How Do You Build a New Singapore? Inside Próspera’s Bet on Private Governance (Erick Brimen, Founder & CEO)

29:48And then that's what's helped elevate China into a world superpower. We wanted to replicate a similar dynamic. So in the context of Honduras and Central America, the island of Roatan was the closest thing to Hong Kong. In fact, it's one square mile larger than the island of Hong Kong. And it has an international airport that you can fly in and out directly daily from Houston, from Miami. And it's an English-speaking population with, as a matter of fact, a common law set of roots because they were a British colony before. So essentially, Roatan was a perfect place to start as a launching pad for additional projects on the mainland of Honduras.

30:31And that's how we ended up here. Fascinating. And so just to take one sort of beat back, you know, you had this sort of Arizona work that you did and then Honduras comes into the picture. When you were sort of thinking of Honduras versus some of the ex-US countries that you had talked to, Colombia, Eastern European countries, was the attraction of Honduras primarily that they had baked out the ZD sort of framework just much more completely and sort of was more synergistic with what you were thinking of? Was that sort of the main draw at that point? I would say that's what got us interested initially.

31:08And then as we studied the country more and the island in particular, we realized that it is, it still remains a massive opportunity waiting to be unleashed. I mean, Honduras is nearly 10 million people strong, but it is one of the poorest countries in the hemisphere. Yet it's strategically located, just as Singapore was strategically located, Dubai and Hong Kong. It's strategically located, Roatan and the northern corridor of Honduras, which is where the second hub is intended, can be a very, very successful trading post. Especially in modern era with a bit of a decoupling between the U.S. and China taking place, where near shoring is a huge priority.

31:53It's just it's a goldmine waiting to be unleashed, not with natural resources, but with human talent and geographic location to serve both the U.S. and the rest of Latin America. I mean, it's a phenomenally well-positioned and currently well-timed opportunity. We've talked a little bit about the ZEDE, which is an acronym, Z-E-D-E, for folks that aren't familiar with this. To sort of bring folks into the conversation a little bit, can you give a sort of precis of what that stands for and what it really means to the extent that it influences what you were able to do? Sure. The translation is Zones for Economic Development and Employment.

32:37In Spanish, Zonas de Empleo y Desarrollo Económico. And it's essentially a law for the creation of special economic zones. But what is unique about it is that instead of prescribing at the organic law level the legal and regulatory system that would be inside of the special economic zones to be created through the law, it enabled through the creation of a commission that special economic zones created through its process could have different legal and regulatory systems. So it created an opportunity for the private sector and the government of Honduras through this commission to come up with the international best practice stack of rules that would apply to a zone.

33:26And then they could either replicate that for multiple zones or do another zone that would be different and then another zone that would be different. And so what it got absolutely right is that instead of having a central authority like the Congress come up with the specific operational rules for a zone, you know, it's like a big centralized decision for something that is very minute. It created a process as opposed to a prescription. And that process allowed us to work with this very forward thinking commission and curate from around the world the things that have worked best. And so we were able to co-create with the commission and therefore the Honduran government a zone, which is now the Prosper Zone, that was best in class and remains.

34:13And I think will always be because of the internal dynamic nature of it. And so we were able to. So that's what made the law unique. Honduras is not known as an international destination of foreign capital. One of the reasons is because it's lacked liberal stability. It's had corruption and lack of security and several important challenges. Most of those do not apply on the island of Roatan. All the reasons why we started there, like the security issues and all that. But the legal stability was a concern. The ZD organic law was created through a constitutional reform that guaranteed a substantial amount of legal stability contractually.

34:55International treaties apply. And so we looked at it and we said, well, on paper, it's the most solid piece of stabilization framework that we could hope for. The question is going to be, will the government of Honduras honor it over the decades? And we figured that they would because we were able to create very powerful incentives, positive and negative. Negative being if they were to validate the agreement, very significant penalties would apply. Positive being, if they just let us do our job, we were in a position to bring hundreds and then billions of dollars of investments and create thousands and then hundreds of thousands of jobs, of well-paying jobs for the local population.

35:41So we figured over time, the incentives were perfectly aligned to sustain this agreement. And we're in the middle of a gamble. You know, like literally, we're in the middle of a gamble. And I think the jury's still out. The only reason why we're still operating after a very substantial change of government back in 2021, 2022, which would have shot us down if they had their way politically. The only reason we're still standing is because I think those structures wear and remain very sound and solid. And we've worked our butts off to show results, while at the same time have very powerful institutional framing of protection that we have to play the game.

36:27And we're in the International Arbitration Center to make sure we have our rights protected and revalidated. But, you know, the jury's still out, you know, but you don't get to change the world without some issues, you know, without some trouble along the way, if you will. Yeah, to put it mildly, and, you know, that foreshadows, I'm sure we'll talk about some of the challenges that you've had to face in these sort of past three or four years. But, you know, to come back to the inception a little bit of this first charter city, the city of Prospera, there are these few different stakeholders that I think it's useful for people to sort of have in their heads.

37:03There's obviously the Honduran government. There's Prospera, the platform. But there's also this sort of, you know, private capital element, you know, to help people understand how those groups interact. Perhaps you can walk us through that a little bit. I think this is a good time to explain the business model because it, in essence - Because it is a business. It is a business. It is a business. And when we were designing it, we wanted, I mean, look, let me take a step back. The US, right? I mean, the most powerful nation on earth and probably in history and in a very short amount of time. How did it get to be that?

37:41It's because the founding fathers created, at the time, an innovative form of government. of the people for the people, right? Free market capitalism with constitutional order. And it's worked great, but it hasn't been perfect. The extent to which it hasn't been perfect, you can bring it down to two core things that unfortunately the founders missed or didn't quite embed, even though part of it was in the Federalist Papers. One is there's no effective exit. So it's intended to be a Federalist form of government where each of the 50 states compete against each other. but there's no exit. So they're kind of trapped, right?

38:18And then on top of it, you add the supremacy clause of the constitution. And so it's like whatever the federal government says goes. And so there's no easy way for a state to threaten exit of the union. And if so, that would have kept the central government, federal government, a bit more in check. And two, the alignment of incentives is not there. The system relied heavily on checks and balances, right? And the founders clearly wrote that it was a government for moral and ethical people in their time, Judeo-Christian values. But it's a check and balance system that depends upon people being moral enough to want to be in check and balance.

39:03But it wasn't arousing through individual private incentives that behavior over the centuries would be aligned to the founders' intent. And therefore, you know, you get corruption and you get, you know, politicians coming up with rules that actually violate some of the core tenets of a free market economy and the American way of life. OK, because the incentives are not there. So then take that to our business model and what we try to do and how it all comes together. Is there value in good governance? The answer is absolutely yes. In fact, you know, only societies that benefit from good governance prosper.

39:42So it is absolutely valuable and it makes the difference between poverty and prosperity. So there is value. Unless you can internalize that value, though, it doesn't matter. It doesn't shape behaviors as much. So there is value in governance. How do you internalize it to be part of the profit motive that keeps people acting a certain way? That's where our model comes in. And we have, as I said, a partnership with governments to create these enhanced special economic zones. But the model of governance as a service is where a company like Prosper comes in. They sign the charter. They're responsible for operating the zone with the rule sets that are proposed and approved.

40:30And then if done successfully, what happens is that you attract investment and catalyze economic activity. and if you do that and then you charge taxes, governments charge taxes, the zones charge taxes, they have to be competitive. Zero controversy, if you provide a service, then you get paid for it. It's just that when you have no market dynamic and you call it taxes, people get a little iffy about it. But if they provide a service, you should pay for it. So in the zone, we provide governance as a service, people pay for it, but they pay for it as a percentage, a small percentage of the overall GDP, right?

41:07I mean, again, taxes capped at a percentage level. So then you got the zone operator, us, incentivized to bring capital so that economic activity can emerge so that a small percentage of it equals high nominal revenue. So now we're aligned to creating attractive conditions to bring capital to people and activity. But then we're in it for the profit, not for the revenue only, right? So then what comes after revenue, costs and expenses. In a typical government, there's no profit motive, meaning that their primary motivation is actually to grow. The cost and expense line has because with that growth comes more power, more influence.

41:46And if you think legitimately that you're doing something good, as a lot of these people do, actually you want to be bigger, not smaller, right? Which means that the budget grows out of proportion. I mean, it's a mess. In our model, you have to grow the top line and you only do it by having the right conditions and quality service. So you got to have an operational structure, which grows as the economy grows, but you only have profit if your costs and expenses don't grow as much. And in fact, if you shrink that - Yeah, if there's a sincere surplus. Yeah. If you shrink that, you got to have a surplus.

42:19So unlike a typical governmental structure, our financial incentive is to keep the equivalent of a bureaucracy small and overall, All high value, low cost and expenses. That's our incentive. That's our investor's incentive. Make a zone attractive, keep operations, lean, make a profit. This episode is brought to you by Tezi, the AI agent for recruiting high quality candidates quickly. When you're ready to hire, it's easy to lose weeks trying to find the right recruiting partner, building their context and filling the pipeline. With Tezi, you can be up and running in minutes, not months. TESI offers agentic AI recruiters that work 24-7 to fill your pipeline with high-quality candidates, handling all the recruiting busy work, from instantly reviewing applications to sourcing relevant talent, rediscovering hidden gems in your ATS, and even detecting fake profiles.

43:11Here's what that means for you. TESI pre-qualifies candidates, so your hiring team only spends time on the best ones. Whether you're short-staffed or just want to move faster, TESI gives you the extra capacity to build a strong candidate pipeline. Fast. Innovative companies like Mutiny, Orem, Nominal, Forage, and Real are already using Tezi. Head to tezi.ai slash Mario for 10 % off your first year and see how quickly Tezi's AI agents can supercharge your recruiting. That's tezi.ai slash Mario to get started. For the governments, the host governments, aside from the indirect benefit of we're going to bring foreign direct investment and employ locals, there are minimum conditions.

43:57For starters, it's not just employ some locals. It's 90 % of the laborers need to be nationals. So the vast majority of the jobs are going for the locals. And people say, well, doesn't that create a problem in terms of access to skills? like, you know, do Hondurans have, you know, biotech, engineers, and all these things? The answer is not in high volumes, but in the short term, you can bring foreigners where you don't find a Honduran to fill the role, as long as you're also investing in educating the Honduran population, okay? So you have an alignment of incentive of employing locally, raising the skills, and importantly, we have a direct revenue share with the government of Honduras.

44:43So not only all the spillover effects, but a percentage of the top line goes directly to the Honduran government without them having any operational obligation, meaning it's pure profit for them, which is amazing, right? I mean, governments generally don't need profit. They don't have to do anything, but they get a piece of the top line. Exactly. We've invested in infrastructure. We run the day-to-day. They They supervise. They don't administer. So it's essentially pure profit for them. This is the beauty of the model now. So and then the final cap to it, going back to the comment about the founders and America, we have the profit incentive and we've baked in exit.

45:26So when a part when a company or property owner really joins the jurisdiction, they're in it. But it's through a contract upon which we have obligations. They have obligations as well. But if we violate our agreements, they can exit. In fact, they can exit if they want to exit regardless. There's a process by which to exit. But it's embedded in their incorporation agreement that they can exit, which again, that was not embedded in the constitutional framework of the U.S. Sorry, the charter city can exit or Honduras can exit or the citizen can exit? within our model, inside of PROCRA, when you join, you know, you sign an incorporation agreement.

46:08That has the embedded right of exiting the jurisdiction. So if you are a resident, a landowner, and you enter the jurisdiction and now you're under this governance framework, you're not stuck in it for life, right? So, outside from the, let's say, proper alignment of incentives, if you're not happy, you can exit. You tell me what other governmental structure you have embedded exit rights. Nowhere else in the world do you have embedded exit rights. Here, you do. Now, the way it's supposed to work is that there's supposed to be multiple Zedes competing against each other so that we keep each other in check.

46:49Honduras has limited the capacity to create more Zedes. So that dynamic is going to be not as powerful as we were hoping, but still people can exit RZ and remain, say, with a municipality or go back to the central government oversight directly. So many interesting threads there. I'm going to try and summarize a little bit to make sure I'm following you. But essentially, the different incentives, you have the Honduran government who gets to say, hey, you're going to bring a bunch of foreign investment and talented people into this part of the country. you are going to take care of actually running this for us, but you give us a piece of your top line revenue, let's say from taxes.

47:28The underlying business takes that taxation revenue and assuming it is able to keep its costs at a low enough rate, takes a profit from it over time. And the people that come into these jurisdictions have the ability to operate under these favorable set of rules, but aren't bound to them forever because they have the right to exit from them. And then maybe the final piece is the local Hondurans are given access to all of these new jobs in which you have sort of mandates to hire 90 % of Hondurans where possible, otherwise, you know, investing in education. And so these are sort of the different stakeholders and how they each benefit.

48:10Have I missed anything important there or muddled anything? Perfect. There's a good reason why you run a podcast. You can synthesize things very well. Well, I want to make sure I'm following. Okay. And so in terms of the direct investment, when you read about Prospera, you see a lot of names that I'm familiar with from the tech world, Peter Thiel, Marc Andreessen, so on and so forth. How much foreign investment have you been able to bring into the city at this point? Because I imagine it's also been a bit challenged by some of the political upheaval. Yeah, it's been challenging. But as of right now, we've raised about$170 million in aggregate.

48:50It's a fraction of what we could have done by now. But you're right. There's been some political challenges in the country. The last four years have been extremely complicated, politically speaking. I have predicted by the end of 25, the number would have been at around$500 million. And I think it will be a lot more over the next four years once a political challenge is a result. Having said that,$170 million, depending on where you're listening from and your context and your experience, might sound like a lot or a little. So let me put it in context. In a place like Honduras, our project represented about a third of all foreign direct investments into Greenfield projects for 2021, 2022, that fiscal year.

49:39Our project has generated more jobs than, as far as I know, any other project in the country during this time frame. Our project has brought more new industries into the country than any other project has ever into Honduras. And not just random industries, but very high value industries in biotech and crypto finance. So aside from what we have already done, which again, in context has been super relevant and significant, we have been setting up a foundation that has the potential to massively scale, not just because it's unique to Honduras, scale at a global level, right? in industries that have transformative potential as a result for Hondurans, but for the world as well.

50:27I mean, we are able to house extremely innovative biotech innovation, gene therapy, stem cell research, all sorts of things that represent value, not just to the people of Honduras, but to the world at large. And that's just in four plus years under extremely complicated circumstances. As you started to break ground in 2020 and have built it up over these past five years, what have been the foundations that you found most important as you think about, how do we create a sincerely productive and progressive charter city? What do we need to get right from the beginning for this to work? To give our team credit, and not just me, but we've managed to aggregate a significant amount of experts and people to get this done.

51:20Those many years up front that went into designing the system before we broke ground have proven to be time well spent. And what I mean is the most important and impactful dynamic that we're seeing today is dynamism. and the customer-centric mentality. These are things that you generally don't categorize with or associate with governments, right? Dynamism and customer centricity. I mean, those are like the opposite, right? You have bureaucracy and bad service is what you think about. Because of those two things, some of the things that we're actually doing on the ground today is not like it wasn't master planned 10 years ago.

52:07Heck, it wasn't master planned five years ago. They have been emergent opportunities, which we have been incentivized and capable of responding to because of the public-private design to this governance-as-a-service structure. Had it not been done that way, if there wasn't a profit motive and there wasn't a dynamic way to operate this where the private sector is the one actually operating on the ground, we wouldn't be what we are today. We would probably just be another, I don't know, traditional special economic zone with some warehouses or something along those lines. To put some numbers around it, you mentioned that in 21 or 22, Prospera was responsible for a third of FDI and has created all these jobs.

52:56What is the sort of size of the Charter City today? How many residents are there? How many businesses do you try and keep track of things like GDP per capita or whatever the sort of right metrics are for this company in a way? Before we talk about Charter City, we got to talk about the governance platform because properly understood, Prospera in Honduras has three different hubs. So the aggregate size of the jurisdiction, all of the incorporated land into the jurisdiction is just over 1 ,100 acres. The size of the DIFC is about 110 acres. So we're 10 times larger. The size of Monaco, I know another relevant example that we didn't talk about, but it's quite relevant.

53:44Yes. It's about 550 acres. so we're twice the size of Monaco as a jurisdiction, 10 times the size of the DIFC as a jurisdiction. However, as I said, this is divided into three hubs. The first hub on the island of Roatan, which is what people think of as the city of Prosper when they come here, that currently has about 420 acres. 420 acres. The remaining acres are in the two different hubs, the biggest one of which is on the mainland, which is the future Shenzhen, it's called Satoye and that has about 400 acres in terms of people we measure them in two levels you first have to be an e-resident before you can be a physical resident so becoming an e-resident is kind of top of the funnel many of them come but don't necessarily live here permanently and I got to check the statistics but we're probably up to about 3 ,000 e-residents and at any given point in time about 10 % of those are on the ground but because we do conferences and events that will spike up to say a thousand at a given sort of pop-up event so the numbers still go up and down the main bottleneck right now is real estate like we need more physical look built space more apartments and offices like more built built space and we're working on that the average gdp per capita last time i checked was about$27 ,000.

55:14And this is about 10 times higher already than the average GDP per capita in Greater Honduras. In Greater Honduras, the GDP per capita is about$3 ,000. And so for what it's worth,$27 ,000, which is lower than what we're targeting. But for context, it's quite substantial. And the type of jobs that are filled here vary from, we have a hotel, for example. So, you know, you have the typical gardener and waiter and we're building. So you have construction jobs, but then we also have crypto finance. So you have high paying finance jobs and biotech. So you have scientists that have developed some really cool IP and are selling very high value gene therapies.

55:59So it's really nice to see in a short amount of time the degree of variability that you can sustain if the conditions are right. So, you know, one of the things that when you read about Prospera, I feel like shows up in every news article is that, you know, this is a haven for Silicon Valley billionaires. It sounds like that is a sort of lazy way of describing this. There's clearly a more prosperous part of the population compared to the rest of Honduras. But this isn't Monaco yet by the sounds of it. No, not at all. In fact, most of the jobs are Hondurans, as I mentioned earlier. And it's funny I think a lot of those articles That say that Our attempt To somehow Use it in a disparaging way Like if we're creating some Enclave for billionaires And that is not what we're doing To be clear It isn't But imagine the lunacy Of the people writing To think that Saying that about a place Is somehow a negative Honduras is not where billionaires go to, right?

57:09So if it were true that we're creating this amazing destination for Silicon Valley billionaires to go in a place that it would be something to celebrate. And as a matter of fact, we have had many Silicon Valley billionaires come and visit, and in fact, some of them are investors. But that's something to celebrate. And the reason why they're investing is because they see that the problem we're solving in governance, it's the world's most important problem to solve. Yeah. You know, and so, you know, some people are trying to go to Mars in part because we might screw it all up here on Earth and that's fine.

57:46And some of them are trying to find, you know, the cure to death because, you know, we want to live longer to solve problems and actually get us to the next wave. We're trying to solve Earth. You know, we're trying to make Earth the most prosperous place possible. And that is all about governance. And a lot of these billionaires get it. And that's why they're investing. That's why they come. You know, we're talking about the scale of Prospera now and, you know, 3 ,000 or so e-residents, you know, about 10 % that are on the ground and maybe some more folks that are full time. Assuming that this, you know, doesn't get totally waylaid by the new Honduran government, where do you sort of hope to be in 10 years time?

58:30And, you know, what's the optimistic but realistic view of things when you look at it from your seat today? I would answer in two dimensions. One is specific to Honduras and the other is more broadly, OK? Within 10 years, in an optimistic yet realistic way, I think Honduras, our projects here could have about 100 ,000 people involved on the ground between employees and residents. and that is having activated at least two of the three hubs, noting that one of them is a much more massive development on the mainland with manufacturing, BPOs. So of those 100 ,000, let's say, people involved, probably 75 % to 90 % would be Hondurans, as I mentioned, and the other would be expats doing all sorts of high-value entrepreneurial stuff.

59:24Beyond that, I would say at least three to five other prosperous cities around the world that will be done with a different shareholder structure as they're designed to be. Maybe most important for us founders and our investors, we don't want to be the only company doing this. we hope to see several several companies that have jumped into governance as a service and are carving a niche alongside us you know in competition in cooperation whatever but we want to see some of the largest companies whether they're the Bechtels or the Jacobs as well as some of the most innovative players realizing that governance is an industry that can be innovated upon and that it is being done It's not that it has been done before.

1:00:16It's being done. And as imperfect as they may be, we're showing that it can happen. So we hope to see, say, at least three, maybe 20, you know, the more the merrier, companies that are in this space, innovating alongside us, competing, but then transforming. and this is key, Mario, transforming the paradigm of how governance is delivered, be it that it's a service, okay? That you don't have to be limited to the elected officials. Like they have a role to play and that's fine and we celebrate it, but you shouldn't rely on elected officials to solve every layer of the governance stack. They can stay up at the meta structure, sort of custodians of the constitution, But then everything below that can and should be done in competition through innovation with the profit motive and exit as being part of the stack.

1:01:10You know, it strikes me that as we've talked about this, we talked through the different stakeholders and why people benefit from the work you're doing. Maybe the one person that we haven't talked about, so to speak, is the Prosperin themselves. What is it that drives people to become an e-resident beyond maybe believing in the vision as an investor or setting up a company there? There's clearly, as I've heard you talk about this before, some tax incentives and other things. What are the main draws there in your view? Well, part of the beauty of our model is that it caters to a very diverse crowd.

1:01:46And I don't mean that in the woke sense. I mean it in it that some people are here because they just want to chillax and they want to have a place where they can keep what they've earned, not have to pay crazy taxes each year in a beautiful destination surrounded by smart individuals. Like that's a use case. Another use case would be the Hondurans that would have otherwise left their country because they are high potential, high intellect, and they could go anywhere and be a contender for high paying jobs or even to start something. But they are choosing to stay here because it's their homeland, because they're close to mom and dad and their cousins and all that.

1:02:28And because actually, in some industries, they wouldn't be able to find a better place anyways. And so, you know, this is the best. And then you have people that are coming from Silicon Valley and Europe because they're working in industries that have been heavily regulated over the decades to the point where you can't innovate any longer. Like it's only designed for the big players to inch their way forward, but little guys can't actually compete. you know they find in Prospera a very welcoming environment for them to prove out their concepts their technologies and then you know perhaps go back to the to the bigger playgrounds and compete with the bigger guys undoubtedly you have some people here that are in it just for business and then you have many people that are in it for ideological reasons and they technically could be doing what they're doing somewhere else a lot of say remote workers but they understand what we're trying to achieve the ethos.

1:03:26And they know that just by being here and being part of this economy, they're contributing. So we have a large spectrum. But the bottom line, when it's all said and done, the value proposition is about having maximum degrees of personal freedom with which you can create value, trade freely, keep the vast majority of the wealth you unleash. And then when you do pay taxes, you pay it to an organization that is aligned with your future benefits and is in check of not growing and becoming abusive as so many other governance service providers have become because of the ill-aligned incentive structures that have emerged.

1:04:08And to put a tangible example around that sort of last cohort you mentioned, the Silicon Valley entrepreneur who says, hey, the industry I'm working in is too regulated. It's not giving me the freedom to innovate. What does that look like on the ground today? Well, it varies. You have things like advanced gene therapies. And you have this, as an example, this Don't Die documentary on Netflix with Brian Johnson, amongst the places he went to throughout the world. It was Prosper here in Roatandi because that's where he found some of the best and most advanced gene therapies for longevity. So that's one clear example.

1:04:46But you have drones flying around and people wanting to innovate in that space without having to spend, I don't know, how long and how much money to get permission from the FAA, to doing robotics manufacturing for construction, balancing international business codes on the one hand, in terms of intended outcomes, but being able to innovate in building materials and shapes and forms that are new and innovative and scientifically better performing, though not necessarily already included in the building codes of a particular municipality or city, to crypto finance and being able to bring real world assets on chain and transact in physical reality, like with an actual apartment, having the mortgage on chain as an NFT, for example.

1:05:34I understand there's some of that going on. It's quite varied. I mean, as I said, If there is some ratio between, say, number of people and aggregate GDP and a diversity of things that are being tried, we are probably at the highest level of whatever that index is. The variability for the amount of nominal activity is massive. Well, let's talk about, you know, the challenges. You mentioned that you're sort of partway through this bet that Honduras will be able to stick to its agreement and that, you know, the sort of setup that you agreed upon is durable enough to survive the changes in government.

1:06:15To bring people up to speed, maybe you can give a sort of precis of what the turmoil over the past couple of years has been and where things stand at the moment. Well, leading up to 2021, there had been 12 years of continuous one-party rule. So the equivalent of the Republican Party in Honduras had been in power for 12 consecutive years. That party was responsible for the creation of the Zede regime, amongst other things. Okay. But to give you an idea for a U.S. audience, the Zedda regime was to the national party. What, let's say, the Affordable Care Act or Obamacare was for the Democratic Party in the U.S.

1:07:04It became a very politicized issue. It wasn't when the law was being enacted. Okay. So I should, I do, I guess that's a very imperfect analogy, but it became that politicized. But when the Zedet Law was enacted. It was quite bipartisan. 120 out of 128 congressmen voted in favor of it, but it became very politicized because this party was in power for so long. There were tensions. And in 2021, a disruptor party, which was a breakout of the equivalent of the Democratic Party, but more radical towards the left, won the elections. They didn't win them single-handedly. They formed an alliance with multiple parties, a European type of alliance.

1:07:51But bottom line is they were at the head of the ticket and they ran and got a power. And as it's normal, the political pendulum swings and whatever the last guys did, especially if they were there for a long time, especially if it's bad and we must undo. And of all the things that they did, the Zeta regime was the most notorious, in part because it was so exciting. It has so much potential. They were very proud of it. So they were promoting it internationally during the election. So it became the flagship, the legacy project of the prior power structure and in particular prior president. So when this new administration came in, they had several campaign promises.

1:08:39One of them was to get rid entirely of the ZEA system and shut down those that were operating a ZEA. So imagine that. I mean, we made it into, say, one of the top three campaign promises to shut us down and get rid of the system. And this was in 2021. It's 2025, almost to the end of it. And I don't want to count my checks before, but we're still operating for sure. So, you know, very, very limited compared to what we could. But we're still here. Now, why are we still here? Well, because we're doing what we said we're going to do. We're bringing investment. We're generating jobs. We're creating and opening new niches of opportunity through innovative industries.

1:09:20And because the legal structures that were set up were super sound, very robust, very clear. And we have had the benefit of a very strong set of investors, financial wherewithal included, that say, right is right. We must prove this. And this is what Honduras wanted. This is what Honduras negotiated. We agreed to it. Now we're going to hold each other to account. So we have one of the largest international arbitration cases against a state currently active through the World Bank in Ixit. That is, I don't know, probably three quarters of the way through the overall process. These are long procedures, seven years or so.

1:10:03So we're four years into it. And so far, we know there have been four instances throughout the process where there's been, you know, where the arbitration tribunals had to make a decision in our favor or in favor of Honduras in all four instances so far devoted in our favor. So we feel really good about where it stands legally. If it keeps going, we're going to win a massive arbitration award. And at the same time, that's not what we're after. As in, if Honduras indeed continues to not honor its agreements, that's where they're going to end up. But what we're hoping for is that our rights are respected, that they're reinstated fully.

1:10:47And there's an election coming up in about a month. in Honduras. Okay. So the 30th of November, there's an election, depending who you ask, but the majority of the political analysts expect that the opposition, so not the regime, will win that election. And so we'll go back to perhaps a more sensible set of political circumstances. And I predict if that happens, then we're off to the races. I mean, we got the rockets full of fuel and we just need to be given the thumbs up and it's going to be massive. The next four years, if the election goes the way I think will, will be massive for us. And so to, you know, maybe in a slightly caricature-ish way, but I, you know, might be helpful to just make sure I'm understanding.

1:11:34When we look at this sort of current state of affairs, the set of outcomes that can happen from here feel like, you know, this less opposed party can come to power on November 30th, in which case, hopefully, that means you're back off to the races and things are sort of back to normal service, so to speak. You could go through another few years of international arbitration and perhaps you lose. It's, I guess, a possibility, even though things have been promising and you have to sort of wind down the project. And then the third path is that Honduras has to sort of pay some sort of award or damages on the scale of many billions, right?

1:12:14As I've heard you mention it before. And so So in that version of things, you sort of win, quote unquote, in the sense of, you know, there's a large outcome, but the project hasn't gotten the chance to flourish over the 50 year cycle that you were hoping for. Is that like a decent summarization of what you see as the main options here? It is with a caveat that, you know, after five years of operations under very complicated circumstances, we have managed to prove the business model. Okay, so the primary loser, unfortunately, if things don't get back on track, will be the people of Honduras. Because especially with a massive payout, we will dust off and keep pushing the model somewhere else where the government is more capable of honoring its commitments.

1:13:08But unfortunately, the people of Honduras will miss out. And so that will be quite tragic. And I don't think it's going to get to that. But honestly, I don't. I think under all scenarios of a political outcome, there's a way to thread the needle because ours is not a political project. There are some political undertones just because, well, the way in which governance services are provided end up being quite related to the political party in charge. And so they like to put labels on things and call it one thing or another. But ultimately, as I said, if you decouple governments and governance, there's no incompatibility with having different types of governance structures if you are a political party, even from the left.

1:13:53If you are a radical left political party, it's not unthinkable that you would allow within parts of the country in special economic zones a much more free market oriented political subdivision. If it's generating taxes, if it's employing people, if anything, it's actually helping their socialist agenda of redistributing wealth that they otherwise wouldn't have. So it's not for sure a white or black type outcome. It's just going to be more challenging to get there because you have to deal with politics and the way things look as opposed to the way things actually are. I think anytime you do something that is quite revolutionary, this ambitious, that is changing a country in one way or another, whether it's happened before, as we've talked about or not, there's obviously going to be criticism.

1:14:49And so there have been critiques that I've read that the ZDs aren't bringing enough jobs in, they're not bringing enough foreign investment in. And, you know, I think we can argue about what range is acceptable. I think you've noted that by a percentage basis, there's some some really good reasons to be positive. And then there's other sort of arguments around the fact that maybe this is too much of a libertarian fantasy. I think Paul Romer, the noble economist said, and these different critiques. I think a lot of that is just endemic to this sort of discussion. But if you had to sort of step into the position of one of your critics and take up one of their arguments, where do you feel like the criticism is most justified or the place where you feel like, hey, maybe we haven't done enough here or there really is something to be concerned about in terms of the sovereignty of Honduras?

1:15:43Look, I would say the biggest self-criticism, though, you know, hindsight's 20-20, like if you could do it all over again, it does tend to be silly hypotheticals. But the biggest failure, and there are reasons why, but the biggest failure is that we were not more proactively transparent and communicative in the early years. And so in the absence of our voice with tangible, solid evidence of what was actually happening, speculative voices, many of which were ill-intended and politically motivated, filled the void and started to create this caricature, negative caricature, of what the project was about.

1:16:30So the narrative was controlled by opposition groups and we weren't loud enough. And again, there were reasons at the time the party in power in Honduras deemed that that was the best strategy. But in retrospect, I think that that is by far the biggest mistake so far. And even with that, the number of people in reality that are actually against Zeles in Honduras is very small. They're just a very loud minority. When this administration, the current administration, won, and one of their top three campaign promises revolves around getting rid of Zedez, Gallup did a poll as to why, you know, they're trying to figure out, well, why did this party win in the end?

1:17:22Only 3.75 % of the population said that they voted in favor of this party because of their anti-ZE stance. So it's a really small percentage. They're just very popular. And it's the type of thing that lends itself to all of the caricatures of victimhood or massive risk or colonization. So it arouses the emotions. But in reality, it's neither that, nor does it matter that much to that many people. Yeah, you can attach the most provocative language possible to it and have it sort of stand in as this specter for so many different things rather than maybe reflecting on it as it is. Anything new and innovative lends itself to that.

1:18:06You mentioned that there are sort of other places around the world that you hope to bring Prospera. And I think you've said in the past, maybe there are five countries that you're looking at. Maybe that number has gone up or down since, you know, whenever that interview was. what's on the docket for the next few years? Like what looks exciting to you? Well, look, I've begun categorizing in my mind the type of conditions that create a very attractive opportunity for what we're doing. One is catch-up growth. And this is countries that are underdeveloped with poverty and what have you. And they have a lot of catch-up to do just to get to world standards.

1:18:51So get rid of poverty and be competitive. And we see Africa, obviously, as one of those places that unfortunately has a lot of catch-up growth to do. They have a massive, young, and rapidly growing population that are very enthusiastic about the future. They read about online, and they're going to go pursue it. And they're going to go pursue it by migrating to Europe or because opportunities come to their home countries. and we want to be part of the latter solution. Africa is not the only place, obviously, that has a lot of catch-up growth. There's plenty of places in Latin America that have that as well.

1:19:27But catch-up growth is one of the, say, positionings. A second one, which is kind of in the middle of the three that I'm going to mention, is industry diversification. So a country might be middle-income, and that's fine. Maybe they're at a world standard, but they want to tap into new industries to grow faster and diversify, maybe not be so dependent on natural resources or in certain partnerships, country partnerships. They want to try new things. They want to diversify their economy, and they're kind of stuck with what they have. And so we can come in and be a massive catalyst of diversification because of how a regulatory system works and how we're able to create very attractive conditions for industries that otherwise wouldn't come.

1:20:15And then the third is to accelerate growth. And the epitome of that is the U.S. So catch-up growth is easy to quantify. You can go to a country like Honduras and see, okay, your GDP per capita is 3 ,000. GDP per capita of Hondurans in the U.S. who go to the U.S. illegally within two years is 30 ,000. so you have at least 10x growth if you stop exporting your people and import international best practice. So that's sort of easy to quantify. What is less easy to quantify is to be in a place like the US and say, okay, your GDP per capita is whatever, 50 ,000. But it could be, what? What could it be, right?

1:21:01I mean, I suppose you could look at other places and say Luxembourg and say 150 ,000. But it's not very credible because Luxembourg is a very niche industry, very high value market, whereas the US is massive, right? So what could it be? What could the US be? But the reality is that that's where I think the biggest opportunity actually lies. Though harder to quantify, it's got the biggest impact for global prosperity to unleash the power of the American entrepreneur, right? To drive American dynamism, re-industrialize, sure, but also lead in every single innovative industry. And that is something that has been the case historically, but that it's under threat, right?

1:21:47I mean, it's why this whole movement in the U.S. is going on right now. But they're trying to solve the problem with traditional tools, which have massive limitations, right? The traditional tools of trying to fix it all top down or through traditional political structures and the traditional governmental institutions is not 21st century by a long shot. So we have 21st century challenges and opportunities. We need to implement 21st century solutions. And what we're doing in essence is that. And so by far, the country that to me represents the biggest opportunity is the US. Amazing. Well, I'll keep my eyes open for Arizona, Nigeria, and wherever else you might have on the agenda.

1:22:30And a final question that I'd like to close the podcast with. If you had the power to assign a book to everyone on Earth to read and understand, what book would you like to assign? Atlas Shrugged. I mean, I couldn't have picked a better one there. I knew that was coming. Yeah. I mean, look, there's so many other amazing books. But because they're so good and they're modern, people are kind of picking them up. But Atlas Shrugged is such a philosophical book when it's all said and done. And obviously, you know, it's got some fiction dimensions to it, but it's got so much profound truth. In current times, unfortunately, too many parallels to the world that is described there with Ayn Rand describing New York and the U.S.

1:23:20So for sure, I would say Atlas Shrugged. Read it. If you haven't read it, read it. and don't go read about it, like read it. It'll take a while. You can listen to it in audiobooks and I think it's, I don't know, 60 to 90 hours depending on what speed you have it read to, but it's definitely worth it. Amazing. Well, I think that's a perfect place to leave it. Eric, thank you so, so much for taking the time. Thank you. That's it. Thank you for listening to this episode of The Generalist Podcast. Please subscribe on Apple Podcasts, Spotify, or your preferred podcast app. Ratings and reviews help others discover these discussions, so if you enjoyed the conversation, I'd be grateful if you could take a moment to leave one.

1:24:05For all past episodes and more, visit us at thegeneralist.substack.com. See you next time as we continue to explore the future.