OPEC

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Colombia: An American Friend


Why Colombia as a topic. I was researching who belonged to OPEC as a start, but it produced no countries that I did not expect. But there was Venezuela. I wondered how this could be the only country, besides the United States, in the Americas to produce oil. It turns out that it is not. Along with Venezuela there are Brazil, a true surprise to me, Mexico and Colombia. Colombia made the most sense to me as it shares a long border with Venezuela to its north and east.

I remember many years ago there were advertisements on television about coffee from Colombia. As it turns out Colombia is only second to Brazil in coffee production. Then I looked at who are Colombia’s main trading partners, and it turns out that the United States import more than double of another other country.

My thoughts turned to thinking that Colombians as a whole must be much like Americans in their earning power. But that is just not the case. First, we must look at the Colombian peso. Right now, the inflation rate in Colombia is 13.3%. It is most simply about the demand for products not produced in Colombia far outpaces its exports. The Colombian Peso is in constant fluctuation and of late, its value against America, its biggest trading partner, has fallen dramatically. That means that certain necessities are very expensive. The following table lists the top 8 imports Colombia gets from America.

  1. Machinery including computers (11.6% of total imports)
  2. Electrical machinery, equipment (11.1%)
  3. Vehicles (10.7%)
  4. Mineral fuels including oil (8.3%)
  5. Plastics, plastic articles (4.8%)
  6. Pharmaceuticals (4.4%)
  7. Organic chemicals (3.8%)
  8. Cereals (3.4%)

And so, a weak Peso vs the Dollar makes importing these things to Colombia very expensive to Colombians.

Rich people, regardless of where they live, seem to have a certain immunity to things like inflation. That is because buying an automobile, regardless of price, is not at issue to them. But when you consider the average Colombian, if they must have an automobile, it must be the least expensive available.

The median household income in Colombia is $15,812. That is below our poverty line but in Colombia, many goods and services are inexpensive relative to an individual’s income. In 1991 Colombia changed its constitution to include socialized medicine. But then I came across a figure which absolutely floored me. The rate of single mothers in Colombia is 84%! Of course, then I had to look at education levels. Well, that turns out to be 59% of Colombians have completed a secondary education or GED. Compare that to America which is 88%.

What do single mothers do for a living? An article written in Forbes magazine states, “Beyond the challenges the sheer volume of these numbers bring forth to already strained resources, the issue in Colombia is further compounded by the fact that a large majority of these single-parent families are headed by women, and that women represent a disproportionate percentage of the countries poor, a phenomenon commonly labeled as the “Feminization of Poverty”.  It is well-documented that lone-mother households are at the highest risk of poverty amongst women due to lack of income. This is further exacerbated by deprivation of capabilities and the gender biases present in both Colombian society and government. The culmination of all these factors in modern day Colombia has resulted in a vicious cycle of emotional, financial and social problems and other stressful life events for both the single mothers and their children.”

Another source took me to what jobs a single mother might take and among them is “sex worker.” I am not just talking about prostitution, the most obvious, but a much less obvious option they take which at the least keeps them off the street, “Cam Girl.” What is that? That is an online industry that has been around a very long time where, mostly men, go to find women, and sometimes men, who will perform various sex acts for them. I found such a site, I will not mention its name, where I was able to chat with a number of women. With one or two exceptions, each was a single mother where the father took no part in support of his child. They had taken the job out of desperation for some sort of an income. One woman in particular, who I will call Julie, recently had to be in the hospital. While she was in the hospital her income went to zero, which brought yet another hardship on she and her son. And as it turns out, such incidents are not uncommon at all. Even worse for them, when people find out what they do, they are ostracized by their community and God forbid their family should find out. They stand the stark possibility of being thrown out of the only housing they have.

American commerce is entwined with that of Colombia, but it seems to me that American investors would do well to invest in Colombia where labor is cheap and readily available. American venture capitalists would not only find it a good investment, but in turn, the people of Colombia would have a chance of lifting themselves out of poverty and those women working in the sex business would have other options.

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Political Tomfoolery


In this election year, the Republican Party has taken our economic condition as its cudgel. Similarly, the Democratic Party has taken abortion as its cudgel. Neither position helps the American public to any great degree.

The Republicans a very disingenuous in using the economy. In my undergraduate studies, oh so many moons ago, I minored in business administration. But even in those days, it was made very clear to us that we live in a world of a global economy. Simply put, every nation in the world is affected by the actions of either a handful of large economies of any single nation or that of a handful of small nations tied together.

Over the last 10 years, one of the world’s largest economies, China, has affected the rest of the world. China supplied, and still supplies, the world with electronic components and toys among to many other items. In return, China imported many food stuffs, particularly from the United States. When the corona virus hit the world, supply lines everywhere were negatively affected. Christmastime last year those supply line issues were shown to us via the major news outlets. Everything seemed to be in short supply, which was true. And who was to blame? Absolutely no one! The simple fact that many workers were too ill to work caused shortages which were entirely because of the pandemic. Recently, China has taken the stance of cancelling many of its food imports.

During those two years, many of those workers dropped out of the work force entirely, some never returned. Additionally, sectors such as transportation laid off huge numbers of their employees entirely because of the lack of demand. But in all cases, many of those workers who were of an age to retire, did so. Others got themselves trained for jobs which were still available and did not return to their previous job. Were there no pandemic, it is not unreasonable to assume they would have stayed on well beyond today. This was not because of the action or inaction of either political party. It was a simple and predictable part of economics. One such example is the oil industry. When demand goes down so do prices, a simple principle of economics. But the response of oil producing countries was to lower supply, an entirely reasonable response. This has the effect of raising prices even in a down economy. But this particular industry is somewhat unique. As the demand for oil started to rise, there is no reason for oil producing countries to increase production even though the United States was able to get OPEC to briefly raise production. Recently, OPEC decided to reduce production again.

Americans, thinking locally have taken this personally, and have disregarded this as a global issue, which, of course, it is. Right now, it is President Biden who is taking the heat for something over which he has no control, a global issue. The entire world is suffering the effects of higher oil prices with no country immune.

Our economy, like every economy in the world, is affected by the whims of stock markets, and in particular, that of the “futures” guessing game within stock markets. Easily spooked and too often wrong, these markets affect the prices we pay in the supermarket. Does the President of the United States or the entire 535 members of Congress has any sway over these things? It is foolish to think they do.

Politically speaking, neither party has the power to change our present economic situation. The best tact for each party is to explain to the public the truth, as I have just laid out, how our challengers with China, the war in Ukraine, the problems with the European Union economies, political unrest in Africa, food shortages world-wide, and so many other ills, all play into the economy in which we now find ourselves. One of the best moves, which Pres. Trump started, and which Pres. Biden has continued in earnest, is to make America lest dependent on supplies from other countries. No place is this more evident than in the automobile industry where new car availability is difficult at best. Pres. Biden has called upon industry to manufacture more electronic components here rather than relying upon other countries to supply them. But that is not an isolated example. Our export deficit has been plaguing us for decades with U.S. businesses sending more jobs overseas in search of lower manufacturing costs. There is one place that politics can take action, if unpopular to business, the resulting effect would be positive to Americans, in supply availability but in job availability.

It would be far more responsible were politicians to honestly educate Americans on the realities of economics than playing the us-against-them ideology being practiced today. All 535 members of Congress plus the President and his political appointees are responsible for seeing that through.