Why Foreigners Fall for the Evo Morales House of Cards

Roberto Ortiz superbly describes how current ochlocracy is ruling Bolivia:

Why Foreigners Fall for the Evo Morales House of Cards

Statistics Gloss Over Bolivia’s Lack of Development, Bubble Waiting to Pop

Roberto Ortiz November 12, 2014 at 8:14 am

Roberto OrtizGiven the expected victory of President Evo Morales, there are many people — in most cases not Bolivians — who believe and claim that his victory was due to a well-managed executive branch, in addition to exemplary economic policies.

For their part, international organizations such as the International Monetary Fund (IMF) and the World Bank (WB) have given rave reviews about the country’s economic growth in the nine years that Morales has occupied the presidency. They have also referenced the increase in government spending and social campaigns that Morales promotes.

Back in the world of reality, many Bolivians are irritated to read such publications on the internet, which can be immediately dismissed as misleading or outright fabricated. Unfortunately, despite the good reviews from abroad, the situation in the country is another matter altogether.

That situation is relatively unknown outside Bolivia, because if there is one thing that Evo Morales knows, it is how to sell a different country to foreign media and his peer presidents. A Bolivia with increased economic growth, a Bolivia that is safe for people and for companies, a Bolivia where human rights are respected, and a Bolivia where everyone is happy with the crony capitalism and mercantilism that is practiced.

Those leading the transition to socialism have been very adept at building smokescreens during this period and isolating the country from foreign scrutiny.

For those people who eagerly awaited a Morales victory, it is easy for them to conclude that the president has done a good job. They focus on particular numbers while ignoring the sources and, above all, the hard facts.

This oversight may not even be intentional. The numbers provided by the WB, the IMF, and the Bolivian state can be very misleading. That is particularly the case if you do not know how to jibe them with the Bolivian reality, the history of touted economic growth, and public expenditure. As any economics professor would say, there are many differences between measured economic growth and genuine economic development.

Let’s refute the comments of these innocent people who have fallen into the trap of statistics.

1. Economic Growth in Bolivia, No Development

Published economic growth and actual economic development are not equally desirable, and one can say that in Bolivia we have only economic growth. What kind of economic growth? A very fragile and unstable kind, since the only driver of it has been gas exports, which are running out, and the relevant prices are highly volatile on the international market.

Even in the case of measured growth, Evo Morales has been the beneficiary of nationalization policies for hydrocarbons and mining applied by previous administrations. This economic growth would have happened regardless of his presence, so praising Evo Morales for “recovering our gas from the imperialists and transnationals” is a fallacy, pure demagoguery.

Once we understand the source of the growth and its recipients, it is necessary to analyze how it is being spent.

2. Money in Bolivian Pockets, No Generation of Wealth

Having so much money in our pockets is practically the dream of all the leaders with 21st-century socialism on their foreheads.

Given the rapid growth of the budget surplus — five times greater than it was in 2005, when Morales took office — it was very easy for him to spend a few crumbs of the cake on social welfare. These have kept many poorer members of the population subsidized and happy, such as pregnant women, the elderly, children, and therefore, their parents.

I say crumbs, since only about 2 percent of the budget is allocated to social welfare, known as the dignity rent bonus (bono renta dignidad), the Juancito Pinto bonus, and the Juana Azurduy bonus. Two of these forms of welfare existed before Morales took office.

Furthermore, most of this spending — over 70 percent — gets gobbled up by public administration, the military, and state companies. Yet each year these intermediaries almost always manage to find themselves in the red.

The reason why the military and the police receive so much money is unclear. However, it is widely known that in Bolivia these security forces live in appalling conditions and are corrupt and inefficient. This is apparent, given that they and the state apparatus appear blind to insecurity, drug trafficking, and human-rights violations.

3. Political Patronage, No Economic Policy

Morales’s economic policies include a higher minimum wage, a lower retirement age, gimmicks like the “double bonus” before Christmas, and many attempts to regulate prices.

These economic handouts receive high praise from many Bolivians employees. However, the entrepreneurs, the real generators of wealth and opportunity, have had to make many layoffs, salary cuts, and in many cases simply close their operations.

Bolivia may well be enjoying strong revenues from natural gas. Nonetheless, if we want a healthy economy, we should not let the money in our pockets blind us, and we should look deeper than the most superficial indicators. The vast majority of the problems in Bolivia remain unresolved. In fact, the Morales government is increasing them. Despite having five times more budget surplus to work with, we do not see five times more schools, hospitals, roads, public safety, nor five times more justice.

Even our economic problems have yet to be addressed. A little bit of luck with market prices, a lot of internal debt, and an absurd and costly bond issuance maintain a thinly veiled bubble that plays with the minds of innocent constituents.

Finally, the assertion that Morales has lowered poverty is relatively speaking and deserves context. The truth is that Bolivia and its people remain poor, because Bolivia is not generating wealth; what is extracted from the ground is not capital and is not renewable. The extra money the poor have now, which “justifies” the misguided opinions of many socialist evangelists, is only an illusion that will soon come to an end.

Translated by Rebeca Morla. Edited by Fergus Hodgson.


Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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