Private cities and state capacity

Last summer I took a bus from Honduras to El Salvador. The bus left at 6:00 AM because, I was told, if it left later it would cross the border in the dark and risk being robbed by highway bandits. A few years ago, I took a bus from Lima to Pulcalpa, both in Peru. In the Amazon we stopped and a man in army fatigues with a rifle strung over his shoulder boarded and asked for “donations.”

I bring these stories up to illustrate the importance of state capacity, which can simply be defined as the ability of a state to exercise its power. In the above situations state power would ensure I wouldn’t be robbed or asked for “donations” by men with guns. One tyrant is often better than many. State capacity also means the ability of the state to complete certain tasks, build a road, effectively tax subjects, etc.

The recent Ebola crisis offered a useful perspective on state capacity vs. private city capacity. An 80,000 person rubber plantation run by Firestone successfully stopped Ebola, despite having no prior experience with such diseases. Instead they simply used common sense and extensive googling to figure out how to best respond. The whole article is worth reading if you haven’t already.

Garcia’s team first tried to find a hospital in the capital to care for the woman. “Unfortunately, at that time, there was no facility that could accommodate her,” he says. “So we quickly realized that we had to handle the situation ourselves.”

The case was detected on a Sunday. Garcia and a medical team from the company hospital spent Monday setting up an Ebola ward. Tuesday the woman was placed in isolation.

“None of us had any Ebola experience,” he says. They scoured the Internet for information about how to treat Ebola. They cleared out a building on the hospital grounds and set up an isolation ward. They grabbed a bunch of hazmat suits for dealing with chemical spills at the rubber factory and gave them to the hospital staff. The suits worked just as well for Ebola cases.

The lesson which should be learned is that though institutional change is hard on a whole, institutional subcontracting can work. Trying to better Liberian institutions could take decades for such results. On the other hand, a private city with an interest in the well being of its residents can deal with a deadly epidemic better than most governments. It can probably do other things better too.


Reflections on my move to Honduras

I moved to Honduras two weeks ago today. What follows is a jumbled collection of thoughts and experiences I have had in those two weeks.

First, the move itself was fairly easy. I packed two bags of clothes, got on a plane, got off a plane, and ended up at my Airbnb which I had booked for a month. I packed as I would for a long trip. Perhaps it is my psychology, or that the internet has reduced distance, but the move itself didn’t seem like such a big deal.

My job has so far exceeded expectations. Everyone has been nice while I struggle with my Spanish. The work I have started is interesting and fulfilling. I am also getting valuable business lessons. I had been worried prior to leaving as the company I am working for is unknown in the US so I took a leap of faith which so far seems to have paid off.

Meeting people outside of work has been difficult. Honduras is the murder capital of the world, and as a white guy, walking on most streets is an invitation to robbery, public transportation even more so. To go anywhere I need to call a taxi, which is also expensive as I am charged more by virtue of being a white American. A 15 minute ride to the airport from my house is $12. I face a catch 22 as to make friends I need to go out. However, I don’t want to go out without friends who know the safe parts of the city as I still don’t.

Perhaps my greatest lesson learned was something I should already know, how amazing the Students for Liberty organization is. My first weekend I attended the Estudiantes por la Libertad conference at the Universidad Francisco Marroquin in Guatemala. From my perspective it ran as smoothly as SFL conferences in the US. In fact, it wasn’t until I attended a few academic conferences that I realized how well SFL conferences are run.

More importantly, SFL helped introduce me to a number of people in Latin America who share my ideals. Having a ready made friend group when moving to a new continent makes life much easier. Last weekend I spoke at CREO in El Salvador about institutions and autonomous cities. The only reason I was invited to speak was because of SFL connections which introduced me to Ricardo Avelar, Executive Director of CREO.

The most fun thing about living in Honduras is the sense of anticipation of the ZEDEs (zona de empleo y desarollo economio). ZEDEs allow parts of Honduras to get rid of Honduran civil and commercial law and import a legal system of their choosing, as well as the administrative functions behind said legal system. Further reading is here. Everyone I have talked to feels a sense of immanency, while recognizing the potential of ZEDEs. Institutionally autonomous cities can raise millions of people out of poverty. Being on the ground level is indescribably exciting.

Two-dimensional spectrum of political media

This is an effort to chart where media outfits fall not only in terms of left-right slant, but their how restrained or bombastic they are.

Factors on the “Reasonable/Restrained – Insane/Bombastic” spectrum include:

  • What they cover: Covering trivial matters makes you negative and covering important things pushes you towards positive.
  • Clickbait and listacles = negative.
  • Level-headedness of tone = positive.
  • Attack-style pieces = negative.

   political grid

If you want something added or think something is out of place, leave a comment or send a tweet to @robert_mariani.

The USA still has the world’s worst corporate tax rate

I published a blog post at FreedomWorks on international corporate tax rates — and how far we’ve fallen behind everyone else.

The Tax Foundation has recently published a report that analyzes the tax policy of the thirty-four Organisation for Economic Development (OECD) member countries, which are more or less all of the advanced economies in the world. The results are jarring. The United States ranks 32 out of 34 in terms of the competitiveness of our taxation – only Portugal and the Socialist-led France rank lower than we do. The main factor in in this embarrassment is our bush league corporate tax rate. The Tax Foundation makes it clear: “The United States provides a good example of an uncompetitive tax code… The largest factors behind the United States’ score are that the U.S. has the highest corporate tax rate in the developed world and that it is one of the six remaining countries in the OECD with a worldwide system of taxation.”

While the rest of the world has been reforming its tax codes, the United States has been left in the dust. The last major change in the US occurred in 1986, and since then, OECD average corporate tax rate has practically been cut in half. Corporations are leaving our shores, as Logan Albright pointed out, and our uncompetitive policies makes investment a bad idea in the first place.

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No panaceas: Libertarian challenges to open borders

Traditionally, libertarianism has welcomed a plurality of views on the immigration question. While nearly all free market proponents agree that current government policies restricting freedom of movement around the world are riddled with problems, we lack a consensus on what exactly these problems are and what should be done to solve them. However, it seems that a growing segment of (mostly young) libertarians are becoming more vocal in their view that unequivocal support for open borders should be *the* libertarian position on immigration. These libertarians tend to emphasize the moral case for open borders, though folks like Bryan Caplan have done a good job of presenting the economic benefits as well.

Unfortunately, advocates of open borders almost always fail to acknowledge important and fundamental tradeoffs when it comes to immigration. As Gene Callahan has written recently, it is strange that libertarian economists, who are usually eager to point out that there’s no such thing as a free lunch, “treat immigration as if it were immune to this principle, and argue as if unlimited immigration is simply an unalloyed bundle of benefits with no associated costs.” Advocates of open borders should recognize that not all opposing arguments are veiled conservative prejudices rooted in xenophobic hysteria and that there are practical downsides worthy of consideration. Here, I will discuss some of these legitimate challenges to open immigration. But first, a few disclaimers on what I will not be arguing.

I will not be arguing that the potential costs of open borders necessarily outweigh the potential benefits. I suspect there isn’t enough evidence to make a compelling case either way and I’m certainly not informed enough to adopt a strong position on the subject. Ultimately, I think that some level of immigration fosters innovation and the exchange of ideas and I have no doubts that the majority of immigrants are hard-working, honorable people who just want the opportunity to create a better life for their families. Nor will I be arguing that the practical challenges of open borders should necessarily drown out the moral arguments, which I generally find compelling. In fact, my path to becoming a libertarian began when I was exposed to the corrupt and unfeeling actions of several bureaucrats towards Haitian immigrants in a congressional office where I interned during high school.

However, I am very skeptical of what appears to me to be an emerging tendency to institute a libertarian litmus test around open borders and a reluctance to engage in a conversation about the many tradeoffs of such a policy stance. I would like to push back against the tendency of open borders advocates to frame the conversation as if immigration is a zero sum game. Tino Sanandaji, a PhD student in Public Policy at the University of Chicago, has criticized Bryan Caplan for such framing:

He [Caplan] analyzes whether immigrants on the whole depress native wages, or whether immigrants as a whole use a lot of welfare, etc. It seems to not occur to him that there may be a good case for restricting immigration even if immigrants as a whole do no net harm. After all, some subset of immigrants might do harm in these various areas even if immigrants on the whole do not. And so it would make sense to ban this subset of immigrants from immigrating to your country. Just about no one actually advocated banning all immigration. And yet this is the position that Caplan’s analysis directly argues against. In so doing it fails to address the vast majority of proposals for immigration restriction actually in existence.

It’s especially worth lingering on the point that virtually no one is calling for a ban on immigration across the board. In fact, there is probably no other policy position more implicitly excluded from mainstream debate than immigration restriction. Nearly everyone is against it, from Brookings to Karl Rove to the ideological left to libertarians — and most have self-interested reasons for doing so; the business right wants cheap wages, the left wants more voters, and so on. Advocating for open borders isn’t as radical of a position as many libertarians make it out to be.