Are Dominicans better off?

[NALs]

Thank you all that have replied. Although, I would like responses or insights of a numerical context, I believe personal insights are just as valuable. The reason I created this thread is due to two reasons: 1) a conversation with my mother, and (2) a viewing of a congressional hearing about the financial challenges of obtaining a higher education in America. Discussions with my mother, and other Dominicans that lived in the <b><i>Capital</i></b>, have led me to conclude that things were cheaper and there was more money in circulation. The congressional hearing had many good points, one was how many middle income families are in dept. I know many students in school that have more then $20,000 in dept, and although when they graduate they might be considered white collared middle class Americans, they will have a huge debt to repay.

I understand there is a middle class in DR, but what portion of that middle class has a huge rotating debt? I believe one cannot be middle class with debt, anybody can buy a car, house, and other items on credit, and appear to be well-off, but might not really be.

1. You have to separate debt into good or bad and a loan used for education is good debt, so graduating at age 22 with college related debt is not as bad as being 22 and with bad debt. Depending on the vocation of the graduate, the return on his/her investment in himself should be good enough to offset, and eventually, eliminate the debt all together; assuming the person is disciplined enough to carry through a plan. Usually, people who finish their college education tend to be desciplined individuals, because finishing college is no small endevour.

Returns on investment of college education are actually higher in the Dominican Republic than they are in the US, at the moment.

2. Regarding whether things were cheaper in the past or not, I'll bring forward the data once I'm done researching them and doing the analysis I promised. It's one thing for people to think things were cheaper, it's a completely different ordeal for things to have actually been cheaper.

3. Regarding the money supply, there is more money in circulation today than there was in the past and today's money supply is going according to market principles. When money supply increases via artificial means (ie. excess public expenditure from the government), that leads to higher interest rates, higher exchange rate (as reserves in hard currency falls and hard currency becomes scarce), and other downward spirals which eventually leads to a panic and a crisis. The fact that interest rates are stable, the exchange rate is stable, the economy is stable and growing, confidence in the economy is stable and preferable, etc is a sign that, among many things, the money supply is at the size the market economy dictates and not at an artificial level.

4. I don't know what portion of the middle class depends heavily on credit, but it shouldn't be a surprise that a large portion are in fact heavily dependent on credit, especially now that interest rates are relatively lower than they were a few years ago and certainly much more stable. Having said that, the DR actually has a high savings rate (higher than the US which happens to be negative for the past couple of years).

Hence, another example of how public opinion doesn't add up to statistical reality.

-NALs

 

[cobraboy]

Debt on an appreciaing asset is not such a bad thing. The problem is debt on a depreciating assets: new automobiles, credit cards, furniture/appliances, etc.

 

[Chirimoya]

CobraBoy, your post got me thinking about the question of the birth rate - but this is an effect as well as a cause of poverty.

Where poverty levels decrease and educational levels increase, birth rates drop. This can be demonstrated all over the world in the last century or so. I believe that education is more of a factor than affluence, because birth rates dropped in Eastern Bloc countries too, even though they could not be said to be affluent in terms of Income per Capita. This happened to the extent that in Cuba, during the "special period" after the fall of the Soviet Union, women all but stopped having babies because times were so hard. In poor societies where people are uneducated, the opposite is usually the case - I remember an excellent post by GringoCarlos about why poor people have so many children, but I can't track it down right now.

A falling birth rate can therefore be taken as a reasonable indicator of social development. I agree that many people in the DR still have too many children in the wrong circumstances - but the fact that it was common for people to have children in the double figures two generations ago, which went down to about an average of six one generation ago, and now stands at about three - which implies that Dominicans are better off in terms of education and affluence.

 

[A.Hidalgo]

Debt on an appreciaing asset is not such a bad thing.

Like a house.

 

[Don Juan]

Absolutely!

Don Juan-

I don't mean to be argumentative at all. But if you stand back, you'd see the problem is very, very simple and very, very basic. It's Adam Smith Basic Econ 101.

There are too many people chasing too few resources.

It's nothing more than pet rats in a cage. A given cage may have two rats living peacefully, eating the food and drinking the water. But if you put 20 rats in the cage and there isn't enough food and water for, say, 10, the rats become violent, kill and eat each other.

The #1 problem with the Dominican Republic, and the source for virtually every problem discussed and debated on this forum, is overpopulation. There are just not enough resources, natural and man made, to support them all adequately. Then government gets involved, and makes things worse.

Until the increase in resources grows at a faster rate than the increase in population, it'll never change.

Babies are cute, but they are killing this country-and other countries.

I agree with you on this one, 100%. Too many people fighting for too few resources, jobs and opportunities.
Our nation can not support or supply with the most basic necessities, such a huge population of illiterate and unskilled people; made worse by the many more immigrants (Haitians) with the same or lesser educational level.

You're right, There are simply too many of us and it's creating havoc in every sector of society. But what to do? We simply can not expel every illegal or force-sterilize people (as was done in China).

You know, I still believe that in spite of the corruption and mismanagement of funds that's so prevalent, and likely will never go away, there's still hope for common sense to prevail and have the present or future government, invest in steering our economy towards a more industrial base and away from just tourism and other typical income sources.
But in order to do that-- and I've gone over this too often already-- the country needs to meet the needs of the industrial sector with enough energy for manufacturing goods that can be exported in compliance with CAFTA rules.
The key here is energy. If China had not invested in energy generation, they wouldn't be the economic powerhouse that they are today,

One other investment that should be done in tandem, is to have every child in school five days a week for at least six hours a day. When they grow up and graduate, they'll have jobs waiting thereby perpetuating a cycle of hope that won't be easily broken

For reasons I don't understand, the greater the income a family can earn, the lower the birthrate. Most of western Europe and japan are having to deal with the problem of not enough taxpayers necessary to support the older generation's pension and other benefits, but that's another matter.

China has way more people than our little nation. They did the only sensible thing and invested in industry and their people. We can do the same and succeed as they did.