En Mexico: We Have Lots to Learn from the Rest of the World

I’ve been the subject of much affection on the internet. Just the other day someone confused me with Richard Cranium! I don’t mind ad hominem attacks or clever sobriquets, but if the name is just wrong, I have to fix it. One of the most stubborn epithets attaches to me that is wrong is libertarian. But my time in Mexico is leading me to believe maybe I’m wrong. Perhaps rules of any kind are the enemy. Or maybe we have a lot to learn from San Agustinillo.

My trip to Mexico began at 10PM in the Seattle airport with a change of planes in Mexico City. Then I managed to avoid a long scheduled layover and caught an earlier flight to Huatulco. From there, it was a wending hour long ride toward the coast and the small village of San Agustinillo.

Before I left Huatulco, I was advised to get as many pesos as possible; San Agustinillo is an all cash economy. There are few cash machines and nobody uses cards. I was glad I got the advice and took it, because the town we passed through just up the road was hosting a jazz festival; the lines at the cash machines were down the block.

There is only one, narrow road through San Agustinillo, a town about five blocks long with a beach on one side and a slight hill sloping up the other. To the north is Mazunte, a slightly bigger town and the location of the jazz festival and about a 15 minute walk.

Two things I’ve noted. Prices are low and innovation and entrepreneurship is high. Breakfast on my second day, huevos rancheros, an americano, and a bottle of water; total price 105 pesos or about 5 American dollars. I typically pay $4 for an americano with an extra shot at home.

Also, there is lots of selling and buying. On the beach one is occasionally approached by someone selling something; sweet bread (pan dulce or just “pan”), jewelry, other food items, or clothing.

Now I can hear an angry, white, American voice in my head saying, “These are among the poorest people in the world. Of course they’re selling. What else can they do? There’s no jobs. Sad!”

I’m not convinced. Someone in the States is reading some New York Times article packed with statistics about how the rest of the world is suffering. It’s called American Exceptionalism and it is a stubborn disease with no known cure other than travel and real world experience. The most common symptom is assuming everyone else in the world wants what we have quantitively (more wealth) and qualitatively (a nice, safe job).

Leftist exceptionalism sees swarms of dark poor people yearning to be like us; what characterizes it is it’s assumption that we, or more accurately white, male republicans and he corporations they run, are responsible for the suffering of the masses. Right leaning exceptionalism tends to see the source of the masses suffering as home grown, things like misgovernment and over population.

Here’s a thought: maybe the rest of the world isn’t as miserable as some of us think. And another thought: They do capitalism far better than we do.

Here’s the case of the ironically named Collectivo, a pick up truck with little shack like structure on the bed that works as part of the local transportation system.

I haven’t deeply studied the Collectivo but such an operation would be strictly prohibited in the United States. One can only imagine the pears that would be clutched in Seattle if a guy put a shed on the bed of a truck, a couple of benches on either side, and some rails to hang off the back. Dios mio! Add to that picture that it’s a cash business and there appear to be no unions involved. I’ve checked, but the sense is that there is some regulation to the trucks and the taxi cabs that pick up people as they go, cramming as many as seven people in a car.

This improvisation is driven by the need for low cost transport between towns, and it appears very competitive and efficient. I asked a local how many people have been killed in accidents. None. One person fell off the back of the truck, but he had a heart attack.

How about the low prices?

I’m no economist and I have done zero formal research, but I’d say that it’s because labor is plentiful and there are plenty of jobs doing various things. There is also likely limited demand; it’s a hard place for tourists to get to. Taken together, scarce land but lots of labor and modest demand for services means prices are very low. The beer on the beach is cheap compared to the US but the proprietor runs the place themselves and probably has fewer regulations and codes to comply with.

Even at a $1.50 a bottle the owner makes $18 for 12 beers, and in Seattle a 12 pack at a grocery store sells for about $14.00. Even at that retail price, the sale clears about about $.30 a bottle. Not much, but remember everything is cheap here.

Maybe there is some dynamic I’m not aware of that keeps people trapped in this tiny coastal town working for as little as $2250 pesos for a seven day week — the pay of a security guard I heard about. Perhaps everyone here would rather live in a frigid coastal city up north, with wet feet caused by rain not salt water, and ride in very safe buses with well paid drivers that would deliver them to a job paying $22.50 (about $17,000 pesos a week, almost 10 times what the security guard makes) an hour in a cube in building downtown.

There is absolutely no doubt that this is a poorer country. But that doesn’t mean the people are miserable. Nor is their success at meeting local needs the basis for ignoring imbalances in the world economy; would the cynical dweller earning $22.50 an hour immigrate illegally to a foreign country where she doesn’t speak the language and would face racism and harassment for $200 an doing the same job? Not unlikely.

But we can learn that relative poverty does not necessarily mean misery, and fewer rules and fewer taxes (taxes are hard to collect on cash transactions) mean poorer people can get into the economy must faster and make a living building their own solutions to local problems. From the perspective of small business, compared to Mexico, the United States seems like an oligarchy controlled by people with lots of money and a government that has rules and taxes that keep small players out.

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