AppId is over the quota
Illustration by Peter OumanskiShortly after the 2009 coup that overthrew Manuel Zelaya, Honduras’s newly elected president, Porfirio Lobo, asked his aides to think big, really big. How could Honduras, the original banana republic, reform a political and economic system that kept nearly two-thirds of its people in grim poverty? Deep Thoughts This Week
1. The world is becoming overwhelmingly urban.
2. Multinationals rarely invest in unstable nations.
3. There must be a better way for rich countries to help poorer ones.
Adam Davidson translates often confusing and sometimes terrifying economic and financial news.
One young aide, Octavio Rubén Sánchez Barrientos, had no idea how to undo the entrenched power networks. Honduras’s economy is dominated by a handful of wealthy families; two American conglomerates, Dole and Chiquita, have controlled its agricultural exports; and desperately poor farmers barely eke out subsistence wages. Then a friend showed him a video lecture of the economist Paul Romer, which got Sánchez thinking of a ridiculously big idea: What if Honduras just started all over again? Romer, in a series of papers in the 1980s, fundamentally changed the way economists think about the role of technology in economic growth. Since then, he has studied why some countries stay poor even when they have access to the same technology as wealthier ones. He eventually realized something that seems obvious to any nonacademic, that poor countries are saddled with laws and, crucially, customs that prevent new ideas from taking shape. He concluded that if they want to be rich, poor countries need to somehow undo their invidious systems (corruption, oppression of minorities, bureaucracy) and create an environment more conducive to business. Or they could just start from scratch. Then he decided to put the theory into practice. In 2009, Romer developed the idea of charter cities — economic zones founded on the land of poor countries but governed with the legal and political system of, often, rich ones. There were a couple of interested parties. (The president of Madagascar was intrigued by a preliminary version of the idea, Romer told me, but he was soon ousted in a coup.) Then, in late 2010, Sánchez met with Romer, and the two hurriedly persuaded President Lobo to make Honduras the site of an economic experiment. The country quickly passed a constitutional amendment that allowed for the creation of a separately ruled Special Development Region. According to Romer, becoming a wealthy country requires better-run cities because that’s where people are headed. Cities might offer horribly paying jobs in factories and domestic service, but many families make the move because they’re still earning far more than they can make by farming. In 1900, nearly 90 percent of the world’s population was rural. By 2000, three-quarters of people in the United States, Western Europe and other wealthy countries were city dwellers. In the next 40 years, the United Nations estimates, the world’s urban population will grow by nearly three billion, largely in poor countries. It has been an ugly transition. I saw it firsthand a few years back, when I visited a family in San Pedro Sula, Honduras’s business capital. José Avila and Gloria Rodríguez, who worked much of their lives on a banana plantation for 25 cents a day, had recently moved to a lawless slum outside the city so that their children might have a better future. By the time I met them, they had just earned enough money to turn their shack into a concrete house. José was selling computers, and his oldest daughter, Joheny, was a star sock-machine repairwoman. Joheny insisted that she was one of the lucky ones. Many of the other women her age were able to work only as prostitutes or for drug dealers. Romer’s charter city is trying to avoid this dark side of urbanization by adapting older, more successful models. The United Arab Emirates, Hong Kong and Singapore were able to build well-designed cities that housed and employed millions, in part by persuading foreigners to invest heavily. Dubai created a number of microcities — one of which, for instance, is governed by a system resembling English common law with judges from Britain, Singapore and New Zealand. Adam Davidson is co-founder of NPR's “Planet Money,” a podcast, blog and radio series heard on “Morning Edition,” “All Things Considered” and “This American Life.”
