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How a start-up utopia became a nightmare for Honduras: US investors are suing Honduras over special economic zones, and the dispute could bankrupt the country
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- Title
- How a Start-Up Utopia Became a Nightmare for Honduras
- Authors
- Guillaume Long, Alexander Main
- Published
- Sep 5 2024
- Word count
- 1510 words
This is one of those things funded by Thiel and Srinivasan isn't it?
Srinivasan is the one with the whole weird "Greys shall run San Francisco and let's run the Blues out and take over the police by offering their family kickbacks in the form of jobs" thing.
Thiel just sucks and wants to do autonomous cities on the ocean and said (although he's apologized for) some really awful things about rape.
Idk why I think this conservative libertarian utopia would suck.
If you videogame at all, BioShock is a powerful immersive rebuttal to these guys
I do occasionally but haven't played it. I may try to when my computer is fixed.
Surprising that SEZs lead to corruption and awful bullshit yet again in another developing economy.
They've been effectively leveraged by China, Mexico, and Vietnam. If officials are corrupt and just trying to defraud investors and the public, there are much easier ways than setting up special economic zones. I'm not convinced that they cause corruption.
Don't forget the original SEZ: Ireland
They 100% do. A lot of the catfishing/pig butchering scams come out of Chinese call centers run out of these places where a variety of African and SE Asian nationals are human trafficked and forced to scam people from their own countries in their native language or even other nationalities if they are from a country with decent English language proficiency (Philippines, Nigeria).
You even have Indians who were probably doing the same thing previously in India (the guys Coffeezilla goes after), now doing it from within Chinese SEZs in Myanmar and Laos.
The pay is good if you are part of the scam gang (i.e. not trafficked), ~3000 USD a month in countries where most people make maybe 80-500/month.
Also drugs, this map kinda says it all:
https://www.unodc.org/wdr2018/prelaunch/6.3.3_Main_methamphetamine_trafficking_flows.pdf
Bunch of links from a previous post of mine on the topic here:
https://tildes.net/~misc/1im2/america_is_losing_southeast_asia_why_us_allies_in_the_region_are_turning_toward_china#comment-dkr9
Thanks for all the links. Perhaps surprisingly, I'm pretty familiar with the region and some of the problems. The human trafficking situation in Myanmar is fucked, but I still don't see what that has to do with SEZs. For all intents and purposes, those regions are autonomously run by local gangs as you mention.
Special economic zones have been used to great effect by less corrupt countries. Mexico, China, and Vietnam have used them to grow their industrial base and experiment with industrial policy in a controlled way. The basic idea is simply having some territories with unique rules and regulations. What's the alternative for development? China's predatory loans? Ignoring growth and accepting poor living standards?
Yeah, I don't disagree with that, but "less corrupt" as a qualifier changes the situation drastically. When you have "more corrupt" things seem to usually go very badly.
The alternative for development is basic healthcare, education, access to non-corrupt micro-finance, and social programs. Then you let people develop themselves. Capitalism alone as a cure for under-development isn't enough because ultimately capitalism is a greedy and selfish process, and if not controlled by decent laws like in the SEZs in Myanmar and Lao just leads to horrible human rights abuses.
I agree that SEZs can work, but would argue that countries need to be more developed to begin with for this to happen, primarily because they come from a better bargaining position. How do they get there? Healthcare, education, finance, and social support...then capitalism.
Edit: Mandatory apology for all the links 😅
I’m guessing that what China does and what some American ideologues do are rather different. Seems like there are a lot of Chinese criminals that are pretty nasty?
One day I hope to read a in-depth article about what really happened at Prospera - how they screwed up, whether they learned anything from it.
Could be, I don't know much about the American side of SEZs. I would assume it's probably negative for the locals, but not as negative.
Usually it's stuff like imbalanced trade/loan agreements that don't really help the local economy as much as they appear to on the surface, e.g:
Water rights for bottled water that remove access to water for the locals, and in turn force them to pay more than they had to before because they have to buy said bottled water.
Nestle and baby formula in Africa which resulted in "Many third-world mothers tried to save money by over-diluting the formula with contaminated water, leading to malnutrition and the deaths of millions of infants." (Kagi summarizer).
Or ye olde, "we will do FDI, so you guys get money", and then extracting all profit from the country, creating burdensome infrastructure costs that end up not being covered by said FDI, and the only longterm gain is a few thousand local employees getting salary, while tens or hundreds of thousands have their lives affected by a giant MNC factory being suddenly built in their backyards.
Archive link
I'm quite skeptical of this article. Some parts seem absurd:
I don't believe it. Is that, like, what they could have theoretically bought under unrealistic assumptions? I wonder where someone at the UN got it from?
I also don't believe the big headline number in the lawsuit means all that much. I mean, sure, they sued for that much; anyone could put anything in a lawsuit. But what are the chances of getting it?
I suspect Próspera would settle for being able to continue using the land they already bought under their existing agreement.
Investor-state dispute settlement can lead to really absurd outcomes which I think most people find deeply morally unpalatable. Unfortunately the system seems to operate with pretty limited scrutiny and basically anything that is in a contract seems to go (a problem given that many contracts – particularly for sovereign debt – are just copypasta boilerplate from earlier prospectuses which nobody reads).
I actually wouldn't be surprised if "poor country gets fucked by international system" is the outcome, as has transpired (devastatingly) in so many other cases.
My understanding is that, in principle, having an international court is supposed to guard against investors getting screwed when there is a regime change and the new regime says, "that was then, this is now. We're just going to take your investments, and you can't do anything about it because we're the government."
I think there is a case for debt forgiveness sometimes, but if there's nothing guarding against that sort of scenario then unstable countries might have trouble getting foreign investment? It's a problem the US doesn't have because a change in government doesn't result in previous contracts not being honored, but it is for less stable countries.
The government backing out of a deal seems to be what's going on here? But people are more sympathetic with the government in this case, not because the investors are actually all that threatening (they don't seem very competent) but because they're weird outsiders. So they make up wild scenarios about how the weirdos might be threatening. One of things the weirdos seem pretty bad at is public relations.
The weirdos are among the richest men in the world. If they'd like to have better PR, they probably could manage it.
Also you cannot PR your way out of advocating for fascism.
The investors in a company are not necessarily the same people as company management. Having outside investors is a thing. There are sometimes disputes between investors and management. And they may very well disagree on all sorts of things unrelated to the company.
Blurring the lines in this way is a common tactic people use when they don't care enough to understand what's going on and just feel like making wild accusations.
The weirdos that are the other weirdos' financial investors can pay for better PR. IMO the entire concept is rotten to start, and paying poor countries to make weird private city-states is not a social good. PR isn't the problem.
(How was I supposed to know which set of weirdos you were referring to?)
Also I'm not playing passive aggressive indirect language games here. If you think that I am doing a thing, please feel free to tell me. If you feel like some other people might maybe sometimes do a thing, please tell them.
I disagree that the whole concept is "rotten to the core" and I think people making connections to Peter Thiel or Balaji Srinivasan is about as legitimate as when conservatives make connections from some nonprofit to George Soros and imply that it proves some kind of global conspiracy.
Sure, they are investors. So what? What are you implying by making that link?
I figured you disagreed. I find the base concept.- a privatized city state that operates on regulation only by choice, that privatizes all social services, that genuinely threatens the sovereignity of the impoverished country it's based in, all of that is rotten. It's banana republics and manifest destiny all over again. I don't trust VCs and libertarian utopias to make ethical decisions for people. Governments don't always either but they're at least hypothetically accountable.
Their founder has talked about how great it will be to have any drug or medical device approved in any country available there. I see a few problems with having zero standard other than "any other country allows it" and if someone is harmed by a doctor there (licensed by whom, anyone?) they can do.... Arbitration. I'm sure pollution of the surrounding land will not be a problem.
And for the record, theres a difference between claiming George Soros pays X people and noting who the investors are. If George Soros actually invests in some sort of non-profit, he probably believes in what it's doing right? If I just pretended that Srinivasan and Thiel were major investors, I'd be doing what most of those conservatives are doing. I'm not saying their names like boogiemen, I'm saying I don't trust where they're putting their money. And I think interfering with the sovereignty of a country is bad whether it's my government doing it or a bunch of billionaires.
Shitty people are financially supporting a shitty business. I'm being pretty specific at how bad I think a libertarian utopia concept is.
I'm skeptical about whether it will work but I just don't see it as much of a threat. Prospera is tiny! You could just walk out. And they're ideologically opposed to preventing people from leaving.
I also wonder whether people having dodgy medical treatments (and they do seem pretty iffy) there is worse in practice than people going to Mexico or India to have things done more cheaply. I don't think the Mexican government is going to be of much help if your operation isn't a success?
I doubt pollution will be a problem because, again, the place is tiny. They'd be polluting themselves. And they don't seem to be doing any manufacturing?
Sure it's not a threat to us, it is a threat to Honduras. But precedents about sovereign corporate city states are not something I'd like to see.
As for voluntary, children are also impacted and they have zero control. And much like high deductible health insurance, low regulation is great until something goes wrong. "You can just leave" - or can the people they're employing? Especially if their land is annexed (legal by the ZEDE law, if theoretically disallowed in Prospera, will that last if there's no legal prohibition, just arbitration and some people with a lot more money than others? I mean they could just change their rules and tada it's fine.)
And I maintain the concept is bad, and so are all the other little "I'm building a utopia" things that many of the same VCs are investing in.
I'm philosophically and ethically opposed to these projects, at least as they're being proposed and implemented today. I can see a world of self selected citizenship, but if it's more Jennifer Government than METAtropolis, I am much less interested. So when I say they're funded by a guy that advocated for a fascist tech takeover of Silicon Valley, and I think they're rotten from the beginning, I'm not implying anything or unwilling to understand or making up bogeymen. Hang out with shitty people, expect the smell to spread.
Some background about other things going on in Honduras:
Silicon Valley Investors Are Not Honduras' Biggest Problem
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