Gault’s Gulch, the Micro-Nation and Honduras

Gault’s Gulch, the Micro-Nation and Honduras

There have been a number of attempts in the last few decades to create micro-nations by those who desire more freedom and less taxation than is currently available in more established nations.  The most successful and famous of these is the Principality of Sealand…although Sealand was only mildly economically successful before its devastating fire several years back.  Sealand’s success was largely in the form of cyber-freedom after the entire ‘country’ (built on a group of World War II anti-aircraft platforms in international waters off the coast of England) was turned into a server farm.  Not so much as a Gault’s Gulch as a steel decked Gault’s Island.

In recent years the proposed creation of micro-nations has moved from maritime endeavors (no unclaimed land left and floating cities have never caught on) to semi-autonomous city states within established nations.  Not micro-nations in the true sense but these economic enclaves provide many of the same benefits without the drawbacks associated with maritime endeavors.  There are even successful models (of a sort) by comparing the economic engines of Hong Kong and Macau ‘Special Administrative Districts’ to the rest of China.Honduras Flag

Gault’s Gulch developers have finally found a country attractive enough and desperate enough to give it a try.  Honduras has passed the legislation necessary to set up a semi-autonomous city-states.  This will be an interesting experiment to watch.  The complexity of setting up a city from scratch in the jungles of Honduras boggle the mind so the logistics of the endeavor will be worth watching as well.  Of course, Honduran leftists are going apoplectic and other groups are already lining up to try to take their piece of the pie…but the plan has a good chance of success if the investment money doesn’t give out before the economic engine gets up to a decent idling speed.  Pretty neat plan…only thing that would make it better is if they actually decide to call it ‘Gault’s Gulch!’

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong, CEO of the MKG Group, which will build the city and set its laws, told

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

Honduran leaders hope that the city will lead to an economic boom for the poverty-stricken country south of Mexico. The average income in Honduras is $4,400 a year.

“[It] will bring a lot of investment into the country [and be] a center for many employment opportunities for our people,” Honduran President Porfirio Lobo Sosa has said.

The laws in the city will be separate from those in the rest of Honduras. Strong said that the default law that will be enforced in the city will actually be based on Texas state law, which has relatively few regulations.

“It will be Texas law with more freedom of contract. Texas scores well on state economic freedom rankings,” he explained.

“Texas law is also very familiar to American business people, and it is very familiar to Hondurans, because a lot of Hondurans have gone there or have family there.”

Investors who think the city will do well will also be able to buy land there.

…To insure the city against political change, the Honduran Legislature has agreed that a two-thirds majority will be required to interfere with the city.

MKG will invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast, said Juan Hernandez, president of the Honduran Congress. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, Hernandez said.

Strong said construction could begin in months.

via Private city in Honduras will have minimal taxes, government | Fox News.


10/20/2012 Update:

Unfortunately, the Honduran Supreme Court struck down that law this week .

Michael Strong, who had a tentative agreement with the Honduran government to build the city, says that the decision leaves “virtually no opportunity for new, innovative Honduran communities envisioned by the [Honduran law.]”

“We hope and expect that another country will choose prosperity over poverty, but for now advocates of poverty have won in Honduras,” Strong says.

via Honduran Supreme Court Kills “Free City” Law | Stossel’s Take Blog.

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