Atlas Mugged: How a Libertarian Paradise in Chile Fell Apart | VICE | United States
It was a good idea, in theory anyway. The plan was to form a sustainable community made up of people who believed in capitalism, limited government, and self-reliance. The site was already picked out: 11,000 acres of fertile land nestled in the valleys of the Chilean Andes, just an hour's drive away from the capital of Santiago, to the east, and the Pacific Ocean, to the west. Residents could make money growing and exporting organic produce while enjoying Chile's low taxes and temperate climate. This was no crackpot scheme to establish a micronation on a platform floating in the middle of the ocean (a common libertarian dream)—this was a serious attempt to build a refuge where free marketers and anarcho-capitalists could hole up and wait for the world's fiat currencies to collapse. They called it "Galt's Gulch Chile" (GGC), naming it for the fictional place where the world's competent capitalists flee to in Ayn Rand's Atlas Shrugged.
The project was conceived in 2012 by four men: John Cobin, an American expat living in Chile who once ran unsuccessfully for Congress in South Carolina; Jeff Berwick, the globe-trotting founder of the Dollar Vigilante, a financial newsletter that preaches the coming end of the current monetary system; Cobin's Chilean partner; and Ken Johnson, a roving entrepreneur whose previous investment projects included real estate, wind turbines, and "water ionizers," pseudoscientific gizmos that are advertised as being able to slow aging.
That initial group quickly fell apart, though today the principals disagree on why. Now, two years after its founding, the would-be paradise is ensnared in a set of personal conflicts, mainly centered on Johnson. Instead of living in a picturesque valley selling Galt's Gulch–branded juice, the libertarian founders are accusing one another of being drunks, liars, and sociopaths. GGC's would-be inhabitants have called Johnson a "weirdo," a "pathological liar," "insane," a "scammer," and other, similar things. Some shareholders are pursuing legal action in an effort to remove him from the project, a drastic measure for antigovernment types to take. Johnson, who remains the manager of the trust that controls the land, claims all the allegations against him are false. So what happened?
Like most prospective utopias, Galt's Gulch Chile started out on a positive note, at least after Berwick and Johnson broke from Cobin. Johnson was a savvy salesman, and it turned out that the somewhat apocalyptically minded people who read Berwick's newsletter were intensely interested in the prospect of a South American sanctuary. For those who think that Western nations are turning into the world of Atlas Shrugged—dominated by parasitic governments, hostile to innovation and job creation, and on the verge of totalitarian socialism—GGC looked pretty good.
You could just sense something was amiss," said Kirley. A question-and-answer session for investors got rescheduled, and when his guests confronted Johnson about the problems with GGC, "he just told these ridiculous stories about all these enemies of the project and how Jeff Berwick was an enemy of the project, which made no sense."
The investors took to the internet with their doubts about Johnson a few months later. McElroy, the Canadian activist, published a blog post on August 25 alleging that GGC owed "immense debts" to Chilean vendors and that she had been sold a lot that she couldn't live on because of the zoning issues. Days later, Berwick published his own account of events on his website.
Berwick had apparently come to Johnson several times in 2013 with complaints about the project—he was worried they were selling lots before GGC had paid for the land, and that the property wasn't zoned for the residential properties the company was handing out. But Johnson convinced him that his fears were unfounded, and none of those conflicts became public. Berwick said they had another fight when he found out that Johnson had transferred control of the land from a company the two of them had owned jointly into a trust that Johnson controlled. (The former partners also have a number of disagreements about non-GGC-related business, and each complains that the other has cheated him in various ways.)
Berwick, Kirley, McElroy, and others involved with GGC have accused Johnson of not paying his staff or vendors, of physically assaulting an employee, and of not delivering on his promises to get the land rezoned so people could live on it. They claim that Johnson traveled around with $250,000 of the investors' money in cash, which he kept in a backpack he'd sometimes leave in his jeep; that he drank in bars and gambled on roulette with their money; that he fed his dog imported salmon; that he may have been involved with scams to sell phony passports; and that he still refuses to disclose the full list of investors in the project. Kirley says that he and 11 other major investors are owed, collectively, more than $4.3 million, and the group is now filing an injunction in Chilean court in an effort to wrest control of the Gulch from Johnson. They still believe in that original vision; they just don't think it can work unless they replace the man at the top.
"We are very happy to offer the respite from the Western world of oppressive governments to freedom-minded people in which they can build a new, more prosperous community," Berwick wrote in May 2013. Wendy McElroy, a Canadian libertarian feminist activist and writer who bought a lot on GGC, followed that up with her own blog post that said, "It is now time for a libertarian exodus that will not take you away from your true home, but toward it." Johnson wrote about "sitting under the stars, inhaling the fresh air and sipping on some Yerba Mate, made with fresh clean Galt's Gulchwater." Discounts were offered to those willing to pay in Bitcoin or precious metals.
People bought it, and bought into it. In November 2013, GGC hosted a celebration on the property, bringing in shareholders, and those interested in becoming shareholders, to view the land and meet one another. Josh Kirley, a commodities trader who was considering making an investment, was impressed by the quality of his potential neighbors.
"These were people who had made money in oil, had made money in real estate. They were former academics, former military. They were very liberty-minded people: non-litigious, hard-working, self-made, intelligent," he told me. "It was the people I met there that sold it to me."
After paying attorneys and investigators to perform a background check on Johnson and make sure GGC held the title to the land, Kirley bought land in the Gulch that included a 25-acre lemon farm for $200,000, and he gave the project an $800,000 interest-free loan. He wasn't the only one putting down serious money: In December 2013 the Economist published a mostly positive write-up of GGC that claimed Johnson had brought in $1.5 million in sales in Bitcoin alone.
Earlier this year, however, it became apparent that something was wrong. In April, another event was held in the Gulch, this time, supposedly, so some buyers could pick out the lots where they would live. This wasn't possible, however—the land wasn't zoned for the 1.25-acre lots that Johnson had sold to many investors. The plan was to rezone the property, but that hadn't happened yet. In addition, according to Kirley, a number of houses that were supposed to have been built were unfinished.
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