Torn Clothes and Blue Jeans

I must confess I lived a sheltered middle class life as a kid. Though I never knew democracy until I was 11 years old, my parents both had steady jobs, my father as a banker and my mother as a social worker in the Electric Company of Honduras. Despite a somewhat difficult beginning they raised both my older brother and I without ever wanting for anything, and by the time I was born in April 1971, they were both reaching for what you may call the Honduran dream.

Barely a month before I was born an election had been held to supposedly put an end to military rule, which Honduras had been under since 1963. Democracy wouldn't last. Less than two years later another coup, bloodless this time, would remove the democratically elected president and install another general as head of state. Despite periodic changes at the top, the military would stay in power under one general or another until 1982, when a new constitution was voted in under pressure from the United States.

The military knew back then that power required consent though, and the United States wanted to help out countries like mine as part of its cold war strategy. After all, poor nations were bound to fall into the communist trap and they certainly didn't want another Cuba, so USAID created a program to help fund subsidised housing projects, trying to establish and grow a middle class in a country where castles are built on sand and nothing ever outlasts a change in government. My parents bought one of those houses with a nice yard and a garage that could fit two cars, and that is where I grew up. This was a time when there was hope that the Honduran dream my parents were trying for could be achieved.

The neighbourhood was nice. Wide paved streets filled with young families with kids my brother's and my age created the kind of environment where there was always something new to explore, whether riding your bike, playing street soccer or baseball, or just walking and talking, drinking an icy coke on a street corner and sharing it with friends. Fresh milk was delivered by horse every day by a man whose name I have long since forgotten. "Two bottles please!" people would yell, while bringing out a pot that he would fill from a container, and which the maid would boil before letting me and my brother have any.

A river, or more accurately, a creek, divided my neighbourhood into two — the upper side, where I lived, and the lower side — and the two were bitter enemies. This rivalry usually came to its climax during Halloween, when it turned into epic water balloon battles between the two camps. Once the water balloons were out, we all went home, wet but happy, having lived to fight another day.

Poor women would go there to do the laundry and bathe their children, barefoot and wearing torn clothes that they washed hitting them against the rocks, hoping, perhaps, that they would last at least one more wash.

One time the doorbell rang. My brother and I were alone at home and he, being the oldest, went to see who it was. A barefoot kid was asking if we had any clothes to spare. We knew this kid. He came every day to sell tortillas — a Honduran staple food — that his mother prepared. My brother went and grabbed two of his best shirts and a pair of pants and gave it to him. The kid was ecstatic and couldn't be more thankful. When my parents came, he told them what he had done. Clothes were expensive back then. A pair of Levi's was something you could only obtain if some relative travelled to the United States and brought it for you, so my father started scolding him. "Why would you give away your nice clothes?" — he asked. My brother's answer disarmed him: "When you give a gift it has to be something nice, not an ugly thing" — and that was that. My father stopped talking and just took the loss and the lesson.

By 1989, things had changed dramatically. Years of economic mismanagement had finally caught up with Honduras. President José Azcona, a decent man trapped by circumstances and a power structure he could not control, like his predecessors, had kept Honduras on a fixed exchange rate of 2 lempiras to the dollar, while running large fiscal deficits and doing little to draw investment. By the end of his term the foreign-credit arrears had become impossible to paper over: Honduras fell behind on payments abroad and defaulted on its fuel imports. His party lost the election held that year to Rafael Callejas, a young, energetic and incredibly charismatic man with a degree in agricultural economics and a modern liberal vision of where the country should go.

Callejas moved fast. He abandoned the 2-lempira peg outright, devaluing to 4 lempiras overnight — a 100% devaluation in a single announcement. Within eight months, the rate that had barely moved for most of my parents' adult lives was two and three-quarter times what it had been at Christmas.

One thing President Azcona had done, back in April 1987, was pass the law creating export-processing free zones — the ZIP framework, the legal machinery for maquilas. At the time it had nothing to run on. Callejas, seeing the opportunity, expanded it into tourism zones in 1992 and launched a concerted effort to attract investment, which soon became a boom that brought a real reduction in poverty. The currency that had been worth exactly the same amount in dollars since before either Azcona or my parents were adults changed by 175% in eight months, and with it Levi's went from a diplomatic-pouch item to something you could plausibly walk into a store and buy. Or substitute for a good pair of Lee's, now proudly made in Honduras.

Despite the painful measures taken at the time, I, like most people my age, remember the 1990s as a time of prosperity and fun. The country was growing, and once salaries caught up with the new conditions there was spare money to spend. Summer nights and weekends were spent going out with friends, clubbing, dancing, having a few beers with one another. My youth was not very different from that of other more developed countries; despite the growing income inequality that always comes with economic liberalisation, everybody was better off somehow. As Margaret Thatcher once argued, even though the gap had grown wider, every bracket had become better off with it. The torn clothes and the ladies doing laundry in the creek soon disappeared, as they moved into better-paid manufacturing jobs and barefoot children became a less and less common sight. Once again, a Honduran dream became something within reach.

Honduras was still small enough that political differences mattered little, so it was safe to go out and stay late, and we all did. Rich or poor, we all talked to one another and just enjoyed each other's company. It was a different society back then, until it broke after President Manuel Zelaya's removal by force in 2009. The division that came out of that episode lasts to this day, and Honduras has never been able to recover from it.

And yet, oddly, the reform work didn't stop. My friends and I — students not long before, with no power or prestige of our own — spent the years after the coup drafting a new generation of investment laws, ZEDEs among them. Foreign direct investment, which had collapsed to $494 million during the crisis, rose 245 per cent by its 2014 peak. The country, it turned out, could keep building capacity even after it had stopped trusting itself to use it.

Honduras never recovered the trust it lost in 2009, and everything since has been governed by that fracture more than by any single administration's decisions. Elections are contested before they are held. Courts are captured and what little we had advanced in rule of law has since been lost. Whatever one government builds, the next treats as suspect simply for having been built by the other side.

Not that it was ever too different. Since independence Honduras has gone through eighteen constitutions, each lasting nine years on average before something broke it. Coups and civil wars have punctuated the country's history at least fifteen times since the 1820s, not on any tidy schedule but in violent clusters separated by uneasy stretches of calm. Strip away the dates and the pattern is simple: whenever the country found a stretch of political stability, however that stability was achieved, growth followed. And whenever the stability broke, the growth broke with it. Honduras has never lacked the capacity to prosper. It has lacked a political system stable enough to let that prosperity compound instead of resetting to zero every time the ground shifted again.

Our constitutions were never much of a social contract in the sense other nations eventually arrived at. They functioned more like armistice agreements between warring factions, addressing just enough of the grievances behind the last conflict to buy a few years' peace before the next one. The 1982 Constitution is the one that has lasted longest by far, turning forty-five next year, though even that one has been slowly rewritten by casual amendments to address political fads and politicised court rulings that have defaced it beyond recognition, petrifying parts of it that were meant to be flexible while destroying others that were supposed to be load bearing. It is arguably not quite the same document that was written to carry us out of military rule and into democracy, and just like every other, not quite by popular consent either.

The sad part is that it didn't have to be that way. In 1824 the Federal Republic of Central America established its first constitution, creating a proper federal state. Shortly after, in 1825, the province of Honduras approved its own, with real checks and balances, a limited executive and a council of representatives to conduct oversight over the executive. Unfortunately, structural weaknesses, foreign intervention by the British and the newly founded United States — who saw no benefit in a strong state south of their own border — and local interests all conspired to keep the dream of a united Central America from ever developing. Something of that same idea, though, would resurface elsewhere: a plural executive, power held collectively rather than by one man, is close to what Switzerland adopted in its own 1848 Constitution, in the collegiate Federal Council that still governs it today. I make no claim that one inspired the other, only that two very different peoples, confronting the same problem of power concentrating in a single pair of hands, arrived at a similar answer a generation apart.

The political instability that has characterised Honduras ever since its founding as a Republic has taken its toll. Consider this: Guatemala in 1990 had a GDP per capita of $845. El Salvador's was $914 and Honduras, $615. Guatemala and El Salvador were already respectably about $230 and $300 richer per person than we were. The starting point was very similar. Not identical, but close. You could even say that they were arguably worse off, having both come out of their respective, bloody civil wars with divided and more deeply unequal societies and little appetite for reform. We, instead, had for once in our history avoided the kind of prolonged guerrilla civil war that scarred them both, even if our own coups and constitutional churn were no gentler in their own way, and were first to learn how to use Free Zones as tools for economic development.

Today, Guatemala sits at $6,150. El Salvador at $5,580 and Honduras at $3,426. Guatemala is now roughly 80 per cent richer on a per capita basis than we are. El Salvador is roughly 63 per cent richer also. Neither pulled away because of one dramatic event. They just kept compounding on their own version of 1990 instead of periodically kicking it back over. The economic reform that started in the 1990s basically died with the 2009 coup, or constitutional removal, or whatever you want to call it. The name is irrelevant. The consequences are what matters.

Poland offers a useful comparison, because back in 1989 it was somewhat close to where we were. Coming out of communist rule, it faced inflation above 600 per cent, some $42 billion in foreign debt, and empty shelves in its shops. Its own shock therapy, the Balcerowicz Plan, passed ten laws in a matter of days in January 1990 and stripped away decades of state control almost overnight, inflicting immense pain on regular folks for a while, until it started working. Eventually, Poland's GDP per capita started climbing until it grew sixteen times over from $1,731 in 1990 to something over $28,000 today. It happened because Poland, unlike Honduras, never looked back even though it went through its own political and judicial crisis which could have derailed all its progress. But whatever went wrong there, it went wrong without dragging the numbers down with it.

That is the part I still cannot fully explain to myself. Honduras and Poland both learned, in 1989 and 1990, that a system can be broken open in a single year. Only one of us learned to keep building anyhow, on the days its politics forgot how to behave. And it is not as if there are no victims when a system becomes sclerotic, unwilling to change despite the obvious need for reform.

I know what happened to the barefoot kid who sold tortillas house by house, whom I told you about in the beginning. He somehow finished high school, thought of going to the public university but couldn't afford it, so he took a job instead to continue helping his mother. Every now and then I would see him walk by the old neighbourhood, his face now well washed, always wearing a good pair of jeans, a clean shirt and a properly cared-for pair of shoes. He would smile and wave goodbye and I would wave back. One day, so I heard, as he was coming back from work, some petty criminal murdered him to take his salary and, in a twist of irony, his brand new shoes. One of thousands of unresolved crimes that happen to invisible people in a society that refuses to do what is best for its citizens. Some people, it turns out, run out of time before reform has a chance to deliver.

The ZEDE framework I helped write aimed to speed up this process, buying people like the boy some precious time and a place where they could stay and prosper instead of having to leave home to find one. In a repeat of the old pattern, it was declared constitutional by two different Supreme Courts and unconstitutional by the one that followed them, once its composition changed, on arguments that did not so much interpret the constitution as ignore it. Meanwhile neighbouring countries that came out of terrible civil wars somehow started getting their act together, partially at least, and leaving Honduras behind, despite being the country that has often led in paper reforms that it later decides not to carry on.

Someone prominent —I can't recall who— was once asked what it would take for a particular nation to change trajectories. "Get a different history" was his answer. That is correct, at least in part. History and culture create patterns that bind us for generations and path dependency is a real thing. But history can be changed. Poland, Singapore, Chile, the Republic of Ireland and many others can attest to that.

I have continued to live a somewhat sheltered middle class life, working through the years on trying to solve a single question: can an economy keep improving even if the political system running it has stopped functioning? Honduras itself became my own test case, more than once, and it kept failing it. And yet I must keep on trying. Maybe someday, my descendants will look back and talk about how obvious and inevitable it was that Honduras would end up succeeding… or maybe not… I still don't have the answer to that question.