Home » How Bad Is The Corruption In Mexico, Panama, Nicaragua And Belize?

How Bad Is The Corruption In Mexico, Panama, Nicaragua And Belize?

It’s time to answer the question that’s the elephant in the room: how bad is the corruption South of the Border?

As the founder of Best Places in the World to Retire, I’m often asked by those living in the US and Canada (what we’ll refer to collectively as “North of the Border,” or “NOTB”), the following question:

“How bad is the corruption in Mexico, Panama, Nicaragua or Belize?” (I’ll refer to these countries collectively as “South of the Border,” or “SOTB.”)When I dig a little deeper to find out why they were asking, there would usually be two responses: 1) they wouldn’t want to live in a country where corruption was bad; and, 2) they wanted to find out how that corruption would affect them personally.

Let’s deal with 1) first; the overall level of corruption.

If you had asked me to compare the overall level of corruption between NOTB and SOTB countries two years ago, having lived NOTB for my entire life, I would have given you a fairly straightforward and confident answer: “The corruption SOTB is much worse. You can bribe cops to get out of traffic tickets and the politicians steal from their people. If it would bother you to live in a place like that, you may want to consider staying where you are.”

Two years later, with the benefit of living SOTB and watching with a bit more discernment what goes on NOTB, I’ve developed a more nuanced answer. (This gaining in perspective – and dare I say, wisdom – is one of the possible happy byproducts of living abroad, which I wrote about in “How Living Abroad Made Me a Better Person.”)

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First, let’s look at the plain facts with respect to how us NOTB folks define corruption, from a NOTB perspective:

– In general, it is true that it is quite possible to bribe a police officer SOTB. Around US $20 or less will usually (but not always–be careful) get you out of a ticket, if you choose to take this route, even though it is against the law. NOTB, trying to give a cop $20 to get out of a ticket would most certainly land you in jail.

– According to Transparency International, the least corrupt country in the world is a tie between Denmark and New Zealand. Canada ranks 9th and the US ranks 18th. Panama is 87th, Mexico is 123rd, Nicaragua is 145th, and evidently, Belize wasn’t ranked.

Prior to two years ago, these facts would have ended the discussion for me. But before we complete our victory lap to congratulate ourselves on how less corrupt we are NOTB and decide never to live in one of those corrupt SOTB countries, let’s consider two other ways of looking at corruption.

1. In most SOBT countries, police are very poorly paid, so one way we can consider that $20 is as a contribution to their salary, so while a NOTB person would recoil at paying a “bribe,” many SOTB people get less worked up about it or don’t worry about it at all; they just don’t see paying that $20 as “corruption” in the same way as would a typical NOTB person. (I know and am very sympathetic to the argument that if we pay the $20 on the spot, we are breaking the law and contributing to “corruption” and personally I don’t do it, but that’s the topic of a different article.)

2. In my view, the amount of debt a country has relative to the size of its economy is a great yardstick of a type of corruption that is not considered in the Transparency International rankings, but that debt is a more subtle and hidden form of corruption.

Let me explain. Without getting too technical, this debt is the amount one generation “borrows” to fund their public spending today, without that generation paying for it. But they’re not “borrowing” in any normal use of the word, because they’re not “borrowing” from themselves. Instead, they enjoy the benefits of public spending today and send the bill to their kids and grandkids to pay some time later. It’s like going on vacation with your spouse and friends, having a great time with lots of fun-filled activities, and charging it all to your unsuspecting kid, who has to pay it because you just stole his credit card while he was sleeping.

In this measure of corruption, the US is the most corrupt country in the group. To put this in perspective, here is the relative amount charged by each country for their carefree vacation, while giving the bill to someone else:

US: $10,671
Canada: $8,651
Belize: $7,631
Nicaragua: $5,208
Mexico: $4,351
Panama: $3,879

In other words, by this measure, even given the size of their economies, the US is more than twice as corrupt as Mexico and almost three times as corrupt as Panama.

Hey, someone has to pay for the former congressmen turned lobbyists who make millions changing the tax code to benefit their clients, Bridges to Nowhere, corporate handouts to companies like Solyndra, etc., and that person paying is not the person racking up the debt. Of course, both political parties in the US do it. If this isn’t a measure of corruption, I don’t know what is.

Do the politicians in Mexico, Panama, Nicaragua and Belize do the same thing? More than likely, of course they do, but the numbers don’t lie. In this form of corruption, the US is the most corrupt of all.

For a typical NOTB expat living SOTB, which sounds more corrupt to you- living in a country where some people give an otherwise underpaid cop $20 for a ticket, or all of us NOTB racking up bills we know very well we will never pay? Maybe by comparison, Mexico, Panama, Nicaragua and Belize are not so corrupt after all, so while we can deplore corruption in all its forms, a NOTB person who doesn’t want to live SOTB because of corruption doesn’t make a lot of sense because both sides have it.

Next, let’s deal with the second reason people ask the question: as an expat living in a SOTB country, how will corruption affect me?

For most expats, the worst that will happen is you will be given the opportunity to get out of your ticket without your insurance rates going up $600 and you wasting an otherwise glorious Saturday stuck in Comedy Traffic School, and perhaps you will be given another opportunity to contribute the equivalent of US $10 to the Policemen’s Ball. The rest-the government part – we can look at as roughly comparable.

And with that behind us, we can enjoy the other aspects of living abroad, of which there are plenty…

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