My wife and I recently took a trip to one of those “all-inclusive” resorts, this one in Mexico’s Riviera Maya near Cancun. Ordinarily I’m not the type of person who goes for this sort of thing. A good vacation in my mind usually involves some adventure and spontaneity, especially when it comes to eating, so the notion of spending the better part of a week on some fenced off beach resort filled with Americans and Europeans and eating all my meals in the same place would normally not do it for me. But having a baby is severely limiting when it comes to vacation, unless you’re one of those alpha-types who straps your one-year-old to your back while climbing Macchu Pichu. For the rest of us, sitting on the beach with nothing to worry about is a lot more appealing when you’ve got an infant stumbling around. Really, our biggest worry on this trip was that our son was ingesting too much sand.
If you are a gringo like me, you can glean a lot of economic wisdom from traveling to a developing country and just observing. Prior to this trip I would have thought this to be impossible on a secluded resort walled off from the rest of the country. But that proved to be wrong.
Ironically, the concept of the all-inclusive resort housed in the developing world and servicing tourists from the richer countries can tell you a lot about where we are as a human race and where we’re gradually going collectively. It provides a snapshot of this moment in economic history, a moment which is destined over time to vanish forever.
That snapshot is this: We find ourselves, in the scope of human history, not far removed from the industrial revolution, an event which caused certain nations to soar in terms of income and wealth and to diverge from the rest. Now those remaining “left-behind” countries are playing catch up, growing faster than the richer ones, and doing it quite well. Mexico is one of them, destined over time to converge towards the living standards of the developed world, just as the likes of Singapore and South Korea did over the course of the past generation.
But that process takes time — in most cases, a really long time — and for now Mexico is in many ways your typical developing country. And by that I mean that it’s characterized by an abundance of unskilled labor (lots of young people), relatively little skilled labor, and low wages compared to the US and other wealthier countries.
That situation allows for such a phenomenon as the all-inclusive resort. While on our vacation sometimes it felt like there were as many resort employees as there were guests. This was probably the most enjoyable aspect of the trip, besides of course the opportunity to escape Connecticut and just laze on a Mexican beach in December. Everywhere we turned, there was someone there to offer assistance. And most of these employees were excellent at their jobs. Every day it seemed, a server in the main dining hall would approach our son in his high chair, smile at him and make him giggle, ask his age, and tell us about his or her own kids before carrying on. Often the employees asked our opinions on the resort and about Mexico, usually in Spanish or a broken but eager English. At one point my wife asked, “How can they afford to employ all these people?”. That question is mostly reflective of how we in richer countries often under appreciate how low wages are in the developing world. The reality is that there are millions of young, talented, and hardworking people in Mexico. But not many of them have skills (one of them being English) that command a high wage globally. That allows for the existence of such a resort which aims to take care of all of a guest’s needs (via a huge amount of labor) while still remaining affordable.
That relative abundance of unskilled labor and scarcity of skilled labor played out in other aspects of the resort’s characteristics. It just didn’t seem like it held up to the standards of an international hotel chain in certain ways, or it was way off in how it tried to cater to Western tastes. At the hotel’s Japanese restaurant, which was supposed to be its best, the sushi tasted strange and the presentation was messy. (Predictably, the Mexican food served in the main hall was much better.) When we were given an English language feedback questionnaire after the meal, the restaurant was labelled “Oriental”, a term I haven’t heard used back home in the US since I was a kid. Sticking on the food theme, in the main buffet dining hall, there was a “diet corner” which served all sorts of starchy foods that lacked oil, which seemed like a throwback to the way Americans used to think about healthy eating about 20 years ago. It just seemed like the hotel routinely missed in understanding what its foreign guests actually wanted. Some subtle nuances of hotel service now basic in the US also were absent, things that are not expensive to provide. Not only did the hotel charge for Wi-Fi, but they wouldn’t allow you to connect more than one device without paying extra. And just after we had checked out and discovered that there was a mix up with the taxi service scheduled to take us to the airport, it took a solid two minutes of pleading before the front desk let me use their phone for a local call.
How the resort could be so good at certain things but so bad at others was confusing, until we learned to see the place through the narrative above: once again, lots of unskilled labor with low costs, and a scarcity of skilled labor (for instance, someone who’s good at preparing sushi) with high costs.
Why is this even worth writing about, especially on a Baha’i economics blog? Because things will not always be this way, and though meaningful economic development can’t get here fast enough, it’s remarkable — even, I dare say, beautiful — simply to admire this momentous transition as it takes place.
Hardship in the developing world, of course, is real. We Westerners often fall into the trap of imagining the lifestyle of those living in poorer countries as purer, more natural, and less stressful, especially out on the farm. That image is shattered when you meet those who actually come from these places and understand their daily stresses. There is no romance for the developing country farmer whose entire livelihood can be obliterated by the whims of commodity prices.
But we also must admit to ourselves that many people in the developing world are currently on the slow, arduous march to a better life, at least materially speaking, something we should all celebrate. Most of the time this is the unintended byproduct of what’s often called globalization. That term is a loaded one, and there is something deeply spiritual about the gradual integration of the human race which it fails to capture.
Many good people — Baha’is among them — are understandably skeptical of this. Countless writers and filmmakers have shed light on the perils of an economically globalized world, often very fairly. How could you call something so seemingly chaotic and destructive spiritual, or even positive?
The economist’s typical response in situations like this is to tell you about what the models and the empirical evidence say. So let’s get that out of the way: economic theory suggests that in a globalized economy, countries produce things for which they’ve got a lot of the underlying factor (the stuff) necessary for making that sort of thing. Hence the unskilled labor-intensive beach resort in a country with plenty of unskilled labor. But economic theory and practice also suggest that the price of those factors in different countries converge when they’re economically connected. This means that wages (the price of labor) in places like Mexico will eventually converge to wages in places like the US. And when that happens, the concept of the all-inclusive Caribbean resort will be a distant memory.
That second part is often hard to believe for people. The image of the young Mexican waiter attending to the needs of the rich, vacationing American does not tend to conjure feelings of progress. Some would even call it exploitation. But the truth is that amid all the dirty and tragic features of this process, progress is happening: in developing countries that are “on the ladder” of economic growth, wages are converging to those of the developed countries, albeit slowly.
Why is this “spiritual” to me? Because the inevitable path to economic unity is part of a larger divine destiny, one which Baha’u’llah once beautifully described as “to walk with the same feet, eat with the same mouth and dwell in the same land”.
When we go on our sunny Caribbean vacations, we should take a moment to talk to our waiters, our hotel maids, and our bellboys. We should treat them with politeness and tip them well. But more importantly, when there’s a moment free, we should learn their names and listen to their stories. And we should cherish those conversations, knowing that our grandchildren will enjoy a kinship which is only available to us in these brief glimpses.