Porque la derecha debe ganar

Free Enterprise in Honduras

In Opinión on 12 noviembre 2009 at 1:02 AM


Contrary to what everyone believes, if international aid to Honduras is stopped the Earth will NOT sit still nor the sun will stop moving across the sky. In fact we have not had international aid prior to the removal of Zelaya, most of the aid was stopped because of rampant corruption, anyways most foreign aid is used to pay bureaucrats, rentals and luxury vehicles. Honduras can win its independence in a real way, by increasing its production.

Henry Hazlitt once said: “The only real cure for poverty is production.”. One of his books “Economics in One Lesson” can be downloaded here http://prawo.uni.wroc.pl/~kwasnicki/EkonLit/Economics%20In%20One%20Lesson.pdf. Hazlitt does a good job at uncovering the economic fallacies that are shown upon us as truth and how they mislead us into believing all those lies.

Let me remember you my dear reader, than Honduras economy is run in a large scale by the informal sector, that part of the economy is huge, with several economist giving numbers showing the informal sector with a production way ahead of the formally established business. Which in my opinion is good for our economy, but why don’t these same people, successful businessmen and women can legitimize their businesses. First of all take a look at what is needed in Honduras to formally establish and run a business (Manual in Spanish)


Imagine a 74 pages manual on how to create a business in Honduras, it is possible for the foreign investor who can afford a lawyer to wade through the legislation, but for a micro or pico businessman making $50 to $300 a day, which is good for Honduran standards, how can you formalize with all that nonsense.

To make it short, you need  a Lawyer to prepare the documentation and you have to register at the government level, state level, city level and finally (sigh) with the local commerce chamber. You have to adhere to several other institutions like RAP/FOSOVI (Housing Fund), IHSS (Social Security) plus you have to pay taxes to the city (Sales Volume Tax, plus operating permits), to the firemen (who are paid about every three months), to the state (which in turn use your money to create more laws and make your life more difficult). Did i mention 14 wages a year for your employees plus from 10 to 20 days of paid vacations. Almost 30 days of national holidays (between formal and informal), ah, and you have to pay double on weekends and Holidays, you have to pay 75% surcharges to your night shifts. Government control prices on many items, etc, etc.

I strongly believe that the complicated legislation on this matter is in fact which is causing the problem. We don’t need more laws, in fact we need to unify the current tax law, and its associated decrees making the process easier, at this point your business papers are nothing but dead trees, you can’t get a loan on your business unless you have property, the city operating permit is nothing but a piece of carton without meaning, your taxes for the firemen are instead used to pay bureocrats which are paid $5000 a month instead of paying the crew of 12 firemen you could need.

Politicians in Honduras, hear our needs, we need to unify legislation to make easy to set up a business formally, the state would reap benefits from it.

  1. We have a real opportunity to grow Honduras. The answer is simplification of bueaucracy and regulation. Unfortunately, the mentality o politicians is normally to ADD regulations to try to solve problems. I hope in the post-crisis stage, we can acheive political will to do the right thing.

  2. […] More: Free Enterprise in Honduras « El Pergamino de la Derecha […]

  3. Siendo Abogada, comparte la urgente necesidad de que tanto el trámite para la creación de una empresa como todos los trámites gubernamentales, sean más expeditos. La sustitución de fronteras físicas por fronteras virtuales viene aparejada con una eliminación de trámites engorrosos e innecesarios que más que brindar control sirven de disuasivos del crecimiento.

  4. Si todo fuera tan sencillo como que la solucion a la pobreza fuera la produccion, en China no hubiera pobres. No creo que algo tan complejo como el proceso economico pueda conocerse en una leccion.
    Y si, creo que al menos un gran paso para mitigar la pobreza en cualquier pais latinoamericano es acabar con la dependencia de los EE.UU, lo que, a diferencia de muchos, no creo que se lograra firmando con ellos tratados de libre comercio. Mexico es un ejemplo.

  5. The first step is always real development. More investment, more jobs. China has come a long way, since they liberated their economy. Honduras can too.

    No government program can truly eliminate all poverty, especially since it’s always a relative thing. But they sure can be harsh in their stated quest to enforce equality, as they were in the Former Soviet Union, where the Government Elite lived well indeed, and the rank and file just got by. Achievement was all about favoritism.

    Making it easier to start a business, and attract new investment would be a good thing indeed. Regulation can kill the golden goose!


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