Latin America

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Jorge's picture

This piece over at LRC is making the rounds. So far I have seen it at Claire Wolfe's and at The Picket Line. Plus a couple of people have emailed me the link asking my opinion.

It is mostly an OK piece, but for the most part it treats Latin America as a monolith, which it is not, and it neglects to mention several "Elephants in the room".

I will start with the Monolith. The days of "Con factura o sin factura?" (with or without invoice) are gone in many places. Sure, in Paraguay, Peru and Bolivia it is probably still common, but in Costa Rica, Panama, Chile and many other countries the tax departments have become much more efficient. It is now no longer just the large multi-nationals that have to pay tax, but almost all formal businesses, which operate from a fixed location.

The author does not mention the country in which he had his dental work done. The price he gives is great, and about 60% of what it would cost in Costa Rica. I know that in Ecuador dental work costs about 50% of what it does here. Even within the same country, or city, prices will vary. Latin America is in general much less expensive than the US for medical care, but this is true of Asia as well.

His comments on driving do not apply anywhere that I have been in Central America. Road rage happens. Accidents at intersections with either no, or non-functioning, traffic lights are a daily occurrence.

I could go on, but want to address what he did not say. Yes contempt for the State exists, and yes government work is not honorable. That does not translate into a libertarian ethos. Especially in the poorer countries. In these countries there are two classes, the oligarchs who are the connected rich, and the poor. The middle class is tiny by comparison. The majority of the people are poor and they see anyone with wealth as an oligarch that they can legitimately steal from. There is no respect for private property. And that makes sense. Those who have wealth have for the most part stolen it. The problem is that the population does not distinguish between those who have earned their money and those who have stolen it. Petty, and not so petty, theft is rife.

In fact, if you view respect for property as a fundamental aspect of Freedom then his ranking of the Latin American countries is almost exactly backwards. It is in the more developed countries where there is a real middle class, and it is in these countries where the people have a greater respect for private property. Most likely because there are many people who acquired it honestly.

The worst piece of advice he gives is "Don’t spend a lot of time studying their laws." This is true if you intend to live as an outlaw or sojourner. Travel light, rent places that are furnished, be ready to leave at any time and do not be too concerned if they deny you entry at the border because you have entered as a tourist too many times. But even then, I would pay attention to the laws. Want to carry a gun? Every country in Latin America requires registration, but it is easier is some than in others, and the penalties for violating gun laws vary widely. Want to smoke pot? It is actually legal in quite a few, illegal in others. Yes the laws usually not enforced, but every once in a while the state needs to put on a show. They then enforce the laws against those with no political clout. Namely foreigners.

If you intend to settle, to raise a family, to have a business, to be part of a community, then pay attention to the laws. Even if you plan to break them. Know what you are doing. Know what the downside is. Have a plan to deal with it.

While you should pay attention all laws, pay close attention to the tax laws. The IRS has signed agreements with many Latin American tax departments to share information and to provide training. Including some you would not expect, such as Ecuador. Quite a few Latin American countries not only tax world wide income (including dividends and capital gains) but also have global wealth taxes. Essentially, "How much are you worth? Give us a piece." Often foreigners are assumed to have wealth outside the country.

Do not forget that if a law is on the books it will be enforced against someone eventually. Do your research, understand the risks.

All that having been said, I do recommend that people checkout Latin America. In most countries the level of day-to-day freedom is very high. The people are in general easy going and friendly. There are many places that can be great to live. But everyone has to do their own research, using their own criteria. No place will be perfect. There will be trade-offs.

Just please do not accept posts like the LRC article, or this one, as gospel.