April 28, 2010

Last word on Bolivia

Bolivia, love it or leave it.  I did both.   Bolivia was the most fascinating and the most frustrating of all the countries I have visited so far.

Imagine a world with no stores, no Safeway, Sears, Walmart, Kmart, Canadian Tire, Home hardware, not so much as a 7-11 not even a 3 aisle IGA.   No real restaurants either, no fast food franchises, no upscale steak houses, no Earls no Appleby's and no Starbucks.  Their long vacant premises have been turned into flea markets where you can buy all the ladies shoes, cell phone accessories, belts, dollar store items and pirated DVDs you might want.  You buy all your food in  bulk from the same place, rows and rows of dead chickens and pieces of cow and pig that have never seen a refrigerator, potatoes, corn and rice from independent vendors.  Bring exact change, because the seller won't have any.

That is a typical small town in Bolivia.  Things are only marginally better in the large cities I visited, La Paz, Oruro, Potosi or Sucre.  Don't forget your roll of toilet paper when you go out.

Bolivia is also where you can drive on the worlds largest and highest salt flats, find near Everest height mountain peaks, see toucans and parrots in the wild, scare yourself silly on single lane roads that are the highest anywhere, visit rain forests, alpine tundra, high dry plains, see incredible vistas, encounter snow in the altiplano just a few hundred kilometers from the steaming amazon jungle, Bolivia has it all.

Most will never experience it, not even Bolivianos.  Travel is difficult, and it will wear you and your vehicle out.  I got very bad advice when asking about roads and directions.  I later realize that the people who are telling me where to go and what to do, have never been there.  Oh yes that is a good paved road (no, it isn't, it would break your car in half).

Bolivia and Bolivianos are unique, they do things their own way, without much  thought about how things might be done elsewhere.  People who think taxes are nothing but a ripoff need to spend a month or two in Bolivia.  I am told that nobody pays taxes, which may or not be true.  What is definitely true is that Bolivianos enjoys very few of the benefits that we Norte Americanos expect from our tax dollars, and the ineffective government neither know or cares which of its laws and regulations are being broken or followed. 

Unpaved major highways (with tolls!), no road signs, no street name signs or numbers, water that is not safe to drink, a police force that does little more than look natty in their sharply creased uniforms, zero public transportation, no zoning, no building codes or inspectors,  kids running around in the streets when they should be in school, beggars with no legs peeing on the sidewalks, pigs, chickens, goats, cows, goats, horses running loose everywhere, horrible bus accidents on unpatrolled unsafe roads, life in Bolivia is never boring.

What is really ironic, the people who cry the loudest about taxation and regulation in North America, entrepreneurs, small business operators and the middle middle classes, are not reaping any of the benefits from zero taxation and zero government regulation in Bolivia.  Because they, as a class, don't exist.   In Canada and the US, this economic class provides most of the jobs and wealth for ordinary people.  In Bolivia, there are very few jobs because there are few businesses.

What employers there are, are mostly large business and government, and a handful of people in the hospitality industry catering to the tourist trade.   What supports most people is hand to mouth one person 'micro business', stall vendors, small (one person) construction contracting, one person mechanical repair and service shops, taxis and independently owned buses, family run one menu item restaurants and the tiendas, little stores that sell liquor, cigarrettes, pop, cookies and a few food items through a barred door in their homes.  Drugstores (Farmacias) are about the only type of business that thrives.   Miners, (minerals are a major source of Bolivia's wealth) are self employed members of cooperativos, choose to work under appalling conditions that recall the worst of the 19th Century mining industry.  Farmers still farm the way farmers farmed before machinery, all muscle power, theirs and animals, oxen teams, horses and burros.  About the only machine power in agriculture is transportation to market by truck and bus.  Textiles are spun and woven by hand.  Ladies walk down the street making yarn on a spindle as they go.

I saw a bit of the same in Peru and some of the Central American countries.  What became clear to me after Bolivia, is that the part of the population that is responsible for the most growth in an economy is very dependent on the infrastructure provided by competent government, particularly at the local level.  In Bolivia a brand new multimilion dollar drilling rig sits beside the only 2 km stretch of paved road for 100 or so km each way on highway six, there are also signs telling the crew where everything is. It is clear that the drilling rig contractor either provided paving and signs on the roads they used, or insisted that somebody else provided it.  A small business does not have that kind of ability or clout.  Small and medium businesses need a dependable, stable infrastructure that will enable their goods and services to reach the it and its markets, in other words, reliable transportation with minimal delays, security, communication networks,  a stable finance industry, fair and enabling regulation of commerce, plus the education and training that provides a labor pool that will provides businesses with competent employees.

Large business will create its own infrastructure if it is profitable to do so, and depart when profitability does.  Micro-business makes do with what is available but is unable to grow to the next stage if conditions are poor.  Large businesses make their owners and shareholders wealthy, wherever they might be, usually nowhere near the grubby source of wealth creation, micro businesses feed only their operators. Small and medium businesses feed the community and the nation as well as keep their owners in luxury well beyond the average, despite bearing the brunt of the tax burden.  To grow prosperous, small and medium businesses need a stable environment with the infrastructure and long term stability for supporting small and medium enterprise, because this egg must come before this chicken.

Bolivians would not have it any other way than how it is, supposedly.  Landlocked, isolated by their geography, few seem to care how the rest of the world does stuff.  I don't want to judge, if they are happy, I am happy they are happy, but I will say that the way things are in Bolivia would not be my choice, and I would be miserable if I had to live here permanently under present conditions.

Some (many) blame President Evo and his MAS (socialist) party.  The Honorable Evo does not impress.  MAS have been in power since 2005, but the decay in Bolivia is more than 5 years old.  The previous government went down the Thatcher  - Reagan, less government private sector is best path.  But what troubles Bolivia is not which hue of the political spectrum is pulling the strings, it is that no one is pulling the strings, because there are no strings to pull.

So, anarchists, tea partyers, libertarians, Fraser Institute think tankers, buy yourselves a  one way ticket to Bolivia and experience the regulation free, tax free utopia of your dreams.  Lemme know how it works out.

re the lead picture, what you are looking at are sidewalk vendors selling hardware items.  What you can't see is that behind them is a hardware store whose owner presumably has invested in a store, shelving, inventory, probably pays some form or business tax as well as rent or invested capital in a building in order to sell his or her goods.  How long do you suppose this situation would last in the community you live in?

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