The Ox-carts Could Be With Us For Years

*** Today, we left the ocean and drove to Granada. We're on our way back to Europe.

Elizabeth had this to say:

"This is a wonderful country. It is so interesting...and so pretty in many ways...and so ugly in others. There is trash all over the place. And the kind of houses most people put up are unsightly hovels. But I suppose we should thank the Sandinistas for making the place so picturesque.

"Remember when we were here 10 years ago? I told the children to look carefully at the ox-carts...because I didn't think they'd ever seen them again. They've disappeared almost everywhere in the world. They were only here because the communists had been in power for so long. They retarded the growth of the country so much that people were still using carts, pulled by oxen, when we came at the end of the '90s.

"Of course, I thought it was quaint...and charming. I never imagined that I'd see the same ox-carts 10 years later. But I think I've seen more on this trip than I'd seen 10 years ago. They're everywhere. And I guess we can thank the Sandinistas again. Danny Ortega came back to power...what...about three years ago, before the ox-carts were replaced with trucks. And now there's a worldwide financial meltdown. The ox- carts could be with us for years...

"I went riding this morning. You know Lencho, who runs the stable? He's only about 40 years old...very distinguished looking...with his rough face and his cowboy hat. He's got 9 children, he told me. We had a conversation about economics while we were riding. He's never been to school...probably not a day in his life. But he had a remarkably clear view of what is going on...I'll tell you what he told me...

"He said that before the Sandinistas came to power the country was poor...but it was growing. And it seemed to be getting richer all the time. People planted a lot of cotton back then...and apparently made a lot of money at it. Then, the communists came...took away their land...and no one wanted to invest. Nobody wanted to plant cotton, for example, or build a herd of cattle...because it took so long to get your money back...and they figured that if they made any money, the Sandinistas would take it away from them. So even the areas that had been productive farms grew up in weeds. And the factories rusted. Even after the Sandinistas left, and the land went back to the original owners, they didn't want to invest as they had before. They figured they couldn't trust the government. Or maybe it just wasn't as profitable as it used to be...and they'd lost their key people...

"He said that he thought the secret to development was to let people keep their money. Then they'd invest to make more money. And people would have jobs. And then they'd spend money.

"He seemed to have the whole thing figured out. And he's right, of course. There's no secret to macro-economics. I know you think about it all the time, but there's really nothing to think about...in a way, of course. If you let people keep what they earn...and make sure they know you won't take away their property...they'll do their best. You can't do better than that."

Bill Bonner
for The Daily Reckoning Australia

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