Not because countries are rich, but because of how they use what they have. Having natural resources is an opportunity that, if used well, reflects in the well-being of all. Peru’s economic history is a clear example of our inability to do that. Countries like Norway know how to do this, as do other countries like Peru, Bolivia and Venezuela. If they stop exploring, the resources run out and the boom ends. The recent Bolivian case is a case in point in this regard.
How to use resources properly? First, you have to explore with the risk of finding or not finding. If a private does, he uses his money, and if he loses, he alone loses. If the government does that, it uses private tax money, so if it doesn’t find anything, it diverts resources that could be used in education, health and housing to the most vulnerable.
Of course, everyone thinks they are comfortable. Today we live moments of love and hate, add ideology to it, and we have the perfect storm. If we leave these elements aside, in principle there is nothing wrong with having a public company, as long as it does not make losses and is efficient. If it isn’t, you need to fix it. If we look at Peru’s history, public institutions have unfortunately been political instruments of the government. Look what happened to PetroPeru. Bolivia and Venezuela have not escaped regional heritage. The former, a gas-rich country, today imports gas, while the latter imports oil. It sounds crazy, but it’s true.
Consider a mining company. If you mine a mineral, you pay all your taxes, you respect the environment; Money received by a state agency, whether central, regional or municipal government, should be used to enhance the well-being of the most vulnerable. In this way, the mining project will reflect in better quality of life.
So the problem is institutional. It is wrong if the government does it. If this is done by the private sector, the taxes paid due to administrative incompetence or corruption will not reflect in the well-being of those most in need. The result is a national game of blaming each other without raising the standard of living.
Then how to do it? Every proposal on how to deal with this fact must be accompanied by empirical evidence to support that position. It’s not just the what, but the how. Economics is a science that studies how resources are used with the aim of enhancing the well-being of all. However, context doesn’t always help. Big case. We are constantly debating whether mining or other activities related to natural resources should be done by the government or whether the individual should pay taxes. Don’t you think it would be great if we take into account Peru’s institutional reality and think beyond ideologies about what can work and what can’t?
A country with natural resources should bring prosperity to the majority of people, but it does not happen. This means that the wealth is not in the country, because if it were, the inhabitants of Peru would live better.
The important thing is that all citizens should meet their basic needs. We think a lot about inequality. Wouldn’t it be nice to think that there is no poverty and everyone has reasonable access to education, health, housing and security? What if we decided to use the money from taxes on natural resources for the most vulnerable? There are examples in world economic history that we can adapt to Peru’s reality. Nothing to find.
Cesar Candela analyzes the election of José Gutierrez