#123 – The Expat Files: Real Expat Life in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:03] Hi everybody, I'm Johnny Mueller and you're listening to The Expat Files, living in Latin America. The show that tells you what it's really like to live, work, play and or retire in Latin America. I tell it just like it is, not the version they give you in those glossy travel magazines, or the picture they paint for you in those international traveler websites, where they're only trying to sell you something. What's it really like for expats living in Latin America? Well, it's time to take off those rose colored glasses and find out. So let's get started. Johnny here again, and if you missed my announcement in the last show, by popular demand I'm going to be giving a Latin American insider seminar personally, down here in Latin America, at an undisclosed location. And it looks like it's going to be for about 3 or 4 days, and I'll be your guided tour

[00:48] and host, along with a few other Latin American specialists, including a lawyer that's so well connected, that every single door is open to him in government, all the way to the top. And he's a Latin American tax specialist, and a copyright and patent law attorney trained in Europe. And besides him, we'll have another all American expat gringo, who's a US and Latin American tax specialist, who's been living down here an awful long time, and who's got hundreds of gringos and expats for clients. Because as you know, if you live outside the United States, you still have to file your taxes every year. So he's the go-to guy and he knows all the angles and tricks. So I'll say no more about that. So if you're interested in coming down and spending a couple of wild days with me, and a few of my expert cronies, and you want to see how tuned in expats really live, work, play, and or retire down here, and you want to learn the secrets to being a tuned in expat

[01:35] yourself, or maybe you want to know how expats live like kings on a half to a third of what you pay up in the first world for a simple middle class life, or maybe you just want to learn how to cut your stress in half and add 20 good years to your life. Expats down here are doing that all the time. It's just a side benefit of being an expat down here in Latin America. The fact that we have completely healthy and natural food, grown right in the area, with practically zero genetic engineering. If you're interested, send me an email and I'll keep you posted. As I finalize the details on what I call the insider's guide to Latin America. And I guarantee you that no one's ever given a seminar like this before, and I promise that a lot of things I'll be talking about, I've never brought up on this show. Because certain secrets just have to remain secrets, and you just don't blab them on the air for everyone to hear, including Big Brother.

[02:23] But if you come with me on this seminar, anything goes. And you know, just a week or two ago I mentioned that I was going to be putting on a seminar down here, and right after that I got a slew of interesting emails from listeners saying things like this. Dear Johnny, let me be the first to say, sign me up for your seminar, finally an alternative to the same old same old thing, like websites and magazines like International Living keep churning out year after year. And speaking of churning that kind of junk out year after year, don't think that I don't see all that stuff out there too. In fact, a lot of you listeners send me emails asking me to comment on various deals and promotions that some of those slick companies are offering out there, wondering if they are a good deal or not and you want my opinion on it. Well, all I have to say is this, they're all selling you something. If you come to my seminar, I'm not selling you a thing, I'm going to force you to see

[03:11] things as I see them down here, how they really are. Not as portrayed on the internet and in those glossy magazines. And for those of you cynics out there who might say, yes you are Johnny, you're selling us this seminar. Well, guess what, it wasn't my idea. When you do a seminar, you have to make time for it, you got to do a lot of preparation, a lot of footwork and scheduling and organization, and that means basically I have to switch gears down here because I live the life of Riley. Why should I hop on the treadmill again and force myself to do some real work? So let me repeat, this was not my idea at all, but actually by popular demand from you guys out there. But I'm glad to do it because like anybody, I'm always up for something new and I've got a stockpile of information that I can't really talk about on the air. So why should I keep it to myself? And as far as you guys sending me emails and asking for my comments on articles and seminars

[03:57] and books and videos and whatever on other countries down here in Latin America, you know I can't really comment on all that stuff only to say that I've read some of it too and at the end they're always trying to sell you something. Always, it's always about the money. And here's something important to keep in mind, remember for the last few years there was a big push on Uruguay, a big push. All those websites and glossy magazines were pushing it hard. But now, where is it? You don't hear about Uruguay anymore. Not really, not like you used to. And though the big traditional internet promoters are still pushing Panama, but they're not on that bandwagon quite as much as they used to be either. Especially now since Panama has caved in on its secrecy laws. You know that don't you? Bank's secrecy laws no longer exist in Panama. They're exchanging information with the US right now as we speak.

[04:44] You worried yet? But the push on that is fading away too if you've noticed. What most people don't know, and it doesn't take much time to figure out, is that a lot of these guys connected with these glossy magazines and those internet sites that are trying to tell you to leave America before it's too late. Well, a good number of those folks are pushing real estate and development projects that they actually have a piece of themselves. Which is not necessarily a bad thing at all, but if they bought some dirt cheap land down in Panama 10 years ago, and developed it, and are offering to sell it to you at some multiple of that now, well they've got some skin in the game, don't they? Just remember that when someone's offering you a deal that you just can't refuse. But whatever happened to Uruguay? Why isn't anybody talking about it anymore? I'll tell you why. I've been down there. It's cold half the year because it has all the four seasons, and you even get snow.

[05:30] It's flat, it's windy, and just not scenic at all. 80% of the country's like being in Nebraska. Only colder. And if you like that style of living okay, some people like living in Kansas too. And in many places the cost of living in Uruguay is quite cheap. Latin American style cheap, you know, half to a third what the first world prices are. And it's really pretty safe. But here's another thing you didn't know about Uruguay. Did you know that 16% of the working population worked for the government? That's almost as much as the United States, which sits at about 20%. Which means that one in five workers in Uruguay are deadbeat freeloaders working for government, and government workers get paid twice as much as a similar job in the private sector. So everyone down there is dying to work for their version of Uncle Sam. So they can sit on their dead asses.

[06:16] And the government is expanding all the time like a cancer. Because they've gotten it into their heads that having a big bloated government is their ticket to being first world. And the little country of Uruguay is on that fast track to big bloated government, that's for sure. But not nearly as fast as Costa Rica, Panama, Chile, and Argentina. Which I'll get to in a second or two. But if that's all you get is cheap and safe, and the rest is all pretty boring and ugly, half the year anyway. I can think of a hundred other places I'd rather be in Latin America than Uruguay if I was going to pick up everything and leave and make a 2,000 mile move. So why were so many people on the internet and those big glossy tourist magazines pushing Uruguay then? Well they've got skin in the game, that's all. It's always about the money, isn't it? Now talking about big brother, this gives me a very good chance to compare first world

[07:02] style big brother to Latin American style big brother. Now I'm about to give you some facts I'm sure you never heard before. So here goes. Now if you look it up, you'll find that in the United States about 20% of the United States working population works for government, state, federal, or local. And if each one of those persons who works for government represents a breadwinner in the average family of four, you've got over 60 million Americans depending on a government check for their livelihood, 60 million. Now remember that number though, 20%, 20% of Americans working for state, federal, or local government. Now let's pick a Latin American country, one that everybody has on the tip of their tongues, Costa Rica. According to their statistics, 25% or one in four employed people work for their version of federal, state, and local government.

[07:49] So they've actually got 25% more of their people on a per capita basis working for their government than the US does and the US is considered the big brother capital of the free world with the UK coming in at a close second. And remember, we're talking the free world now, not China, North Korea, or Cuba. And believe it or not, in North Korea and Cuba, 50% of the adult population works for the government. Talk about big brother. Now let's take countries like Salvador, Bolivia, Ecuador, Guatemala, and Peru. Now according to their statistics, they'll get about 5 to 10% of all their people working for government. About half as many as the United States per capita and a third as many as Costa Rica per capita. Now what does this mean exactly? Well if you look strictly at the numbers, the more people you have working for government,

[08:36] the stronger the government enforces its laws because it's got big numbers of people to do it. Big legislatures, big rule making bodies, big police forces, countless committees and paperwork pushers, dozens of bureaus and law enforcement agencies, and of course, very high taxes to support that structure. And the tendency, like any blood sucking parasite or cancer, is to grow even bigger. So when you look at it that way and you compare the United States to the big majority of the 20 Latin American countries, the ones that have the fewest government employees per capita, between 5 and 10% of their workers in government service, the ones like Guatemala, Salvador, Nicaragua, Honduras, Peru, Bolivia, Ecuador, and alike. And here's the ones that don't belong in that group, Costa Rica, Panama, Chile, Argentina,

[09:23] and Uruguay. In those countries that first world style government cancer has taken hold, and in a big way, and it's not about to stop and it's only going to get worse. So let's talk about that in relation to the big brother effect, which is only possible when you do have a big bloated government. So with the United States having two times or greater number of workers per capita in government than that long list of Latin American countries that we just spoke about, you could say the United States has two times the enforcement power, two times the governmental oversight, twice the capacity to make new legislation. The fact is they could do two times as much damage or more as a big brother state than any of those Latin American countries I was talking about. Just based on statistics, all else being equal. But of course, I'm making a big oversimplification here because I'm not breaking down the branches

[10:09] of government and how many people work in them. I'm just assuming that all the government departments and agencies in the United States are twice as big or more than their analogs in those Latin American countries. And you can really make a general assumption that that's probably correct, because all governments in Latin America are intercopying everything the United States does, including the U.S. Constitution, their treaties, their rules and regulations, and all their screwed up mind-boggling volumes of legislation. But that also means, for example, if the majority of Latin American countries have half of the people staffing their IRS department, for example, and that means you're surely looking at a very weak tax enforcement system compared to the United States. Just imagine the United States IRS if you cut half its employees today and threw them out on the street. Yippee! Not only would every American dance in the street and start partying, they'd be breathing

[10:57] a huge sigh of relief every time they took a questionable deduction. Because if the IRS only had half of the manpower that it has now, and that means half of the budget, well, all else being equal, you'd predict that you'd probably have half as much stress yourself because there'd probably be half as many audits. But that's not gonna happen. It's just a little fantasy of mine and a few hundred million other people. But it is a good example. So basically what I'm saying is, if you live down in one of those 14 or 15 Latin American countries that I spoke about, you're looking at less than half the size of government in general, half the size of the Nanny State, and half of the specter of Big Brother. If you're just simply looking at the government employee numbers. But here's the other thing, those low government employee numbers are really not the whole story at all. In fact, for us expats and you expat wannabes up there, there's even better news.

[11:42] It comes down to the fact that people in Latin America, in every Latin American country, including Costa Rica, Chile, Argentina, Panama, and Uruguay, the ones with the high Big Brother quotient, anyway, all Latin Americans, especially the ones that work in government, live with what we expats and gringos call down here, the manana mentality. Which means we're really not in a rush to do anything. And if the pressure's on and we've got a big stack of work on our desks, and we've got a lot to do, we'll just shove it in a drawer, have a walk through the park, have a nice coffee or a drink, and do it tomorrow, manana, maybe. And down here it's not just a government phenomena, it's in every facet of society. Why do you think it was so difficult when first world companies first came down here at the franchises like McDonald's and Wendy's and Burger King, why do you think it was

[12:28] so difficult for them to get their employees whipped into shape? Because in those early days, at least 80% of those Latin employees were late for work, nearly every day of the week, for weeks and months at a time. And the boss can fire one or two people if they're chronically late, but you can't fire 80% of your workforce, now can you? But those were the early days of franchising, and those weren't the only trials that franchises were put through in the early days, due to that manana factor. But now that franchises are down here in a big way, employees really do know what their first world bosses expect out of them. And guess what? Most first world franchise operators that I know have told me that they'll only rarely hire an ex-government employee. Because for one thing, down here government employees don't quit, because they get paid twice as much as the equivalent job in the private sector. So anyway down here, anyone who fills out a resume for you saying that he quit a government

[13:17] job, well that alone should raise a lot of suspicions for you. But that's another story. And if they happen to have been fired from a government job, then forget it. Because down here, to get fired from government, is virtually an impossibility. It's just like up in the first world. You practically have to be a child molester or a serial killer to get the boot. And even then, your union just might get your job back for you, with back pay and damages. Such is the craziness of government jobs, government unions, and lawyers up in the first world. But don't let me mislead you here. Down here in Latin America, you can forget about the power of the unions. A few do exist here or there, but they've got zero power, believe me. And if the unions down here did have any clout, those poor schmucks in those Nike sweatshops would be making more than five or six bucks a day. And that's why these days, Latins who work at the first world franchises down here, the

[14:05] ones that went through the training period and have a good record, are considered very valuable employees, even if they only make 300 bucks a month. Why? Because the first world managers whip them into shape, and they come to work on time. But that's another story that will get into in another show. I'm talking about that manana attitude now, and how it plays out down here, and the laziness of government employees in general, even in the first world. Take your own hometown up in Cleveland. All you have to do is walk into your local job service office, welfare department, housing department, or whatever government agency, and take a look around and tell me that your taxpayer dollar's not going right down the crapper. Well, take that inefficiency and multiply it by two, or even more, and you're talking about the efficiency of Latin Americans who work in their government. Besides the fact that in every Latin American country, they have government jobs that only

[14:50] require a sixth grade level of education as a minimum requirement for a job interview. And I've seen the want ads in the local papers down here, and just lately I was looking at a Managua Nicaragua paper, and the cities got a big push to hire a new policeman, and they're asking for a minimum of a ninth grade education now for hiring police. And I guess things must be progressing, because just a few years ago, it took a sixth grade education to become a cop. Now if they only could train those cops to stop urinating on the side of the road, now that would be progress. Now you have to trust me on my estimates here, but what I think all things considered is that countries like Ecuador, Guatemala, Peru, Belize, Nicaragua, El Salvador, and Bolivia don't really have half the big brother effect of the first world, like the raw statistics

[15:36] might bear out, but in reality in those countries there's almost no big brother effect at all. And a lot of it's just government complacency and the manana effect. Not to mention governments down here don't know how to budget their time, their money, or their resources. You're talking about countries here that have brand new fleets of cars, but no one budgeted the money for gas, or for that matter, maintenance. And that's really good news for all you people who hate big brother and excess government, like so many expats do. So in effect, in the majority of Latin American countries, the big brother effect is almost negligible. Compared to what you guys are used to up in the first world, they've got no Patriot Act, body scans, or cavity searches down here. You see none of that yet. But in Costa Rica, Chile, Panama, and Argentina, they aren't making their baby steps in that direction. Especially Costa Rica and Panama.

[16:23] But let's talk about those other countries like Salvador, Honduras, Guatemala, Peru, Ecuador, and Bolivia. The ones that have a negligible big brother effect. When you live in some of these countries, like I have, the only time you ever think of government as a pain in the ass is when you actually have to go down to one of their government offices and get something, like a driver's license. Or get your property registered, or renew your residency or something like that. But every wise expat knows he never has to do that himself, he just has his lawyer do it. Anyway, other than standing in a bunch of lines waiting to get your driver's license, expats have almost zero contact with government. And even if you do own a business, it's your lawyer or your accountant who are going to do the necessary government paperwork. And those guys work so cheap that there's no point in you doing it yourself. In fact, expat Eddie told me that for his restaurant businesses in Salvador, and he's

[17:10] got six of them, his accountant does all the paperwork for all six. And Eddie pays him about $1200 US a year. That's $1200 a year, not a month. Which works out to $200 bucks a business for all the accounting work. And Eddie just goes into his lawyer's office four times a year and signs the paperwork. And that should give you a little idea of how things are done down here if you're an expat in business. And that's why so many expats do start successful businesses, even if their Spanish stinks. Guys with bad Spanish just hire a 100% bilingual translator for a month or so at three or four hundred a month until they get the hang of things. Now down here, since there's very minimal government presence and minimal interaction with you on any kind of level, well, it's like this. One retired expat lady tells it best. She's living in a nice, inexpensive, low-volume tourist town in Guatemala called Antigua.

[18:00] And she told me, living in Antigua is a lot like the way she lived in Danville, Illinois, back in the late 50s and early 60s. She remembers back then, in her little town in Illinois, that her and her family had absolutely no fear of government at all. The thought that it might be oppressive never crossed their minds. No one was watching them, scanning them, monitoring their phone calls, or patting them down at airports. Of course, the technology for that stuff didn't exist. But give this, back then, in the late 50s and 60s, about five to ten percent of working adults made a living working for the government, state, federal, or local. Yep, the very same percentage of the population working for the government that the majority of Latin American countries have right now. Except, of course, those five higher-tax countries that I pointed out that I don't recommend

[18:45] you live, work, play, and or retire in. But they're very nice places if you don't mind spending first-world money, being hit with first-world-style taxes, and you don't mind out-of-control growth in government. So if you think my estimates are off and I'm making too many extrapolations, be my guess. Go down and live in Costa Rica or Uruguay for a while. Then tell me how much different their version of Big Brother is from the one you knew up in the first world. It might seem a clumsy, pale imitation now, but the gap is narrowing. And, just remember that in the late 50s and early 60s, the US had the same total percentage of people working for the federal, state, and local government. And if any of you were around back then, you'll remember there was no talk of Big Brother. Not in the US government anyway, in Soviet Russia and Cuba maybe, and of course in Orwell's book 1984, where the term actually came from, but the term was never really used or directed

[19:35] towards the United States with such cynicism like it's used today. And that's why I can honestly say, if you live in Nicaragua or Bolivia these days, it's like living back in the late 50s and 60s. Now that number that I'm tossing around for Costa Rica, that 25% of the adult population that's working for the government, well guess what? Those are the government's target numbers for Chile, Argentina, and Panama too. Though none of those countries are near there yet. The figure for those countries is hanging around 15 to 20%. Right in the range of Uruguay and the United States. Talk about creeping socialism. It's practically galloping. And isn't it funny that those are the countries that I told you many times before, whose governments are on the fast track to tax and spend just like we do up in the first world. Latin American governments and big wigs have it in their heads that they can drive themselves

[20:21] into first world status by copying everything that first world governments do, including the taxing and spending part. Man, are they heading down the wrong road. In those four countries, Costa Rica, Panama, Argentina, and Chile, they just keep on getting bigger and fatter and piling on more and more of the first world legislation and regulations without regard to how in the long run what it really does to the society. Take for example just recently in Costa Rica, those 500 speed trap cameras that I mentioned in a past show, posted up and down the road from the airport to San Jose, the capital. Pretty much specifically designed to catch gringos, tourists, and expats, who have the money to pay for those $300 to $500 fines, which automatically get slapped on you by those robotic speed trap cameras that take your photo. And that trap system was designed, but they won't tell you this, to prey on hapless starry-eyed

[21:10] tourists, who don't know much at all about driving in Costa Rica, and can't do the metric system calculations in kilometers per hour. Not when they're driving in a foreign country where practically everything is new to them, including that rental car that they're driving. You might remember I talked about those speed traps in a previous show, in that it was a huge money maker for the Costa Rican transit system. Well, even with all that bad publicity, including mine, they actually plan on adding 1,500 more speed trap cameras just like that throughout the whole country. And since we are talking about Big Brother, let's talk about Venezuela for a second, a country that I don't recommend you live, work, play, and or visit, or invest, or retire in, not the mainland anyway, though they have a lot of nice islands off the mainland, which are great tropical beach retirement havens, if you like that style of living, hot, humid

[21:57] and breezy all the time. And these offshore Venezuelan islands like Margarita Island, my favorite, suffer almost none of the problems that the mainland does. You know, extreme poverty, crime, 35% inflation rate, the second worst in the world, if you're using the local currency boulevards, that is, which expats try to avoid at all costs. So anyway, I'm not ruling out Venezuela completely, the islands are cool. But in regards to Big Brother, you have a virtual dictator in charge, who's not going to get out of office until he dies. And since the government has nationalized all the oil reserves, the refining capabilities, and the fact that Venezuela is the fifth largest oil producer in the world, you'd think that the standard of living would be way up there and the whole country would be putting on the writs. Because they definitely could. In fact, it's been estimated that, if Hugo Chavez actually did share the wealth, all

[22:45] those hundreds of billions of dollars of oil money that come in every year to the government, every single Venezuelan could live a middle class or better life. Then why does 30% of the population live on 3 bucks a day or less, and the minimum wage is only about 325 bucks a month, along with like I said, the second highest inflation rate in the world at 35% a year. You gotta wonder what Hugo's doing with all that oil money. But you don't have to wonder why, 25% of all adult Venezuelan workers are working for the government, one in four, just like Costa Rica. Which really isn't as bad as it sounds when you consider they actually have a product to sell, oil. And that the government owns it, therefore the government gets the income, and they can dish out the money the way they see fit. But if they have so much oil, why is Venezuela such an economic basket case? This is a country that, at $100 a barrel, pumps out $2 billion worth of oil a week.

[23:37] All signs point to the fact that they have way too much government, way too much big brother, and they have a huge military, and they keep purchasing more outside first world firepower. And what about militaries in Latin America? Now we all get that certain image in our heads, from the nightly news, of a half dozen military guys in camouflaged uniforms and flak jackets, standing on every street corner in every big city in Latin America, with their AK-47s blasting rounds at freedom fighters, dug in across the boulevard, with their headbands and Molotov cocktails and Che Guevara t-shirts. Well let me set the record straight, down here you don't see any of that anymore, in fact I've been down here 20 years and I've never seen any of that, even in Cuba. Man if you see that stuff on TV, that's old pre-80s newsreel coverage, stock footage of a typical latin revolution.

[24:23] And sure, nearly all the countries down here did have that stuff going on some years ago. But when that stuff was really rocking, most of us weren't even born yet. But just like your grandparents and maybe even parents had their stories about World War II, everybody had a friend or a relative who went over there and died. Or got his leg or his arm blown off or something. Anyway, all the people down here in Latin America have the same kind of memories of their revolutions. And if you go to any average latin americans house, and there's an old timer at the dinner table, if you get him going he'll tell you about his war stories too. Everybody's got him. But it's ancient history, just like for us Vietnam is ancient history. But there's still a lot of guys in wheelchairs because of it. But the point is you don't see hordes of military guys on maneuvers, that's just not going on down here. Not even in Cuba believe it or not. And why do you think that is? Well that's because it scares the tourists, and tourism is huge, especially in Cuba.

[25:13] Though I'm not saying that the spirit of Che or Fidel or for that matter Bob Marley isn't alive and well down here, in the minds and spirits of would-be rebels, the university coffee house set, and the hippie wannabes. Every day you see kids on the street and people walking around with their Che t-shirts. Practically every CD disco and retro bar has a Che Guevara photo stuck up there somewhere. Right up there with Bob Marley, Eric Clapton, and Marilyn Monroe for that matter. Che memorabilia has always been big down here. But none of these guys take it seriously. Not really. A guy with a Che t-shirt knows his name, but he doesn't actually know what he did or what he stood for. It's just a cool thing to wear or to have on your wall. Like James Dean or Elvis in his lean years. There is very little revolutionary spirit left down here in Latin America. And as for the young kids and college students who are usually responsible for drumming up

[26:01] support for violence and revolutionary stuff like that, well they're the Latin Mi generation. Into consumerism in a huge way. Just like high school and college kids are up in the first world. Though everything down here lags by a few years, so what you might call the Mi generation I guess is the X generation down here. Which we call the Y generation up in the first world. I think. Latin college kids who a generation ago would have been on the streets advocating overthrow the government. Well nowadays they're focused on even obsessed with Facebook, Twitter, fashion, the latest version of Grand Theft Auto, and even the Kardashians if you can believe that. They're absolutely obsessed with everything in anything first world. And they really don't seem to care much about who's in government. As long as they can download the latest pirated DVD. In that way they're exactly like the high school and college kids up in the first world.

[26:49] They don't really give a damn who's in political office either. They're more concerned with the next iPhone app. And even if the vast majority of Latin kids, over 50% of the population, don't have an internet connection at home, or a smartphone because their parents just can't afford it. They're still very tuned in to what's happening in the first world because they have those dirt cheap cafe internets down here where it's 50 cents an hour. And everyone, even the poorest family, has cable TV these days, even if it's pirated. So even those families who can't even afford a gas stove and who cook with firewood can eat their nightly rice, beans, and tortillas watching Kim and Courtney take New York. And by the way did you know that Che Guevara died with a $5,000 Rolex on his wrist? Capitalist pig. You've been listening to The Expat Files, living in Latin America, coming to you each

[27:42] week from somewhere south of the border. And don't forget you can email me on anything at all about Latin America, The Expat Files at gmail.com. Once again, The Expat Files at gmail.com. See you next time. Los bemos.