Trickling Up: An Expat Economic Theory

The U.S. Trickle-Down economic theory sounds hopelessly pessimistic to me. The word “down” used as an adjective reflects negativity and is downright depressing. It defines a lower position ( Nicaragua has a down economy.), something unable to function (Our electricity is always down!), and someone who is sick. ( My neighbor is down with the flu.)

Therefore, with optimism and enthusiasm, I am going to attempt to explain my expat economic theory of Trickling Up. Just the word “up” sounds so much more encouraging, don’t you agree? If there is one thing I have learned while living in Nicaragua, it is to always be optimistic and encouraging, and lend a hand up when possible.

When we moved to Nicaragua, we received advice from everybody… from how to purify our water to how to bargain like a Nica. Some of the advice was well-received. Other advice, I couldn’t help but wonder about. For example, I was reprimanded by other expats for providing a free lunch for our workers, tipping too much at local restaurants, and paying too much for a taxi. They said, “You are driving up the cost of everything by paying gringo prices willingly.” Or, “The workers will expect the same treatment and pay from us, too.”

I look at it this way. Trickle-Down has never worked in impoverished countries because huge sums of money allocated to government officials never reach those who need it the most. What is wrong with reversing the system of aid by trickling up? The average Nicaraguan earns five dollars a day! Even in Nicaragua, that is well below a level of poverty that defies my understanding of how hard-working families exist.

Here’s an example of my trickling up theory. We are building an addition to our guest house. We hired Marvin to build a bathroom, dig a new septic tank, and add a new kitchen/living room area…nothing fancy…just small and comfortable for our guests. First, we had Marvin make a list of all the materials he would need and give us a list of the costs of materials. Then, we told Marvin that in the U.S., we usually figure labor costs based on the cost of materials. Labor is usually the same amount as the cost of the materials. The carefully prepared list of materials came to $2,000, so we told Marvin that we would pay him $2,000 for his labor. “That is not how we do it in Nicaragua,” Marvin honestly replied. “We charge $10 a day for the contractor and $5 a day for the helpers.” If we did it Marvin’s way, he and his helpers would make much less and take more time to complete the job.

We wrote up a contract, specifying the payments in six weekly installments. Marvin orders the materials with our approval and we pay the bill at the local hardware store. It is a win-win situation for all of the families. Marvin will have enough money to buy more tools and supplies for his business, and meet the needs of his growing family. His son and another friend are his helpers. Marvin can decide how much of a percentage to pay them and knowing Marvin, he will be generous with his percentage.

Marvin and his crew

Trickling up is a fair and sound economic system for expats. We can live comfortably on our retirement savings because the cost of living in Nicaragua is about 1/4 of the cost of living in the states. Our money goes a lot farther here, so why not invest in the future of Nicaragua? Trickling up makes sense to me! With a simple system of accountability and fairness in good labor practices, everybody is happy.