Wednesday, March 27, 2013


This has been a week of scandalous social media overshares in Guatemala. 

First there was 'shu-majestad' Jessica Duque (above), who achieved instant national meme-dom after daring to suggest that Ricardo Arjona had only gone and lowered the drawbridge of the sacred citadel of Cayalá, thus permitting the barbarian hordes to pile in and generally sack the place. 

Then there was this shamefully shumungous behaviour from some sentimental ossifers of the PNC. 

One suspects they will have trouble deploying Jkita's official excuse - that it was some other random racista that 'wogged' her mobile phone and used it to post those deleterious comments all over her profile!

Tuesday, March 19, 2013

The Cayalá Phenomenon

Guatemala might not have dual currencies like Cuba, but one doesn't have to look far to see the signs of a two-tier economic system here – there are businesses charging in Quetzales and businesses that are either explicitly or implicitly charging in US Dollars. And the thing that concerns me most is that many of the latter are doing so even when their staff costs and other overheads are effectively priced in Quetzales. 

Now I am no economics licenciado, but I really don't think this can be a good thing for the country in terms of its development both economically and politically, and were I ever in a position of unassailable power in a land such as this, I would tweak the fiscal system in order to seriously dis-incentivise this practice. 

Perhaps the greatest concentration of evidence of its deleterious effects can be witnessed here in Antigua with its mass of empty, overpriced restaurants. 

Yet for me, the poster-boys of what I shall call the Cayalá phenomenon (after Guatemala's brand new walled garden of dollar consumerism, Z16's Paseo de Cayalá) have always been the foreign-owned – and generally less empty – fast food chains. Domino's for example, almost certainly pays no rent in this city as they own the freehold of their site, surely pays its employees at local rates, and buys its tomatoes, as we do, from a local finca at around Q1 a pound, and yet expects the end consumer to pay developed world prices for their pizzas. 

Mark, of the fondly-remembered GuateLiving blog, once suggested to me that these prices reflect the additional risks of doing business here. Perhaps so, but from the outside it looks more like a nice-little-earner rather than a reckless gamble, and there's really nothing to stop companies in Guatemala from putting their own price on this sense of risk, charging according to what they think affluent, dollar-earners can pay, and in a manner that is only loosely connected to things like demand and supply and their cost base. 

It seems to work for the fast food giants, but one can't help thinking that many businesses in Antigua would be better off lowering their prices a bit in order to increase the number of actual sales as well as appealing to a wider customer base. (I'm surprised that more don't at least use flexible prices to bring in more customers on otherwise slow days.)

Anyway, this post is not so much about improving business performance in the retail and restaurant sectors, it's about the affordability gap that exists between the quetzal and dollar-based economies. In Cuba one notes that while the average state salary works out at around $20 a month, the lighter-skinned population are much more likely to benefit from both better-rewarded positions and from remittances sent over from the 'exile' community in the USA. The end result, an economic chasm with some rather insidious racial connotations. There may well be ethnic repercussions of a more recondite nature here in Guatemala, but it is the economic defile that looks the most damaging to me, because it has to be holding up the development of the middle class, for there will be individuals pursuing white-collar careers in this country, earning less than their US equivalents, and yet expected to pay US prices for many of the goods their peers up north habitually consume. 

The problem may not be as monolithic as I have painted it. For every Domino's there's a Cinépolis –  firms offering an aspirational, middle-class products at prices more in line with local equivalent earnings power. But the gap is still there, and not only is a dollar-based pricing system one of things putting the brakes on Guatemala's economic potential, there are also political consequences, for without a middle class capable of providing a genuine bridge between the extreme ends of wealth and poverty in this country, the state is always likely to be the playground of oligarchs and populists, with enlightened, social-democratic governance only popping up periodically as a commitment which will inevitably flatter to deceive.