This article is being cross posted on my other blog, Incidents of Travel. Incidents of Travel chronicles my life as a Peace Corps Volunteer in Nicaragua and my thoughts on culture and life in general. Please check it out if you are interested. The article was also submitted to the Peace Corps Nicaragua Gender & Development Committee for publishing on their blog, but they declined to respond.
A book that I read recently that influenced me greatly was Why Nations Fail. The thesis of the book is that the main differentiator between the development path of nations is neither geography nor culture, but instead the institutions of the country, and how inclusive they are of the population. The more politically and economically inclusive, the more development potential, past and present.
I am very compelled to the thesis, and I tend to agree with the theory that culture does not have a strong effect. For the very most part I believe, scientifically, that all humans have equal capacities for intelligence and that characterizing a culture as “lazy” or “hard working” can be an inaccurate generalizing claim based in racist tendencies. The authors instead demonstrate that what may superficially look like a lack of economic motivation on the part of citizens may instead be a response to the lack of economic stimulus and opportunity that exists in the country due to poor societal institutions. For instance, a farmer may not exploit her land to its fullest potential because agricultural price policies lead to over-supply in the market. Or rather, laborers may not seek full employment because of strict government wage schedules across all industries that keep wages artificially low and working is literally not worth the bother.
Nevertheless, the idea that culture may inform economic divergence between nations nags at me. Rugged individualism, the importance of hard work, and the Protestant work ethic are well engrained in my American psyche. In addition, I routinely hear from Nicaraguans that they are an haragán (lazy) people, don’t like to work, and that their labor doesn’t size up to other countries’.
So how do I reconcile the theory with my conditioning and what I hear here in Nicaragua? First of all, folk-theories about rugged individualism, the importance of hard work, and the Protestant work ethic are probably just artifacts of a colonial world riveted by racism. I’m sure there are thousands of essays, papers, and books on Max Weber and his virtues and follies. I won’t delve further into that. As for the self-characterizations of the Nicaraguans as lazy and not hard working, I think that they may have internalized their own oppression and poverty. The imperialism, tyranny, and their derivative poverty that they have lived under for hundreds of years have become to such an extent part of the Nicaraguan psyche that they legitimately start to believe it and express it in their actions. I have seen multiple times teachers, who are poor people themselves subject to the same oppressive institutions as their students, lecture their students telling them that they are poor, come from a lazy culture, and are inferior to other countries. The result of this conditioning is that the students will begin to act accordingly. And these attitudes and behaviors will last for the rest of their lives. In effect, even though culture does not have a direct impact on development, cultural norms and beliefs can become entrenched in the institutions of a country itself, and institutions do affect development.
Another profound aspect of the Nicaraguan culture that has become more deeply entrenched and truly institutionalized is machismo. Machismo is a cultural system that values qualities traditionally considered to be masculine over qualities traditionally considered to be feminine. It manifests itself in many aspects of life. At its most innocuous machismo dictates the games and activities that parents play with their children, and at its most destructive it leads to domestic and psychological violence against women and even femicide. Economically, machismo manifests itself through gender roles: jobs that are assumed to be for women and others that are presumed to be more suitable for men. For instance, in Nicaragua employers typically search for women only for positions such as clothing store attendant, house maid, secretaries, childcare, nursing, and chefs/waitresses (often the same person) at small eateries. Men are deemed more suitable for management, transportation, medicine (especially surgery), physical labor, finance, and engineering. From what I’ve seen, secondary education is more equitable, but primary education is more of the feminine realm (and yes, primary school teachers make a little bit less money than their secondary counterparts, which I find asinine given the importance of primary education and how challenging the work is).
The results of this culture are numerous and deleterious. First, women on average earn less money than men, so they often find themselves financially dependent on men even when they would be better off single. This leads to health and emotional consequences, such as being coerced into having unwanted children. Furthermore, seeing less potential for financial attainment after school, women will seek less education. This leaves women with fewer opportunities, especially well-paying opportunities, so they turn to the informal sector, which constitutes 80% of Nicaraguan employment, and is overwhelmingly feminine (men are more likely to immigrate out of Nicaragua, especially to Costa Rica or Panama).
I work with a cooperative that has 12 male members and one female member. The cooperative is acquiring a small restaurant to feed their guests, and they let me know that the female member would be placed in charge of the restaurant since that is naturally a feminine task. The woman immediately interjected, stating her reluctance and her lack of knowledge about cooking and restaurant management. Nevertheless, she remains in this capacity. This decision winds up hurting the whole cooperative. Maybe she is better at guest relations or accounting, and maybe a male member of the cooperative has skills suited for cooking and restaurant management. If their roles were re-arranged the cooperative would be operating more optimally and probably obtain more profits for its associates, but a machismo culture prevents this from panning out.
The informal sector in Nicaragua is hard work for a pittance. It usually involves waking up early to buy basic food ingredients, then making snacks to sell on the streets or in the bus terminals. Competition ensures that margins are thin to non-existent. In addition, being self-employed, these women have no benefits. They literally cannot afford to get sick and miss a day or work, and they are not paying into the Nicaraguan social security system to hopefully one day retire with even a modest pension that the system provides.
This is the institutionalization of machismo, and it pervades the public sector as well. In Nicaragua, the law states that for high ranking officials, there needs to be equality. For instance, if a mayor is a woman, then the vice-mayor must be a man, and vice versa (curiously, the President and Vice-President are both men). But this mandatory equality is only at the highest levels of government. The bureaucratic ranks are male-dominated.
Basically, I am describing the institutionalization of culture. Insofar as an exclusive culture (such as machismo) becomes institutionalized, culture very much can have an effect on the development of a country, and I believe it is having that profound effect on Nicaragua.
Despite what I have observed about the pervasiveness of institutionalized machismo, I have seen some conflicting reports in the news. The Economist reported last year that the World Economic Forum’s Gender-Gap Index ranked Nicaragua sixth-place globally for gender equality. Based on what I have observed and described here, I find this very hard to believe. And a deeper dive into the WEF’s data seems to corroborate my doubt.
The score each country receives in the index is an average score of four sub-categories:
- Economic Participation and Opportunity (0.635)
- Educational Attainment (1.000)
- Health and Survival (0.980)
- Political Empowerment (0.544)
Nicaragua’s 0.789 was sufficient to rank sixth place worldwide.
Nicaragua receives low marks for female participation in the work force, wage equality, and participation in civic life. On the other hand, it gets high marks for education and health. And it is true, as I mentioned, Nicaragua has a high number of female government leaders – statutorily. Nicaragua even had a female President, elected in 1990. Doña Violeta was the first in the line of three non-Sandinista interregnum presidents. Overall though, Nicaragua’s marks for economic participation and political empowerment were mediocre. Nicaragua’s relative strength in the ranking comes from educational attainment (theoretically perfect, according to the WEF’s methods) and health outcomes.
WEF’s data for educational attainment come from UNESCO. However, UNESCO compiles its reports from figures sent in from the Nicaraguan government, which recent investigative reports have exposed as being highly suspect. UNESCO’s last submission from Nicaragua was for the 2010 school year. Publically released information in Nicaragua has been self-contradictory with regards to enrollment levels, and over a ten year period prior to the numbers released for 2014, publically released data actually registered a decrease in the number of students (despite population growth and a large youth population), and then an enormous increase in 2014. In addition, there is evidence that the numbers are being smoothed by selectively including tertiary education, technical education, and adult literacy courses. In addition, there is no comparison in public data between students in conventional daily classes vs. secondary school students in weekend classes. Taken all together, the WEF’s educational attainment score is not reliable, even though it is the largest contributor to Nicaragua’s impressive ranking.
Nicaragua’s score for “Health and Survival” is almost startling. It ranks first place worldwide, which is an amazing accomplishment, especially for the second poorest country in the hemisphere. But again, on closer inspection, I doubt the conclusion. Health and Survival only takes into account two statistics: sex ratio at birth, and healthy life expectancy. Worldwide, women have a longer life expectancy than men. The index attempts to correct for that. However, I think the effect may be particularly strong in Nicaragua, which may account for some of Nicaragua’s strength in the area. Men, on average, have riskier lifestyles. Many more men than women are alcoholics, and men, due to their prevalence in heavy labor jobs, face many more occupational hazards. Fishing and logging are the two most dangerous jobs in the United States; imagine the risk in a country where OSHA does not exist and most fishing, logging, agriculture, and small industry is nearly completely unregulated. In one town alone, Chichigalpa, there is a neighborhood known as the Island of Widows because so many men (an estimated 20,000) have died from kidney failure related to sugar cane harvesting.
In addition, “Health and Survival” does not take into account other indicators of feminine health, such as domestic violence and abuse and teenage pregnancy. This is a methodological choice on the part of the index creators. They want to capture gaps between the sexes, and these factors are not subject to gaps – men simply cannot get pregnant, and there are no data collected on domestic violence and abuse against men in Nicaragua (or most countries). Nevertheless, Nicaragua has the highest rates of teenage pregnancy in Central America. One in four new mothers are under 18 years old. This leads to health complications for the young women, plus lower educational attainment and lifelong economic dependency on providers, who very well may be the abusive men who got them pregnant in the first place. Domestic violence and abuse is also prevalent in Nicaragua due to the machismo culture. The psychological element of this abuse leads directly to political disenfranchisement.
Overall, I would take the index results with a grain of salt. Methodologically, the index omits a number of important variables to capture the type of data it is selectively looking for. In addition, by averaging the four categories evenly, the index implicitly assumes that economics, health, educations, and political participation are all ends in and of themselves, but many would consider economic participation and health as the ends, with educations and political participation being the means. And lastly, the unreliable nature of data collection and dissemination in Nicaragua makes me suspect of the statistics and results compiled for the index in the first place.
So culture can in fact affect the development path of a nation, if an exclusive culture (such as machismo) becomes institutionalized.
To me, Uber is the pinnacle of economic innovation. It harnessed technology, the app revolution, and used it to improve efficiency and provide a new service. The service is designed to deliberately overcome a classic economic problem, asymmetric information. And the pricing model is based on sound economic principles. It is at the forefront of a technology driven revolution that economists are calling “the sharing economy.” Similar services include Lyft, AirBnB, and Craigslist.
Uber, at its core, is simply an app. You download it to your smartphone from an app store, and then you give it some basic information, including a credit card number. Then, whenever you need a ride you use a map to tell the app where you want to be picked up and you specify the level of service you want – a private car, a taxi, a black car, or an SUV. The app takes care of the rest. It dispatches a driver and gives you his or her name, user rating, contact information, and estimated time of arrival.
When the driver arrives the app alerts you and you can head outside and hop in. All you need to do is tell the driver where you are headed and he or she will take you. Then when you arrive at your destination you just get out. No fumbling for change in your pocket or listening to the taxi driver grumble about you wanting to use a credit card. The app, which already has your credit card information, automatically bills you based on level of service, distance traveled, and time elapsed. All of this information, including a map, is e-mailed to you. I’ve used these e-mails in the past to compile invoices for my business trip expenses at my old job. Gratuity and any taxes are automatically subsumed into the rate. The app simply asks you to rate the driver, out of five stars, and provide any comments or feedback.
Asymmetric information is a classic economic challenge. It is when the two sides of a transaction – the buyers and sellers, demanders and suppliers, consumers and providers, whatever you want to call them – do not have the same information about the product or service. For example, the used car market suffers considerably from asymmetric information. The dealers know a car’s history and if it’s a lemon, but the buyers don’t have this information, which saps demand and can lead to less than optimal prices on vehicle sales.
Uber has solved this problem for the chauffeured rides-on-demand market. Not only does the rider have to rate the driver, but the driver has to rate the rider. Riders and drivers both have average ratings out of five stars, which are revealed to both parties when the service is called for. Riders can decline a driver with a poor rating, and drivers can decline service to rude riders with a poor rating. This symmetrical access to information improves the efficiency of the market and helps secure the fairest price for service possible. It also ensures quality. I’ve taken many uber-clean Ubers in which I’ve been offered a small bottle of water or a nice sucking candy, at no additional cost.
Pricing is another strong feature of Uber. Accurate prices take into account both real-time supply and demand for a service. But sometimes prices are fixed and only take into account one side of the curve. For example, one problem with certain popular “hot lanes” on interstates is that they only take into account demand. The price goes up when the normal lanes are congested, but it doesn’t take into account how congested the express lanes are. When the express lanes are also jammed this has the effect of unnecessarily attracting more vehicles, worsening the congestion. And when the fast lanes are empty the prices are not optimized to attract more vehicles, improving traffic flow for the normal lanes.
Uber, on the other hand, has base rates for distance and time traveled. However, when demand is high or there are not a lot of cars available, they implement a surge pricing scheme which multiplies the price of the ride based on the real-time state of the market. At first this pricing scheme got Uber some bad press due to lack of transparency, but now that they have improved the app to make the user aware of the price it is a great system. The people who are most willing to pay for the service, as expressed by price, are most efficiently matched with the drivers most willing to provide the ride.
The app is sleek. The pricing system is fair, and the its rating system overcomes classic economic challenges to ensure as free of a market as possible. So what’s the problem? What’s all the fuss with Uber about? The problem with Uber and the sharing economy is that everyone who has their hands in the traditional economic structure is throwing a fit. Uber’s success is partially at the expense of traditional taxi drivers. And taxi services are heavily regulated in most cities around the world. This is leading to taxi commissions throwing up roadblocks (some literal, most legal) all across the world. However, regulated taxi markets are a relic of an over-regulated past. Like most markets, regulation and government intervention benefits few and passes on unnecessary costs and under-service to most. I can certainly understand why taxi commissions are protesting. The livelihood of their beneficiaries is being completely upended. However, innovation, invention, and new technology, are the engine of economic growth. When government policies suppress the urge for unnecessary regulation and allow innovation to flourish economic prosperity reaches the most people – even the disrupted taxi drivers, once they adjust their service or find another job.