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Marketing is hard. But I'll tell you a

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that's libsyN ads.com today. The Michael Shermer Show. Hey everybody,

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it's Michael Shermer. It is time it's Michael

0:48

Schirmer. It's time for another

0:50

episode of the Michael Schirmer

0:52

Show. Have I got a

0:54

winner for you today? This

0:56

is a subject I've long

0:58

been interested in. As you

1:01

know, I've written a bit

1:03

about what we might do

1:05

when we we set up a

1:07

colony on Mars. will must What

1:09

we'll must do for his

1:11

political system or economic system

1:13

or taxes or roads, Conflict resolution.

1:15

How are we gonna do

1:17

all that on Mars? Well,

1:19

on Mars? There have have been many experiments

1:21

here on earth here my earth today is

1:24

somebody who's trying to start his own

1:26

Well, I don't know if I'd say

1:28

a country, but some kind of a

1:30

I'd say a community but some kind of are called

1:32

a zo These are called ZOZZZED, for for and economic

1:34

development. He's doing this in Honduras He's

1:37

doing nice to see you. Thanks for coming on. Eric, nice

1:39

for having me Thanks for having me on

1:41

me. Yeah. Yeah. So when so when your publicist

1:43

or or whoever that was that

1:45

contacted me me. reached out, I

1:48

thought, this this is somebody I'd I've been I would

1:50

to talk to to as I mentioned at

1:52

the start here, the you know, how do

1:54

you set up a up a new country

1:56

or zone of of

1:58

living and doing

2:01

business surviving I have no idea

2:03

other than kind of the egghead

2:05

political theory books that I've read,

2:07

but I've never actually met anybody

2:10

to try to do something like

2:12

this. So give us a little

2:14

bit of background. Where are you

2:17

from? Where'd you go to school?

2:19

How'd you get into all the

2:21

different things I just introduced you

2:23

as? Sure. I was born and

2:26

raised in Venezuela in South America.

2:28

The country that by any measure

2:30

should be one of the wealthiest.

2:33

I grew up thinking and wondering

2:35

why that was the case, but

2:37

it wasn't until I went to

2:39

college near Boston at Babson College

2:42

and I studied entrepreneurship and economic

2:44

development that I realized that the

2:46

problem that my country of birth

2:49

was facing and why there was

2:51

so much poverty instead of prosperity

2:53

is because there was a lack

2:55

of good governance. There's certain basic

2:58

principle services that we take for

3:00

granted. or had taken for granted

3:02

in the US, which are painfully

3:05

missing in many parts of the

3:07

world. And because there is a

3:09

lack of good governance, there is

3:11

no rule of law, there's no

3:14

property rights protection, there's no individual

3:16

rights defense, then economies and populations

3:18

can't thrive. And that's where you

3:21

get poverty from. So I grew

3:23

up wondering what could be done

3:25

about it. And while at school,

3:27

I realized that the solution. was

3:30

in theory easy because it was

3:32

empirically very clear that the more

3:34

economic freedom a society has the

3:37

more prosperity that it has as

3:39

well. So the formula was there,

3:41

was observable, it's measurable, it's been

3:43

true throughout the ages and throughout

3:46

all parts of the world regardless

3:48

of race and language and latitude.

3:50

But it's politically very challenging. because

3:53

if you try to implement these

3:55

systems you're leveling the

3:57

the playing you're making

3:59

it equally easy

4:02

and hard. hard for

4:04

the the little guys as well as

4:06

the entrenched to compete. to compete, and

4:08

you're in in essence implementing emeritocracy

4:10

at a societal level if you

4:12

have economic freedom. freedom.

4:15

And there's a lot of vested a lot that don't want to see

4:17

it happen. that don't want to see that

4:19

most developing economies, the institutions

4:21

are not strong enough. are

4:23

not withstand the vested the

4:25

of cronies of cronies and

4:27

time, they give

4:29

way to increasingly anti

4:32

-competitive measures. that are that are

4:34

initially put forth as regulations

4:36

to protect the customers and the

4:38

public, but in reality, they evolved

4:40

to be nothing more than

4:42

barriers of entry. barriers of entry to

4:45

would-be be competitors and ways

4:47

to preserve positions of privilege

4:49

for. for larger incumbents.

4:52

So realizing that it

4:54

was politically challenging, the answer

4:56

had to be about how to

4:58

implement those policies successfully. And

5:01

so we looked around in different parts of the

5:03

world and realized. the world and realized that trend

5:05

throughout the world of

5:07

the creation of of special

5:09

economic zones. Nowadays over 5 ,000 special

5:11

economic zones zones they vary in size

5:13

and type of focus But the

5:15

thing that is common common all

5:17

of them them is that they're part

5:19

of a host nation. nation. but within the

5:21

physical territory, it is accepted that

5:23

there's going to be a different set

5:26

of rules. a and the of

5:28

vary. the difference just

5:30

about taxes, other times it's

5:32

about labor law. times it's it's more

5:34

comprehensive. So you can think of. there

5:37

is a spectrum of variability between

5:39

the host nation and what is

5:41

true within the zone. the

5:43

most. is true within the zone.

5:45

The most differentiated, done

5:48

right. You You know, one could argue

5:50

are areas such as Dubai and

5:52

the DiFC .C. Hong even Hong Kong,

5:54

which we don't think of as a special economic

5:56

zone. zone so

5:58

it's so substantially... than the

6:00

whole country, but in essence

6:02

it's that it's the territory

6:04

within the country with different

6:06

rules. So we figured that

6:08

that delivery mechanism was proven

6:10

to work elsewhere and wondered

6:12

what if you could do

6:14

that as a service? What

6:16

if you could do it

6:18

in a partnership structure with

6:20

a public government, with a

6:22

for-profit intention, but where the

6:24

profit was derived from successfully

6:26

creating the conditions so that

6:28

a population... on average could

6:30

be way more prosperous and

6:32

that's where prosper came from.

6:35

That's a great story. Nice

6:37

introduction. Venezuela. Let's talk about

6:39

that for a minute. What

6:41

happened? It seemed like I

6:43

just came on my radar

6:45

maybe five years ago or

6:47

so as examples of what

6:49

conservative social commentators talk about

6:51

in the United States is

6:53

what we don't want to

6:55

do. And of course they

6:57

accused Democrats, you know, the

6:59

moment you take one step

7:01

in that direction you're heading

7:03

for Venezuela. What happened to

7:05

Venezuela? So forget that, but

7:07

just what happened in Venezuela?

7:09

Well, what is perceivable now

7:11

with Subservable now in Venezuela,

7:13

basically it's a series of

7:15

socialist policies that an authoritarian

7:17

government has been using as

7:19

a way to preserve its

7:21

power and control its people.

7:23

But to understand how we

7:25

got there, you have to

7:27

realize that for 40 years

7:29

leading up to the late

7:31

90s. There was a system

7:33

of democracy and capitalism that

7:35

lent itself to a fake

7:37

version of capitalism, you know,

7:39

cronyism. So it, it, it,

7:41

it, though there was democracy

7:43

and private enterprise, it was

7:45

very corrupt and the wealth

7:47

was concentrated at the top

7:49

and there was too much

7:51

poverty and that made the

7:53

population vulnerable to a populist.

7:55

you know, president want to

7:57

be to become elected democratically.

7:59

by promising a bunch of

8:01

goodies, right? Promising free education

8:03

and promising free this and

8:05

free that. And of course,

8:07

the government doesn't have any

8:09

of that to give away,

8:11

so the only way to

8:13

do so is by redistributing

8:15

wealth. So a population that's

8:17

mostly poor combined with a

8:19

populist, charismatic leader resulted in

8:21

a gradual and then sudden

8:23

move towards socialism redistribution, which

8:25

destroys the fabric. of productive

8:28

society by discouraging you know

8:30

wealth creation especially by those

8:32

that are most capable since

8:34

those that are most capable

8:36

often have the opportunity to

8:38

just leave you know they

8:40

don't have to put up

8:42

with with that and so

8:44

progressively are left to the

8:46

country that lacks the most

8:48

productive members of its society

8:50

with an increasing authoritarian government

8:52

reduced freedoms and then it

8:54

collapses which is what happened

8:56

in Venezuela. Amazing. And who

8:58

was the dictator or president

9:00

or whatever the prime minister

9:02

that started that process? Hugo

9:04

Chavez was elected initially democratically

9:06

and by a significant margin

9:08

in 1999. And then in

9:10

subsequent elections, his support kept

9:12

falling to the point where

9:14

his predecessor, Nicholas Maduro, Basically

9:16

lost the election in July

9:18

of the present year by

9:20

a landslide. I was 70%

9:22

to 30, you know, according

9:24

to the opposition. But they're

9:26

using all sorts of oppressive

9:28

mechanisms to stay in power.

9:30

For now, we'll see what

9:32

happens with the new Trump

9:34

administration. Yeah. Well, I'm sorry

9:36

that happened to your country.

9:38

That's too bad. But it

9:40

is a model and a

9:42

lesson to be learned from

9:44

history of... Underline principles that

9:46

apply everywhere. Now you often

9:48

hear some countries are wealthier

9:50

than others because of natural

9:52

resources. You want to tee

9:54

that up for you there?

9:56

You can have a whack.

9:58

that so-called Dutch disease.

10:00

Venezuela is think

10:02

the world's largest

10:04

largest of oil as the

10:07

the larger reserves. reserves, but it

10:09

doesn't have the right economic

10:11

and political system to

10:13

encourage the productive development of

10:15

the oil fields, the

10:17

distribution. the You know, so

10:19

even though it even though

10:21

it sits on top, wealth, there's

10:23

wealth, a system by which

10:25

to to... to it and

10:28

it to reach the

10:30

population. population. is not true that you

10:32

need natural resources to be prosperous, in

10:34

fact. be prosperous. of a

10:36

correlation is somewhat of a when you have a

10:38

lot of oil as an example. disease

10:40

when you have a lot fuels

10:42

corruption. It easily there's

10:45

a lot of wealth to be

10:47

taken, a so of wealth to be amplifies

10:49

the wrong incentives. the wrong incentives.

10:52

that encourage people to get into politics.

10:54

If there's a lot of wealth that you

10:56

can steal, then the wrong people get

10:58

into politics. then the And conversely, get you

11:00

have places like Singapore

11:02

and Hong Kong and Dubai

11:04

Singapore and Hong Kong and Dubai, where

11:06

there is no vast natural to speak. mean,

11:09

look at Singapore, it's just a small

11:11

island. it's but they focused

11:13

on they governance. And

11:15

as a result, a you have

11:17

a a creative... entrepreneurial class, a business

11:19

a business community that

11:22

leverages that economic freedom. find to

11:24

find various creative ways through which to

11:26

make a living and of course they

11:28

have focused more on services. need So

11:30

you don't need natural you need What you

11:32

need is good governance. good With good

11:34

governance, you can be wealthy if if you

11:36

have no natural resources. and And without

11:39

good governance, you're gonna be poor to if

11:41

you have natural resources. resources. Yeah, Interesting, I

11:43

was just in Dubai last week, for a week,

11:45

and a week and I never been, I didn't know

11:47

much about the about the UAE and you know I know,

11:49

I kind of just, in the back of my mind

11:51

of my just be this money. just be oil But then when

11:53

I got to Dubai, they said, no, to divide as more

11:55

in Abu Dhabi, but not so much Dubai. not so

11:57

much Dubai then I took took a little

11:59

you know tour of the history of

12:01

the country and you know night

12:04

basically in the early 70s it

12:06

was just sand it was next

12:08

to nothing there we went to

12:10

the old town of Dubai and

12:13

it's just just like mud nothing

12:15

just these little one or two-story

12:17

buildings and now of course I

12:19

went to the top of the

12:22

Burj Califa the world tallest building

12:24

yeah but the buildings around it

12:26

are like 80 stories 60 stories

12:28

70 stories and they look tiny

12:31

it's just amazing how all that

12:33

happened in just 50 years How

12:35

did that happen? It's true, it's

12:37

amazing and the key to success

12:40

to Dubai as one of the

12:42

Emirates of the UAE is exactly

12:44

the type of formula that we

12:46

have, you could say, productized so

12:49

that we can deploy it in

12:51

partnership with host nations as an

12:53

economic development tool. And in essence

12:56

what they have done, what we

12:58

think of as Dubai as a

13:00

city, in reality is a network

13:02

of about 30 plus different special

13:05

economic zones, each with separate management,

13:07

but all inside of a context

13:09

where they compete against each other.

13:11

And in that competitive landscape, imagine

13:14

there's like over 30 special economic

13:16

zones, the whole United States of

13:18

50 states. These special economic zones

13:20

have a tremendous amount of autonomy

13:23

to set policy, everything from taxes

13:25

to regulations. And so they compete

13:27

to attract investment to keep companies.

13:29

So you have a health care

13:32

city, you have an internet city,

13:34

you got a media city, all

13:36

within a city. And then of

13:38

course the epitome of it all

13:41

is the DIC, Dubai International Financial

13:43

Center, which did the deepest level

13:45

of reform to be world-class competitive

13:47

in one of the toughest industries

13:50

to compete, which is finance. So

13:52

that competitive dynamic gets the best

13:54

of us. I mean, we know

13:57

this competition in every dimension, you

13:59

know, makes the best of us

14:01

come through it. You have to

14:03

be better than the rest. Otherwise,

14:06

you stagnate. that model of competition

14:08

and governance proved itself in Dubai

14:10

and we think we can do

14:12

it even better by injecting true

14:15

entrepreneurialism free market enterprise and the

14:17

profit motive because Dubai it's still

14:19

a monarchy and so while their

14:21

structure through competition and partnership with

14:24

businesses is better it is not

14:26

nearly as good as if you

14:28

put let's say international entrepreneurs to

14:30

compete against each other in providing

14:33

this vital service of governance. We

14:35

often don't think of governance as

14:37

a service. We too easily attach

14:39

it with the institutions that we

14:42

have grown accustomed to delivering it,

14:44

which are governments. But the government

14:46

is a structural entity. The services

14:48

of governance is separate. You know,

14:51

there's no reason why services. of

14:53

governance must be delivered exclusively by

14:55

this antiquated structural entity called governments,

14:58

you know, especially the day-to-day management

15:00

and administration of what most people

15:02

experience as getting governance services. Yeah.

15:04

So what you're doing in Prospera

15:07

in Honduras is essentially modeling a

15:09

political platform that you then want

15:11

to duplicate and repeat elsewhere in

15:13

the world because it shouldn't matter.

15:16

what the particular natural resources are

15:18

of wherever you plop it down

15:20

and draw your boundaries, right? Am

15:22

I getting that right? Is that

15:25

what you're trying to do with

15:27

prosperity? Correct. We've developed the methodology,

15:29

we have a platform that serves

15:31

as a plug and play, and

15:34

it can be leveraged in any

15:36

territory that lawfully can run on

15:38

the prosper governance platform. And what

15:40

we bring with the platform... is

15:43

instant access to international best practices

15:45

and reciprocity so that within a

15:47

prosperous zone you can have companies

15:50

from anywhere in the world they

15:52

have to follow the local law

15:54

obviously. as as it

15:56

relates to the

15:59

agreement that that

16:01

to rise economic zone.

16:04

but the regulatory framework within, so

16:06

the civil and commercial law. civil

16:08

and commercial law, not criminal law, not

16:10

sometimes family law, just

16:12

civil and commercial law. law, the

16:14

the rules under which they operate inside

16:16

of a of a prosperous zone, is to

16:19

anywhere else in the

16:21

world world OECD countries, and

16:23

then an an number of

16:25

specialized best practice regulations. And

16:27

in this environment, what it

16:29

means means basically is a company, for for

16:32

example, from Germany. Germany, that has

16:34

an interest in expanding operations to

16:36

the to the Western we have operations

16:38

in Honduras. in they could

16:40

choose to operate in prosperous

16:42

zone, continuing to follow. laws and

16:45

the laws and the systems that they

16:47

understand. Let's say the system, let's say say

16:49

a bank, they could continue to follow

16:51

the follow the German regulations. but

16:54

in in a prosperous zone in

16:56

Central America. America. might ask, so why would

16:58

might ask, so do would a company

17:00

do German banking laws because German banking

17:02

laws are not necessarily known to

17:04

be the best. a huge learning because

17:06

there's a huge learning curve. And

17:08

there's also risk mitigation of the

17:10

German headquarters. how to follow knows how to

17:12

follow German law, they don't want to

17:15

learn something new, they don't want to be

17:17

exposed to a series of other of other rule

17:19

sets. So just import that that reciprocity. and

17:21

you can apply that to that

17:23

to education and construction and all

17:25

sorts of regulated industries. sorts of but

17:27

you have an optimal balance. so you have

17:30

an flexibility and

17:32

freedom. while retaining

17:34

a healthy level of

17:36

dynamic supervision in

17:38

industries industries know, are more dangerous

17:41

than others because of the

17:43

risk that an operator it

17:45

it. have a can have a substantial

17:47

amount of negative externality. upon

17:49

non -consenting third parties. That's where

17:51

some form of regulation could

17:53

make sense. make sense, but it does not

17:55

make any sense when you only have have

17:58

a one-side-fits-all approach. to

18:00

regulation with centralized power authority and

18:02

access to knowledge. That's not the

18:04

way markets work. So is your

18:07

platform then somewhat flexible based on,

18:09

I don't know, the different cultures

18:11

for where you happen to set

18:14

it up? Absolutely, yes. Culture is

18:16

generally encapsulated more in criminal law

18:18

and family law, but the rules,

18:20

the standards that make enterprising successful.

18:23

those tend to be fairly universal

18:25

that this is the you know

18:27

at least this is the empirical

18:29

evidence regardless of religion culture language

18:32

race you know latitude countries that

18:34

have a high degree of economic

18:36

freedom do well and that's what

18:39

we focus on so we can

18:41

have a prosperous zone in Africa

18:43

where the native population prefers to

18:45

keep let's say a very conservative

18:48

standing when it comes to social

18:50

norms and that's fine as long

18:52

as there's high degree of economic

18:55

freedom you're going to have prosperity.

18:57

Yeah you mentioned Dubai being a

18:59

monarchy so you don't have to

19:01

have a democracy like China is

19:04

not a democracy but they have

19:06

a you know a robust economy

19:08

so apparently it is possible maybe

19:10

it's not a long-term solution but

19:13

it temporarily it could prosper with

19:15

a I don't know a benign

19:17

dictator or something like that. Democracy

19:20

is a system of governance of

19:22

political government that is intended to

19:24

be responsive and accountable to the

19:26

population under that government. And vis-a-vis

19:29

a monarchy, vis-a-vis a dictatorship, it

19:31

has the potential to be a

19:33

lot more responsive because people can

19:36

literally vault their leaders in and

19:38

out. But the key is that

19:40

there is responsiveness. Just like in

19:42

the market you have market signals

19:45

for companies that are doing well,

19:47

you know, they make more money,

19:49

companies that are doing poorly. make

19:51

less money. The market system is

19:54

an extreme case of fluid democracy

19:56

in a way. If you think

19:58

about it, every day when people

20:01

vote with their dollars, they're voting

20:03

in favor or against different companies.

20:05

So the market is made up

20:07

of institutions that are hyper responsive

20:10

to its customer base. Governments are

20:12

much less responsive to their customer

20:14

base, but of the forms of

20:17

government, democracies... are more responsive because

20:19

once every four years or so

20:21

the customers get to vote and

20:23

decide if the leaders are doing

20:26

a good job or not. So

20:28

if you think about it in

20:30

a spectrum of responsiveness, you know,

20:32

by the leaders to the population,

20:35

then up until now democracy can

20:37

be thought of as the best.

20:39

But I think we can do

20:42

better and that's what we're after.

20:44

So in the context of a

20:46

democracy or a monarchy that sets

20:48

up these special economic zones and

20:51

allows the prosperous system to operate

20:53

Inside of the zone, you have

20:55

a fluid, extreme case of democracy

20:58

because every day customers are voting

21:00

for the service provider that gives

21:02

them the most important service of

21:04

all, which is governance. And in

21:07

a way, this is what's happened

21:09

in Dubai, but it's happening more

21:11

and more internationally. And candidly, countries,

21:13

cities, special economic zones that are

21:16

archaic and slow to response are

21:18

going to go out of business.

21:20

And we're seeing it. Most governments

21:23

around the world. lose money, customers

21:25

are very unsatisfied, and quite literally

21:27

the structure of the institution is

21:29

the definition of bureaucracies to slow

21:32

to respond. And if you don't

21:34

adjust to market demands, you go

21:36

out of business and it might

21:39

take you longer if you're a

21:41

big antiquated institution like a big

21:43

government, but loss of nature nevertheless

21:45

apply. But what we're helping to

21:48

create is a much more dynamic

21:50

and responsive arm, if you will,

21:52

of the countries that are partnering

21:55

with us. so that you have

21:57

entrepreneurship inside of the system. It's

21:59

not, not much less it's

22:01

much less disruptive if you have

22:03

like within the within the overall

22:05

organ. And then we can investment,

22:07

attract investment, uplift populations and create

22:09

opportunity at home to opposed to

22:12

forcing people to leave like

22:14

it's unfortunately happening a lot in

22:16

Central America where they leave even

22:18

risking their lives to to the

22:20

land of the free in their

22:22

mind. to to pursue opportunities, We're

22:24

we're trying to say, you know what,

22:26

instead of exporting your people. people. Why don't

22:28

you import the conditions that the people are

22:30

looking for? And we can do that in

22:32

partnership. And we can do that levels initially,

22:34

and then the country as

22:36

a whole levels time. and then their

22:39

policies to be world over but that takes longer

22:41

if you do it at a national level.

22:43

Yeah. Yeah, I've heard about

22:45

this immigration issue in the United States

22:47

a national level. Yeah. Yeah, I've heard about

22:49

this immigration issue rather recently. States

22:51

vaguely. Yeah, so you you know,

22:53

Ludwig von Mises and Friedrich Friedrich

22:56

Hayek talked about. know, the

22:58

you know, the value of prices of

23:00

a form of information. to, you know, to

23:02

give to owners what know and

23:04

business owners what they need to

23:06

do of this my favorite example of

23:08

this is, know, how many bagels do

23:10

we need in London? morning? Now,

23:13

you Tuesday every little bagel maker, you know, knows of

23:15

course, every little to need because what he's

23:17

gonna need, because last Tuesday many how

23:19

many people we had or whatever, Did a

23:21

government ever figure that out? Well,

23:23

I suppose that out? like the Soviet Union

23:25

tried to do, you collect

23:27

data and make predictions. you know, you

23:29

but your point is that they're gonna

23:31

be super slow and ineffective. is that they're

23:34

going curve. super slow and too

23:36

many mistakes and it could making too for

23:38

decades, but at some point it's just

23:40

so inefficient that it it collapses on

23:42

itself it's just so inefficient that

23:44

it collapses on itself. Yes,

23:47

institution. the bigger the Is it

23:49

bigger the bigger the... the damage that can

23:51

can be if they get it

23:53

wrong. it wrong. you have, you know. ,000

23:56

small shops. handful

23:58

of them get it wrong. it wrong. well,

24:00

you know, they might go out

24:02

of business or they might have

24:04

to correct, but the harm that

24:06

they can cause is limited. If

24:08

it's a centralized entity, like a

24:10

government, and they get it wrong,

24:12

then they push down the wrong

24:14

position on everybody all at once,

24:16

and then you create a tremendous

24:19

amount of harm. So it's also

24:21

very risky to centralized decisions and

24:23

power. because of the amount of

24:25

harm you can cause if you

24:27

make mistakes. Okay, we'll get into

24:29

the details of your economic plan

24:31

there in Prospera, but first one

24:33

more point on democracies. A couple

24:35

years ago I tweeted at Elon,

24:37

when you start the first Mars

24:39

Colony, what documents would you recommend

24:41

using to establish a governing system?

24:43

U.S. Constitution Bill of Rights, Universal

24:46

Declaration of Human Rights, the Humanist

24:48

Manifest Manifesto, the Humanist Manifest Atta.

24:50

And he actually responded, he said,

24:52

direct democracy by the people. Laws

24:54

must be short, as there is

24:56

trickery and length. Automatic expiration of

24:58

rules to prevent death by bureaucracy.

25:00

Any rule can be removed by

25:02

40% of people to overcome inertia.

25:04

Freedom. And then he elaborated on

25:06

it at a South by Southwest

25:08

conference. Somebody asked him a similar

25:11

question. And he said, most likely

25:13

the form of government on Mars

25:15

would be somewhat of a direct

25:17

democracy where people vote directly on

25:19

issues. instead of going through representative

25:21

government. When the United States was

25:23

formed representative government was the only

25:25

thing that was logistically feasible. There

25:27

was no way for people to

25:29

communicate instantly. A lot of people

25:31

didn't have access to mailboxes, the

25:33

post office was primitive, etc. A

25:35

lot of people couldn't write, so

25:38

you had to have some form

25:40

of representative democracy or things just

25:42

wouldn't work at all. On Mars,

25:44

everyone votes on every issue, and

25:46

that's how it goes. There are

25:48

a few things I'd recommend which

25:50

I'd suspicious going on. if there's

25:52

long laws you can always count

25:54

on eelan to be be colorful

25:56

and how he describes these things

25:58

but what would you your comment

26:00

be on on something like that

26:03

is starting a new country somewhere

26:05

well there's some very good features

26:07

there and we've adopted some of

26:09

them in the prosperous governance system,

26:11

including the fact that the population

26:13

at large can at any time

26:15

vault out rules that are passed.

26:17

But before, what one must ask

26:19

is, from a first principle perspective,

26:21

is what is the government going

26:23

to do? Because how people make

26:25

decisions inside of an institution matters

26:28

a lot depending on what the

26:30

government is supposed to do. So

26:32

if you're going to say, if

26:34

you accept as a matter of

26:36

principle that governments have a proper

26:38

role to regulate every dimension of

26:40

human life, then do you really

26:42

want direct democracy? Like do you

26:44

want the majority of people to

26:46

define what individuals can and can

26:48

to do? That's risky. I don't

26:50

think I would go down that

26:52

path. So the first thing to

26:55

do is to enumerate the powers.

26:57

that such an entity that you

26:59

call a government is going to

27:01

have. Once you have that clear,

27:03

then it follows that the structure

27:05

by which you make decisions matter,

27:07

but the first decision to make

27:09

is about what decisions this entity

27:11

gets to make. After that is

27:13

how the decisions are made. So

27:15

I am, as I said, the

27:17

market is the most direct form

27:20

of democracy, but it only gets

27:22

to decide on matters that affect

27:24

the people who are deciding themselves.

27:26

There are derivative consequences by rewarding

27:28

or punishing service providers, but because

27:30

you only get to decide in

27:32

the market without coercion on things

27:34

that are relevant to you and

27:36

which you can transact voluntarily, then

27:38

sure you get to decide on

27:40

everything all the time without restrictions.

27:42

But the moment that you can

27:45

impose decisions, now it becomes tricky.

27:47

Right now it's now you enter

27:49

into a world of morality. and

27:51

ethics and you have to wonder

27:53

well what gives the right to

27:55

song doesn't matter you know the

27:57

percentage now becomes second there,

27:59

but. what gives you the you

28:01

the right to impose upon me a decision or

28:03

vice vice What gives me the right to impose

28:05

upon you? impose upon you? My

28:07

You know, should I be able to do it? Do I have

28:10

to get I have to get two for have

28:12

to get I to one, to to

28:14

one? one? You point does the

28:16

individual the its sovereignty? lose its sovereignty

28:18

in of personal decision. So I think

28:20

that's the first question to ask. first

28:22

question to you should do. you

28:25

should what we're trying to

28:27

do trying to minimize need to realms.

28:29

realms. of of collective action. and

28:31

imposed decisions

28:33

that any entity they of

28:35

how they decide. for a whole bunch of

28:37

other do for a whole bunch of other

28:39

people game is stop of the game is about

28:42

thinking so much about the do you

28:44

create the perfect monolithic one government? maybe

28:46

And it's maybe more about injecting competition

28:48

and growing by a factor of 100 or

28:50

1000, the number of the number of options

28:52

that we have to choose from so that

28:54

that now you have variability, you

28:56

have real choice. choice. Maybe the answer

28:58

is not what is the right the right

29:00

fits all but how do we

29:02

make sure that we have many more

29:04

options many and that the cost to

29:06

switch from one option to the

29:08

other is option to the other perhaps and

29:10

you can inject the right incentives in

29:12

how some of these options in how So of

29:14

these the marketplace of

29:17

governance. marketplace the entire earth, but

29:19

there's only about 200 service

29:21

providers, only about 200 service

29:23

providers, These are of, say, of, say,

29:25

nation states. And of those 200 service providers

29:27

that sounds like a lot, the reality

29:29

is that lot, the than is that

29:31

less than 5% more than 80 % of

29:34

the market. of the market. is

29:36

whether you measure it by

29:38

revenues or people, or So

29:40

you have a very concentrated. concentrated

29:42

industry, which on top

29:44

of it, it, almost every single

29:46

provider loses money every year. every

29:49

year, highly indebted, very

29:51

customer base. base. and most

29:54

of them are of them are structurally manners that are

29:56

very hard to change. to change. So instead

29:58

of trying to make a single want

30:00

to be much better, I think

30:02

we need to open it up

30:04

for a whole bunch more to

30:06

be to emerge with as much

30:09

level of autonomy as it's possible

30:11

so that we can have innovation

30:13

in the world of governance, which

30:15

is what's been lacking for hundreds

30:17

of years. And so I would

30:19

defer from Elon to say it's

30:21

not really about thinking about how

30:24

to do the one perfect structure,

30:26

is how you create a system

30:28

by which competition can be injected

30:30

in governance and you can have

30:32

a high degree of variability, a

30:34

lot more choice. and ease of

30:37

entering and exiting different jurisdictions. Yeah,

30:39

I had Robert Zubert on the

30:41

show. He's the guy, the author

30:43

of the book on Mars, how

30:45

to get there direct. Anyway, so

30:47

that was his solution, exactly the

30:50

same as yours, is just have

30:52

lots of competition. So if you

30:54

have some dictator that takes over

30:56

one colony and says, I'm going

30:58

to cut off the oxygen to

31:00

your colony if you don't do

31:03

X, you just move to a

31:05

different colony where they don't cut

31:07

off your oxygen, something like that.

31:09

Yeah. So, okay, so how did

31:11

you set up prosperity? You go

31:13

to Honduras, I mean, why Honduras?

31:16

Did you go to the government

31:18

or the president or whoever and

31:20

go, can I lease a couple

31:22

hundred acres and we'll give you

31:24

10% of the profits or whatever?

31:26

And they go, okay, how does

31:29

that work? Well, so if we're

31:31

talking about Honduras, I think we

31:33

need to take a step back

31:35

because prosper emerged out of new

31:37

way capital. And when I create

31:39

a new way capital, I wanted

31:42

to... to ignite this marketplace of

31:44

innovation and governance. So the way

31:46

we went about it is figured,

31:48

well look, let's fund and catalyze

31:50

enhanced forms of special economic zones

31:52

as a model to be replicated.

31:54

And so from that perspective, it

31:57

was like a venture capital fund

31:59

dedicated in this very unique niche.

32:01

We canvassed the world. and we

32:03

were looking for opportunities to partner

32:05

with governments to create these types

32:07

of special economic zones. And we

32:10

had a great time over several

32:12

years of visiting many places from

32:14

the Korean... Haiti, Haiti, to Central

32:16

America, Latin America, Eastern Europe, Africa.

32:18

We canvassed the world in many

32:20

places and signed a few emolus.

32:23

And surprisingly, the place where we

32:25

started was in the US, actually.

32:27

After canvassing the world, we figured

32:29

that the best place to pursue

32:31

our vision was in the US.

32:33

And so we entered into an

32:36

agreement with the state of Arizona.

32:38

the governor at the time was

32:40

Doug Ducey, he created a special

32:42

commission to explore you know these

32:44

prosper zones and at the time

32:46

we were hypothesizing we would create

32:49

a special zone on the border

32:51

with Mexico and I would have

32:53

differentiated rules and regulations that would

32:55

cater to a highly competitive environment

32:57

that could benefit from best of

32:59

both worlds the rule of law

33:02

environment of the US, cost of

33:04

labor from Mexico and then of

33:06

course it wouldn't just be low

33:08

coffee. low-cost labor but anybody and

33:10

for advanced manufacturing as well. But

33:12

while we were in the process

33:15

of creating the legislative systems and

33:17

passing laws locally in Arizona that

33:19

would later be upgraded to the

33:21

US so that you can have

33:23

these almost federalized zones with autonomous

33:25

rules and regulations, Honduras reached out

33:28

to us. And they said, that

33:30

thing that you're talking about, that

33:32

system of decentralization of enhanced special

33:34

economic zones, we have something that

33:36

we think is what you're looking

33:38

for, or at least kind of

33:40

lying to what you're looking for.

33:43

And so it turns, this was

33:45

2015 when we were in Arizona.

33:47

In 2013, so two years prior,

33:49

Honduras has passed this Zeta law,

33:51

which, you know, was like a

33:53

special economic zone legislation that created

33:56

indeed this. what could be enhanced

33:58

special economics also that the organic

34:00

law of the zetas is very

34:02

is very good it's very strategic

34:04

it builds on how home Congress

34:06

set up, how Dubai was set

34:09

up, but it does not prescribe

34:11

how the zones were to be

34:13

set up. It basically says that

34:15

in Honduras you can create enhanced

34:17

special economic zones and that within

34:19

the zones, you know, Congress can

34:22

approve a highly differentiated set of

34:24

rule sets. That's pretty much all

34:26

it said, right? Okay, now we

34:28

had a campus upon which to

34:30

potentially deploy a collection of international

34:32

best practices regardless of the fact

34:35

that it's in Honduras, why not?

34:37

attract the best of the best

34:39

from all over the world and

34:41

deploy them in one location. And

34:43

so we, based on that invitation,

34:45

went to Honduras, visited with the

34:48

government, diligence, the law, visited the

34:50

country, and we were pleasantly surprised.

34:52

Indeed, the legal foundations were very

34:54

interesting, very innovative. We're not super

34:56

prescriptive, so indeed it allowed a

34:58

lot of importation of international best

35:01

practices. and the country was full

35:03

of young people hungry for opportunities,

35:05

unfortunately leaving by the hundreds of

35:07

thousands per year to try to

35:09

have a better life in the

35:11

US. So you had what you

35:14

could say, a population that was

35:16

very eager and in need of

35:18

better services. And so we went

35:20

through a period of about two

35:22

years of understanding the system. We

35:24

were the first partnered to the

35:26

Honduran government to propose the first

35:29

Zaire. It took us three years

35:31

from when we started to when

35:33

it was approved and the rule

35:35

sets were all integrated. And so

35:37

it was approved in 2017. It

35:39

took about three years to develop

35:42

the internal legal systems and by

35:44

2020 we started breaking ground in

35:46

our first location which was on

35:48

the island of Rotan, a beautiful

35:50

Caribbean island. It's part of Honduras

35:52

but it has a very unique

35:55

history. It's a former British colony.

35:57

It's a place where they speak

35:59

English mostly that use the dollar.

36:01

It's a beautiful... terrorism destination but

36:03

largely undiscovered and we thought the

36:05

best example in the world of

36:08

how this methodology has worked is

36:10

in Asia and to be very

36:12

specific in Hong Kong and how

36:14

it inspired Jinzen on the mainland

36:16

of China and how Jinzen then

36:18

inspired dozens and dozens of additional

36:21

special economic zones which is in

36:23

fact how China has become a

36:25

world superpower as you pointed out

36:27

they're not a democracy but they

36:29

do have a huge network of

36:31

special economic zones which adopted free

36:34

market capitalism in stages. But all

36:36

of that was inspired by Hong

36:38

Kong. So we figured, okay, we

36:40

can build with the government of

36:42

Honduras on the island of Rotan,

36:44

the equivalent of Hong Kong for

36:47

the region. Perhaps the equivalent of

36:49

Hong Kong to Honduras, where on

36:51

the mainland we would then catalyze

36:53

a more industrially focused city. which

36:55

in Honduras it's on the northern

36:57

coast, the city called Laseba, we

36:59

have a second footprint near Laseba,

37:02

with a vision of replicating what

37:04

has worked elsewhere, but even though

37:06

the intended outcome is the same,

37:08

the innovation is in the methodology

37:10

of being able to do this

37:12

as a public-private partnership with private

37:15

capital being invested, no money necessary

37:17

from the government, bringing the best

37:19

talent and the high degree of

37:21

capital from any war in the

37:23

world. to unleash the trapped potential

37:25

of, in this case, Honduras, but

37:28

frankly it works the same anywhere,

37:30

to unleash their potential joining businessmen

37:32

from abroad to businessmen from the

37:34

country, creating jobs opportunities for the

37:36

local population, and then tapping into

37:38

the best world opportunities. So for

37:41

Honduras, there is an opportunity in

37:43

finance and health care out of

37:45

the island of Rotan, but there

37:47

is a huge near shore opportunity

37:49

for the mainland as... Supply chains

37:51

are relocating naturally and then with

37:54

COVID became exacerbated from being far.

37:56

away on the East and

37:58

in China to being the

38:00

the hemisphere so

38:02

that that's been that's

38:04

been division and we're slowly it, not without

38:07

obstacles, as we can talk about in

38:09

a bit. we can talk about it in a bit.

38:11

vision, it's a vision vision, it's

38:13

a proven to work to then it's

38:15

scalable, it's scalable. So Okay, so it in Honduras

38:17

is just a staging ground It can

38:19

be replicated by other companies or ourselves

38:21

or any other part of the world part

38:23

of the That's such a great story. my

38:25

god. So many questions come to mind.

38:28

I mean first of all had you

38:30

set up in Arizona set up in that

38:32

would be one solution to the one

38:34

problem to people these are bad people

38:36

mean maybe people, guess but most are

38:38

just going people, I mean, maybe some are, I guess,

38:40

but most are just you okay

38:42

over there? want yeah. to work. And, um,

38:44

are you okay have gotten there? Yeah, some reason.

38:47

must that was Siri. Yes, I thought

38:49

I recognized that voice. I voice. Oh, tell

38:51

if it was Alexa or Siri. I thought I

38:53

recognized that voice. I them separate so they don't

38:55

get jealous. Alexa or Siri. Sorry. Yeah, so I so

38:57

I mean, know, come on over, over, except of,

38:59

you know, going to San Diego or whatever, go

39:01

to go to Arizona there and work and you'll

39:03

have work. and work and the new work

39:05

for it. now send them all down

39:07

to Honduras now your direction. to

39:09

Honduras in your direction. But more seriously, so if say

39:12

someone like Ford Ford Motor says, says, we

39:14

we to to come down to

39:16

Honduras and set up a

39:18

factory in your in your of the

39:20

woods there. there. And so on. So

39:22

this is who would work there?

39:24

These are describing, something for work.

39:26

then they could make it. this work at

39:28

this board. and then the Honduras Honduras government

39:30

itself would profit from this because

39:32

they would be paying their income

39:34

tax. tax they'd be making money rather

39:36

than being unemployed. than being unemployed

39:39

would make money. would make on. So

39:41

this is on. of the model kind of the

39:43

something like that. Yeah, very

39:45

much like that. Yeah, very much. So in

39:47

our setup in Honduras, part of

39:50

the agreement through law is

39:52

at 99, 90% of the workforce of

39:54

the workforce has to to be native,

39:56

has to be in in this

39:58

case. And so while you

40:00

create a system that provides significant

40:02

regulatory, physical and legal advantages so

40:05

that companies can focus on what

40:07

works and get rid of the

40:09

burden of unnecessary rules and red

40:12

tape. The flip side is, you

40:14

know, these are designed to be

40:16

of tremendous benefit to the local

40:18

population, so 90% of the workers

40:21

have to be local. There's some

40:23

exceptions, so if you have some

40:25

key positions with specialized knowledge that

40:28

you just... don't find a Honduran

40:30

for, then you go through a

40:32

slightly different process. But the incentives

40:34

are stacked in favor of hiring

40:37

local. So the natural tendency is

40:39

to set up training institutes, universities,

40:41

and even schools so that maybe

40:43

they're not well trained right now,

40:46

but within a few years you

40:48

have a local population that is

40:50

well trained and available and they're

40:53

there. You know, experts are very

40:55

expensive, no matter where in the

40:57

world you try to take them.

40:59

Very expensive and skills can be

41:02

taught. So there's a strong incentive

41:04

to develop a local population. Prosper

41:06

zones are not tax-free zones. They

41:09

comply in fact with the IMF

41:11

standards so as to not be

41:13

considered tax havens because we wanted

41:15

to make sure that these zones

41:18

can be the tax jurisdiction for

41:20

the companies operating within. Otherwise there's

41:22

a significant amount of double taxation.

41:24

So they're not tax-free zones. but

41:27

their tax optimized zones. So it's

41:29

very straightforward, easy to file, and

41:31

relatively low cost, certainly compared to

41:34

the advantages you get. But all

41:36

and of the taxes that are

41:38

collected and the fees within the

41:40

zone, the national government has a

41:43

guaranteed revenue share percentage. So they

41:45

have a direct benefit from all

41:47

the revenues that are generated within

41:50

the zone. And it's 12 to

41:52

15%. You know, I'll leave it

41:54

at a range for now. But

41:56

imagine it's 15% the remaining 85%

41:59

state inside to make sure that

42:01

there are capital to fund, you

42:03

know, so-called public access goods and

42:05

services because the whole idea is

42:08

to create a world-class destination to

42:10

do business in, to live, and

42:12

to have a life in general.

42:15

So it's not just like an

42:17

industrial zone where companies have their

42:19

office, it's literally housing and hospitals

42:21

and education. I mean, the vision

42:24

is you start as an economic

42:26

zone, but you grow up into

42:28

a thriving city. you know, metropolitan

42:31

area with all sorts of industries

42:33

not limited to any one industry.

42:35

So basically replicating the Hong Kong

42:37

and the Dubai models, but in

42:40

partnerships, public-private partnerships. That's direct benefit

42:42

revenue share. And then of course

42:44

with 90% of the workers having

42:46

to be locals, then that means

42:49

now their families have better incomes,

42:51

they spend money inside and outside,

42:53

you have supply chain considerations, you

42:56

know, building these places physically, and

42:58

then keeping them supplied. with food

43:00

and materials. It benefits the overall

43:02

local economy because it becomes a

43:05

magnet of demand. So there's a

43:07

lot of direct benefits and indirect

43:09

benefits and it's like it's a

43:12

combination of things that work in

43:14

the world of economic development with

43:16

the with the institutional structure and

43:18

the incentive structure of entrepreneurship. You

43:21

marry those two and you have

43:23

a rocket ship for economic development.

43:25

Yeah, when I was in Dubai,

43:27

I was asking my host, who

43:30

built all these buildings? I mean,

43:32

literally, physically built them. They said,

43:34

well, mostly people from outside the

43:37

country coming in for work. And

43:39

it's a massive amount, apparently. But

43:41

yeah, so your team sent me

43:43

photos of your, your prosperity, it's

43:46

gorgeous. Wow, the hiking, the swimming,

43:48

snorkeling, holy moly. Now what's there

43:50

now? If I came down tomorrow,

43:53

what would I see? The prosper

43:55

has three areas. in

43:57

the country of

43:59

Honduras, three different

44:02

hubs. hubs. The main one is

44:04

The main one is on the island of and what

44:06

you would see right now would you would

44:08

see right now a look initially.

44:11

Although you will see community initially.

44:13

something different you will see

44:15

that there's something different already

44:17

starting to happen a there's a

44:19

robotics factory You wouldn't have a

44:22

robotics robotics you know, in a have

44:24

a high -rise tower high-rise use that

44:26

makes use residential office retail. have co

44:28

-working spaces. spaces. It's a a

44:30

beautiful, natural space, but space, but

44:32

Very early, mean, we

44:34

started construction in construction

44:36

in while COVID was going COVID

44:38

was current The hub 1

44:40

is about 420 acres. is

44:42

about intended to over time

44:44

be about 750 acres 750

44:47

put it in perspective. put

44:49

it in is about 535

44:51

acres. 535 acres. So

44:53

is intended to be slightly

44:55

larger than Monaco. larger than with

44:57

the capacity based

44:59

on urban plans to occupy

45:02

about 100,000 people to house

45:04

about 100 ,000 people between those

45:06

that live and work, which we

45:08

have not the second hub on

45:10

we have not broken ground on

45:12

yet mainland on the mainland of Honduras. and that

45:14

would look would look more

45:17

like an industrial park initially, focused

45:19

on on and operations. shore and but

45:21

with housing opportunities as well

45:23

for the early employees need to

45:25

move. This is a bit

45:28

of a more distant part from the main

45:30

from the main population of

45:32

San Peraans and the Usigalpa. So as to as

45:34

to attract top talent and keep them

45:36

there. not not just about the

45:38

factories, not just about the offices,

45:40

about the residential conditions. residential so you

45:43

would expect schools would expect well.

45:45

and Back to as well. a second,

45:47

one you have a second, you have, you have

45:49

you have housing inside as well. housing

45:51

inside as well. and we have a

45:53

beautiful golf course what it's worth what

45:55

it's worth and division, of the

45:57

Hong Kong Hong Kong division, saying analogy

45:59

is First, you've got to track the capital

46:02

and you've got to track top talent

46:04

because the true engine of an economy

46:06

is not government and it's not just

46:08

investors. You need talented people to build

46:10

and grow their businesses and as a

46:12

consequence of having a comparative advantage to

46:14

operate there, then you also hire. That's

46:16

how you create jobs. So our first

46:18

hub is designed to be world-class compatible

46:20

with entrepreneurs from any part of the

46:23

world. Right, so if I'm an American

46:25

and I want to invest in prosperous

46:27

in prosperity in prosperity, prosperity. say I

46:29

got an extra million dollars laying around

46:31

and I come to you and let's

46:33

say I invest in some of your

46:35

startups or whatever do I still have

46:37

to pay income so let's say you

46:39

double my money in five years do

46:41

I have to pay pay capital gains

46:44

to the federal US government and taxes

46:46

to Honduras or how does it work?

46:48

As a US citizen unfortunately we are

46:50

all exposed to universal taxation so regardless

46:52

of where we invest, when we make

46:54

money, we pay the U.S. government. Ultimately,

46:56

right? I mean, maybe if the profits

46:58

are left inside of an LLC or

47:00

a company abroad, then, you know, maybe

47:02

not, but if you actually want to

47:05

get access to it, as you know,

47:07

eventually you'll pay the IRS. As to

47:09

the business taxes that might be paid

47:11

in the in the zone, you're only

47:13

paying taxes where you're doing business. So

47:15

there's no universal taxation. by the U.S.

47:17

government on companies that are owned by

47:19

U.S. citizens only when you're going to

47:21

distribute the profits back to the beneficial

47:23

owner if the beneficial owner is a

47:26

U.S. citizen? So the answer is partly

47:28

no, not at the business level or

47:30

the business level, you're just paying local

47:32

taxes, which obviously go to the Honduran

47:34

government and to the zone itself, but

47:36

when you repatriate the profits, then you

47:38

will pay the income taxes that applied

47:40

to you in the U.S. If you

47:42

were patriot. And then in your area

47:44

that you occupy are there. roads

47:47

and who owns

47:49

the roads and who

47:51

maintains the roads

47:53

and how do you

47:55

pay for that?

47:57

Or any other public

47:59

services? Yeah, yeah,

48:01

yeah. It's funny. People

48:03

automatically associate roads

48:05

as having to be

48:08

public. But be they

48:10

don't, yeah, no,

48:12

no, no, of course

48:14

of roads and everything,

48:16

but they're all

48:18

private. The infrastructure is

48:20

private. And, and

48:22

the thing is that as a,

48:24

as a developer, so we have the

48:26

governance service provider, which in partnership

48:28

with the Honduran government, and they, they

48:30

do as a provision. But then

48:32

as a real estate developer, you

48:35

know, guess what? If you want to

48:37

have a successful future city, you got to

48:39

make sure there are roads and there

48:41

are water mains and electric lines and so

48:43

on. Yeah, they're privately owned and people

48:45

pay a fee for using them, which tends

48:47

to be according to their use, you

48:50

know, X amount of cents per gallon of

48:52

water or percentage of the electric bill

48:54

to handle the internal grid. And then for

48:56

the roads, there's just a general service

48:58

fee that people pay per year. And that's,

49:00

you know, that's used to maintain the

49:02

roads in terms of investing to build them.

49:04

It's part of the overall real estate

49:06

investment. It's part of the horizontal infrastructure you

49:08

have to lay in order to then

49:10

build vertical developments that you can sell and

49:12

rent. So in none of it is public.

49:14

All of it is private property. Yeah. and

49:17

Yeah, I think in general, people kind

49:19

of take these things for granted and assume

49:21

there has to be public control of

49:23

things like roads and electricity or whatever. But

49:25

even where I live, I'm just up

49:27

in the foothills here of Santa Barbara. I

49:29

live on a private road and all

49:31

of us families, the household, we all have

49:33

to pay to maintain it. And we're

49:35

on a well system because there's no public

49:37

water up there. We have to drill

49:39

a well and it costs money. And the

49:41

water is essentially free once the well

49:43

is done. But have it's expensive to put

49:46

a well in. So you got to go,

49:48

oh, I see. And then we have

49:50

this cranky guy toward the top of the

49:52

road. He doesn't use much of the

49:54

road. So he goes, I don't want to

49:56

pay for the road down there where

49:58

you guys are using it. I only this part

50:00

I'm like, oh great. So we had to had to do

50:02

this calculation of how much how of each the

50:04

road each of road each of us much we

50:06

have to pay we suppose all planned communities

50:08

have to do this but if you think

50:10

about it do this, but you go

50:12

to Google about it, like if Microsoft. Google

50:15

or You know, they, you know, those are

50:17

are all private roads you know, you know,

50:19

they have their own mail system and

50:21

so on. It's, you on. It's, you know,

50:23

it's just giant giant malls. You

50:25

know, those are all private roads this,

50:27

this, you know, this system is, this system is,

50:29

know, run run by the proprietary. owners

50:32

of the of the of the of the place and and

50:34

so on and so forth. It's just what you

50:36

get used to I think to, I think.

50:38

It is. And of timing a lot of timing

50:40

so. implications. So, collective

50:42

action issue, but if you start

50:44

But if you start from the get go on

50:46

a a vision of a

50:48

private. vision of you know, and development. know, then

50:51

you embed a lot of these

50:53

considerations into the CCNRs of the property.

50:55

the CCNRs that you can

50:57

manage these. manage these. this private

50:59

goods, but that have mass access

51:01

to them. They're almost like public

51:03

goods but they're privately And

51:05

so if you you if you can start start from

51:07

scratch we we have, you then you just bake

51:09

that into the system. and then it with

51:11

time. So you don't have to then enter into

51:14

a debate whether people should pay for the whether It's

51:16

part of the deal the they buy. it's part of a

51:18

land they buy a in of land going to say,

51:20

you know, they're going to be say you know

51:22

assessed yearly assessed maintain

51:24

these properties. these properties

51:26

that's part of the deal. of the deal yeah And

51:28

And then are there

51:30

labor issues the concerns that you the

51:32

concerns that you or the

51:34

companies that are in in in

51:37

Prospera. We'll take advantage, unfair advantage

51:39

of the poor, of

51:41

the poor labors in in us for

51:43

example for I mean, some

51:45

people some but in a

51:47

concern but in rights of

51:50

workers within workers are

51:52

far higher zone are

51:54

more strictly applied. applied

51:57

because Again, ask.

52:00

the administrator, our commitment to our responsibility

52:02

is not to any one particular

52:04

company or tenant. You know, we

52:06

are in the business of creating

52:08

a generalized set of conditions, so

52:10

yes, a bunch of companies come,

52:12

but also a bunch of employees

52:14

and the best talent comes. And

52:16

so our incentive is to create

52:18

a rule of law environment and

52:20

in a rule of law environment,

52:22

it's not about the business as

52:25

always right. It's about are you

52:27

honoring the agreements that you've entered

52:29

into? And so Honduras and by

52:31

extension prosper are governed by all

52:33

sorts of international treaties of human

52:35

rights and labor rights and all

52:37

that sort of stuff. We can

52:39

comply with those and frankly most

52:41

of the friction is not in

52:43

the overall principles but in the

52:45

bureaucracy of having to go through

52:47

the minutiae, you know the principle

52:49

of paying fair wages, of paying

52:51

people for the work that they

52:54

do of paying extra if they

52:56

work beyond certain amount of hours.

52:58

I mean those concepts are easy

53:00

to comply with. as a general

53:02

principle, it's when you have a

53:04

bureaucracy that is slow and delayed,

53:06

that's where the problem is. So

53:08

within the zone, you comply with

53:10

all those standards, and then if

53:12

you don't comply, or if there

53:14

is a dispute between a company

53:16

and an employee, as to whether

53:18

or not the employee got paid

53:21

their severances, or God forbid there's

53:23

an accident, and who should pay

53:25

what, all that is adjudicated through

53:27

a purpose-built labor tribunal inside of

53:29

an arbitration center that must resolve

53:31

the matter. within 90 days. Sometimes

53:33

these cases take years in countries

53:35

like Honduras and in other places.

53:37

Here there's a guaranteed 90-day window

53:39

maximum of which the issue is

53:41

resolved and it's not necessarily in

53:43

favor of the company. It's in

53:45

favor of what's fair with the

53:47

contract says and what the international

53:50

standards require. Yeah, two books I

53:52

read on this. One was by

53:54

Spencer Heath called the Art of

53:56

Community. in which he talks about

53:58

shopping centers are proprietary communities as

54:00

our condominium complexes mobile home parks

54:02

retirement communities and us Park, private

54:04

colleges and universities, corporate campuses like

54:06

Microsoft, Apple, and Google. The hotel,

54:08

a hotel has its public and

54:10

private areas, corridors or streets, and

54:12

a lobby for its town square.

54:14

And the lobby is the municipal

54:16

park with its sculpture, fountains, and

54:19

plantings. It has shopping areas where

54:21

restaurants and retail stores bid for

54:23

patronage. Its public transit system, as

54:25

it happens, operates vertically instead of

54:27

horizontally. When you rent a hotel

54:29

room, including in the price for

54:31

utilities such as water, electricity, heat

54:33

and air conditioning, and sewage. And

54:35

for an extra fee, you get

54:37

rubs service. Current movies and high-speed

54:39

internet access. Well now mostly that's

54:41

free. Also provided are police and

54:43

fire protection by security guards and

54:45

sprinkler systems. Many hotels include a

54:48

chapel for religious services, babysitting in

54:50

play areas for children, pools for

54:52

recreation and bars for imbibing. concerts

54:54

and plays and even theater shows,

54:56

especially Las Vegas, the main difference

54:58

between this community and that if

55:00

cities that hotels are entirely private

55:02

and organized by voluntary contract. Yeah,

55:04

it's all true. In other words,

55:06

it's been done. We are already

55:08

doing this, so why not extrapolate

55:10

it to larger areas? That's your

55:12

point. Exactly. And why not do

55:14

it in parts of the world

55:17

that needed the most? where a

55:19

partnership between host nations and private

55:21

capital makes a lot of sense.

55:23

You mix the best of all

55:25

worlds. You have a high need

55:27

for much better services. As a

55:29

result, there is a profit potential.

55:31

There's a bit of an arbitrage

55:33

opportunity, saying the cost of land,

55:35

the cost of labor, in underdeveloped

55:37

areas of the world. But if

55:39

you can then bring in world-class

55:41

standards, then that arbitrage accrues. to

55:44

those who help fill the gap

55:46

between poverty and prosperity, which is

55:48

exactly what you want. The surprising

55:50

mechanism is an incentive structure. You

55:52

know, if allowed, the market work.

55:54

Beautifully to attract

55:56

the most capital

55:58

most energy to

56:00

where it is

56:02

needed most. where it

56:04

is needed other example is

56:06

the 2014 book by

56:09

the book by the economist Peter Leason,

56:11

Anarchy Unbound. Why self -governance

56:13

works better than you think. you

56:15

think. Now one of of the critiques

56:17

of that that but you have these economic

56:19

zones within zones within traditional

56:23

states and... What if the local the local

56:25

the local get a new you get a new of

56:27

of Honduras and he goes, goes, hey, I I really

56:29

like what you're doing there in there in Thank you

56:31

very much. We're just gonna take over the

56:33

whole place. to Good -bye and good luck. And what

56:35

are you and to stop my army from coming

56:37

in? to do to stop my army from is

56:39

not only know, hypothetical risk,

56:41

it's actually a situation a facing

56:43

in Honduras. in Honduras, change

56:45

of government three years ago, years ago that

56:48

brought in a brought in

56:50

different aligned administration administration.

56:52

And if if they could have their way,

56:54

they would get rid of the underlying system

56:56

upon which we operate for exactly that reason. operate

56:58

for exactly know, no

57:00

business model is no perfect. model born

57:03

And this is an innovative way

57:05

to way economic development. It's

57:07

an innovative business model at the

57:10

same time. model at the same time. So

57:12

we're we go. We're figuring out

57:14

how to solve for those challenges. for

57:16

those challenges. And and, and we're

57:18

seeing that there are mechanisms, for example. for

57:20

example. know, there's all sorts

57:22

of legal structures that you can

57:24

set in place from the beginning that

57:26

provide you maximum level of legal

57:28

protection and stability, leveraging international law and

57:30

institutions like the World Bank. and

57:33

the Center for like the

57:35

World Bank and the Center for know

57:37

State dispute half sovereignty. You

57:39

know, countries but they don't get

57:42

to operate without operate without They wanna

57:44

be part of want world economy.

57:46

of the world a U .S.

57:48

US company, We're were protected by international

57:50

treaties that the US .S. this this case

57:52

Honduras and many countries around the

57:54

world the world enter and it's a condition to

57:56

have access to the the .S. market that you

57:58

play by certain rules. and those. rules include

58:00

that you honor and respect private

58:02

property of U.S. companies that go

58:04

and invest. So there is a

58:07

multiple layers of legal protections that

58:09

you can set up and we've

58:11

done that. The challenge is political.

58:13

As you pointed out, what happens

58:15

if the political will changes and

58:17

that's what we're going through. And

58:19

I think the solution is going

58:21

to look something Well, like in

58:24

the world of politics, like what

58:26

gets a politician into power? What

58:28

gets a politician into power is

58:30

popularity, ultimately, right? How they gain

58:32

that popularity varies. But ultimately, in

58:34

our case, I think that I

58:36

think it's not enough to just

58:38

have legal protections. I think that

58:40

prosper needs to earn a license

58:43

to operate, a social license to

58:45

operate, and it must maintain it

58:47

over time so that... Politicians don't

58:49

have an incentive to go against

58:51

something that is popular in the

58:53

country. And so that's the state

58:55

we're in right now really figuring

58:57

out that that fourth leg to

59:00

the model and how do we

59:02

you know we are convinced we

59:04

know that we're having such positive

59:06

impact but perception is reality in

59:08

a democracy you know for good

59:10

and for bad. So if people

59:12

don't perceive the good that you

59:14

are doing they cannot vote accordingly

59:16

and so that's that's a huge

59:19

opportunity that we're going to be

59:21

leaning into how do we translate

59:23

good in reality to good in

59:25

the perception of the people so

59:27

that as the exercise their their

59:29

vote and voice their opinions they

59:31

can signal to the politicians that

59:33

you know that prosper is is

59:36

is is an attribute of the

59:38

country that ought to be protected

59:40

not attacked yeah so if you

59:42

don't want to spend money on

59:44

a Army, essentially a military force

59:46

to defend your company. I guess

59:48

you could have private security guards

59:50

or something like that. Disincentivize.

59:52

is anyone from

59:55

wanting to just

59:57

take it over

59:59

violently because they're

1:00:01

so successful. They're

1:00:03

making so much

1:00:05

money. and it's so prosperous

1:00:07

to be in business with you that they

1:00:09

don't want to. that they Just take your

1:00:11

stuff. just take your stuff. a combination

1:00:14

of sticks and carrots. of sticks you've got

1:00:16

to make it very costly for them

1:00:18

to destroy it very profitable for them to

1:00:20

maintain. and And, you know. them

1:00:22

to the reality is know the reality

1:00:24

is at the world of human affairs. human

1:00:26

affairs regardless of what we want to

1:00:28

think. to think morally, ethically, ethically,

1:00:30

philosophically is right of the way

1:00:32

it should be. be, is

1:00:34

that people react to incentives.

1:00:36

to incentives, you know, and you can ignore it and try

1:00:38

to cover the sun with a thumb. the

1:00:41

sun you can just realize that

1:00:43

that is why politics that is begin

1:00:45

with. and that you

1:00:47

need to proactively and that that energy.

1:00:50

in the best possible way,

1:00:52

and in good thing possible way. And the

1:00:54

good thing is that in the the competition

1:00:56

between systems as to which one

1:00:58

generates the greatest amount of good to

1:01:01

the greatest amount of people. the There's

1:01:03

no question. of people. The free

1:01:05

market that does that.

1:01:08

does that.