Startup Cities: Better Law and Governance Through Entrepreneurship

What are Startup Cities?

“Startup Cities compete for citizens by providing high-quality public goods, security, social services, and a fair administration of justice.” –

Central America has a lot of problems.  Violence, drugs, poverty…

Honduras has the highest murder per capita rate in the world.  Next door neighbors Guatemala and El Salvador aren’t far behind. Senseless violence, crushing poverty.  These are tragedies anywhere, anytime and are all the sharper to me having recently spent nearly a month in Guatemala where, violence and poverty aside, I found a lush beautiful country, a warm friendly people, great food and atmospheric crumbling colonial architecture.


Why it’s so bad.

As Business Insider reports, some 80 per cent of the cocaine that reaches US soil is now trafficked via Honduras, either spirited there by sea or flown into remote air strips carved out of the jungle in the inaccessible wilderness of the north-east.

As US-led counter-trafficking operations have squeezed cartels to the south in Colombia and the north in Mexico, the drug gangs have turned to the country as an alternative staging post. Situated mid-way between the coca fields of the Amazon basin and the consumers of American cities, Honduras’s location and geography has turned into a curse.

The drugs are overwhelmingly smuggled through La Mosquitia, a sparsely-populated, lawless and near-impenetrable rainforest along the Nicaraguan border and Caribbean coast.

Mexico’s feared Zeta and Sinaloa cartels have teamed up with local drug-lords to run the multi-billion dollar smuggling operation. But they have also imported their ruthless rivalries.

Senior Honduran military personnel privately acknowledge that they are waging a losing battle against the vastly better-resourced “narcos” – despite the backing of the US Drug Enforcement Agency.  Read More Here

Reform can seem impossible.

Reform seems impossible. Change is slow. Politicians run on platforms that merely tinker within a broken system, rather than trying to pass the major reforms necessary to give the poor the opportunities all people deserve.

Not to mention that many people depend on things staying the way they are.  Government bureaucracy relies on fees and levies on productive activity to finance themselves. Low-level bureaucrats and police officers — often poorly-paid, poorly-trained and facing serious violence — rely on the bribes they can extract by enforcing destructive regulations to support their own small incomes.

Laws that restrict new, often poor entrepreneurs support inefficient private or State-owned monopolies. These special-interests oppose reform each step of the way.

Efforts that begin to trickle into the system are stalled or even hijacked by these forces. Most often, reform ideas are simply never given a fair hearing.

Out of the ruble…the return of the City-State.startup cities

Thinkers from Doug Casey to Nassim Taleb have expressed admiration for the city-state, from the ancient to the modern…Athens to Hong Kong.

But this isn’t just empty pining for the past or economy envy from abroad.  The idea of a new incarnation of the city-state called “Startup Cities” is spreading across Central America with Honduras as the front runner as far as implementation, and Guatemala serving as home base to the Startup Cities Institute.

An excerpt from

“Startup Cities are a major refinement of 20th-century free zones, sometimes called ‘special economic zones’, ‘export processing zones’, or ‘tax-free zones’. These zones are small patches of land with slight differences in tax or regulatory policy. Many of these zones have created jobs and brought investment, but did little to open-up access to the tools of entrepreneurship for the world’s poor.

Startup Cities go further by democratizing access to law and governance. Citizens are allowed to freely enter and exit the city. Since these cities begin small, exercising the right to exit is easy. Citizens opt-in to the Startup City and, should they become dissatisfied, can easily express their dissatisfaction by leaving to a competing jurisdiction or voicing their concerns. Startup Cities enhance democratic accountability by giving people the ability to raise their voice through the power of exit.

With better law and regulatory regimes, citizens can finally access the legal tools they need to become entrepreneurs.”

If this sounds exciting to you (as it does to me) I recommend looking into and also this video from Reason TV

Written by Adam Richardson

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