Category: reason

FDA Case for Menthol Ban Undermined by New Study


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Just in time for the Food and Drug Administration’s expected announcement of a formal rule to ban menthol cigarettes, a new study undermines one of the agency’s central arguments for prohibition.

The FDA claims that menthol cigarette brands (which contain high amounts of mint flavoring unlike typical cigarettes) are easier to start smoking, more appealing to youth, and more addictive than their non-menthol counterparts. But that’s hard to square with the existing data. According to the 2021 National Youth Tobacco Survey, more than 60 percent of middle and high school students who smoke use non-menthol cigarettes. It’s widely known in the public health community that menthol smokers typically start later in life and smoke fewer cigarettes per day. A Reason Foundation study found that states with the highest menthol consumption also had the lowest youth smoking rates.

But there is another argument in the FDA’s dwindling arsenal. FDA and its allies claim menthol cigarettes are harder to quit, particularly for African Americans. Because around 85 percent of African American smokers use menthols compared to around 30 percent of white smokers, the Biden administration believes prohibition would “promote health equity” and reduce health disparities. It should be noted that according to the American Cancer Society, disparities are already narrowing because African American youth are less likely to start smoking than their peers of other races. Furthermore, African American adults do not smoke at significantly higher rates than whites.    

A new study conducted by researchers from Vanderbilt University Medical Center, published in the Journal of the National Cancer Institute, finds no statistically significant difference in quit rates between menthol and non-menthol smokers. Using data from participants in the Southern Community Cohort Study, the average annual quit rate was 4.3 percent for menthol smokers and 4.5 percent for non-menthol smokers. There was also no difference in quit rates between African American and white smokers.

“In this large-scale follow-up study, we could not confirm the FDA’s report that menthols are harder to quit, at least in the population we followed,” said the study’s corresponding author, William Blot.

Blot also highlighted a potential unintended consequence of menthol prohibition: “If the existing epidemiologic data showing lower risk of lung cancer among menthol than non-menthol smokers hold generally, then in the long-term if high percentages of menthol smokers switch to non-menthols, the ban could have the unintended consequence of a net increase rather than decrease in risk, at least for lung cancer.” Blot is referring to scientific literature, including research he has authored, showing menthol smokers typically contract lung cancer at lower rates than non-menthol users. While the mechanisms for these findings are not well understood, as menthols are just as deadly as non-menthol cigarettes, it could result from menthol smokers starting later in life and smoking less.

Where they’ve been implemented, like in the European Union and Canada, menthol cigarette bans have been a disappointment to their supporters. Most menthol smokers switch to regular cigarettes, buy illicit menthol, or use devices to adulterate legal cigarettes to give them a minty taste. But the U.S. is uniquely vulnerable to the dangers of prohibition. Its menthol market is larger by comparison, at around a third of cigarette sales, and there are significant racial disparities in use patterns.

Law enforcement groups, civil rights organizations, and think tanks are pleading with the Biden administration to embrace a strategy of harm reduction instead of criminalization to reduce smoking rates. But in the name of equity, Biden’s FDA appears committed to banning a product disproportionately used by African Americans while leaving the favored cigarette of white smokers free and clear. If prohibition is a necessary and proper solution to menthol smoking, which is unpopular among a majority of youth and adult smokers, why wouldn’t the same logic apply to non-menthol cigarettes, which are responsible for the majority of smoking-related diseases?

It’s hard to answer this question without coming to the conclusion that the administration believes singling out a minority of a minority is an easier prospect than trying to ban all cigarettes at once. And if one can do so under the guise of promoting racial equity, so much the better.

The post FDA Case for Menthol Ban Undermined by New Study appeared first on Reason.com.

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MSNBC’s Joy Reid Claims Elon Musk ‘Misses’ Apartheid-Era South Africa


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On Tuesday night, MSNBC anchor Joy Reid implied that SpaceX/Tesla founder Elon Musk, who’s in the process of purchasing Twitter, wants to own the social media site to restore the white supremacy of Apartheid-era South Africa.

In Reid’s telling, right-wingers on Twitter have “been described as being on the outside of the culture looking in through the glass. But they don’t just want to come in. They want to come in and be able to punch people in the face and walk around and laugh about it and then not have anyone to stop them.”

“The enjoyment they get out of being in this ‘town square’ is being able to harass people, being able to attack people…Elon Musk, I guess he misses the old South Africa in the ’80s, I guess he wants that back,” offered Reid.

Reid wasn’t the only one hinting at, or outright declaring, that Musk has racist motivations. She was joined by discredited Black Lives Matter activist Shaun King, who said Musk’s actions were “about white power” and that he “was raised in Apartheid by a white nationalist.”

This is false on multiple counts. Musk was born in Pretoria, South Africa, in 1971. His parents divorced when he was a child, and Musk lived with his father Errol, an engineer who amassed a large fortune, for several years. Musk moved to Canada in 1988 when he was 17. He and his father became estranged later on, though Errol contributed some angel funding (to the tune of $200,000) sometime in the late ’90s to one of Musk’s early business ventures.

The oft–repeated claim that Elon Musk is a racist or an Apartheid supporter likely originates from the Errol‘s claim that he owned a Zambian emerald mine in the 1980s. Many people have since used Errol’s claim to argue that the family must have profited from Apartheid, with some detractors alleging that this fortune was then funneled to Elon and used by him at the start of his career.

But this story doesn’t hold up. Errol, who has been embroiled in salacious scandals and whose own family members say is unreliable, claims he owned a stake in an emerald mine in Zambia in the ’80s, after the Musk parents divorced. The mine was in Zambia, not South Africa, and we have no evidence that whatever profits the mine produced actually was given to Elon in the late ’90s as angel funding. Nor do we have any evidence that Musk was fond of South Africa’s terrible segregationist policies, which all white South Africans benefited from, regardless of whether they supported them. Toward the end of the ’80s, Elon jumped ship to Canada in order to avoid mandatory military service in South Africa. “Spending two years suppressing black people didn’t seem like a great use of force,” he said in an interview later. He received a university scholarship and worked various menial jobs at farms and lumber mills—odd behavior for someone who was purportedly privy to his father’s fortune.

Elsewhere, writers like Elie Mystal, The Nation‘s justice correspondent, have dubiously suggested that Musk has a “history of racial animus” that could threaten the safety of black journalists, sources, and activists.

“History of racial animus” is a weird way to describe a draft dodger who specifically left his native country at least in part because he did not want to take part in the government’s efforts to oppress black South Africans.

Very few of these talking heads have even mentioned that black employees at Tesla are suing the company on the grounds that Tesla was filled with “rampant racism” that went “unchecked for years.” That omission is pretty striking—there’s a brand new lawsuit they could reference, as opposed to conjecture based on wild claims of ancient grandeur by Musk’s estranged father.

Perhaps that’s because pegging their case against Musk to allegations of bad labor practices at a company with 70,000 employees isn’t quite as eye-catching as claiming that a white South African immigrant born under Apartheid is hatching plans to further or worsen racial discrimination. Discussing conditions would require separating Musk’s personal animus (or lack thereof) from his awareness of factory culture as CEO of Tesla.

The media class, as evidenced by the above clips and tweets, seems more preoccupied with the idea that Musk is a racist who wants to empower whites and subjugate minorities. These are incredibly serious allegations for which they offer no proof, recycling false or suspect claims with no additional reporting that might corroborate stories about Musk’s family, fortune, or beliefs.

All these attempts to paint Musk as the new capo of the coming race war say more about Musk’s media critics than they do about the man himself. Journalists at major outlets and networks, who ought to have some fidelity to truth, are more interested in tarring perceived ideological enemies than soberly critiquing what their political adversaries have gotten wrong.

The post MSNBC's Joy Reid Claims Elon Musk 'Misses' Apartheid-Era South Africa appeared first on Reason.com.

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MSNBC’s Joy Reid Claims Elon Musk ‘Misses’ Apartheid-Era South Africa


Thumbnail (10)

On Tuesday night, MSNBC anchor Joy Reid implied that SpaceX/Tesla founder Elon Musk, who’s in the process of purchasing Twitter, wants to own the social media site to restore the white supremacy of Apartheid-era South Africa.

In Reid’s telling, right-wingers on Twitter have “been described as being on the outside of the culture looking in through the glass. But they don’t just want to come in. They want to come in and be able to punch people in the face and walk around and laugh about it and then not have anyone to stop them.”

“The enjoyment they get out of being in this ‘town square’ is being able to harass people, being able to attack people…Elon Musk, I guess he misses the old South Africa in the ’80s, I guess he wants that back,” offered Reid.

Reid wasn’t the only one hinting at, or outright declaring, that Musk has racist motivations. She was joined by discredited Black Lives Matter activist Shaun King, who said Musk’s actions were “about white power” and that he “was raised in Apartheid by a white nationalist.”

This is false on multiple counts. Musk was born in Pretoria, South Africa, in 1971. His parents divorced when he was a child, and Musk lived with his father Errol, an engineer who amassed a large fortune, for several years. Musk moved to Canada in 1988 when he was 17. He and his father became estranged later on, though Errol contributed some angel funding (to the tune of $200,000) sometime in the late ’90s to one of Musk’s early business ventures.

The oft–repeated claim that Elon Musk is a racist or an Apartheid supporter likely originates from the Errol‘s claim that he owned a Zambian emerald mine in the 1980s. Many people have since used Errol’s claim to argue that the family must have profited from Apartheid, with some detractors alleging that this fortune was then funneled to Elon and used by him at the start of his career.

But this story doesn’t hold up. Errol, who has been embroiled in salacious scandals and whose own family members say is unreliable, claims he owned a stake in an emerald mine in Zambia in the ’80s, after the Musk parents divorced. The mine was in Zambia, not South Africa, and we have no evidence that whatever profits the mine produced actually was given to Elon in the late ’90s as angel funding. Nor do we have any evidence that Musk was fond of South Africa’s terrible segregationist policies, which all white South Africans benefited from, regardless of whether they supported them. Toward the end of the ’80s, Elon jumped ship to Canada in order to avoid mandatory military service in South Africa. “Spending two years suppressing black people didn’t seem like a great use of force,” he said in an interview later. He received a university scholarship and worked various menial jobs at farms and lumber mills—odd behavior for someone who was purportedly privy to his father’s fortune.

Elsewhere, writers like Elie Mystal, The Nation‘s justice correspondent, have dubiously suggested that Musk has a “history of racial animus” that could threaten the safety of black journalists, sources, and activists.

“History of racial animus” is a weird way to describe a draft dodger who specifically left his native country at least in part because he did not want to take part in the government’s efforts to oppress black South Africans.

Very few of these talking heads have even mentioned that black employees at Tesla are suing the company on the grounds that Tesla was filled with “rampant racism” that went “unchecked for years.” That omission is pretty striking—there’s a brand new lawsuit they could reference, as opposed to conjecture based on wild claims of ancient grandeur by Musk’s estranged father.

Perhaps that’s because pegging their case against Musk to allegations of bad labor practices at a company with 70,000 employees isn’t quite as eye-catching as claiming that a white South African immigrant born under Apartheid is hatching plans to further or worsen racial discrimination. Discussing conditions would require separating Musk’s personal animus (or lack thereof) from his awareness of factory culture as CEO of Tesla.

The media class, as evidenced by the above clips and tweets, seems more preoccupied with the idea that Musk is a racist who wants to empower whites and subjugate minorities. These are incredibly serious allegations for which they offer no proof, recycling false or suspect claims with no additional reporting that might corroborate stories about Musk’s family, fortune, or beliefs.

All these attempts to paint Musk as the new capo of the coming race war say more about Musk’s media critics than they do about the man himself. Journalists at major outlets and networks, who ought to have some fidelity to truth, are more interested in tarring perceived ideological enemies than soberly critiquing what their political adversaries have gotten wrong.

The post MSNBC's Joy Reid Claims Elon Musk 'Misses' Apartheid-Era South Africa appeared first on Reason.com.

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Woman Calls Cops on Dad Taking Pictures of His Own Kids, Then Pepper Sprays Him


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Earlier this month, a woman in Arlington, Virginia, saw a man taking pictures of kids and suspected the worst: a creep on the prowl with his camera. Disgusting.

She quickly alerted a security guard and, according to a subsequent police report, told him she believed the man was photographing children he didn’t know, for presumably nefarious purposes.

The security guard went to investigate and made contact with the man. As it turns out, the guy was taking pictures of his own children: He was a dad on an outing with his kids. The guard went back to report this reassuring news to the lady. Case closed?

Not quite. As the Arlington police reported:

The suspect then intervened, deployed pepper spray and sprayed the victim, before fleeing the scene on foot.

So the suspect is a woman in her 20s or 30s—a pepper-spraying maniac—and the victim is the man taking the pictures. (The dad sustained non-life threatening injuries, which were treated at the scene by medics.) The suspect was so obsessed with the idea there are predators everywhere that she literally couldn’t accept reality when confronted by it.

Security guru Bruce Schneier coined a term for this leap from mundane reality to thrilling depravity. He calls it the “movie-plot threat.” The more something resembles a movie-plot threat, the less likely it is to happen in real life, hence the less time and money we have to spend preventing it.

Thinking that way is the equivalent of seeing a small bruise and automatically assuming child abuse, or seeing a child alone and automatically assuming neglect, which also happens: Watch dad Ashley Smith testify in favor of Let Grow’s “reasonable childhood independence” bill in the South Carolina Judiciary committee. His family was investigated for child abuse and neglect because someone saw his daughter doing her homework on the front lawn and called 911.

How much better off we’d all be—saner, smarter, safer, nicer—if instead of assuming the very worst anytime we see a child, or an adult with a child, or an adult near a child or photographing a child, we gave everyone the benefit of the doubt.

In the meantime, the police investigation is ongoing.

The post Woman Calls Cops on Dad Taking Pictures of His Own Kids, Then Pepper Sprays Him appeared first on Reason.com.

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Woman Calls Cops on Dad Taking Pictures of His Own Kids, Then Pepper Sprays Him


dreamstime_xxl_45080043

Earlier this month, a woman in Arlington, Virginia, saw a man taking pictures of kids and suspected the worst: a creep on the prowl with his camera. Disgusting.

She quickly alerted a security guard and, according to a subsequent police report, told him she believed the man was photographing children he didn’t know, for presumably nefarious purposes.

The security guard went to investigate and made contact with the man. As it turns out, the guy was taking pictures of his own children: He was a dad on an outing with his kids. The guard went back to report this reassuring news to the lady. Case closed?

Not quite. As the Arlington police reported:

The suspect then intervened, deployed pepper spray and sprayed the victim, before fleeing the scene on foot.

So the suspect is a woman in her 20s or 30s—a pepper-spraying maniac—and the victim is the man taking the pictures. (The dad sustained non-life threatening injuries, which were treated at the scene by medics.) The suspect was so obsessed with the idea there are predators everywhere that she literally couldn’t accept reality when confronted by it.

Security guru Bruce Schneier coined a term for this leap from mundane reality to thrilling depravity. He calls it the “movie-plot threat.” The more something resembles a movie-plot threat, the less likely it is to happen in real life, hence the less time and money we have to spend preventing it.

Thinking that way is the equivalent of seeing a small bruise and automatically assuming child abuse, or seeing a child alone and automatically assuming neglect, which also happens: Watch dad Ashley Smith testify in favor of Let Grow’s “reasonable childhood independence” bill in the South Carolina Judiciary committee. His family was investigated for child abuse and neglect because someone saw his daughter doing her homework on the front lawn and called 911.

How much better off we’d all be—saner, smarter, safer, nicer—if instead of assuming the very worst anytime we see a child, or an adult with a child, or an adult near a child or photographing a child, we gave everyone the benefit of the doubt.

In the meantime, the police investigation is ongoing.

The post Woman Calls Cops on Dad Taking Pictures of His Own Kids, Then Pepper Sprays Him appeared first on Reason.com.

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Honduras Ends Its Experiment With Charter Cities


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Honduras had been a pioneer in experimenting with what were called ZEDEs—”Zones for Employment and Economic Development” in English translation. But last week, in a depressingly unanimous vote, Honduras’ congress reversed the enabling law and constitutional amendment that made ZEDEs possible.

The ZEDE program was beloved by those in what’s known as the “charter cities” space—those who try to propagate unique set-aside spaces with different rules, ideally ones more friendly to economic growth or liberty or both. (Those in the field tend to see the two as buttressing each other.) The theory behind ZEDEs had roots in the work of Nobel-winning development economist Paul Romer, on how institutions and laws were vital to sustainable economic growth.

The ZEDE program was a long time coming, and faced many roadblocks and detours along the way. As Ian Vasquez, director of the Center for Global Liberty and Prosperity at the Cato Institute, tells Reason, Latin America has seen a resurgent socialist radicalism lately that has had ZEDEs in their sights.

Socialists “are fairly effective when they see something they don’t like, doing every thing they can to destroy it, by any means possible,” says Vasquez, including spreading false claims that ZEDEs would “destroy the livelihoods of people.”

According to Guillermo Pena, a principle in an existing ZEDE called Zede Orquidea, the declining reputation of the former Honduran president most associated with pushing through the ZEDE idea, Juan Orlando Hernandez, bears a lot of the blame.

No one wants to expend political capital on defending an always controversial idea linked so closely to the disgraced ex-leader who was extradited to the U.S. last week to face drug and gun charges. The new ruling party LIBRE, and new president Xiomara Castro, were always opposed to ZEDEs; and they succeeded in turning Hernandez’s National Party against the concept entirely now as well.

Are Existing ZEDEs Dead?

But what does that mean for ZEDEs that already launched, with what they thought were airtight contractual relations with the Honduran goverment? Prospera was the first ZEDE to seal a deal with Honduras, and has operated since 2020 on the Honduran island of Roatan. Its CEO Erick Brimen was interviewed in Reason’s January issue, explaining how his organization intended “to attract international entrepreneurs and investors and become a financial center for the country and region.”

In a statement, initially issued the day before the cancellation of the ZEDE program, the Prospera folks were confident they could continue as they were; indeed, that they had airtight legal agreements that ensure it.

“The ZEDE framework was built to last and specifically tailored to serve as a rule of law oasis of economic freedom and legal stability in Honduras for decades to come,” Prospera said, after insisting the project is protected by “a Fifty (50) year legal stability agreement” and that “in case of repeal or amendment of the ZEDE framework, Article 45 of the ZEDE Organic Law nevertheless states that the rights and privileges of ZEDE investors will stay in place for the duration of their stability agreements.”

Prospera’s future is further secured, the statement said, by the fact that “Honduras Próspera, Inc., the Promoter & Organizer of Prospera ZEDE, is a U.S. company with rights under the Central American Free Trade Agreement (CAFTA-DR) and the U.S.-HN Bilateral Investment Treaty, which extend to investments made in Próspera ZEDE the highest degree of legal protection in Honduras.”

Prospera was not the only functioning ZEDE in Honduras; another is Ciudad Morazan. That is a 24-hectare project which describes itself as “a complete community located at the outskirts of Choloma, Honduras, the third largest city and the center of its vibrant manufacturing region.”

A third is the aforementioned Zede Orquidea, which is not trying to build a city with residents. It is a 1,000-hectare zone in rural Honduras, not near a coast, operating since June 2021 and dedicated to agricultural production, processing, and sale (to the U.S. market) of mostly green peppers. Pena says this ZEDE he works with has already been harmed by the change because of one of the laws, which allowed Honduran nationals to sell to the ZEDE without the imposition of a sales tax, that was repealed last week. That change is likely to represent an unexpected million-dollar hit to his operation, Pena says.

Still, Pena hopes the ZEDE will be able to stay in business. Zede Orquieda merely went a few steps beyond the already (and still) existing Free Zones, which have trade liberalization benefits without the wider range of independence a ZEDE has. The fact his ZEDE took that approach rather than going for something more experimental and dealing with financial regulations and managing a population, Pena thinks, will make it easier for it to stay the course regardless of Honduras’ new hostility to ZEDEs.

Not everyone in the space is as optimistic that Honduras will honor its agreements to the existing ZEDEs and worry that the very governing style that made it a country needing ZEDEs might make them less secure in their rights and prerogatives then they should be. International investors, which the existing ZEDEs need, might be made nervous by the government’s current hostility to the very idea. Vasquez, for one, worries more broadly that it’s all too common in Latin America for laws, agreements, and even constitutional limits to be evaded by a powerful leader, especially if he feels he has popular support.

How Did ZEDEs Become So Politically Vulnerable?

Jeffrey Mason of the Charter Cities Institute this week wrote an insightful essay at CCI’s site that sums up the Hondura ZEDE story so far, detailing elements of its history that made it politically vulnerable. One such aspect was that “the new [ZEDE] law was found constitutional by a new Supreme Court comprised of members appointed by the party which passed the law and ousted the judges that had previously voted against the law.” To Mason, aspects of how the Hondurans treated the project over the years made ZEDEs seem “clearly more of an ideological exercise than a practical exercise to generate development.”

As far as the fate of the existing ZEDEs, Mason acknowledges the legal protections Prospera itself detailed above, and concludes that although “these legal mechanisms exist, we don’t really know what will happen next….it’s possible that some kind of compromise off-ramp arrangement is reached with the government, especially since the government would almost certainly lose any cases that go to international arbitration.”

“From the ZEDEs’ point of view, an agreement which gives them relatively long-term legal stability to continue pursuing their project while the government takes a public victory lap for ‘ending’ the ZEDEs might be the best case scenario,” he concludes.

“All indications so far is that the Castro administration does NOT intend to go back on her word to the USG, nor violate the existing strong legal protections,” Brimen wrote to me last week. “Further, it would make no logical sense… the financial liabilities alone of violating the agreements would be staggering, and the blow to the credibility of the administration substantial.”

Though Honduras may be a setting sun for the concept of free cities, Zambia is a country where some in the free cities space believe interesting steps toward their dream may happen in the near future.

The post Honduras Ends Its Experiment With Charter Cities appeared first on Reason.com.

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Americans Want Change. Private Mints Are the Solution.


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Two years after a lack of spending brought on by the COVID-19 pandemic caused a coin shortage, American retailers still find themselves short on change.

In March, industry representatives called on Treasury Secretary Janet Yellen for help as the shortage lingers, but they’re unlikely to find relief. The federal government has been steadfast in its commitment to present only short-term solutions, like rationing coins or pushing social media campaigns. If the government actually wanted to solve the problem, it would allow the private sector to produce its own coins.  

In 2020, the combination of government-mandated lockdowns, consumer health concerns, and a shutdown of the U.S. Mint brought the circulation of coins to all but a grinding halt. Though the economy at large is much better than it was in summer 2020, the circulation of coins has struggled to recover.

While some businesses have chosen to break away from cash transactions altogether in response to the shortage, others don’t have that luxury. Brian Wallace, chief executive of the Coin Laundry Association said, “[If] we can’t make change, we can’t make money.” That reality became clear when some business owners began driving for hours to find available coins.

Consumers have been hit hard too. For the 7.1 million unbanked and 24.2 million underbanked households in America, cash is one of the most important resources they have for making purchases. The coin shortage has locked many of them out of the economy or caused them to incur new costs on top of current inflation.  

The Federal Reserve’s main response has been to ration coins “based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels.” The U.S. Mint, through advertisements and social media campaigns, also asked the public to “pay with exact change and return any spare change to circulation by depositing coins, exchanging them for bills at a financial institution or taking them to a coin redemption kiosk.” And a “U.S. Coin Task Force” was convened to monitor the ongoing shortage. At best, these are merely short term solutions. 

The task force’s latest report notes that its members “have worked tirelessly to address the coin circulation disruption, issue recommendations for the broader coin supply, and influence actions within their organizations.” And while they argue their report “reflects the commitment, enthusiasm, and creativity” the members used in crafting their suggestions, there was a notable solution missing from the task force’s recommendations: welcoming private currency.

It wouldn’t be the first time the private sector stepped up to provide alternative forms of currency when supplies of official money have run out. So why haven’t private businesses done so during this shortage? There are many possible reasons why a “Pat Penny” or a “Dex Dime” hasn’t taken off, but it’s most likely because the U.S. government doesn’t like to see currencies competing with its monopoly on money—even if the government itself is failing to meet the needs of Americans.

The government has made it illegal to make metal coins that are intended to be used as money. This prohibition is different from counterfeiting—the law specifically bars the creation of coins “of original design.” The Department of Justice and U.S. Mint used this section of the law most infamously in 2006 against the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED). It declared the use of the NORFED Liberty Dollar as money to be a federal crime. After such a prosecution, it should be no surprise that the private sector has been hesitant to provide an alternative currency like it has in the past.

Congress should strike down that restrictive language and welcome coins of original design. Instead of chasing shortages with short-term solutions, welcoming the private sector to supply its own coins—as history has shown it will—could be just what’s needed to help solve the current coin shortage and stop future shortages from taking hold of the economy.

The post Americans Want Change. Private Mints Are the Solution. appeared first on Reason.com.

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Honduras Ends Its Experiment With Charter Cities


prosperaphoto

Honduras had been a pioneer in experimenting with what were called ZEDEs—”Zones for Employment and Economic Development” in English translation. But last week, in a depressingly unanimous vote, Honduras’ congress reversed the enabling law and constitutional amendment that made ZEDEs possible.

The ZEDE program was beloved by those in what’s known as the “charter cities” space—those who try to propagate unique set-aside spaces with different rules, ideally ones more friendly to economic growth or liberty or both. (Those in the field tend to see the two as buttressing each other.) The theory behind ZEDEs had roots in the work of Nobel-winning development economist Paul Romer, on how institutions and laws were vital to sustainable economic growth.

The ZEDE program was a long time coming, and faced many roadblocks and detours along the way. As Ian Vasquez, director of the Center for Global Liberty and Prosperity at the Cato Institute, tells Reason, Latin America has seen a resurgent socialist radicalism lately that has had ZEDEs in their sights.

Socialists “are fairly effective when they see something they don’t like, doing every thing they can to destroy it, by any means possible,” says Vasquez, including spreading false claims that ZEDEs would “destroy the livelihoods of people.”

According to Guillermo Pena, a principle in an existing ZEDE called Zede Orquidea, the declining reputation of the former Honduran president most associated with pushing through the ZEDE idea, Juan Orlando Hernandez, bears a lot of the blame.

No one wants to expend political capital on defending an always controversial idea linked so closely to the disgraced ex-leader who was extradited to the U.S. last week to face drug and gun charges. The new ruling party LIBRE, and new president Xiomara Castro, were always opposed to ZEDEs; and they succeeded in turning Hernandez’s National Party against the concept entirely now as well.

Are Existing ZEDEs Dead?

But what does that mean for ZEDEs that already launched, with what they thought were airtight contractual relations with the Honduran goverment? Prospera was the first ZEDE to seal a deal with Honduras, and has operated since 2020 on the Honduran island of Roatan. Its CEO Erick Brimen was interviewed in Reason’s January issue, explaining how his organization intended “to attract international entrepreneurs and investors and become a financial center for the country and region.”

In a statement, initially issued the day before the cancellation of the ZEDE program, the Prospera folks were confident they could continue as they were; indeed, that they had airtight legal agreements that ensure it.

“The ZEDE framework was built to last and specifically tailored to serve as a rule of law oasis of economic freedom and legal stability in Honduras for decades to come,” Prospera said, after insisting the project is protected by “a Fifty (50) year legal stability agreement” and that “in case of repeal or amendment of the ZEDE framework, Article 45 of the ZEDE Organic Law nevertheless states that the rights and privileges of ZEDE investors will stay in place for the duration of their stability agreements.”

Prospera’s future is further secured, the statement said, by the fact that “Honduras Próspera, Inc., the Promoter & Organizer of Prospera ZEDE, is a U.S. company with rights under the Central American Free Trade Agreement (CAFTA-DR) and the U.S.-HN Bilateral Investment Treaty, which extend to investments made in Próspera ZEDE the highest degree of legal protection in Honduras.”

Prospera was not the only functioning ZEDE in Honduras; another is Ciudad Morazan. That is a 24-hectare project which describes itself as “a complete community located at the outskirts of Choloma, Honduras, the third largest city and the center of its vibrant manufacturing region.”

A third is the aforementioned Zede Orquidea, which is not trying to build a city with residents. It is a 1,000-hectare zone in rural Honduras, not near a coast, operating since June 2021 and dedicated to agricultural production, processing, and sale (to the U.S. market) of mostly green peppers. Pena says this ZEDE he works with has already been harmed by the change because of one of the laws, which allowed Honduran nationals to sell to the ZEDE without the imposition of a sales tax, that was repealed last week. That change is likely to represent an unexpected million-dollar hit to his operation, Pena says.

Still, Pena hopes the ZEDE will be able to stay in business. Zede Orquieda merely went a few steps beyond the already (and still) existing Free Zones, which have trade liberalization benefits without the wider range of independence a ZEDE has. The fact his ZEDE took that approach rather than going for something more experimental and dealing with financial regulations and managing a population, Pena thinks, will make it easier for it to stay the course regardless of Honduras’ new hostility to ZEDEs.

Not everyone in the space is as optimistic that Honduras will honor its agreements to the existing ZEDEs and worry that the very governing style that made it a country needing ZEDEs might make them less secure in their rights and prerogatives then they should be. International investors, which the existing ZEDEs need, might be made nervous by the government’s current hostility to the very idea. Vasquez, for one, worries more broadly that it’s all too common in Latin America for laws, agreements, and even constitutional limits to be evaded by a powerful leader, especially if he feels he has popular support.

How Did ZEDEs Become So Politically Vulnerable?

Jeffrey Mason of the Charter Cities Institute this week wrote an insightful essay at CCI’s site that sums up the Hondura ZEDE story so far, detailing elements of its history that made it politically vulnerable. One such aspect was that “the new [ZEDE] law was found constitutional by a new Supreme Court comprised of members appointed by the party which passed the law and ousted the judges that had previously voted against the law.” To Mason, aspects of how the Hondurans treated the project over the years made ZEDEs seem “clearly more of an ideological exercise than a practical exercise to generate development.”

As far as the fate of the existing ZEDEs, Mason acknowledges the legal protections Prospera itself detailed above, and concludes that although “these legal mechanisms exist, we don’t really know what will happen next….it’s possible that some kind of compromise off-ramp arrangement is reached with the government, especially since the government would almost certainly lose any cases that go to international arbitration.”

“From the ZEDEs’ point of view, an agreement which gives them relatively long-term legal stability to continue pursuing their project while the government takes a public victory lap for ‘ending’ the ZEDEs might be the best case scenario,” he concludes.

“All indications so far is that the Castro administration does NOT intend to go back on her word to the USG, nor violate the existing strong legal protections,” Brimen wrote to me last week. “Further, it would make no logical sense… the financial liabilities alone of violating the agreements would be staggering, and the blow to the credibility of the administration substantial.”

Though Honduras may be a setting sun for the concept of free cities, Zambia is a country where some in the free cities space believe interesting steps toward their dream may happen in the near future.

The post Honduras Ends Its Experiment With Charter Cities appeared first on Reason.com.

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How ‘Cranks’ Advance Science


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“Don’t believe the claim that the internet has corrupted our public discourse with misinformation,” says Jeffrey A. Singer, a senior fellow at the Cato Institute and general surgeon in Phoenix, Arizona. “Experts don’t have a monopoly on the search for truth.”

In his recent article, “Against Scientific Gatekeeping,” which appeared in Reason‘s May 2022 issue, Singer examined the politicization of the COVID-19 pandemic, in which those who broke with the establishment were branded cranks or accused of having blood on their hands. “The medical science priesthood has a long history of treating outside-the-box thinkers harshly,” he writes.

Most theories turn out to be wrong—”American science fiction and fantasy writer Theodore Sturgeon said, ’90 percent of everything is crap,'” Singer notes. “But the remaining 10 percent can be important,” which is one of the major lessons of the pandemic.

“Science should be a profession, not a priesthood.”

Photo Credits: Institute of Oceanographic Sciences (Great Britain); National Institute of Oceanography of Great Britain; Great Britain. Colonial Office. Discovery Committee, No restrictions, via Wikimedia Commons; Dr. Dalia Ibrahim, CC BY-SA 3.0, via Wikimedia Commons; BSIP/Newscom; Gavin Kent Mirrorpix/Newscom; Dr. Laughlin Dawes, CC BY 3.0, via Wikimedia Commons; Tamar Hayardeni, CC BY 3.0, via Wikimedia Commons; Gupta 1 Sharkpixs/ZUMApress/Newscom; PLOS Video Channel, CC BY 3.0, via Wikimedia Commons (for iondannis photo); Abaca Press/Berzane; Nasser/Abaca/Sipa USA/Newscom; Internet Archive, Archive.org; Envato Elements.

Music Credits: “Blue Race,” by Out of Flux, via Artlist; “Ant,” by Evgeny Bardyuzha via Artlist.

Written by Natalie Dowzicky and Jeffrey A. Singer; narrated by Singer; edited by Regan Taylor; camera by Benjamin Gaskell.

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Americans Want Change. Private Mints Are the Solution.


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Two years after a lack of spending brought on by the COVID-19 pandemic caused a coin shortage, American retailers still find themselves short on change.

In March, industry representatives called on Treasury Secretary Janet Yellen for help as the shortage lingers, but they’re unlikely to find relief. The federal government has been steadfast in its commitment to present only short-term solutions, like rationing coins or pushing social media campaigns. If the government actually wanted to solve the problem, it would allow the private sector to produce its own coins.  

In 2020, the combination of government-mandated lockdowns, consumer health concerns, and a shutdown of the U.S. Mint brought the circulation of coins to all but a grinding halt. Though the economy at large is much better than it was in summer 2020, the circulation of coins has struggled to recover.

While some businesses have chosen to break away from cash transactions altogether in response to the shortage, others don’t have that luxury. Brian Wallace, chief executive of the Coin Laundry Association said, “[If] we can’t make change, we can’t make money.” That reality became clear when some business owners began driving for hours to find available coins.

Consumers have been hit hard too. For the 7.1 million unbanked and 24.2 million underbanked households in America, cash is one of the most important resources they have for making purchases. The coin shortage has locked many of them out of the economy or caused them to incur new costs on top of current inflation.  

The Federal Reserve’s main response has been to ration coins “based on historical order volume by coin denomination and depository institution endpoint, and current U.S. Mint production levels.” The U.S. Mint, through advertisements and social media campaigns, also asked the public to “pay with exact change and return any spare change to circulation by depositing coins, exchanging them for bills at a financial institution or taking them to a coin redemption kiosk.” And a “U.S. Coin Task Force” was convened to monitor the ongoing shortage. At best, these are merely short term solutions. 

The task force’s latest report notes that its members “have worked tirelessly to address the coin circulation disruption, issue recommendations for the broader coin supply, and influence actions within their organizations.” And while they argue their report “reflects the commitment, enthusiasm, and creativity” the members used in crafting their suggestions, there was a notable solution missing from the task force’s recommendations: welcoming private currency.

It wouldn’t be the first time the private sector stepped up to provide alternative forms of currency when supplies of official money have run out. So why haven’t private businesses done so during this shortage? There are many possible reasons why a “Pat Penny” or a “Dex Dime” hasn’t taken off, but it’s most likely because the U.S. government doesn’t like to see currencies competing with its monopoly on money—even if the government itself is failing to meet the needs of Americans.

The government has made it illegal to make metal coins that are intended to be used as money. This prohibition is different from counterfeiting—the law specifically bars the creation of coins “of original design.” The Department of Justice and U.S. Mint used this section of the law most infamously in 2006 against the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (NORFED). It declared the use of the NORFED Liberty Dollar as money to be a federal crime. After such a prosecution, it should be no surprise that the private sector has been hesitant to provide an alternative currency like it has in the past.

Congress should strike down that restrictive language and welcome coins of original design. Instead of chasing shortages with short-term solutions, welcoming the private sector to supply its own coins—as history has shown it will—could be just what’s needed to help solve the current coin shortage and stop future shortages from taking hold of the economy.

The post Americans Want Change. Private Mints Are the Solution. appeared first on Reason.com.

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