Charter Cities and Corporate Soap Opera

I cannot recommend strongly enough listening to this edition of This American Life. Thanks to Tyler Cowen for the pointer.

The episode looks into what happened with the Charter City concept in Honduras. The reporters, Chana Joffe-Walt and Jacob Goldstein, hone in on exactly the aspect that most fascinated me about the story: what I call corporate soap opera. It’s all there–the egos, hurt feelings, control issues. I feel as though I have been, at one time or another, in the shoes of all the major participants in this story.

Human beings seem hard-wired to create conflict. That is why speaking of “the state” or “the corporation” as a unitary decision-maker strikes me as often misleading.

This entry was posted in business economics, Tyler Cowen is my Favorite Blogger. Bookmark the permalink.

3 Responses to Charter Cities and Corporate Soap Opera

  1. Georg Thomas says:

    As a species, we’re too inventive (too attentive, inquisitive, creatively speculative, and experimentally alert) to ever live in harmony. However, to survive as a species we have to be inventive. In fact, the core proposition of my personal epistemology is:

    Man is fallible – his fallibility is his greatest asset. Only crocodiles (and politicians) are infallible.

    The state is a bee-hive of multi-party attempts at instrumentalising a many-facetted power technology.

    It is sad that many libertarians have rather a naive and simplistic concept of the state.

    I am just reading Hendrik Spruyt`s excellent “The Sovereign State and its Competitors”, which incidentally helps to show that the state has been very conducive to and supportive of liberty, and that, like other social forces including those that happen to act directly on the state, it is in aggregate almost always both inadvertently pro-liberty as well as inadvertently anti-liberty.

  2. Mike Gibson says:

    This is one of the better accounts of the whole the episode. But it’s still too biased in Romer’s favor. The “Spock” explanation is too fair. Having known some of the inside baseball, I’d have to say his actions were more insidious. You can read a post I wrote at LATNB:

  3. I second everything that Mike Gibson states, both here and at the link.

    Romer could have admitted openly that he had never been formally appointed to the Transparency Commission and then withdrawn gracefully. The project might well have succeeded had he not made a public display of his illegitimately proprietary feelings about the project. From the timeline at the MGK FAQ:

    Early 2000s: Mr. Sanchez and others start thinking about next-generation zone-based reform concepts for Honduras.
    Sources: Coalianza/Octavio Sanchez and

    January 2010: Mr. Sanchez is named Chief of Staff to newly elected President Lobo and they set a goal of getting new zone-based reforms established.

    Fall 2009: A third party in Guatemala emails a link of Mr. Romer’s 2009 “Charter Cities” TED Video to Mr. Sanchez, which Octavio sees as a powerful tool for marketing the Honduran reform zone concepts.

    December 2010: Paul Romer first meets in person with Mr. Sanchez and other(s) in Miami. They end up showing the TED video.
    Source: (4:05)

    January 4-5, 2011: Paul Romer visits the Honduran capital of Tegucigalpa and meets with Honduran officials. They show the TED Video in Congress.
    Source: (5:20)

    January 19, 2011: The Honduran Congress passes a Constitutional Amendment authorizing areas within Honduras that have genuine judicial and legal independence from the national government system. The vote is 124-1 in favor.

    February 17, 2011: the Honduran Congress passes the Constitutional Amendment the required second time with a vote of 114-1 in favor.

    March 17, 2011: An advisory commission called CORED (Comision Coordinara de las Regiones Especiales de Desarrollo) is created by publication in the official gazette. Ricardo Maduro, Toribio Aguilera, Jorge Ramon Hernandez, Mr. Sanchez, and Paul Romer are subsequently appointed to CORED. While CORED apparently never actually meets, its mission is completed with the passage of the Constitutional Statute in July 2011.

    July 29, 2011: The Constitutional Statute authorizing the creation of REDs is passed in Congress with over 90% voting in favor. As of September 4, 2012 the Government of Honduras has stated that “Any authority, rights or other ability that CORED had to influence or to be involved in the creation or management of SDRs in any way, expired completely upon the passage of the Constitutional Statute that defined all the currently relevant entities.”
    Source: Coalianza/Octavio Sanchez

    August 2, 2011: The domain was created by the current Registrant Organization. As of September 22, 2012 with the last update as of July 8, 2012 the whois registry for shows the Registrant Organization to be “CORED” with a non-Honduran address of PO Box 1707, Los Altos, California and a non-Honduran phone number (650-762-6619) that corresponds to the San Francisco Bay Area.
    Source: “Whois red hn 9-22-12″ (attached file),

    On or before October 14, 2011: A website appeared at that presented itself as the official CORED website. The initial post is titled “What is CORED?” and includes the statement: “CORED will post information to this website for anyone interested in tracking the progress toward the first RED.” The Honduran government did not create or control the website. As of September 4, 2012 the Government of Honduras has stated that “No official website for the Special Development Regions or for the Comision para las Regiones Especiales de Desarollo (CORED) has been created by any entity of the Government of Honduras.”
    Source: “ Snapshot 12-13-11″ (attached file), Coalianza/Octavio Sanchez

    November 3, 2011: The website posts “Economic Opportunities in the RED” in which the following statement is made: “President Lobo must first appoint the initial members of the Transparency Commission and the governor of the RED.” This statement is plainly false and not based on Honduran law as Article 78 of the Constitutional Statute makes clear: “Article 78.- In preparing the investment and development plan of an SDR, memorandums of understanding, trusts, or preparatory contracts for a public-private partnership or an international treaty may be entered. These will be executed with the SDR’s Transparency Commission, or before the formation of such board, with the organization responsible for public-private partnership in the country. In these cases it is not necessary to indicate the territorial boundaries of the SDR that wants to be created.”

    December 8, 2011: The website posts that “President Lobo Appoints Initial Members of the Transparency Commission.” This new entry coincides precisely with the December 8, 2011 release of the December 10, 2011 online edition of The Economist. This edition contains a story titled “Hong Kong in Honduras” which links to as the only reference in the article for the claim that a Transparency Commission has been created.
    Source: “ Snapshot 12-13-11″ (attached file),

    December 13. 2011: The Charter Cities website posts “President Lobo Announces Transparency Commission” even though no announcement from President Lobo is referenced or linked. The language and formatting appear similar to the earlier announcement appearing on the website.

    September 4, 2012: The Honduran government signs and announces an MOU signed with Grupo MGK. Shortly thereafter Paul Romer publicly circulates a “resignation letter” from a Transparency Commission that does not exist. As of September 4, 2012 the Government of Honduras has stated that “The Transparency Commission has not been created.”
    Sources: Coalianza/Octavio Sanchez

    On or about September 24, 2012: Paul Romer circulated an “open letter” which included the following statement: “The public perception, that the Transparency Commission was in operation, differed from the reality.” In that letter, Paul Romer did not explain or reference the source of the confusion.

    As of September 29, 2012: The website has been taken down, but the whois information is still available.
    Sources: ,

Comments are closed.