Honduras Conducts Bold Experiment in Economic Freedom
What is Honduras best known for? The small Latin American country has a lot going for it. It has one of the best national soccer teams in North America. Its tamales are to die for. Soon, though, Honduras might acquire a new reputation for helping forge a new path for liberty and the free market.
A bold new scheme has seen Zones for Economic Development and Employment (ZEDE) pop up across Honduras. On the island of Roatan, an ambitious group of entrepreneurs have banded together behind a shared philosophy of growth and innovation, united by a belief that the free market can bring the change the world so badly needs.
Known as ‘Prospera’, the Zone is near-unique in its governance structure. Resisting the government-centric model — the endless tax-and-spend cycle and resorting to nanny statism to confront every social problem with a centralized response — Prospera places rapid economic growth, job creation, and innovation top of mind.
The results speak for themselves.
Prospera has already attracted over $80 million in investment from outsiders keen to get their hands on a slice of the pie and take advantage of the universally beneficial environment it offers for uninterrupted growth. Along with two other ZEDEs on the Honduran mainland, Prospera has collected almost a quarter-billion dollars in private investment, leading to thousands of new jobs for locals and tens of thousands more almost certainly on the way.
All these ends are achieved through one very simple but oft-forgotten idea: freedom. No one is forced to live or work there. The private sector – with the consent of the governed – provides services, and residents enjoy enforceable contracts with the government. The twin evils of bureaucracy and corporatism are banished. Instead, residents enjoy an open, transparent relationship with each other and their institutions.
The ZEDE idea is unapologetically pro-growth. That is its defining feature. As commodity prices for all kinds of essential goods from gasoline to food continue to skyrocket and economies across the Western world hurtle towards recession, we need pro-growth governance more than ever. Too often, we settle for managed decline. We find ourselves choosing between politicians and parties who seem to espouse slightly different versions of the same pessimistic, backward-looking economic worldview.
The only way out of that is growth, and the only way to achieve growth is for the government to get out of the way. That is what is so exciting about the Honduran Zones for Economic Development and Employment.
The ZEDE scheme is reminiscent of regulatory sandboxes, a creation of the British financial technologies industry designed to foster innovation by temporarily freeing pioneers and start-ups of the burdens of red tape. By permitting parts of the economy to operate outside the regulatory environment (but still subject to important basic laws such as consumer protections) we neatly sidestep the ever-growing state machine and instead create an environment in which innovators develop new technologies to lower costs and improve quality of life for everyone else.
Regulatory sandboxes have been wildly successful. The idea has been exported to several countries around the world including Czechia, Rwanda, Serbia, and Zimbabwe, and American state governments are racing to implement them (eighteen at the last count). The Honduran Zone for Economic Development and Employment idea could similarly catch on and take the world by storm, creating hundreds of growth pockets across the globe.
But ZEDEs might never reach that point. Prospera and other ZEDEs are under threat of being squashed by a motley crew of regulators and rent-seekers who fear and despise its vision of growth and liberty for all. In Honduras, local elites want to see ZEDEs destroyed because they represent new competition. Meanwhile, politicians locked into a statist worldview attack ZEDEs because of their emphasis on property rights and the consent of the governed, as opposed to silent, conformist collectivism.
If Prospera and the other ZEDEs lose this battle, the Honduran people who benefit from them will suffer. They will face a stark choice between living in relative poverty or upending their lives to attempt migration to America. Either way, the limitless potential of the ZEDE could be lost any day. Now is the time for those of us who desire prosperity, believe in growth, and value liberty to stand up for our values and pave the way for an idea which could change all our lives for the better.
Jason Reed is the spokesperson at Young Voices and a writer and broadcaster on politics and policy for a wide range of outlets. Follow him on Twitter @JasonReed624
