Friday, July 18, 2008

Viewing the economy

Here is a set of contrasting views about the economic situation in El Salvador. First, the view of the ARENA government as described in an article from the Washington Times on July 17:

Vice Minister for Foreign Affairs Eduardo Calix appears not overly worried. He recently noted that "the election is still a long way off" and finds it difficult to believe a majority of voters will back the FMLN. "The election will be a battle between our democratic system and their revolutionary system, at a time when the country is having unprecedented peace and prosperity. Backed by Venezuela and others, the FMLN want to completely change our economic and social system.

"It will be a passionate campaign," Mr. Cadiz acknowledges, "but the FMLN cannot ignore the improvement in the lives of most citizens over the past several years, and they cannot resort, as before, to violence - the government will not permit it. El Salvador enjoys political security and a solid financial situation, and Salvadorans know the government is working to continue the rising prosperity, sound employment, steady food supply and fairly priced gasoline. We have a steady flow of illegals from our neighbors - and we need them. Migrants move where they see opportunity, and with such a low unemployment rate, we need qualified workers at all levels in most sectors."

Compare that upbeat assessment with the reporting of the Los Angeles Times today in a lengthy article about the impact of soaring food and energy prices and the global economic downturn on Latin America in general and El Salvador in particular. The article includes stories of Salvadoran families struggling to get by:
Maria and Jose Lopez, squatters who live with their three children in a two-room cinder block house perched on a hillside in this gritty Central American capital, are among those feeling the strain. This year, they scraped together $148.50 for a down payment on their own place in this hard-luck area, which is aptly named Thin City. But their dream of homeownership has long since vanished. The new priority is simply to eat.

Like most of the world's low-income people, they spend the largest chunk of their wages on food. Basics, including eggs, rice and beans, have all jumped in price by more than 30% in the last few months, cutting deeply into the family's $500 monthly income. Jose, a laborer, pawned his wedding ring to buy groceries after a short bout of unemployment. Maria, who works weekdays in the central market downtown, got a loan from her employer.

She recently took a weekend job as a domestic and pulled her two oldest children -- 14-year-old Laura and 10-year-old Kimberly -- out of Catholic school. Only 7-year-old Bryan is attending classes. The family can no longer afford the $17 a month in tuition for each girl on top of its debts, child care and ballooning food bills.

"I'm frightened," said Maria, 32, displaying the near-empty larder. "I'm working seven days a week, and it's still not enough."...

Wiping fresh dough from her fingers behind the plastic and tin shack she shares with 10 family members in San Salvador, tortilla vendor Consuelo Esperanza Acensio said the price of the imported cooking oil she uses had jumped 50% in the last few months. Corn and firewood prices have surged too. She said she can't recall a bout of inflation this swift and steep in all of her 44 years, even during civil war in the 1980s. (more)

My own conversations with people in El Salvador in the past few weeks were very similar to these stories in the LA Times. It's a simple fact that people living in poverty, or just above the poverty line, simply can't cope when prices for essential items increase so rapidly. The "Government with Human Feeling" and its happy talk aren't convincing many in El Salvador.


Anonymous said...

Below are links to an article of Elfaro relating to this year¨s PNUD report, which I¨m in the process of reading and is linked to as well. Some interesting tidbits of the article follow:

¿Y quiénes son esos a los que el PNUD, en su informe, llama “subempleados”, y que constituían el 43% de la fuerza laboral?

Who are those that the UNDP, in their report, refers to as subemployed, and that constitutes 43% of the work force?

Según el estudio, el alto nivel de subempleo es parte de la explicación de las bajas tasas de desempleo en el país.

According to the study, the low unemployment rate in the country can be attributed to the high level of subemployment (underemployment).

It is amazing how the guy makes mention of the Nicaraguans and Hondurans that come to work to El Salvador, of which those who come at harvest time need special mention, that come here make dollars which translate to their currency back home into a hefty sum they can actually use to satisfy their needs, as opposed to the people here whose wage isn¨t enough. It is so interesting that tue article fails to mention the remittances and massive immigrations that serve as sustenance to hindreds of families left behind.

"Solo 1 de cada 5 salvadoreños
tiene empleo digno"

PNUD 2007-2008 report: "El empleo en uno de los pueblos más trabajadores del mundo".

El-Visitador said...

«"I'm frightened," said Maria, 32, displaying the near-empty larder. "I'm working seven days a week, and it's still not enough."...»


And to think women like this were just robbed of the hope and economic potential that a whole new industry, the mining industry, could have brought to El Salvador.

Choices have consequences. El Salvador has opted for the frightened Maria's with the empty larders.

Anonymous said...

"...when prices for essential items increase so rapidly. The "Government with Human Feeling" and its happy talk aren't convincing many in El Salvador."

Does that mean that you are blaming the increase in food prices on the Saca government? It would seem that all the neighboring countries, if not most of the countries in the world, have the same inflation in food prices. An inflation that comes a good part from the fact that more poor worldwide actually have more money to buy food, so now there is a supply and demand problem, causing prices to raise. I guess the solution to that would be to keep the poor from having more money, which must be what Fidel had in mind.

A recent article in one of the two dailies here showed that inflation in El Salvador was the lowest of any nation in Central America. Now that can be actually traced to the policies of Saca and Arena as opposed to trying to trace worldwide food price hikes back to them.

The highest rates of inflation were in, you guessed it, Venezuela, Bolivia and the socialist countries that profess to have the poor's best interests at heart. Interesting.

Tim said...

I don't blame the Saca government for the increase in food prices or the increase in fuel prices. My point was simply that Eduardo Calix statements at the beginning of the post do not reflect the reality that most Salvadorans feel. With respect to relative levels of inflation, at leasst some statistics show that the price of food has gone up more in El Salvador than in neighboring countries see my post here.

There's also another question to discuss -- has ARENA done anything to help alleviate the problems of the poor in dealing with these increases in prices.

Edwin said...

Certainly the economic situation is not better now that we have international preasures like the exponential increase in fuel and food prices accross the globe. We are a poor country and there's only so much that can be done to alleviate this situation. Arena does not have ALL the solutions for EVERYONE just like the FMLN doesn't even have an idea of a plan to generate more employment. The big loud mouth of Chavez is trying to spread his revolucion bolivariana and that may not be such a good idea for my country. I don't see how bolivia or ecuador or nicaragua are living a better life after they elected their leftists presidents. ARENA simpathisers don't go around burning buses and killing police just for the sake of attention. For the sake of the revolution.

Edwin said...

...oh and one more thing... It is a fact that fmln was in cahoots with the ASFARC just as CHAVEZ and Correa and DANIEL ORTEGA are. I do not... do not want my government to have anything to do with terrorist organizations like ASFARC. We the ethical people of El Salvador do not want to do anything with kidnappings or drugs. It is not surprising of the fmln to be in cahoots with these terrorists... do a little research... you'll see that with a little help from Daniel Ortega and Fidel, they operated the same way that the ASFARC operated back when we had the war. I remember way too well all the barbaric stuff these guys did. Not that the government was a saint either. They have been hungry for power and if they get it they won't let go. The fmln may fool their young believers but I'M 100% SURE THE FMLN HAS NOT CHANGED.

If the fmln was to win, they would impose policies (or try to at least) that have been proven not to work in other communists countries in the past. We would be going backwards just like Nicaragua.

Anonymous said...

I'm giving away my age, but when I was a kid gas cost $.30 a gallon, a hamburger was a quarter and a Coke was $.06. I also grew up in a poor family. Should my government have subsidized the price of those items so that now years later I still paid the same price?

In everyone's lifetime the price of basic items will increase, doubling or even tripling. It will happen again in the next generation. Should governments expend all their resources trying to maintain those items at the level they were when that person entered the world? The government, be it Arena or the FMLN can't control those prices. They can try, like Chavez, but then no one can sell them for the fixed price, and in the end those items can only be bought on the black market, which in turns make them more expensive than if nothing had been done. So give the government a break, this is something that is out of their control, and this short term solution inspires a mentality that from now on the government will keep my basic costs artificially low. That will definitely come back to bite every one in the end.