The homeland is its people and its institutions

By: Hugo Marcelo Balderrama - 10/08/2025

Guest columnist.
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In Latin America, it's often said that our eternal problems are a legacy of Spain, from having been a colony. However, when the Spanish Overseas Provinces were under the administration of the Mother Country, cities like Lima, Buenos Aires, Potosí (present-day Bolivia), and Havana were among the most developed in the world. So what happened?

The great Argentine patriot Juan Bautista Alberdi, in the mid-19th century, offered the best explanation: the newly formed nations of the Americas had not designed their legal systems to guarantee the freedom and progress of their inhabitants, but rather to perpetuate local leaders in power. For example, the constitutions of Peru, Paraguay, Mexico, and Bolivia contained very restrictive articles for foreigners, especially if they were businesspeople, investors, and Protestants. Zero freedoms for citizens, too much power for rulers.

Likewise, the Tucumán hero taught that a nation is not merely its territory. However beautiful the salt flats, jungles, mountains, and rivers may be, they are a mere coincidence of nature. A nation must be built, and for that, it requires entrepreneurs and good men. In essence, a nation is its people. Hence, the Argentine Constitution of 1853, which owes its birth to Alberdi, established property and liberty as its fundamental pillars. They fared wonderfully until Perón appeared in the forties of the 20th century. The rest is history.

In the 1970s, Douglas North, Nobel Prize winner in Economics in 1993, explained that institutional frameworks, including the legal system that guarantees the right to private property, are the true factors that explain the success and wealth of nations. In his own words:

A discrepancy between private and social benefits or costs means that third parties, without their consent, will receive some of the benefits or incur some of the costs. This discrepancy occurs when property rights are not well defined or enforced. If private costs exceed private benefits, individuals will be unwilling to undertake the activity, even if it is socially profitable.

In short, technological innovation, capital accumulation, growth in business productivity, improvements in education, and increased investment will only occur when nations have built institutional frameworks that respect and safeguard private property.

Friedrich von Hayek came to a similar conclusion, as this other great economist stated: "The system of private property is the most important guarantee of liberty, not only for those who have property, but hardly less so for those who do not."

My native Bolivia just celebrated its 200th anniversary of independence. It did so amid inflation, according to official sources, hovering around 15%; a 50% devaluation of its currency against the dollar; and an energy crisis that keeps citizens waiting in lines at fuel pumps for up to three days.

But that's not the worst of it. Those who present themselves as "saviors" continue to peddle the narrative that natural resources, especially lithium, will be our ladder to development. They seem to have forgotten that Evo Morales and Arce Catacora stole no less than $1.2 trillion from gas sales. That was the country's greatest historical opportunity to enter the ranks of developed nations, but nothing happened. Sorry, in reality, we've regressed in freedoms, increased corruption, and grown in poverty.

In fact, over the past 20 years, more than 3,000 Bolivians have left the country as a result of political persecution by the MAS. However, the greater number was the voluntary exodus, those who left for one reason only: fleeing poverty. According to 2022 data from the United States Census Bureau, it is estimated that around 142,108 Bolivians live there. To put this in context, there are more Bolivians in the northern country than in departments like Pando, whose population is 130,761.

In closing, allow me a personal confession. My relationship with my homeland is very complicated, as I am the first to criticize many, many, Bolivian customs, but I also hope to see it prosperous and free one day. I also hope that one day, hopefully I can witness it, families will be reunited, that no Bolivian will ever again be persecuted or suffer poverty. Therefore, my work in teaching and research can be summed up as follows: as an economist and professor, I seek to help my readers and students understand that the true wealth of a nation is not its territory or its natural resources, but its freedom.

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