Why Peru is poor

or – why every Peruvian needs a Jack Russell terrier.

Why Peru is a poor country

Why Peru is a poor country

The picture is from the park in our complex. Although the soccer goal only collapsed in the past month or so, the park has been in complete disrepair for as long as I’ve been here, and most probably long before that. About a month ago, the mayor of Wanchaq put up a sign that he would build a beautiful new park in our complex, 80% financed by the city.

Great news, everyone was all excited, right?

WRONG. A bunch of people in our complex were up in arms that a nice new park would only attract drunks and teenage couples, so they complained at the municipality until the mayor dropped the idea of building a new park.

I once read in El Comercio: “Peru is a poor country because Peruvians act like poor people.” I totally agree with that. The reason our park is in disrepair has nothing to do with money and everything with attitudes. The people in our complex have cellphones and internet, they buy stuff every month from Avon and L’Ebel and so forth, but they refuse to improve the neighborhood they live in.

Our daughter won't play on this junk

Our daughter won't play on this junk

Our neighborhood in Cusco, Peru

Our neighborhood in Cusco, Peru

To any observer here it is obvious how the political and business elite in Lima is totally disconnected from the way of life in the provinces, plenty has been said about that. But I believe there is another issue in Peru:

The middle class is hiding from life.

The dilapidated park in our neighborhood is only one example. The middle class in the cities in Peru lacks initiative and organized behavior, they simply don’t act as if they are empowered to create a better tomorrow. On top of that, they complain about Indios but forget it’s people like Mama Vicky who put food on grocery store shelves. Say what you will about the current recession in the developed world, the middle class in the US is not to blame for that. The high standards of life in the US and Europe are because the middle class always felt empowered and believed they could make a better tomorrow.

I shake my head every time someone tells me they want to leave Peru because there are better opportunities in the USA. Horsebaloney. There are tons of opportunities in Peru, fantastic human and natural resources, but you have to make your own happiness. Take advantage of the opportunities instead of backing away from the challenges.

This is why every Peruvian needs a Jack Russell terrier. Our dog Roxi has boundless self confidence and energy, she will never, ever, back down. She barks at Rottweilers and Mastiffs – she might get her butt kicked, but she will never put her tail between her legs and go hide.

The Peruvian middle class needs a dose of that type attitude fast, so they will start taking on some of the challenges in Peru – or they shouldn’t be surprised in 2011 to wake up to their own copycat of Hugo Chavez or Evo Morales.

“China fears bond crisis” – buy$ Peru

Interesting article about the Chinese Central Bank again questioning US monetary policy.

“…Simon Derrick, currency chief at the Bank of New York Mellon, said the report is the latest sign that China is losing patience with the US and aims to diversify part its $1.95 trillion (£1.3 trillion) foreign reserves away from US Treasuries and other dollar securities.

Hans Redeker, head of currencies at BNP Paribas, said China is switching into hard assets. “They want to buy production rights to raw materials and gain access to resources such as oil, water, and metals. They know they can’t keep buying bonds,” he said …”

Since the US government has been printing up money as if it’s going out of style, the Chinese are worried that their dollar-denominated foreign investments (US Treasuries) may soon become, well, Monopoly money.

Peruvians should pay attention to these developments, as Peru recently signed a free-trade agreement (TLC) with China, giving China greater access to Peru’s natural resources as well as infrastructure projects. Look for the Chinese to continue investing in Peru (say, La Oroya).

Finally, unless Prez. Two Breakfasts (Alan Garcia) gets a dose of social equality really fast, don’t be surprised to see some Socialist ideology trickle into Peru along with Chinese investments.

Journalism

From Time.com:

“The legislative achievements have been stupendous — the $789 billion stimulus bill, the budget plan that is still being hammered out (and may, ultimately, include the next landmark safety-net program, universal health insurance). There has also been a cascade of new policies to address the financial crisis…”

If you’re into the 100-day-Obama-lovefest, read the complete article: Joe Klein on the President’s Impressive Performance Thus Far.

To me this is terrible journalism, akin to the Latin Business Chronicle voting Alan Garcia as Leader of the Year. Where are the hard questions journalists are supposed to ask? Take this quote from an Obama speech for example:

“It is simply not sustainable,” he said, “to have an economy where, in one year, 40% of our corporate profits came from a financial sector that was based on inflated home prices, maxed-out credit cards, overleveraged banks and overvalued assets.”

This quote is completely contradictory to the economic policies the Obama administration has implemented, which amount to nothing more than printing up collosal amounts of money to keep the big banks and big wigs on Wall Street in business.

If Obama actually believed what he said in this particular quote, he would simply let some of the big banks (and GM) go bankrupt. If you think that sounds insensitive, it could be argued that throughout history successful societies have been distinguished by having some orderly liquidation/bankruptcy process, so that smart, innovative, successful businesses can replace those that for whatever reason became obsolete and insolvent. If anyone actually believes middle class America benefits from the big banks on Wall Street’s survival, I have a mountain top in Peru I’d like to sell them.

In fairness, other than the economic policies of the Summers-Geitner team I’m not critical of anything President Obama has done in his first 100 days, and to his defense Joe Klein does say it’s a “journalistic conceit” that the President could be assessed in 100 days. But to print these type of quotes without at least questioning whether the President’s policies are in line with what he said, is just plain terrible journalism.

Corporate workshop

I will be in the US during April – May. I just finished up a 2-day corporate workshop that I’ll be offering while I’m in the US.

The idea of this workshop will be to challenge participants to erase the destructive corporate culture of the late 20th century and replace it with new, responsible thinking. Any inquiries or referrals, please contact me.

Ward Welvaert
ward DOT welvaert AT gmail DOT com
919 889 9208