Montreal, April 15, 2005 No 153




Bradley Doucet is a writer living in Montreal. He has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.




by Bradley Doucet


          I had no idea, when I decided to visit Costa Rica for a week last month, that the trip would prove so inspiring. In talking with expats, reading the local English-language newspaper, and doing research on the internet during my brief stay, I discovered some things about this small Central American country that should be heartening to lovers of liberty everywhere.


          Of the seven countries of the Central American isthmus, Costa Rica is the wealthiest, as measured by per capita GDP (adjusted for purchasing power parity). It also has the lowest income inequality of the region as measured by the Gini index. This is certainly due to Costa Rica's recent political stability and long democratic tradition, as compared with its war-torn neighbours. Another factor, according to some expats I spoke with, is that foreign investment in residential property is more secure in Costa Rica than in any other country in the region, including Mexico.

          Costa Rica does have its problems, though. Like most, if not all, other Latin American countries, it has a socialist history. State monopolies are the rule; competitive private businesses, the exception. Not surprisingly, most indigenous Costa Ricans (known as Ticos) are still quite poor as measured by the standards of industrialized countries, lacking as they do the connections needed to profit from the burdensome bureaucracy of the state.

Water Woes

          A story in the March 18th edition of The Tico Times, however, points to a growing disillusionment with heavy-handed government. The article relates the sad tale of Guanacaste, the province I was visiting, running out of water. This is not good news, but what is good is the frank assessment of the situation in the self-affirmed leading English-language newspaper of Central America. Extensive coverage is given to views that place the blame squarely where it belongs: on the government's shoulders.

          According to sources quoted in the article, the government has actively supported the growing of rice, a water-intensive crop, in this driest region of the country. It has dismantled the price mechanism by charging farmers a low, fixed price for water for each 10 hectares of land no matter how much water is actually used, thereby discouraging efficiency and conservation. To make matters worse, there are 17 (!) government institutions that have some legal power in water management. One of these has been obstructing the study of desalinization by the developers of a tourism project, on the grounds that there are no regulations in place to control the use of seawater.

          If dissatisfaction with government mismanagement and an appreciation of the beneficial effects of market mechanisms are aired in such a prominent media vehicle, then the winds of change are indeed blowing in Costa Rica.

Winds of Change

          By itself, a single intelligent, incisive newspaper article would hardly herald major change, but I discovered other, much more inspiring signs when I searched the internet. Chief among these are the recent successes of Costa Rica's very own libertarian party, Movimiento Libertario. In 1998, the party elected its first diputado, Otto Guevara, to the country's 57-seat congress. His defense of economic and personal liberty proved very popular with both the people and the press, and in 2002 the party captured almost 10% of the votes. This translated into the election of 6 diputados (though one of these defected shortly after the election). Nowhere else in the world has a libertarian party achieved this kind of electoral success.

          In an interview with Reason magazine in the summer of 2003, Guevara noted the importance of Costa Rica's proportional representation system to his election in 1998. This first victory allowed him to spread awareness of libertarian ideas among the population at large, and also to increase the exposure of his party, which led to the more than tripling of its share of the vote in 2002. Otto Guevara is now running for president in the 2006 elections, less than a year away. The party's website projects optimism about its chances of winning still more seats this time around, and maybe even the presidency itself.

"Costa Ricans seem fed up with corrupt officials, disenchanted with government mismanagement and with bureaucratic hurdles, and they seem ready for a change. The libertarians' success at presenting a principled alternative has been impressive already. People are taking notice."

          Another sign that things are changing for the better is the recent negotiation of the Central American Free Trade Agreement (CAFTA) between the United States and five countries of the isthmus (Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica), later joined by the Dominican Republic. Costa Rica is actually one of only a very few countries with whom Canada already has a bilateral free trade agreement, the CCRFTA, which came into effect in 2002. CAFTA, as a multilateral agreement involving Costa Rica's largest trading partner, the United States, promises to have far more wide-ranging effects. As such, it does face some resistance in certain sectors of Costa Rican society, notably those who feel they have a vested interest in propping up the many state monopolies which would lose much of their power under the new agreement.

          Like all trade agreements, CAFTA falls short of the libertarian ideal of actual free trade, but despite its limitations and exceptions, it is a big step in the right direction. As such, it is enjoying the enthusiastic support of the Movimiento Libertario. In fact, their support of it went so far as to challenge traditional congressional procedure. For political reasons, the current president has been delaying presenting the agreement for ratification by the congress, insisting that a controversial tax package pass first. The Movimiento argued that once the President has negotiated and signed a treaty, any diputado can present the agreement to congress for ratification, and so they took it upon themselves to do so. This is just one of many small ways in which the minority party is making its presence felt.

          Those who benefit from the status quo will never support either CAFTA or Movimiento Libertario, of course, but these beneficiaries are necessarily in the minority. As a local businessman told me, arguing in support of CAFTA, if Costa Ricans can produce bananas more efficiently than Americans, and Americans can produce rice more efficiently than Costa Ricans, why shouldn't consumers in both countries be free to choose from whom to buy? Why should they have to pay the government a premium in order to prop up the inefficient producers?

Teaching by Example

          Costa Ricans seem fed up with corrupt officials, disenchanted with government mismanagement and with bureaucratic hurdles, and they seem ready for a change. The libertarians' success at presenting a principled alternative has been impressive already. People are taking notice. Whether the party's hopes of capturing the presidency in 2006 are plausible or merely quixotic remains to be seen, but clearly, something is afoot.

          In the aforementioned Reason interview, Otto Guevara sees even broader implications in the recent developments in his country. If the party continues to grow and build on its victories, ascending eventually to the presidency, he hopes that Costa Rica can then serve as an example to people in other countries. The comparison between socialist Costa Rica and libertarian Costa Rica would be striking, and we libertarians abroad could point to a real life example of what we are talking about. We could point to the significant improvements in standards of living, the spreading wealth, the disappearing poverty, the flourishing environment all the results of fully respecting individual rights and allowing people to be truly free. The clearer and more concrete the examples are, the less hypothetical the discussion will be.

          It is no coincidence that these developments are taking place now, in the age of the internet. Without the internet, would I have found out about CAFTA during my recent trip? Would I have found out about Costa Rica's libertarian party? Without the internet, would the party have been as successful in getting its message out in the first place? Would it even have existed? As Martin Masse, publisher of le QL, recently wrote, the internet is a great source of optimism for libertarians. The internet magnifies everyone's ability to gather information, multiplying the opportunities for different views to compete in the marketplace of ideas. Such competition can only help the cause of liberty.

          Recent developments in Costa Rica are yet another source of optimism for libertarians. Like the Free State Project in the United States, Movimiento Libertario promises to teach the benefits of libertarianism by example. Both the FSP and the ML are shouting the same slogan from their pulpits liberty in our lifetime and they are getting closer and closer to that goal. We all stand to benefit from their successes.