There is a famous place in Mexico: San Miguel de Allende. This small city offers an attractive mix of Mexican and US cultures—with relative safety, order, and First-World amenities—and tourists come from near and far, along with plenty of expats.
San Miguel de Allende is a glimpse of what can be in Latin America with the right ingredients. In the late 1930s and 1940s, Americans and aristocratic Latin Americans moved to San Miguel de Allende as part of a new art school. Now known informally as Bellas Artes, the school and the new arrivals cultivated optimism, investment, and meritocracy.
A Paraguayan originally piqued my curiosity regarding how to pull the rug out from under corruptos. He shared that trade deals not only enable the likes of Paraguay to enjoy fewer impediments to commerce; the agreements also import regulatory and arbitration regimes.
Herein lies his pearl of wisdom: expecting corruptos to police themselves is foolish. You can circumvent them with the peaceful entry of healthy institutions and values.
This logic applies to many areas, from major companies and private educational institutions to arbitration associations and even professional sports teams. It is not an accident that some of Argentina’s most successful organizations are soccer teams. They have meritocracy at their core and are embedded within international governing bodies that impose scrutiny.
A bottom-up culture of dishonesty will not go away easily. Top-down initiatives with ad hoc targeting will inevitably fail. The healthier route is a dispersed approach of countless institutions that decline to engage in bribery and deceit.
Consider what would happen if Hillsdale College of Michigan set up a satellite campus in Central America. This private institution refuses all taxpayer funding and is a bedrock of academic integrity. For example, Mark Moyar, author of Masters of Corruption (2024), teaches history at Hillsdale and has paid a heavy price as a whistleblower within USAID. Hillsdale would put many local institutions to shame and raise expectations in short order.
The Honduran ZEDEs were an attempt to defrock corruption that bit off more than it could chew. However, even though the ZEDEs lacked sufficient support, the idea was right: (1) utilize the world’s best public policies, and (2) bring in foreign investors who will work with locals to put entrepreneurship into hyperdrive. If Próspera and other ZEDEs can rise from the dead, perhaps with a lifeline after the next election, they will be game-changers for Honduras.
The other route that merits more attention is raising the IQ of the local population through better nutrition and education and less of a brain drain. Higher-IQ populations have lower corruption and more impulse control. Unfortunately, this approach would take a generation or two, and, to some degree, it puts the cart before the horse.
