Quo Vadis Bolivia 2025

By: Hugo Marcelo Balderrama - 11/08/2024

Guest columnist.
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Bolivia, August 6, 2024, year 199 of independence, the local currency lost 50% of its value against the dollar; Queues for fuel are an everyday occurrence; Savers saw their life's work disappear from the government, and inflation destroyed citizens' salaries. There is nothing left standing, although our idiosyncrasy makes us hide misfortunes in the midst of alcohol, loans and carnivals.

Obviously, many are looking for culprits. There are. In reality, it is only one. Different authors, including Axel Kaiser and German Arciniegas, explain that Hispanic Americans are prey to a Populist Ethos.

This Populist Ethos is a five-headed monster: 1) Contempt for individual freedom and a corresponding idolatry for the State. 2) Victim complex, since we always blame others for our miseries, the United States, Spain, the patriarchy, etc. 3) Contempt for the free economy, since, in relation to the previous two, we expect the State to solve all our pecuniary and material problems. 4) The falsification of the concept of democracy, since all totalitarian projects have been camouflaged as democratic to achieve their nefarious ends, Evo Morales and Hugo Chávez, for example. 5) Envy of other people's success, or egalitarian obsession. Let's admit it, we are more concerned about other people's failure than our own progress.

All of the above has a consequence at the political level, because any moderately charismatic character, using hollow promises, wins elections and establishes a dictatorship. Rafael Correa, Hugo Chávez, Evo Morales or Néstor, el narigón, kirchner are typical cases of caudillismo and populism.

So how do we explain the apparent economic successes of the past decade in Bolivia?

Latin America, in general, and Bolivia, in particular, was favored by the economic context: high prices of raw materials and its effects on the favorable terms of trade.

However, despite this stroke of luck, the national economy was not diversified. In fact, investments were not even made in exploring new gas wells. Ergo, Bolivia's growth was due to excessive Public Spending, the GDP trap, but not to an increase in productivity, much less an improvement in competitiveness. In simple terms, Evo and his henchmen hit the jackpot, which they then squandered on white elephants.

However, starting in 2014, with the fall in the price of tin, hydrocarbons and other commodities, the beginning of the exhaustion of the expansionary cycle of the international economy and the prices of raw materials was marked, and thus, the beginning of a cycle economic slowdown in the region. Something that the coca grower himself admitted in December of that year.

However, there was no prudence to put an end to the partying, the waste and the joke. It happens that, for conventional economists, economic cycles are not a consequence of the harmful intervention of the State, but rather respond to "natural" conditions, which then, as if by magic, fix themselves. So, there was no need to worry about falling gas prices or lack of income, we could resort to debt. In short, when things improve, the debts will be paid.

That was Arce Catacora's way of thinking when he was Minister of Economy and now that he is in office as acting dictator. We are in the hands of a guy incapable of looking at the disaster he himself caused, worse yet, of assuming that things are bad.

Quo vadis Bolivia

It is neither Cuba nor Venezuela, it is Bolivia, and it is much worse.

«The opinions published herein are the sole responsibility of its author».