Panama: Land Of Extremes Amid Global Tug Of War

Panama is a land of extremes in many ways, and nothing proves this more succinctly than the great variance in Panama’s cost of living.

For example, in Casco Viejo, Panama City’s historical district where newly restored buildings fetching millions of dollars sit immediately next to decrepit buildings that are nearly ready to fall apart if they haven’t already, you should prepare to shell out $7.00 for a vodka soda at an upper scale restaurant with an outdoor patio on one of the recently restored historical plazas, and $14.00 for an 8 oz pepper steak with rice.

Yet, walk up the street a half a block from the same high-end restaurant, and there’s an elderly man with a sewing machine in an unmarked “office” who will hem your pants while you wait for $2.00.  And that same steak in a grocery store will set you back about $3.80/lb (succulent “four pepper” sauce not included).

And after spending $100 on a dinner for two with wine, you’re expected (not obligated) to tip the parking security guard a mere 25 – 50 cents for ensuring your car is not stolen, crashed, scratched or blocked from exit while you dine. For this tiny donation, your self-employed parking assistant will even hold up traffic while you back your car out into the street and get on your way.  And if you thought 25 cents would be insultingly small you’d be wrong – they are grateful, because there is always someone who drives away without tipping at all.

On a side note, this type of self-propelled entrepreneurial solution to unemployment would be “illegal” in the U.S. or Canada, where providing service for money is unacceptable and unlawful unless all of the proper permits, licenses, insurance, taxes, disclaimers, and accreditations are in place.

Indeed, the stark contrast in prices for goods and services in Panama relates to the dramatic differences in earning power between the upper 1% and the lower 99% of income earners.  If you are looking to buy something that appeals to everyone (the 99%) like locally grown food, Chinese made clothing, or public transportation, you’ll enjoy a bargain lifestyle.

But if you like to indulge in the luxuries enjoyed by the 1%, like fine dining, high end sports cars, luxury penthouses, or brand name jewelry, expect to pay about the same as you would in Miami or Toronto.

The contrasting extremes also goes for housing and rentals… as an example we recently contrasted one rental in Panama for $100 per month and another for $10,000 per month, with almost the same square footage.

As it is, Panama has managed to attract newcomers from both ends of the spectrum: retirees looking to scrape by on their social security checks, and multi-millionaires looking to move assets offshore or add Panama property to their list of emerging market asset holdings.

Alas, these extremes represent a potential problem for Panama.  Unlike a socialist country like the United States, the lowest 1% in Panama, who are mostly of indigenous descent, do not receive food stamps, medical subsidies, or very few if any government hand outs.

The lowest 1% of income earners in Panama have not experienced any of the benefits of Panama’s recent economic growth, and if anything, life has become even harder for these people, as the cost of living rises faster than their already paltry monthly wage of $300, if they are employed at all.

The result of these inequalities have been protests, which recently blocked Panama’s main highway to the province of Chiriqui, including David and Boquete, for an entire week.  Violence broke out this past Sunday Feb. 5, when the national police were called to clear the roadway.

As ironic as this world has become, its interesting to note that while
The Bachelor and his many female suitors were frolicking at the luxurious Trump Ocean Club and visiting the Embera Indigenous tribes in the Darien region of Panama on prime time U.S. television, the indigenous population on the ground in Panama were seething with anger and frustration at the inequalities being forced upon them by the realities of globalization.

The protests and road blockages had serious effects all over the country. Many Panama City supermarkets and restaurants ran out of fruits and veggies imported from the western side of the country, while the cities and towns of Chiriqui were starved of diesel fuel which is brought in from Panama City.  Travelers heading in one direction or the other were stranded without adequate access to food or water.  Flights between Panama City and David were overflowing with passengers as the only way to get from one side of the country to the other.

We’ve lost count of the number of countries experiencing social upheaval, all of which in one way or another relates to the 99 to 1 discrepancy in the way the spoils of globalization have been distributed.

Obviously, the tug of war between 1%ers and the 99%ers is not limited to the United States.  Indeed, if the proportions were extended globally in terms of per capita income (assuming food stamps and government handouts were quantified and considered income), nearly all Americans would be considered part of the upper 1% of income earners globally.   Yes, let’s not forget that even U.S. college drop outs who are unemployed and up to their ears in debt are somehow better off than 99% of the global population in terms of standard of living.

But anyway, the point is, globalization has had a rather peculiar effect.  Globalization has enabled a growing middle class in the developing world, it has put a downward squeeze on the middle class in the developed world, and pulled the wealthiest and poorest 1% even farther apart from one another in terms of spending power.  The question remains, what happens if (or rather, when) the tug of war finally snaps?

Watch The Bachelor Ben in Panama (preview):

Watch Spanish language news coverage of the protests in Panama, February 2012: