Does the government promote bribery?

Government BureaucracyI’ll never forget what a random expat from the United States told me about Nicaragua. He said, “This country has laws made so that you have to handout a bribe” (known locally as a “mordida“).

It’s true. We see it everywhere. It’s not just in Nicaragua; the bribe culture exists in many countries around the world. But I’ll stick to Nicaragua for the sake of this article. Even though the majority of the people I know deem it immoral to bribe a public servant, most people have done in one way or another. Whether it was to get out of a traffic ticket, or even unconsciously, they have in some way or another helped to bribe a public employee.

If I were to ask you, do you think it is immoral to bring two bottles of 100 aspirin into Nicaragua?  Or, do you think it’s immoral to import a cellular phone without first registering it at TELCOR and paying a permit? I’m pretty sure the majority would say no.  Well, it’s illegal to do both. MINSA and TELCOR will not let you bring in these (and many more) products into the country without first paying a sum for permits and paperwork.

This is how government has made it profitable to break the law.

A very square owner of a popular restaurant in Nicaragua once told me how it was almost impossible to get his buffalo wing sauce into the country. This is a man known to be a very honest person by all that know him, yet he had to smuggle his sauce (FDA approved by the way) into the country for many years because MINSA wouldn’t give him a permit to do so legally.

Here is another example: Have you ever been told by an importing company “we will put it right to your door, clear customs, and no taxes.” Well if you agreed to those terms, you are essentially hiring a contraband company. Many people say, it’s either do that or what was done in the old days, which is to ask: “Is anyone coming back from the USA any time soon?” Nicaragua’s government taxes and regulation on imports are the highest in Central America; this has promoted bribes, high prices, shortages, contraband, delays, bureaucracy and inefficiency.

There was a country that faced this exact same problem. Great Britain in the 1700s was a nation of smugglers and bribers. However, by the 1800s Britain had become a nation of law abiding citizens. You couldn’t bribe a public official.

WHAT HAPPENED??? How did a nation of smugglers turn into law abiding citizens???

Simple, they eliminated the laws that could be broken. By abolishing the Corn Laws and introducing a laissez faire, free-trade system, there was no need to bribe a public official.  Why? Because you didn’t have to pay import taxes. Smuggling was unnecessary — you were free to bring in anything you wanted. You also didn’t have to bribe a public official for a license to start a business because you didn’t need one.  The results were that Britain benefited as a whole because of free trade and laissez fair system.

In the same way, I believe Nicaragua could benefit if they had lower import taxes and less importing regulations like Guatemala, Panama, Chile and the United States have. Curiously, there are a record number of employments in Free Zones (Zona Francas). They have added hundreds of thousands of jobs. Free Zones do not pay import taxes or export taxes. Why not extend this to small and medium businesses throughout all Nicaragua? At least lower it to an equilibrium level where it is not profitable to bypass the law. I believe now is the time. We would see the same results free zones are seeing and the country would benefit as whole.

 

“No nation was ever ruined by trade.” – Benjamin Franklin

 

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