This article was published in the Spring 1999 issue of Formulations
by the Free Nation Foundation
Update on Laissez Faire City
Introductory Note
by Richard Hammer

  (to table of contents of FNF archives)   (to John Kingman's report)

In August 1998, FNF Members John and Richard Kingman (brothers) traveled to San José, Costa Rica, to get a firsthand impression of the Laissez Faire City organization.

Since its founding in early 1995, Laissez Faire City has attracted FNF's interest—and garnered our skepticism. In June of that year a full-page ad in The Economist announced LFC's formation of " International Founding Trust for the purpose of establishing and promoting a great new world-class city based on the ideals and principles of Ayn Rand."

Roderick Long and I started a series of exchanges with LFC. We have reported occasionally on these exchanges here in Formulations (Autumn 1995, Winter 1995, Autumn 1997).

While FNF and LFC share goals, our approaches differ substantially. Even though LFC obviously has some money, their promotions and communications seem amateurish, garish, and sometimes vulgar. Since FNF strives to build a reputation for professionalism, in a movement which has been plagued with disreputable and almost-laughable scams, we did not find many opportunities for sharing with LFC.

I must add however that I never had any substantial aggravation with LFC. While odd, they seem to be generally decent people. Nonetheless, the frequency of FNF's communications with LFC diminished and now, for the last few years, communications have ceased almost entirely.

LFC's first project, establishment of a free city, faltered in the first year or so. They changed their approach and now emphasize development of cyberspace businesses, intended to help their customers achieve virtual freedoms.r

You can learn more about LFC at:
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Report on a Visit to LFC in San José, Costa Rica
by John Kingman

I judge the members that we met in San José, and most of the effort to be essentially legitimate—which was part of the overall concern I wished to answer. There are reasonable and real objectives, which seem like good ideas. The basic concept is:

1) provide an environment for like-minded (libertarian and/or objectivist) individuals to communicate and do business both with each other and with the outside world but through secure/private communications. A key concept here is that to a large degree participation can take place entirely over the Internet.

2) establish some core businesses and services which would facilitate economic activities and wealth creation. Such core services include encrypted/private communication servers (which, in addition to masking message content also mask sender/recipient combinations), a stock exchange, and a digital cash exchange.

The private communication service is useful although not new, as PGP users will know. An aspect of that service that is important and unique is that of routing messages whereby the sender/recipient pair is masked. For example, if I send an encrypted message to an offshore bank (Bank X) using my current Internet Service Provider, eaves-droppers would not know the content of the message, but they would know that I was sending encrypted messages to Bank X. Using the LFC private communications service, this link I am sending/receiving messages to/from would become invisible to the eaves-droppers.

The stock exchange (and ability to easily form a Laissez Faire City corporation) is especially intriguing to me.

And there are more "cyber" industries, services, and concepts floating around in the minds of the many young LFC computer workers in San José. I suspect many of those notions are just that: cyber or virtual only, with little chance of becoming a real thing. Undoubtedly however, there are genuine opportunities and concepts that these fellows can visualize—but that I can not.

In addition to the electronic businesses and services named above (my list is probably not complete), LFC has a real estate development project, a seaside resort along the western coast of Costa Rica.

We were not impressed by the initial introduction and portrayal of LFC and associated plans. In fact, Rich [Richard Kingman] and I were unimpressed to the point that we almost walked out, judging there to be little of merit in the organization. I believe the problem to be due in part to the fact that 'the vision' has been in the mind's eye of many of the LFC guiding members for so long and in such detail that they have lost the ability to effectively communicate or portray that vision to neophytes. I am sympathetic to this problem as I frequently suffer it in geophysical/technical conversations. However, the communications problem is more firmly rooted than in this difficulty alone. The on-site presentation of the LFC concept was made in vague, glowing terms, but was never adequately grounded in the real services and concepts that I have described above. There were also some glaring communications deficiencies in one specific case which, to be kind, reflected immaturity.

Fortunately, before giving up we met two LFC "netizens" who seemed to have their feet planted a little more firmly in reality and were very pleasant and easy to talk to—they made sense to Rich's and my way of thinking. One is currently living in the LFC community and seems to be quite happy and prosperous. My judgment that LFC has merit relies to some degree on my assessment of their characters.

The LFC headquarters is on Nicaraguan soil—the former residence (in San José) of the Nicaraguan ambassador. Now leased by LFC, it is in an attractive embassy neighborhood with embassies and diplomatic residences. Apparently Rex, an original founder, made the lease arrangements. Rex is said to have made, lost, and remade a lot of money over the years.

The original goal, when LFC was founded and the ads in The Economist taken, of forming a physical "Galt's Gulch", has been put on the back-burner. This goal is judged, by the present guiding (cyber minded) members, to be valid for the long term but to have little chance of bearing immediate fruit. To some degree, however, the present location in San José does form a miniature Galt's Gulch. I sense that there may have been some investors' funds lost and otherwise bitterness related to the changeover from the original LFC founders to the present young generation of drivers.

The de-emphasizing of the Galt's Gulch objective is a key strategy. I believe it fair to say that most LFC members judge tactics such as those of the Free Nation Foundation to be looking too far in the future; i.e. they are anxious to pursue more immediate rewards in the quest for freedom.

We met about eight members. All are working on the various projects underway. There is a practice amongst some of the members to operate under aliases—perhaps to promote the notion of privacy. We didn't ask as to the purpose.

An interesting discussion, which unfortunately may speak volumes as to the viability of the LFC plans as currently managed, pertained to the cause and effect relation between financial services and primary (or core) services and products. Cyber financial services (whatever that means) were held as one of the more important industries that LFC would like to develop. One of the guiding members, if I understood correctly, espoused the notion that we have airplanes and cheap food because lending institutions exist-and not vice versa. I disagree with that notion and reckon that errors of this type (in the fundamentals) ultimately limit one's ability to progress. You may recognize a bit of my Objectivist background peaking through here. We found that with some members there was little room for discussion or debate in these matters.

Rich and I did some real estate shopping and were generally impressed with value reflected. A beautiful 600 square meter "mansion" on a hillside overlooking San José (recently built by a Lee blue-jeans executive who was subsequently moved) was going for $350,000. I will be giving serious consideration to moving down there this year.

Also, while in Costa Rica we were able to meet with Rigoberto Stewart for a little over an hour (too short) and both were favorably impressed. We both intend to return and get a guided tour of the Limón region by Rigoberto and consider purchasing land there. As you know, his enthusiasm is engaging. He estimates 80% probability of success in his endeavors. Apparently Costa Rica has a significant number of Libertarians in federal offices, with popularity and visibility increasing rapidly.


To summarize:

1) There are some good ideas being generated and pursued at LFC. Open lines of communications between FNF and LFC should be maintained.

2) Energy and enthusiasm are clearly there; maturity and level headedness are, in some cases, not. The official lines of communication within LFC, especially for dealing with LFC visitors, need strong improvements. To me this deficiency was evident in the LFC web page when I last checked (January 1998)—it is vague and does little to satisfy the curious or interested. D


John E. E. Kingman is a geophysical engineer who spends much of his time working on contract in Australia where he has helped design and build a new geophysical system for the mining exploration industry. He specializes in electrical geophysics, signal processing, and drilling dynamics. He can be reached at:

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