20 Jan What do you prefer? That your family receives Bs 8,000 or that the Government spends it on your behalf?
“What kind of question is this?” you might ask. Well, let me provide some context. Imagine, for a moment, that since 2005, the governments in power had decided to distribute gas revenues directly to every Bolivian. Specifically, if the revenue from the Direct Hydrocarbon Tax (approved by Hormando Vaca Díez) and the income from the so-called “nationalization” had been divided equally among all Bolivians—regardless of age, gender, or poverty status—then everyone would have received what many call “their share.” How much would we have received?
I conducted this exercise for a family of four, and the results are shown in the following table. How should it be interpreted? For example, if in 2010 the Government had distributed the funds as described, a family of four would have received Bs 3,979 per year; if the same had happened in 2013, that family’s income would have reached the not-so-modest sum of Bs 8,988. Not bad, right?
This exercise reflects a more liberal economic perspective (not even neoliberal), where the Government distributes money to everyone, assuming that people will spend it in the wisest possible way. What actually happened, however, was the opposite: the Government managed these resources under the major assumption that it could do so better than each of us—a more paternalistic vision, to put it one way.
As with everything in life, both positions—the liberal and the paternalistic—have their pros and cons. Let me outline some of them:
In favor of distributing the money to every Bolivian:
People know their own needs better than the Government.
Our revenues wouldn’t finance acts of corruption.
Small family businesses could use these funds as seed capital for small ventures.
Family savings could potentially increase, boosting total savings in the economy.
In favor of the government spending on your behalf:
Only with the Government as an intermediary could these resources fund large-scale projects like roads or schools.
If society agrees, these resources could serve to redistribute income, improving the living conditions of the less fortunate.
Promote policies to protect the environment.
In simple terms, they could finance activities that individuals might not undertake.
Against distributing the money to every Bolivian:
Is this really the message we want to send to our children? That all they need to do is hold out their hand to receive money from the exploitation of natural gas?
Do people truly know how to spend wisely? I still recall this image: people receiving their old-age pension and, upon leaving the bank, being approached by trinket vendors… items of little or no use.
Lastly, look at the table above. While in 2013, each family might have received almost Bs 9,000, by 2019, this figure dropped to less than Bs 3,000. Given the high volatility of revenues from non-renewable natural resources, this could disrupt household economies.
Against the government spending these resources on our behalf:
The public official in charge has every incentive to say, “Look how great I am; here’s your gift,” when we all know those revenues belong to everyone.
Corruption associated with these funds is no small matter. Doesn’t it hurt to hear news about these resources ending up in someone’s pocket?
The Government doesn’t necessarily spend on what most people need or want.
More liberal-minded individuals prefer to have money in their own pockets, while those who believe in a “nanny state” prefer that it—the Government—spends money on their behalf. Each of us has our own preference, which should be respected by others. However, there’s one thing I’d like to make clear: gas taxes (and, in fact, all taxes) belong to all of us. Therefore, opening the debate on how we spend them is an ongoing and necessary task.
S. Mauricio Medinaceli Monrroy
La Paz, Bolivia
January 20th, 2022
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