This fascinating article is from Canada Free Press, by Kelly O’Connell:

In Honduras, a novel undertaking has been constructed—private cities whose purpose is to maximize safety and happiness (also referred to as “Free Cities”, “Charter Cities”, “Model Cities”, or in Spanish, “RED—Regiones Especiales de Desarollo”, and “Ciudades Modelo”.). This idea is a capitalist’s dream, but a liberal’s nightmare. And in a most fascinating manner, the idea of a privately owned commons has brought to the surface the multifarious contradictions of the modern age—with our continual demand for “liberty” while the deified state grows into a malignant colossus. …

The full 18-member Honduran Supreme Court must still rule on President Lorbo’s agreement. But even if the idea does die in Honduras, private cities—like those modeled in early colonial America, Singapore and India’s old British empire, are still an option for virtuous, libertarian minded souls. …

The real questions raised by the rise of private cities is what is the nature of the city, man, law and moral authority. Specifically, what is the meaning of law and the state? Further, what gives a country moral authority in which to erect statutes, establish courts, prisons and pass and enforce sentences? …

The idea — a city built by private funds, with rules not derived from a state legislature, but the settlement’s founders. Add to that a private security force and strong walls. And so a libertarian entrepreneur answered the call for action:

Last Tuesday, the government signed an agreement with private investors led by Michael Strong—a libertarian entrepreneur and close associate of Whole Foods co-founder and CEO John Mackey—to construct a city-from-scratch in one of at least three special development regions (“las Regiones Especiales de Desarrollo” or “REDs”) scattered around the country. REDs possess the legal right to establish—or outsource to foreign governments and companies as necessary—their own hospitals [for profit], schools, judges, and even police, all independent of Honduran law. …

The REDs are the brainchild of Paul Romer, the New York University economist who has proposed building “charter cities” as a solution to endemic poverty. Romer believes that importing sound laws and policies into small corners of badly run countries will help leaders reform their governments from the inside-out. Honduras certainly qualifies—the original banana republic is still grappling with the political fallout of a 2009 coup while cocaine traffickers have pushed its murder rate to the highest in the world.

In early 2011, aides to Honduran president Porfirio Lobo invited Romer to the capital of Tegucigalpa to make his case to Congress. Within weeks, Congress passed a constitutional amendment granting Lobo’s government the power to create and administer the REDs.

Is it inherently immoral for private citizens to buy land, recruit residents, write their own laws, and then begin operating as a franchise community? If so, why? After all, what is it that makes a city, state or country legitimate? On the alternative, given the socialist direction many countries in the West are following, is it possible that only a self-derived city could chart a course against the political grain here? Or does mankind have to bow and scrape at the feet of the modern government colossus irrespective of whether it is just, moral, or effective—simply because it is called “government”? …

It’s certainly not “immoral” to establish a private city and “operate as a franchise community”. Morality doesn’t come into it.The first question is: will states, will governments – all to a greater or lesser extent in the hands of statists, liberals, collectivists – allow it? Will the Honduran Supreme Court allow it? We wait to see.

If private cities are inherently illegal, what about the foundations of America, which were done along these same lines? Interestingly enough, the debate in the American colonies was over whether an immoral government had the right to dictate to men how to act. The Founders decided it did not. So the question raised is whether immoral modern governments can derail moral private communities? After all, what is a government in the first place?

What would characterize a “moral government”? If by “moral” is meant “democratically elected and not oppressive”, aren’t all governments in actuality oppressive to some degree and so to some degree “immoral”? And if so, is it not because oppression is inherent in the nature of government and therefore inescapable?

We think that even if the answer to that question is yes, state government is nevertheless necessary – to uphold the rule of law and protect the nation from foreign invasion. Which is where we part company with libertarians (while remaining sympathetic to libertarianism) and anarchists.

Certain anarchists declare their position somewhat confusedly on this question:

A group of writers calling themselves Private-Property Anarchists have taken on [ie challenged] the theory that only the state possesses the inherent ability to organize a government or police its citizens. In a most obvious way this makes perfect sense since government will always be assembled from some group of residents who then decide upon rules, structure and powers of government. Why must we assume one group of freely assembled persons are more acceptable than another? Further, with the failure of much of modern government to address basic needs, how can anyone help but try to find a better way to manage the affairs of men? …

Several aspects of law should be mentioned on this issue. The first is that it is a fairly recent development for the state to own all official policing powers. According to Bruce Benson’s The Enterprise of Law, Justice Without the State, the Anglo-Saxon law was fixated on protecting property. Further, with the development of English lex mercatoria, ie mercantile law, much enforcement and many remedies to this day were created for enforcement by private parties.

In fact, even the criminal code was mainly enforced by private parties in the history of Anglo-Saxon law. … Englishmen also resisted public prosecution because “a private prosecutorial system was necessary to check the powers of the Crown. If not so limited the power of criminal prosecution could be used for politically oppressive purposes.”

The great fear in the liberal establishment is that a private system of government and law will be antinomian, that is—lawless and a mere tool for the use of greedy capitalists and megalomaniacs. Yet, the opposite is true. In fact, people allowed to build their own justice systems for their own small city-states are apt to be more motivated to create justice and order than those presiding over the legislatures of far-flung empires.

But to build a justice system, big or small, is to establish government.

American citizens are certainly not pleased with the state of our justice system. For example, Edward P. Stringham in Anarchy and the Law argues, if the American legal system and police powers are so successful, and in effect the only game in town, why do private police, i.e. security guards, outnumber official state police?

The debate over private cities begs the question of what is a government in the first place. Let’s remember Jefferson’s sublime words from the Declaration:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.—That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness….But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.—Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government.

If critics attack the lack of inherent authority of private communities, what is their basis? If a private city creates a better economy, a more just police and legal system, and a safer environment than public communities—is it not the latter which are truly the immoral and lawless frauds? We do well to ponder the foundation of legitimate, God-given government. This can only be established upon the rule of law, civil rights and respect by the leaders for the consent of the governed—or all we have left is an illegitimate tyranny.

While we cannot fathom what the meaning of “God-given” can be here (it makes no sense at all, even if  everyone who founds a nation and everyone in power is a believer in “God”), we see the writer’s point. “Legitimacy” as commonly perceived on whatever grounds does not in itself make for good governance.

What we wonder is: How would the forum, whatever it is called, set up in a private city to “create a better economy” (ie let an economy run itself, we hope) and establish a police and legal system, be different from any other democratically elected government? If the people as a whole retain too much power over it, will it not soon fall apart under the pressures of conflicting expectations and demands? And if they retain too little, won’t it gather power, grow, and become the enemy of the people just as every government does, even those democratically elected?

We are all for private cities. We like the idea immensely. We would like to see them established. We would like to live in one. We don’t see why they shouldn’t be self-governing. We think the government that such property owners would elect stands a good chance of doing a better job of governing than existing governments do. But we do not think that, given the minimum power it would need to be effective, it would be immune from avarice for power, or resist the temptation to find a compelling necessity to expand and oppress. How to prevent that; how to limit the power of government, is the perpetual problem of all democracies, great and small.