By Michael Manville
A lot of people wonder why I spend so much of my time in the “third world” - or to use the politically correct term – “developing world”. Many people have never lived in a developing country and have no idea what the difference is between “developed” and “developing”. While I enjoy and appreciate both worlds, in today’s volatile economy and increasing government control, the benefits of living in the “first world” are fading fast.
Terminology
For the purposes of this article, the “developed world” or the “West” as it is often termed, basically consists of North America, Western Europe, Japan, Australia, and New Zealand. The West comprises the nations with the highest per capita GDP which are generally regarded as the most economically productive. Everywhere else, most economists would acknowledge, is in some form or another “developing”. Now let’s take a look at the way I see the West vs. the developing world.
Business and Communities
In the West, starting your own business is becoming extremely difficult. Without the support of a large corporate body or existing start up capital, the expense and bureaucracy of starting a business is daunting. In generations past, it was common to see “mom and pop” establishments in the local community. Now those moms and pops work for Wal-Mart.
When I go to Wal-Mart or any other chain store in the “developed world” the first thing I notice is the lack of personalized service. In some cases, the person at checkout does not even lift his or her head to see who is buying the products.
Since this person is not responsible for the overall success of Wal-Mart, she or he is not conscious of the transaction taking place and responds only with distant phrases such as “credit or debit”, “paper or plastic” and “next”. In the developing world, the large proportion of independent business owners helps develop cohesiveness in the community. Productivity is not measured by number of units scanned, it is measured by whether or not their customers keep coming back and how their products or services are perceived by the community.
In the developing world, the independent business is still the lifeblood of the community. The business owner usually lives in the same community where his or her customers live, and there is no place to hide if a problem occurs. There is no customer service department or legal department to handle the issue. People deal directly with each other, eye to eye, and work things out on a day-to-day basis. People in the developing world come to know one another and this interaction increases the level of gratitude and respect from both buyer and seller.
In the West, we have corporate departments, advanced technologies, and just-in-time inventories that are supposed to provide cost savings and efficiency. However, when I went to the deli the other day here in Canada, I paid $9.00 for a chick pea salad and $17 for a steak at a grocery store. Yesterday afternoon, I paid $11 for a glass of wine in a restaurant. In Argentina, Ecuador, Vietnam or Panama for example, I can eat a whole meal served to me with wine for under $8.00. So much for efficiency and cost savings.
Housing
Years ago, when I first went to Venezuela back in 1998, people there marveled at the size of the homes we enjoy in North America and asked me what it was like to live with such a high standard. It wasn’t just the size of the home, it was the modern look to the interior, the fancy appliances and the large windows.
I explained that most of the homes you see when you are driving through neighborhoods in North America are not really owned by the owner, they are owned by the government and the bank. Sure, the “owner” is on the title, but only remains so if a large monthly payment is paid every month to the government and the bank.
At the time in Venezuela it was impossible for most people to get a loan to purchase a house. I’ve personally visited homes in the developing world that cost half to one-third the price with equal or better quality construction and appliances and far cheaper maintenance and taxes. Many of these homes are owned outright in the developing world, with no loans of any kind. I don’t have any statistics available, but I’d wager that most people in the developing world are closer to “owning” their homes than those of the “developed” world.
Debt loads in the leveraged, er… I mean “developed” world are staggering compared to those in the developing world and what do they have to show for it? Garages full of junk made in China.
Security
A lot of people ask me about crime and security in developing countries. They assume that the crime rates in “those poor countries” must be off the charts and that security must be a constant source of fear and anxiety.
However, when I return back home to Canada, as I do every summer, the police sirens never cease. When I walk outside of my neighborhood, one of the better off “trendy” neighborhoods downtown, I am greeted by panhandlers, homeless people and drug dealers. Yes, I see at least as many people begging for money in the developed world as I do in the developing world – the difference is the beggars in the developed world will do so while standing right next to a help wanted sign and those signs rarely exist in the developing world.
When I am in a big city in Canada I have to equally careful walking around at night. I actually feel much safer in most parts of the developing world.
Health
I recently had a conversation with a Vietnamese woman here at the health food store in my home town in Canada. I asked her about how I could import a natural health food product I had discovered from Ecuador. She explained how many health foods from abroad could not be imported into Canada due to “regulations”. In fact, it would cost $40,000 just to apply to a government authority to see if they would approve a new product, not to mention annual renewal fees once approved.
In the developing world, if it grows in the ground, it’s approved!
The same lady told me how certain medicinal herbs in Vietnam could be purchased by the pound for what we pay by the ounce. She explained how a pound of artichokes costs far less in Vietnam than one artichoke here. I’ve witnessed the same on a recent trip to Vietnam.
Not only is health care much cheaper in the developing world, but people’s lifestyles are healthier (less drug and alcohol consumption, less consumption of prescription meds, lower fat intake, and more exercise). There is no secret to good health, it’s all about lifestyle and not about the drugs your doctor prescribes. Off course, in the West, “big pharma” (multinational pharmaceutical companies) are the ones who tell your doctors what to do about your symptoms, but I won’t get into that for now.
Employment
Well, surely the employment opportunities, “the American dream”, the rise of the middle class, and the chance to make money are reasons to live in the “developed world”?
Not so fast. First you have to subtract the increased taxes, the cost of education to obtain employment, the added cost of living including gas, car payment, clothing, and food. Now throw in the likelihood of getting laid off. And don’t forget the two working incomes most people require to afford to borrow a home, and that’s IF they are willing to risk a variable rate mortgage.
I really don’t see very many financial rewards in today’s developed world unless you are already in the top 10% of the rich. Much of the middle class in the West is getting squeezed by increased costs, larger debt loads, and growing unemployment. The only way the middle class can afford any of the luxuries that developing world middle class people can’t, is to take on even more debt that forces them to spend their lives as a slave to the bank.
Where I do see problems in the developing world are in those areas that are trying to develop too fast. Take Eastern Europe or Iceland for example, who have been hammered by the credit crunch and financial crisis. Most of their problems stem from piling on too much debt, especially in foreign currencies which have appreciated rapidly against their own local currencies.
In an effort to develop too rapidly (largely force fed by lending institutions and hedge funds), these nations have fallen off an economic cliff. These are not developing world problems, these are problems imported from the developed world’s vision of economics.
Climate
I won’t even bother discussing this one. I am from Canada. Enough said. I’ll leave the tropical beaches, the eternal spring like climates, and lack of snow and ice found throughout most of the developing world for your imagination to ponder.
Food, Entertainment, and High Society
What about all those snazzy restaurants, social events, artistic expressions and creature comforts in the West? Without going into too much detail as to why, I avoid chain-style restaurants and the processed food that dominate social circles in the developed world. This food goes through so many processes, distribution channels, injections, re-modifications, hydrogenizations, and/if/or/may contain… I can’t imagine processed food to be healthy.
In tropical nations where most of the developing world is located geographically, it is much easier, convenient, and cheaper to eat locally grown food. Go to the town square, walk in to a family run restaurant, and you are eating locally for $3 per plate.
Regarding entertainment… the other night at my friend’s barbecue here in Canada, we had to bring our voices down to a whisper after 10 PM so as not to annoy the neighbors and risk a call from a by-law enforcement agency.
If someone wants to party in the developing world, the music comes on loud and everyone is invited. The music goes all night and nobody complains.
Believe it or not, there are towns and villages on this planet where people smile and greet each other in the street and they are not on Prozac! Most people who try to sing or dance in the streets of a “developed” nation are worried about getting arrested.
Most developing nations do have a base of very wealthy citizens. This enables classy restaurants, theater, art and many other cultural expressions to thrive – not to mention local festivals and events. High society in the West is for the most part over-rated and over-priced.
Political Stability
What about safety from government upheaval, war, floods, and other disasters? I think recent times have shown, from 911, to Hurricane Katrina, to the terrorist attacks in Madrid and London, that the developed world is no safer than anywhere else. If anything, these types of risks are higher today now that we have “developed”.
Measuring Wealth
In my view, per capita GDP is not a measure of true wealth. A nice car and a nice house don’t matter as much as one might believe.
A measure of true wealth is affordable access to healthy food and water that is locally produced, a sense of community spirit and respect for one’s neighbors, and a lack of unnecessary government regulation and taxes. By these measures, the developing world nations are among the wealthiest on Earth.
In addition, even GDP growth figures are now favoring the developing world. A quick look at the economic growth patterns for nations like Brazil, China, India or Panama compared to the U.S., Germany, France, or the U.K should put this into perspective.
At the same time, the developed world is no longer the world’s creditor, it is the world’s debtor and owes what is left of its financial stability to the developing world. The financial realities of today’s economic order are already posing a serious drag on the standards of living of those residents who choose to remain in the developed world through increased health care costs, higher taxes and insurance premiums. The only thing propping up Western economies at the moment is government subsidies and government-induced super-low interest rates.
Education and Immigration
Education and immigration patterns shape our future more than anything. People often forget that a dynamic blend of immigrants built the developed nations into strong, prosperous economies. Now immigration trends are beginning to reverse. While college students in the West are being groomed by institutions to serve a multinational corporate machine that does not encourage them to think for themselves, college students in the developing world are going abroad for post-secondary education and returning to their home countries for jobs and careers. If the developed world can no longer attract and maintain the world’s best and brightest, it will put those societies at a severe disadvantage going forward.
Advantages to the Developed World?
There are a few benefits to living in the developed world, although even those are on shaky ground.
One is the justice system.
Courts and trials function more transparently in the West. Unfortunately, today’s courts have begun to use the Golden Rule – “he who has the most gold makes the rules”. In a case of well financed legal counsel vs. not-so-well financed legal counsel, I think you can guess the winner. If you want to win in today’s developed court system, you need to have more cash or be better connected than the other guy. Corruption is one thing developed and developing justice systems seem to have in common, albeit more blatant in the developing world.
The second advantage in the developed world used to be the media – freedom of speech and all that jazz. Yet, in developed nations today the media control and brainwash the population at the press of a button. They can cause a panic faster than you can say “swine flu”. The media today can condemn a foreign head of state for hiding weapons of mass destruction – even if those weapons are never found.
The third and possibly most important benefit of living in the developed world is the intrinsic level of trust felt among citizens of the developed world. The intrinsic trust stems from the confidence people have in law makers, law enforcement, and a long history of feeling safe and well off. In nations where recent history has caused hunger, war, or political strife, trust thy neighbor is a new concept and not easily adopted.
Where Do We Go From Here?
While culture shock and missing one’s friends and loved ones may be valid reasons for staying home, it’s worthy to point out where our societies are heading and what we might do to steer things in the other direction.
What developed nations have “developed” here in my view is not a graceful steward of the environment, nor a model for economic and social development, but over-indebted ultra-consumerism bent on exporting its problems to the developing world in an effort to sustain itself even while the quality of food, water, environment, and community begin to break down.
Stay tuned for future posts.
Michael Manville
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Good stuff! I agree with yopur comments and opinions.
Thanks for a good article.
John
Micheal, As long as you compare the cost of living in the developing world to a paycheck from the developed world thing seem cheep. But an $8.00 dinner is no bargan when you make $5.00 a day. Nor is a $40,000 condo. Dave
Right on as I write from one of your top 5-Sayulita.!!
[...] Has The West Lost Its Way? – an overview of what’s gone wrong with America and the rest of the “first world”. [...]
Spot on with the article. the true measure of quality of life is what you have left over after the essentials are paid. the balance sheet needs to include car loan, credit cards, motgage and tax liability. Wait to see what happens in the developed world when it comes time to pay for all the economic band aids and the governement debts are foisted on their citizens!
I appreciate your comment about how much cheaper the cost of living in the “developing world” is, but isnt a lot of the cost savings purchased at the price of cheap labour and the exploitation of the working classes? Things here are more expensive because they are more expensive to produce, and that is so because of high wages and high taxes which build social infrastructure and protect the environment, etc. So isnt retiring to the “developing world” just another stage of Western neo-imperialist exploitation?
Alex, thanks for your comments.
I’d argue that retiring to low cost labor economies is one activity that would reduce unemployment in that country and eventually drive up labor costs leading to a better standard of living for the communities supporting foreign retirees.
In the same way, China is benefiting from their low labor costs and gradually improving the middle class conditions in China. Low labor costs attract all kinds of industry and investment, including “retirement industries”, “tourism industries”, “real estate” and many other industries. This movement of resources and capital is what eventually raises labor costs and improves middle class standard of living in the developing world.
Unfortunately for the “developed” world, our high labor costs are serving as a drag on employment and discouraging new investment while encouraging increased investment in emerging markets. In a free market, resources, investment, and people go where they believe they will receive the best value for their dollar until the trade off is no longer so obvious.
I don’t believe that hiring someone to work for a low wage is exploitation, I believe that forcing a person or business to pay a high wage is exploitation, and that is what we have tried to do in the West to the detriment of our economy (through the use of unions, pensions, and “social programs” that reduce the competitiveness of our businesses).
As we will see with the US unfunded medicare and social security liabilities exceeding $100 trillion, we only thought we could afford all of those social programs we will soon realize it was a pipe dream. It seemed like a smart idea at the time… to enforce social programs and protect our society from hardship… but in the end we may face worse hardships as our businesses are unable to compete. How GM or Ford will ever compete against Chinese car manufactures I don’t know (at least in terms of their US-based manufacturing), and the same challenge exists across many industries.
What’s China’s number one advantage? Low labor costs. Who do you think is exploiting who right now on the world stage? Countries like China with low labor costs, huge cash reserves, superior infrastructure, and more efficient government planning and program execution, or the “neo-imperialist west” with massive debt obligations and hardly any economic growth?
Watch as the world begins to realize the impact of the emerging-market exploitation of Western laziness, indifference, and ignorance.
Take a group of American teens and a group of Ecuadorian or Chinese teens and put them to work for $5 per hour. Watch the difference and you’ll realize why the “West” is in for a wake up call.
Thanks for your frank response. I am planning to retire in ten years to Thailand specifically, and am worried that by the time I retire with quite limited – but adequate by current standards – resources, Thailand may be too expensive for me to retire there. Since your own answer implies that eventually these retirement destinations will become more expensive, do you have a time line for when you think they will no longer be attractive retirement havens?
Good point Alex. It’s possible that in 10 years some of these countries will be much more expensive to live in, especially in US Dollar terms. My suggestion to you or others in a similar situation is to learn to create an income from your new found destination. This is what we teach in the Business In A Briefcase training course.
Generally in agreement with the article, although this bit:
If someone wants to party in the developing world, the music comes on loud and everyone is invited. The music goes all night and nobody complains.
is in no way positive and noise pollution in the developing world is a big negative for me.
One point that is missing, renting in the West is usually no cheaper than a mortgage, therefore throwing money away – renting in the developing world tends to be a lot cheaper than servicing a loan and for Westerners with a foreign income rent is usually very cheap.
Over the long term, rents will come up to Western standards, therefore if you want to retire to a certain country the best thing to do is to buy property there whilst it is still inexpensive by Western standards. As mentioned, it is unlikely that locally produced food will ever become too expensive, so with no rent to pay and eating locally, the country should remain affordable regardless of how strongly it develops.
Michael,
One of the things that interested me about your article was your reference to “increased government control”. The US ranks as one of the most surveillance-intensive nations on earth (along with the UK, Russia and China). The Department of Homeland Security, the Transportation Security Administration and the bumper crop of “intelligence” organizations that have come into being since 9/11 are less about fighting terrorism than spying on and controlling law-abiding American citizens. Recent laws and court decisions have put increasingly invasive technology (warrentless covert GPS vehicle tracking and military-grade aerial surveillance to name but two)into the hands of James Bond wannabe local cops. The FBI’s fingerprint database extends to one-fifth of the US population. Personal information that the government is by law explicitely prevented from amassing is simply shifted to private corporations such as Checkpoint which then “work in close cooperation” with law enforcement agencies, IRS, SSA etc. Google Earth’s satellite imagery defeats the last bastion of personal privacy; a goddamn backyard fence.
This is no longer the country that I was born in. The trajectory is clear; it will get worse, it will never get better. I want to spend my remaining time in a place where I can walk down the street and feel free and anonymous. That place is not the United States of America. So, where is it, Michael?
James
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Tonga residency is easy, the country is safe (and safely away from No. America & the Northern Hemisphere), unspoiled, beautiful AND inexpensive – what more could you ask for ?