Tegucigalpa, Honduras

The socialist opposition has won Honduras’ election and pledges to fight against charter cities there. “Immediately upon assuming the presidency, we are going to send the National Congress an initiative for the repeal of the ZEDE law,” incoming president Xiomara Castro said.

This was what everyone was afraid of. But the last party tried pretty hard to protect ZEDEs from trigger-happy successors, and the constitution currently says that the only way to get rid of them is to win two consecutive 2/3 votes to do so, then give the existing projects ten years to wind down.

Can the socialists get a 2/3 majority? Wikipedia predicts the incoming Honduran Congress will look like this:

These are still preliminary; this person argues that the Nationalists might pick up a few more seats as more conservative rural areas get counted.

Liberty and Refoundation (the socialists) will probably enter into a coalition with the Savior Party and have 65/128 seats for a bare majority. They need 86 votes for a 2/3 majority, which in theory they can get if the Liberal Party agrees. The Liberal Party seems centrist and hard to pin down, but this article includes the following great quote:

“The Liberal Party opposes the ZEDEs because, above all, they undercut our national sovereignty, and because we don’t want them to become hideouts for extraditable criminals,” said [Liberal Party leader Yani] Rosenthal, who served a three-year prison sentence in the United States for money laundering and participating in a criminal scheme with the Los Cachiros cartel.

Rosenthal kind of goes back and forth elsewhere, but in the end I think he’ll vote with the socialists on this. Still, there’s some speculation that his party might not vote as a bloc, and even a few defectors would be enough to prevent a supermajority.

In theory, even if the socialists win two consecutive votes, they have to give the projects ten years to wind down. Ten years is forever in politics, and probably before then the capitalists will get back into power and say never mind, everyone can keep doing what they’re doing. The socialists are aware of this and say that their supplementary strategy is to have everything about the ZEDE law declared unconstitutional.

This should be a hard sell, because ZEDEs are a constitutional amendment, plus the current Supreme Court explicitly ruled a few years ago that they were constitutional. But apparently the Honduran Supreme Court can declare constitutional amendments unconstitutional if it really wants. And the new government will get to appoint a new Supreme Court in two years, and although the exact process is complicated, they may be able to get people who agree with them on this.

Also, incoming president Castro is married to Manuel Zelaya, a former president who tried to pull an Andrew Jackson after the Supreme Court ordered him to stop holding an illegal referendum to change term limits in his favor. He ordered the military to hold the referendum anyway, and was only ousted after the military couped him instead. So this is not exactly a family known for their deep respect for the exact wordings of laws or court rulings (not that anyone in Honduras has really excelled on that front). See further speculation eg here and here. And here’s Mark Lutter from Charter Cities Institute on the elections and the future.

Conchagua Volcano, El Salvador

Meanwhile, insane El Salvadorean president Nayib Bukele says he is ordering the construction of a coin-shaped city dedicated to Bitcoin at the base of a stratovolcano:

“Residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail - everything devoted to Bitcoin,” the 40-year-old said.

And:

The president, who appeared on stage wearing a baseball cap backwards, said that no income taxes would be levied in the city, only value added tax (VAT).

He said that half of the revenue gained from this would be used to “to build up the city”, while the rest would be used to keep the streets “neat and clean” […]

Mr Bukele did not provide dates for construction or completion of the city, but said he estimated that much of the public infrastructure would cost around 300,000 Bitcoins.

It’s tempting to dismiss this plan as crazy. First, this photo:

El Salvador plans first 'Bitcoin City', backed by Bitcoin bonds, World News & Top Stories - The Straits Times

Second, Bitcoin miners don’t want a city the shape of a Bitcoin with a central plaza in the shape of a Bitcoin logo. They want cheap electricity. Bukele has promised that there will be cheap geothermal power from the volcano, which sounds good, but this article says El Salvador’s existing geothermal energy costs about 12 cents/kilowatt-hour, much higher than the 4 cents/megawatt-hour miners can get in the current cheapest areas. Maybe El Salvador could do a really good job upgrading their energy infrastructure, but at some point you’re subsidizing this rather than using it as a cash cow.

And third, this isn’t even the stupidest plan to build a cryptocurrency-themed city in the Third World. That arguably goes to Akon City, a thing where a pop singer named Akon was going to build a cryptocurrency city in Senegal. Now, without any construction having started, they’re planning to build a second one in Uganda! All competing for the same handful of crypto companies!

But I looked into Bukele to see if he was a moron with a habit of coming up with terrible ideas. It seems like no. He rose from nothing to become El Salvador’s first outside-the-traditional-party-system president, and has an approval rating of around 90%. And apparently he’s presided over a historic drop in the homicide rate of this previously murder-capital-of-the-world country. Although I’m betting that one day he’ll make a great Dictator Book Club entry, I’m prepared to give him the benefit of the doubt on “doesn’t do stupid things for no reason”

What’s the non-stupid explanation for this? Maybe it’s supposed to be a signal. You can give up 5% of the way through, but even trying to build a Bitcoin-shaped city at least shows very conclusively that you’ve got a crypto-friendly regulatory climate, so many easily-spooked crypto companies will flock to you. This makes sense in the context of big crypto companies moving to the Caribbean for regulatory reasons, eg FTX moving to the Bahamas and Binance moving to the Cayman Islands. But if I understand correctly, both of these companies make on the order of $1 billion a year. If El Salvador can tax them at 5% (dubious, since a big part of promising a friendly regulatory climate is low taxes), that’s still only $100 million if they can capture both of them. Which they can’t, because these companies seem happy where they are. And I don’t think there are a lot of similarly-sized crypto companies looking for Central American homes that I don’t know about. And even though El Salvador is pretty poor, it’s not so poor that $100 million is worth embarrassing themselves over. So I’m stumped.

EDIT: See this comment.

Praxis, aka Bluebook Cities, the Internet

Speaking of stumped, who are these people?

Right now, they’re a web page with a lot of buzz promising the City Of The Future, in very poetic language:

Praxis is a grassroots movement of modern pioneers building a new city. We are technologists and artists, builders and dreamers. We are building a place where we can develop to our fullest potentials, physically, culturally, and spiritually. Bitcoin was developed as a financial technology with political goals identical to those of the Founding Fathers: liberation. The ultimate end of crypto is the possibility of a future for humanity unshackled from the institutions that seek to limit our growth. Our ultimate goal is to bring about a more vital future for humanity, and we will use technology to achieve this righteous end.

Our civilization is unwell. We eat food that kills us, we’ve lost sight of beauty, and we neglect our spiritual lives. The world is deranged and decayed, and this frightens people. We don’t look up from our screens; we seek to live within them. Crypto is a fundamentally political technology – escape to the metaverse is a betrayal of the principles on which it was founded. We are descended from the people who built Rome and Athens, who dared to split atoms and voyage to the Moon. We can build new worlds not just of bits, but of atoms.

But where is this city? What will its policies be?

As we leave old lands, our values are our compass. Like wolves, tribes of pioneers are muscular by necessity. For voyaging tribes to settle, they must perform murmurations: intricate coordination with little communication, at scale. This is only possible with a strong sense of asabiyya (group feeling derived from deeply-held shared values). Our values inform the destiny we desire, and for which we struggle. Asabiyya is forged in this struggle. With asabiyya, pioneers can earn the divine mandate to build a city. Cities are the fount of human ingenuity. In cities, people enjoy their fullest potential by contributing their resources under the auspices of civilization.

Who even are you? What experience do you have with city-building?

Civilizations rise and fall. All around us, we see civilizational decay. The people are not vital: physically, culturally, spiritually. We live in an era of obesity, remakes, and pollution. We are losing the divine mandate, and in an era of absolute weapons, what’s at stake is everything. But perhaps there’s some glory in death by a light brighter than a thousand suns. A worse fate may await humanity: atrophied bodies submerged in gel, fed synthetic bug paste, minds occupied by the petty amusements of a corporate metaverse. There, nothing is at stake; there are no frontiers to explore; no growth is possible. Nothing to live for, and nothing to die for.

As we walk between these twin fates, the light of our civilization dims. But beyond the horizon, we see a new light emerging. Like the sun at dawn, it cannot be stopped. Vitality itself is the foundational value of this new civilizational form, and we have the technology to enact our moral imperative as never before.

You’re not answering my…okay, fine, whatever, forget it.

As far as I can tell, Praxis is two 25-year-olds with no previous experience, armed with about $10 million in Peter Thiel’s money. Peter Thiel is a smart person known for having good business sense, but he’s also known to have a weakness for young people who dream big and sound like purveyors of esoteric secrets. I wonder if the simplest explanation is just that this is one of the cases where his weakness got the better of his sense, and now these two random people have $10 million earmarked for building a city, and no idea what to do.

[CORRECTION: some people involved in Praxis have reached out to tell me that it was $4 million instead of $10 million, and that it was Thiel-backed Pronomos and not Thiel himself. I’ll be getting in touch with them to learn if there are other issues or things I should correct here]

But that’s not how they put it! The way they put it is - all previous charter city founders have started by approaching governments and pitching their ideas. But there’s a chicken-and-egg problem: governments don’t want to give land to a purely hypothetical city that might not pan out, and the city can’t pan out until governments give it land. Praxis’ plan is to build the community first, then go to a government saying “Here’s 50,000 people who have agreed to join our city, and lots of businesses and organizations that are excited about it. Please give us land for our guaranteed-success, concretely-existing project.”

Now this is a different chicken-and-egg problem: why join a community of people with no land and no plans? Praxis writes:

What if we try to draw people to new cities not on an economic basis, but rather on a spiritual one? Which city (or country) founding projects have succeeded that have drawn people on a predominantly non-economic, but rather spiritual basis? Among others, Israel and America. Both groups were oppressed, and sought the freedom to live by their values. Both felt the intangible pull of the frontier. Both had a keen historical instinct. This is how cities with spiritual significance are founded.

The correct approach to city building in this new world is demand-first (or as Balaji Srinivasan calls it, Cloud City first). We build the citizenry before the city. First, we create communities of true believers, organized around shared values, online. People move to cities for people, and it follows that if you collect a group of people who all want to live together, they’ll all move together if at a moment in time everyone else does, too. Today, we have new tools. The emergence of Web3 enables us to supercharge communities with self-ownership, governance, and determination. Once you build a community of people ready to move to a new city together, you can self-finance the entire project. With something real to offer nations, conversations with governments become productive (e.g. Gigafactory). That’s how you make the risk dominoes fall.

The problem is, Israel worked because it had Judaism. Judaism is a very specific belief. Prospera is specifically libertarian, Telosa is specifically Georgist, and even the Bitcoin-shaped volcano city knows what it’s about. What is Praxis? The use of “atrophied bodies submerged in gel, fed synthetic bug paste” as a warning reads very slightly right-wing to me - there’s a right-wing meme about how the media keeps trying to get people to eat bugs, and how this is the shape our future dystopia will take. But whether I’m right or wrong, the fact that it’s hard to tell is a problem.

The only other clues we’re getting are their Discord, which seems to be focused around getting a currency called PRAX for completing tasks. Once you get enough, you can become a Member, which seems to be where the real excitement starts.

(source)

I’m not even being sarcastic - I expect being a member to be quite fun. I say this because when I was a teenager I was part of a bunch of country simulation projects, some of which got past the inherent nerdiness of being a country simulation project exactly the same way Praxis is doing it - by saying that we were going to become a real country someday, as soon as we were big enough to convince people. These were usually fun and interesting and educational, and I made lots of great like-minded teenage and twenty-something friends. But none of them ever came close to becoming a real country, and I’m not sure it was merely for lack of millions of dollars.

I hope I’m wrong and they manage to forge new lands through struggle to uplift the human spirit or whatever.

Elsewhere In Model Cities

  • Vitalik Buterin on the intersection between local government and blockchain technologies. He recommends they “start with self-contained experiments, and take things slowly on moves that are truly irreversible”, which is a weird way of saying “what we crypto leaders really want is a city at the base of a volcano, shaped like a giant Bitcoin”.

  • I’m not going to be able to fund Charter Cities Institute through ACX Grants this year, but I told them I’d give them a signal boost here. They’re a great organization, they could be doing more work with more funding, and if you’re at all interested in charter cities they’re the people you want to be supporting. If you can’t get in touch with them directly, let me know and I’ll make an introduction.

  • The California city of Oroville recently passed a resolution declaring itself a “constitutional republic” as some kind of opposition to COVID mandates. It later clarified that it was not seceding from the US, but reiterated that it was now “a constitutional republic”. The best-case scenario here is ending up with a Conch Republic style colorful local legend; the worst case scenario is that they actually resist a federal law and everyone involved gets arrested.