Life as a Spectator Sport

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Monday, August 08, 2005

How to avoid the coming meltdown . . .

Just plonk down $25,000 on a prime piece of Costa Rican real estate, brought to you by an increasing number of fly-by-night operators, and some genuine real estate brokers (franchises of Century 21, for example).

I've wondered for a couple of years now why the folk in power, and their corporate buddies, have behaved in such an inexplicable way. Why cut the financial legs out from under the middle class when it provides your primary customer base? Why emasculate the environmental laws and allow air and water quality to become even worse? Why exempt increasing amounts of income from taxation when our educational system is in such poor condition? Why allow increasing numbers of people to move their income out of the United States and avoid paying taxes at all? Those taxes don't just pay for the welfare system and the war in Iraq. They maintain the infrastructure of this country, the electrical grid and the interstate highways that our transportation system (and our consumer goods) depend on. You may buy your clothes in designer salons, but the raw materials for them still arrive mostly by truck. No matter how much money you have yourself, you still have to use the same roads and bridges as the rest of the population. You still breathe the same air.

Well, maybe not.

One answer to those questions is that the super-rich don't plan to be here to suffer the consequences of their actions. I balked at that conclusion when it first occurred to me. It just seemed too far-fetched. Where would they go, for one thing? Americans, even mega-rich Americans, aren't overly popular in a lot of places any more. Europe, the traditional playground of the rich, seemed less likely than it would have been in an earlier day. If nothing else, its large urban populations and dwindling rural areas make it as risky a place to live as the US when the oil stops flowing freely. Asia is just too culturally different for most Americans to feel comfortable there, except for countries such as Australia and New Zealand (and New Zealand does indeed have many American immigrants). Africa was clearly out—the people are the wrong color and the governments too unstable. That left Central and South America.

The countries south of Mexico bring one thing to most Americans' minds, I suspect: drugs. But the more I thought about it, the more likely it seemed that Americans fleeing the US would be tempted to look south. Much of the geography is still not just rural but completely wild. There is "elbow room," as Daniel Boone would have put it. There is a tradition of domestic service as well, something that I imagine well-off Americans would find attractive. Property taxes—indeed, taxes of all kinds—would be low compared to the US. Best of all, those countries seem to be relatively indifferent to what goes on in the rest of the world. American money is just money, with no political taint. And the countries are nominally Christian, the religion that has proven itself most amenable to corporate management. You may have missionaries from every imaginable Christian denomination in Central and South America, but Islam has apparently avoided it.

But it still seemed like too wild and paranoid a notion, even after I learned that much of America's solar panel production is going overseas, and that it is consequently difficult for Americans still living here to purchase large solar panels.

Then I heard of someone who was moving his family to Costa Rica. He tossed off a list of what he would buy to power their new home: generator, solar panels, batteries, controllers, inverters, etc. I don't know the dollar value of all this, but it sure ain't pocket change. What's more, Costa Rican real estate sites stress the importance of paying cash for your investment, or at least getting your financing somewhere else, as limited mortgage money is available and interest rates are high. So moving to Costa Rica takes a chunk of ready cash, not something the average bill-stressed American family can put its hands on.

These real estate sites (just google 'Costa Rica real estate' for a very long list of them) say that American corporations are moving to Costa Rica in large numbers, and that over one hundred thousand Americans have already purchased property there—an American colony in the making.

Costa Rica isn't the only haven for Americans fleeing the US, but it has the most stable government in the area, and it is actively courting American emigres. Other destinations include the Caribbean islands of Belize, Bermuda and the Barbados, those offshore tax havens where people "protect their assets" (to quote some of the numerous "offshore account" websites) from US tax laws. The IRS has estimated that 70 billion dollars of US income has avoided taxation by going out of the country. leaving the rest of us with the burden of maintaining roads and bridges, educating our children, and providing for our elderly on a much smaller tax base than would be available otherwise. Think that isn't a problem? Just look at the inner cities. Suburban flight left very much less income to tax, resulting in less money for street maintenance, garbage collection, police and fire department coverage, and all the issues we've come to associate with living in large cities.

So if your income falls in that rarified stratum protected by Mr. Bush's tax changes, and you're smart enough to get out while you can, consider Costa Rica. You'll be associating with people in your own moneyed class, and it probably doesn't cost much to hire a maid, cook and gardener. And if you're lucky enough to work for one of the corporations relocating there, you won't even have to change jobs.

But you know what? This is nation-looting on a scale never imagined by Ferdinand and Imelda.
posted by Liz @ 8:23 AM     |


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