Serious consequences of the second Christmas bonus

A well-thought Editorial from El Diario:

The second Christmas bonus offered by the government for both the public and private sectors will be $4,751 million Bolivianos ($682.6 million dollars) more or less, which, in the conditions of poverty in which the country is debating, results in a expense contrary to any foresight of judgment and prudence. To pay that amount that although it will personally benefit those who receive salaries or monthly salaries, is counterproductive to the economy.

Only the public sector will spend the sum of 2,665 million bolivianos in the “double Christmas bonus” and, almost certainly, it will do so on the basis of using part of the reserves, loans contracted abroad and charged to the deficit; on the other hand, the private sector will have to do so by contracting loans or using part of reserves that it has achieved for clear purposes: replacement of machinery, purchase of raw materials, increase in production, diversification of work and, almost certainly, increase in employment; In other words, the private sector will have to be restrictive in everything that it should do or had the intention to carry out.

The consequences of the double Christmas bonus are many: first, business profits will decrease; in the second, it will lead to the reinforcement and growth of contraband; third, it will prevent the creation of new jobs and, in some cases, see if it continues to maintain the current payrolls; fourth, it will discourage both domestic and foreign investments; fifth, it will increase production costs; in sixth place, it will cause the public sector to increase the deficit; In general, poverty will increase.

Some authorities believe that the double Christmas bonus is, in the current circumstances, an investment and the truth is that it is, in every way, an expense; spending that will determine that costs rise and what occurs in goods and services have higher costs than in trade will lead to increases in the prices of everything sold. The double bonus will benefit those who receive it and will not always invest it or convert it into an instrument that implies personal and less general financial development. This benefit will contribute to weakening the economy of service companies and to the commerce that sells products of use and consumption; but more to the short that in the long run, it will complicate the business economy and will aggravate the poverty of many sectors.

In addition, the double Christmas bonus is discriminatory because it favors only a part of the population leaving the rest, which is the majority, without the benefit. Finally, the measure will cause an inflationary process that could have unpredictable consequences because, almost certainly, the cost of living will increase from the first months of next year, if not before.

To dictate this measure, is nominally beneficial for few and contrary, for its consequences, for the most, just for electoral reasons, is not fair, neither convenient nor responsible.

Three cartoons from El Diario also illustrate this demagogue, manipulated and not a sustainable bonus. This one is from  10/16/2018:

It shows how the street vendors raise prices as soon as the second Christmas bonus is approved.

This one is dated 10/11/2018:


It shows a worker telling the economics minister he does not want to get the second Christmas bonus, as he was let go and prefers to keep his job.

This one dated 10/15/2018:

Here the taxi driver says: “I’m charging you double because of the double bonus … you know what is it about…”

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