Economic Equivalency in El Salvador
If you were offered a cup of coffee for $22, would you buy it?
What if your spatula broke as you were scrambling your morning eggs, and you learned that it would cost $72 to replace it?
Would you buy a new pair of sandals for summer time, if they cost $391?
The ruler of poverty measures differently in different places, according to variances in economy, currency, and availability of goods. In El Salvador, the disparity between rich and poor is great, but it takes a little more work than simple observation to understand it. Sometimes it takes exercises such as calculating Economic Equivalence to bring to light the economic issues that exist in El Salvador, among other other countries, that thrust people into poverty to the degree that it seems impossible to get out. (Economic Equivalence is the dollar amount of what it “feels like” for an American to purchase necessary items, within the American economy, an item in the "basket of goods," or necessary items, within the economic situation of another country.)
This December, 7 participants on the Latin America Regional Team participated in an exercise in economic equivalence by visiting a mall in Escalon, San Salvador, a wealthier area in the country’s capitol city. The mall in Escalon boasts similar stores and prices to those of American malls. By all external appearances, window shopping there is really no different than browsing at your local Gap. The real difference is, to the vast majority of the population of El Salvador, purchasing nearly any item at the mall could thrust them into months - even years - of debt.
These 7 team members gathered prices of various items from different stores and calculated based on the hourly income of 4 Salvadorans in varying types of work, what it would feel like for an American to purchase the items if they were in a proportionate economic situation. An employee of a textile factory making approximately $7 per day, $0.87 per hour, would have to work 9 hours to purchase a package of 40 diapers, which sells for $7.65 at the store. For an American, who makes $20 an hour, this would feel like spending $175.86 on a packet of 40 diapers. For a person working the coffee fields at harvest time and making $4 per day, at $0.50 an hour, the luxury of going to a movie theater is worth 9 hours of work. For an American this reality would feel like spending $160 for a movie!
The results of the study beg the question: “How can such pricing be maintained in El Salvador?” When El Salvador took on American currency in 2001, it was a move of those in power aiming to bulletproof the banking system, lower inflation, and ignite economic growth through attracting more foreign investment. The effect of the currency change from the colon to the dollar was that prices of everything - from staple food items to expensive luxuries - rounded up, but salaries did not increase. Those most negatively impacted by dollarization are those who live in severe poverty. Whereas before they were at least able to make ends meet, the sudden change to the American dollar made such impossible.
For the families we work with in rural El Salvador, the mall in Escalon is a distant reality they may never set eyes upon. But the reality they encounter every day is that they live in an economy where the impact of war and participation in a free trade agreement that primarily benefits the United States now prevents them from experiencing a beneficial type of marketplace, in which they could buy and sell the goods they grow, and experience an honest and healthy economy within their own communities. Luke 6:38 speaks to this kind of economy: “Give, and it will be given to you. A good measure, pressed down, shaken together, running over, will be put into your lap. For with the measure you use it will be measured back to you.”
For our immersion participants on the field, exercises like this increase awareness of economic issues that directly affect those we work with. However, it is our response that tells the kind of people we choose to be, once we obtain the understanding. As we continue to serve the people of El Salvador, we teach and implement the economic practices we learn from God’s word--dealing honestly with our neighbors, taking care of our friends, working when it is time to work, and resting when it is time to rest. Poverty and broken economies are not solved in a day, but we believe the example we set today does impact the practices of those we work with for tomorrow. To this end, we continue in faith.