What is the difference?

One of the great questions often debated is: How can some countries have mass poverty and others mass wealth? I got to the office this morning, grabbed a cup of coffee and looked out my enormous wall of glass with a beautiful view of the city. I wondered why this biggest city in Guatemala is barely bigger than my hometown with a crime rate that makes Flint look like heaven. Does this city, or country for that matter face a spiritual, economic, or political condition? What is at the core? I sat down at my desk and fired up my computer. While I was waiting for it to boot up, I picked up the Prensa Libre and read the following: 50% of the 13 million Guatemalans are facing conditions of poverty; 17% are in extreme poverty (living on $1 a day). But how is this? How can I go home, a middle-class citizen, and enjoy all my toys and they have nothing? I believe the core reason stems from a critical principle: economic stability will only result from constitutional stability. I sat my coffee cup down, and got on facebook.


The US Constitution resulted from a desire for economic improvement. While Jefferson wanted an agrarian communal approach, Hamilton desired strong centralized power that directed the economy. Madison sought a futuristic approach, which was one of a nation, or people that could respond to changes as they came. This, I believe, as Russel Hardin puts it, was the "saving grace" of the US Constitution because it allowed the American people to function out of coordination, rather than a contractual agreement with the economic mandates of a Constitution. This can be best demonstrated through the economic responses to WWI, The Great Depression and WWII. Economic policies of all types were proposed, implemented, and proposed again. Had Jeffersonian agrarianism dominated the Constitution's economic policies, no adjustments could have been made to respond to economic needs- and the same is true of Hamilton. I do not think, however, that the economic reaction to those crises was the best - an observation I make in hindsight mind you.

My point is this: You must have a stable Constitution that functions as a coordination mechanism rather than a contract between government and society. In Guatemala, five Constitutions have been put into effect. How can a people invest under such instability? They can't. Their only security is to depend on community property in order to distribute the losses. If you know by the flip of a coin that you can either double your property or lose it, you're less likely to take the risk. In Guatemala, it’s not much different. The laws consistently change.

But not only do the laws change, but so to do the institutions. Like American Progressive Woodrow Wilson stated: "The Constitution was not made to fit us like a straight jacket. In its elasticity lies its chief greatness." The problem with this view is that it does not understand that the very purpose of our constitution was to allow us to respond to social evolution and advancement without the need of institutions to secure any one way. In Guatemala, the Constitution of 1985 has already become passé. The government has replaced the Constitution with institutions. As a result, the people do not know what the law is and cannot respond accordingly.

Now I must add here that there are various institutions that governments should implement- for example, private property rights. In America, the process of acquiring property is fairly simple. But in Guatemala, we find the contrary. There is no stock market in Guatemala. Investment is impossible. What incentives are there then to promote social harmony when the individual cannot seek to better his personal welfare? In the US, the Constitution did not guarantee any certain economic structure. What it DID guarantee, however, was a respect for individual rights. This naturally resulted in a market capitalist economy because Market Capitalism is the system that best respects individual rights. The US Constitution protects individualism and then allows the welfare of the individual to be determined by the market and not by the polity.

In Guatemala, this is not the case. Social democrats proclaim to guarantee the prosperity of Guatemalans and try to determine the welfare of the citizens in the polity, removing any individual rights in the market. When we view a constitution as an "elastic" document, we remove the chains of government. This is what is happening in Guatemala. They cannot have a stable stock market, because investment depends on the law, which constantly changes.

An inconsistent Constitution results in shambled economy. Guatemala proves this. I am glad that I’m working for an organization like ProReforma which understands the importance of equality before the law. ProReforma is the first of many steps that are needed to see reform in the country of Guatemala.