[ACX Linkpost] Prospectus on Próspera

It will allow us to decouple "successful, because located on a trade route" from "successful, because of libertarian environment".

Other comments have mentioned that it may be difficult to distinguish between "this business exists because Prospera is so awesome" and "this business already existed, but moved to Prospera because of lower taxes". Or perhaps, for businesses that do not exist today, between "this business started because of Prospera" and "this business would have started regardless, but pays lower taxes because it is in Prospera".

That is, data about successful businesses that will appear in Prospera will not necessarily tell us what would have happened otherwise. And will not allow us to predict what would have happened if we had fifty Prosperas instead -- would we have fifty times as many successful companies, or just the same number of companies, and fifty cities competing for them by offering even lower taxes... maybe also reducing employee rights, etc.

That's a lot of the appeal. Roatan was known as a scuba destination before this, and so long as Prospera keeps the waters clean, that should only increase. Medical tourism, as well as medical research, including pharma, is also a big selling point with the full reciprocity and choice of regulatory environment. 

One big point I feel should be pointed out is e-residency. Prospera intends to profit not just from activity on-site, but also from people and companies declaring e-residency in Prospera. If the attraction of its regulatory environment works out, it may well have tax revenue disproportionate to physical residents which it actually has to provide services for. 

Cowen doesn't seem to have written his own thoughts on the matter, but has reported on it at the links below, and seems excited. Until recently the project has kept relatively quiet, as they were shopping around for big early investors. It's only recently they've opened themselves up to the public, and they're still focused mostly on attracting local Hondurans. I've known about the project for a few years,  but only because I'm close to people who got in on the early stages. If I had to guess, I figure they want to have more built and have a solid local base before advertising to the foreign public. Just a guess though.

https://marginalrevolution.com/marginalrevolution/2021/03/charter-city-finally-in-honduras.html

https://marginalrevolution.com/marginalrevolution/2020/05/a-charter-city-finally-in-honduras-from-mark-lutter.html

Apologies for the redundancy if you've already seen those links. 

Roatan is safer than the mainland, both due to its separation from the bulk of drug crime and the local focus on tourism, which shifts the weight onto petty crimes that target tourist's wallets. But it's still Honduras, and there was the notable murder of a US citizen a couple years ago. Prospera aims to have private security, instead of depending on the local police. 

Prospera also claims to be minimally dependent on the Honduran government, in particular by setting up its own services and courts for most crimes. The deal they negotiated is supposed to be a hands-off affair, where HPI pays them taxes and abides by a portion of Honduras' laws. Whether this can be done successfully is yet to be seen.

Honduras deciding to take over seems unlikely, but future administrations wanting to increase their cut in violation of contract is a very real worry. Prospera is trying to curb that by setting maximum tax revenue as a portion of GDP in their charter and Bill of Rights, but if the Hondurans did try to force their hand, it's not clear what they could do.

That's as much as I can answer for now. I'm going through their materials and intend to ask questions of their CEO. If you have specific questions for him, I may be able to pass them along.