Lobo's Model Cities

Yesterday Porfirio Lobo Sosa gave a long press conference about model cities and his unqualified support for the idea. From it, it's clear that Honduras will go ahead with the plan, with the National Congress scheduled to hold the first debate on legislation today. It's been fast-tracked, though it will take until 2012 to make all the constitutional changes that are needed to allow model cities. Nonetheless, it's interesting to hear what Lobo Sosa thinks about the idea, and how he conceives of the implementation.

He's thinking of areas of about 33 square kilometers, not the 1000 square kilometers that Romer calls for. He sees nothing wrong with ceding sovereignty over such an area for 80 or more years to either foreign governments or national or international businesses while they go about their business. He said:

"This is nothing for Honduras, above all it will be an unpopulated place not appropriate for agriculture, where now we have nothing and afterwards we will have factories, schools, secondary schools, hospitals, like in the cities of more developed countries."

But El Heraldo reports that Lobo Sosa said that if any campesino or land owner doesn't want to sell his or her land, that

"[they'll] rent their land, that means profits, there's nothing pre-negotiated, first the law, first the rules, and after that, we'll see."

which would indicate these are not unpopulated places. This was clear from another statement of his,

"If there are land holders there, they'll have the option to sell their land, or rent it."

but presumably not withhold it!

The President will have veto power over who administers the model cities.

The rush is to get it approved in this Congressional session, which ends this week, because if not, they won't finish all the approvals until the 2012 session, because of all the constitutional changes that are required. Lobo Sosa wants this done during his administration.

Lobo Sosa indicated the government was looking at Ocotepeque, Trujillo, the Agalta valley, and near the port of Amapala on the Pacific coast, as possible locations for a model city. He projects they will provide up to 3 million new jobs, all of which, Lobo Sosa assures, will go to Hondurans.

Lets see. 33 square km. is about 13 square miles, or smaller than Whittier, California, population 83,000 and exactly the size of the affluent Calabasas, California, population 22,000. Industry, California, is an industrial city of about 12 square miles, with 2500 companies generating about 80,000 jobs but it only has 777 residents.

Hong Kong has a population density of about 6400 people per square km. At that density, a model city of 33 square km. in Honduras would have about 211,000 residents.

Hong Kong is a bad success story for Romer to have chosen. Not only does he ignore the historical contingencies of his example, but he ignores the historically poor distribution of income there as well, the worst in Asia.

Who benefits in Hong Kong? The gini index measures how income is distributed across households from the poorest to the richest. To the extent that that curve differs from a straight line, income distribution is skewed. Values range between 0 and 1. The lower the number, the more evenly income is distributed. The closer the value is to 1, the more income is concentrated into fewer and fewer families.

The gini index of Hong Kong was .53 in 2008, while Honduras had a gini index of .56 in 2010. That means Hong Kong and Honduras already have similar income distributions, with lots of poor people and a few wealthy households. Would you expect something different in a model city? Why?

This income distribution is what you would expect from little regulation of capitalism. Most European countries have values in the range .2 to .3, while the US has a gini index of .45. The rich get richer, the poor stay poor, and the middle class gets poorer as capitalism is regulated less.

So tell me again how model cities will be good for Honduras?

Update: The legislation was indeed fast-tracked, and has passed. Other blogs are now paying some attention as well. This has led to Romer himself correcting Honduran press reports: Lobo Sosa either said or should have said that these would be 33 km on a size, and thus 1000 km. We would note that the decreto that was passed has nothing about proposed size. We stand by our opinion that this is a bad idea that makes no sense and note that using real people's lives as an abstract experiment should be considered unethical.Any source