, or that the justice system was really designed to rehabilitate offenders—instead acting as a school for the development of criminals. Overall, is it any wonder that Americans and citizens of other countries would be interested in modest yet effective attempts at creating safe and prosperous private communities?


The debate over private cities begs the question of what is a government in the first place. Let’s remember Jefferson’s sublime words from the Declaration:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.—That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness….But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.—Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government.
If critics attack the lack of inherent authority of private communities, what is their basis? If a private city creates a better economy, a more just police and legal system, and a safer environment than public communities—is it not the latter which are truly the immoral and lawless frauds? We do well to ponder the foundation of legitimate, God-given government. This can only be established upon the rule of law, civil rights and respect by the leaders for the consent of the governed—or all we have left is an illegitimate tyranny.
Kelly O’Connell hosts American Anthem on CFP Radio Sundays at 4 pm (EST).
Kelly O’Connell is an author and attorney. He was born on the West Coast, raised in Las Vegas, and matriculated from the University of Oregon. After laboring for the Reformed Church in Galway, Ireland, he returned to America and attended law school in Virginia, where he earned a JD and a Master’s degree in Government. He spent a stint working as a researcher and writer of academic articles at a Miami law school, focusing on ancient law and society. He has also been employed as a university Speech & Debate professor. He then returned West and worked as an assistant district attorney. Kelly is now is a private practitioner with a small law practice in New Mexico. Kelly is now host of a daily, Monday to Friday talk show at AM KOBE called AM Las Cruces w/Kelly O’Connell

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