Imagine a place where government plays a negligible role in public life. Taxes are almost non-existent. Businesses operate free from the burden of regulation or bureaucracy. People lean on each other to establish and enforce standards of public behavior. Imagine a place with no Obamacare, no insurance mandates, no mandates of almost any kind.
Libertarians are often derided as dreamers whose vision of the world could never be made real, but that is not true. All over the planet there are places where the Libertarian dream of hyper-limited government is played out in daily life. We can learn a lot about the merits and pitfalls of Libertarianism by examining the shape of life in the world’s Libertarian strongholds.
Belize is a stunningly beautiful nation of beaches, rainforests, and coral reefs at the southern end of the Yucatan Peninsula. A former British colony, it escaped the upheavals of Cold War politics in the Third World by being altogether too small (only about 300,000 citizens today), too remote, and too poor for anyone to notice their existence.
The country is a Libertarian paradise. The government is tiny and weak. Technically Belize imposes an income tax, but no one I encountered there seemed to know anything about it. Property taxes are laughably low. A couple I met from Dallas who own a beautiful $225,000 beachfront home in Belize pay an annual property tax of $40. Apart from entry and exit fees, those are the only taxes they pay to live there.
Property owners can more or less do as they please with their patch of land. Such rules as exist are loose and inconsistently enforced. The government lacks the resources to enforce any meaningful property restrictions even if they developed the will to impose them.
Why, then haven’t you heard of this country? If anything we have learned from Ted Cruz or Rand Paul is true, Belize must be an economic dynamo where the entrepreneurial energies of a free people are set loose from the stifling constraints of government.
It is not. Economic growth has been fairly stagnant in recent years, especially in comparison to other developing countries. GDP per person is a fairly reasonable $8,000, but that fails to reflect the concentration of the country’s resources in relatively few hands. Roughly half the national income flows into the hands of the country’s top 10%. Unemployment remains in double-digits and almost half of Belizeans live in poverty by local measures.
There does appear to be a remarkable degree of small scale entrepreneurship in Belize, just as you commonly find in other grindlingly poor countries. People have no choice. There is very little formal employment and no social safety net. Survival means investing enormous energy in an effort to find tonight’s meal.
What is unique about entrepreneurship in Belize is how little their efforts can accomplish. With no infrastructure, virtually no education system, and no access to global markets for knowledge work, Belizeans are almost universally hard-working, entrepreneurial, and poor.
That $40 property tax bill does not deliver an effective public school system. Belize offers nearly-free public primary school which allows most of the country to receive an education through junior high. About 80% of students complete the 5th grade. Almost 10% of boys under 14 are officially in the workforce.
High school is tuition-funded at rates comparable to a US junior college. Very few Belizeans receive a high school education and a tiny percentage attend any college.
Tourism revenue has been increasing as travelers discover the beauty of this off-the-grid destination. Despite the promise of this new revenue source, infrastructure to develop higher earnings has been nearly impossible to develop. The tiny international airport struggles to meet demand. The country has few paved roads and most of which become impassible for lengthy periods in the rainy season. Poor environmental protections mean private businesses and landowners must constantly struggle to keep beaches and reefs clean.
All this “liberty” means that the impressive work ethic and entrepreneurial energy of Belizeans earns them a very meager return. Using a government to pool resources allows a country to develop infrastructure that moves a population up a chain of value creation.
The people in Belize are no different from Americans. However, no one in Belize is building the next Google because they are still trying to get reliable access to the Internet. There are stark limits to what private entrepreneurial activity can accomplish without the power of an effective government.
Governments can potentially interfere with property rights in ways that dampen economic growth and harm liberty. That’s a reason for care and involvement, not a justification to destroy them. Ideology is minimally useful as a guide to solving political and economic problems. Making a complex political structure work requires a willingness to engage reality and prioritize results over purity.
Fortunately, for those who insist on having their absolute personal liberty unadulterated by other interests, there are still some beautiful places that will welcome them. Coincidentally, they’re all very cheap. Drink bottled water, use lots of bug spray and plan extra time to get through the airport.