Setting the Record Straight on Próspera

Próspera is a good-faith actor, intent on building a jurisdiction to catalyze prosperity for Hondurans and entrepreneurs from around the world. And enough is enough. It is time to refute misleading activism masquerading as “journalism” that mischaracterizes the facts. The full, unedited interview between Próspera Chief of Staff Trey Goff and MIT Technology Review journalist Laurie Clarke is linked below.

Today, the Próspera project was the subject of a hit piece by Laurie Clarke, a journalist writing at the MIT Technology Review.

What was published was expertly crafted to fall into the murky gray zone between “outright lies” and “deliberately and intentionally misleading.” Its publication in a source as reputable as the MIT Technology Review warrants a response, so below we will walk through the most glaring errors, omissions, and misleading statements in the piece.

Intentional misleading begins with word choice. Take, for example, this sentence: “A growing number of crypto investors are also trying to persuade other governments to create semi-autonomous zones that double as laboratories for economic experimentation, claiming it will stimulate growth and enrich nearby communities.” The deliberate choice of the phrase “laboratories for economic experimentation” connotes a sense of recklessness, of danger, of risk, and a lack of track record. This is followed immediately by the snide characterization that we are “claiming it will stimulate growth” — the underlying implication being that mere assertions are being made.

Contrast that misleading statement with the reality of what is going on in the Próspera ZEDE:

Independent economists at Universidad Francisco Marroquin in Guatemala have written not just one, but two economic impact analyses demonstrating that the Próspera ZEDE’s institutional improvements could have Hondurans within the ZEDE experiencing levels of prosperity akin to the United States by 2045. You can find these economic impact studies here and here.

There is nothing surprising in these analyses. They are not mere “claims.” The economist Douglas North won a Nobel Prize for pointing out that governance institutions — the rules, laws, and regulations of a jurisdiction — are the real source of poverty and prosperity in jurisdictions. Daron Acemoglu, an MIT Economist and recipient of the John Bates Clark Medal, more recently wrote a critically acclaimed book, Why Nations Fail, which explains in exquisite detail how improving governance institutions can catalyze rapid prosperity, and how poor governance institutions keep some developing nations mired in poverty.

The Próspera ZEDE simply took these lessons to heart, copying the principles of American Common Law within the jurisdiction and instituting many public policy improvements inspired by places like Dubai, Singapore, the United States, and more.

Contrast those facts with the impression created by the excerpt above.

Another tactic bad faith journalists love to use in shaping narrative is a game of “guilt by association,” something which occurs throughout this piece. In the following paragraph, the author writes, “But in Central America, foreign investors have parachuted in with promises of prosperity before, only to grab land and extract value for themselves.” Ms. Clarke then draws a comparison — the exploits of the United Fruit Company in the 19th and early 20th century in Central America.

Próspera ZEDE is creating a platform that will attract foreign investment and generate prosperity because it empowers and showcases the best Honduras has to offer–from talented and hardworking people to productivity-inspiring places to innovative industries. It is nothing like United Fruit. By drawing the analogy, Clarke leaves outrageous and false accusations implicit rather than explicit. This is a deliberate choice: without evidence for the accusation, she makes it implicitly in order to remove the burdensome task of finding evidence (of which there is none) to support these claims.

After these opening salvos, Ms. Clarke spends ample space discussing prior failed attempts at building new cities and discussing the ongoing attempts to create a Bitcoin City in El Salvador before turning her attention to the Próspera ZEDE more directly. Sadly, she doesn’t make it more than one sentence before once again employing ambiguous verbiage to mislead. Clarke describes Próspera as “supported by the Free Private Cities Foundation.” It would be completely reasonable to assume from the wording of this statement that the Free Private Cities Foundation is, say, an investor in the project, or perhaps intimately involved in some way. That organization is neither an investor nor actively involved in any way; but, in the hope that she can stir up the implication of a connection that doesn’t exist without accountability, the author chooses to use the ambiguous term “supported” which can run the gamut from writing a nice blog post to investing millions of dollars.

Returning to the tactic of charged language, Clarke describes the SEZ program known as ZEDEs as “enclaves,” rather than “jurisdiction,” “SEZ”, “economic development program”, or any number of neutral and accurate terms available. The word choice is unmistakably intentional, as “enclaves” has a negative, exclusionary connotation. Who is the Próspera ZEDE excluding, exactly? No one, of course; that fact is beside the point, as it would run counter to the narrative she is constructing.

The next paragraph is equally misleading, and we will demonstrate how point by point:

“Próspera, which broke ground in 2020, plans to implement ultra-low taxes, outsource services typically managed by the public sector, establish an “arbitration center” in place of a court, and charge an annual fee for citizenship (either physical or e-residency) that involves signing a “social contract” the company hopes will discourage misbehavior.”

• The word choice “ultra-low taxes” is intended to add an ideological bent to the Próspera ZEDE, implying indirectly the jurisdiction is nothing more than a tax haven. In fact, because the Próspera ZEDE has a 5% effective personal income tax, it has a higher personal tax rate than nine US states and 16 countries, including the Bahamas, the Cayman Islands, Bermuda, Kuwait, Monaco, Qatar, and the United Arab Emirates among many others.
• “Arbitration Center” is in quotations, an intentional choice that can only be understood as casting doubt sarcastically on that claim, as if the arbitration center is somehow fake or a contrived notion. On the contrary, it exists and is staffed by former US state-level supreme and appellate court justices, Australian magistrates, and renowned US legal scholars. It is in no way a replacement for a court, and in fact the Honduran Supreme Court has created a separate ZEDE Court Circuit. The author makes no mention of this fact, of course, as that would directly disprove her “in place of a court” statement.
• The term “social contract” is in quotations as well, and Clarke writes that it is intended to discourage misbehavior. In fact, the Próspera ZEDE is the only jurisdiction on Earth which solicits express written consent of the governed by asking those moving into the jurisdiction to sign an explicit social contract. No one can or will ever be forced to join the jurisdiction, and this explicit social contract exists to ensure those moving into the jurisdiction actually do give their express and free consent to the governance structures as they exist. It has nothing whatsoever to do with “misbehavior,” and is instead a drastic improvement in democratic consent of the governed relative to any other jurisdiction on Earth.

In the following few sections, Ms. Clarke goes in for the kill. She walks right up to the line of the “outright lies” side of the gray zone which bad faith “journalists” inhabit. She interviews one local community member from a nearby village, Crawfish Rock. This local resident notes that the Próspera team promised that members of their village would be offered the first jobs on the site.

That is precisely what happened. Próspera hired over a dozen members of that 300-member strong community to work on the very first construction project and currently employs 33 members of the community as part of the Próspera ZEDE’s ongoing development today — that is around 10% of the total population of Crawfish Rock. The absence of these facts in the article is so conspicuous as to be obviously deliberate.

Contrary to Ms. Clarke’s claims, no one at Próspera lied about the project in order to gain local support. Próspera held a community referendum in 2019 about our planned developments, explicitly mentioning that we are a ZEDE developing a large-scale real estate and community development project next door; no mention of being a “small tourism project. The actual document signed by community members at that referendum is pictured here:

We have seven more pages of signatures for this referendum. Here is a photo of the gathering itself:

Ms. Clarke then goes on to make the false and defamatory claim that Próspera representatives threatened to expropriate their land. Not only did this never happen, but equally, if not more importantly, both the Próspera ZEDE’s charter and subsequent resolutions explicitly prohibit any such expropriation. The author says we “claimed” this, implying there is no way to know if it is true or not. The charter and the resolution explicitly preventing expropriation are both publicly accessible and easily verifiable here and here. We did not “claim” it; that is an irrefutable fact.

Clarke concludes with a high level blanket statement from our Chief of Staff Trey Goff, saying our only response to the above was the following: “We have very much focused on, from very early on, building strong community relations with that community.”

Despite falsely presenting Goff’s statement as a reply to a dogged inquisitorial confrontation, the fact is that Ms. Clarke did not present Goff with any of these accusations. It is likely she didn’t even manufacture them yet. Instead, you can listen to the actual recording of the questions asked by the author, and our response:

None of this made its way into the final version of the article; these facts would be an inconvenient detraction from the narrative the author is building. Since that interview, Próspera has continued its community outreach efforts, including launching a bus service for the children of Crawfish Rock,who were previously walking miles a day, sometimes in the rain, to get to school.

The full unedited recording of Ms. Clarke’s interview with Mr. Goff can be found here.

Ms. Clarke then concludes by quoting a researcher who doesn’t like ZEDEs in general. This is yet another tactic of narrative construction — in order to maintain a veneer of objectivity, journalists often find third parties who will say what the journalist would like to say directly, but can’t. Clarke could have spoken with economists (referenced above) who actually conducted an economic impact study on the Próspera ZEDE, or a huge raft of other well-known international economists and political scientists who are strong supporters of the Próspera ZEDE, including figures like Shanker Singham or Tyler Cowen. One can only assume that other economic opinions were excluded from the piece in service of the author’s preferred narrative.

Perhaps the most shocking element of this article is not the inaccuracies and sloppy activism masquerading as journalism, but the fact that this was published by the MIT Technology Review. This publication bears the name of one of the most prestigious universities in the world; a university globally renown for its rigor, insight, and quality of work. Is this article representative of the type of work MIT does now? This doesn’t just reflect poorly on MIT Technology Review, but on the institution as a whole, as this isn’t some student run paper, but is instead a premier publication directly affiliated with the MIT brand. the faculty, the students, and the alumni should all be incensed that such shoddy work is publicly parading under the name “MIT.”

Articles like this do not dissuade the Próspera team from working to catalyze prosperity in Honduras. However, we feel it’s important to dispel misleading information like this when published. As we recently announced, we have raised more than $60M to invest into supporting economic development in Honduras and will continue to invest much more in the coming years. The Honduras Próspera Inc. team is committed to supporting growth in Honduras. We have nothing to hide, and we welcome the opportunity to discuss any and all aspects of the project with any journalists acting in good faith. We look forward to building a better and brighter future for Honduras!