Jason Devitt

There are too many cars in Phnom Penh. As soon as we left the bus station, our tuk-tuk got caught in a traffic jam.

This is an economic observation, not just a grumpy complaint.

Motorbikes rule the streets of Saigon and Hanoi. We were told that ten years ago we’d have seen only bicycles. If the economy keeps growing, ten years from now most people will have cars. Beijing is further along; Bangkok has completed the transition. But today in Vietnam a Chinese motorbike starts at $400 - about six to nine months’ salary in the cities - and so right now a moto is the vehicle of choice.

Cambodia is much poorer than its neighbor. Average incomes are half those in Vietnam. Infant mortality is almost three times higher. Most people don’t finish high school. Most people don’t have bank accounts. (There were no ATMs in the country a year ago, and some people asked us how they worked.) Gas is often sold out of bottles by the curbside, even in the capital. The road from Ko Kong to Sihanoukville and on to Kampot is mostly dirt and even the road to Phnom Penh and on to Siem Reap was not completely paved. So how come so many people can afford cars?

I thought at first it might be the ugly face of capitalism: great inequality of income, urban wealth in a country where most people are subsistence farmers and there are still occasional famines. In other words, a lower average income than in Vietnam but a greater variance.

But in that case where is the middle class? The goods in the markets are very basic and there are no large stores. On Sisowath Quay, a pleasant riverside strip of bars, hotels, and restaurants, very few of the Cambodians that we saw were owners or even customers. If they weren’t employees they were beggars or touts. Outside the capital we saw no sign of any economic activity beyond agriculture, fishing, tourism, a little construction, and a lot of begging.

I am serious when I call begging an economic activity. Children are farmed. Modern Fagins rent or buy kids from their parents and organize them into teams with distinct territories. Women rent newborn babies to beg with, drugging them to keep them quiet.

You won’t notice any of this if you take your cue from "Why Is Everyone Going To Cambodia?" Spend four days at Sokha Beach in Sihanoukville - a four-star resort that will earn its fifth when they open their spa - and three days at The One Hotel in Siem Reap, which promises a cameraman and stylist to accompany you as you tour Angkor, and you’ll leave Cambodia thinking that it’s a rapidly growing market economy with charming, happy natives and a fab-u-lous heritage.

As the writer mentions in paragraph 156 or so, the reality  - and the answer to my original question - is that Cambodia is a totalitarian kleptocracy; a land ruled by thieves, where a weary population is trapped in poverty by a corrupt government that imprisons its opponents and rewards its supporters … with cars.

Teachers make $20 per month. Hotel staff make twice that. People who work for the government can afford brand new American and Japanese cars.

What moved me beyond moral outrage to educated self-interest is that they are stealing most of it from us. About half of the budget of the Cambodian government comes from foreign donors, mainly the US and the EU. You and I are paying for half the cars in Phnom Penh.

Now I believe in foreign aid and I’d like to see America’s paltry budget (in percentage terms) go up a lot. But foreign aid has turned Cambodia’s government upside down. In America the government get most of their revenue from us - the governed - through taxes (and fines and fees for services). In return they provides services that the majority of people want them to provide. Assuming that they want to stay in power and that we don’t want to pay higher taxes, the only way to keep improving services is to broaden the tax base: adopt policies that drive long-term economic growth so that there are more taxpayers and all of them are richer. Fail and we give someone else the job.

In Cambodia the government also get most of their money from us; they skim enough to buy off the smart people who can be bought, threaten the smart people who can’t be bought, and still have enough money to return more than a dollar in services for every dollar paid in taxes which, if you are not very smart, seems like a good deal.

We can’t give someone else the job, because there are no grounds for international intervention. We can reduce foreign aid in protest at the amount of corruption, but they can pass most of that reduction along to the general population without feeling much pain. And we can tell them that we think that this is a really, really bad way to run a country, and watch them ignore us.

Personally I would like to starve the beast, a Republican phrase that seems strangely appropriate. Let’s bypass the Cambodian government as much as possible and give more money directly to NGOs that represent local communities. Are there corrupt NGOs? Some, probably, and many more that are inefficient or wasteful. But we can cut off funds to an NGO completely and give the dollars to another one; there is only one government.

The real problem is how to decide which NGOs to fund and how to monitor their performance without wasting a lot of money on administration. I’ll return to this topic, but given my background it won’t surprise you that I think we should use the web.

This entry was posted on Tuesday, January 31st, 2006 at 11:31 pm and is filed under Economics, Travel. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.