Scenes and Thoughts on Poverty: Panama City and the Canal Zone

    Reviewing the hundreds of pictures I took during six days in Panama, some images gnaw at me: in fact, after seeing so much poverty everywhere we went in Panama City and the Canal Zone, I felt a sense of culture shock when I returned home.
    According to the CIA World Factbook for 2011, Panama's poverty level is 30% (our guide and the World Bank put it at 37%), with an unemployment rate of 3%. The government seems to be making an effort to employ people, as in the official street sweepers we saw; however, the average monthly income of those who are employed is $500, which our guide assured us is not enough to live on. 

Housing next to remains of Panamá Viejo

    While transiting the canal, I suggested to my traveling companion that Panama should give every citizen canal proceeds, as Alaska does with the Alaska Pipeline.
As I read about the canal and try to understand an iota of economics, I cannot comprehend the duality that this land of so much poverty is also the land of one of the world's most spectacular engineering accomplishments, how we humans can imagine and realize the amazing, and yet somehow, we cannot realize an end to vast poverty. "Welcome to the Third World," my husband commented.
    Panama is of course not alone. According to the CIA, as of 2011 the United States poverty rate was 15%, with unemployment at 9%. Peru, which we visited a few months after I was in Panama and where we also saw frequent poverty, has 31% poverty and 8% unemployment. Interestingly, the adult literacy rate (age 15 and above) is reported at 99% in the United States, 92% in Panama, and 93% in Peru.

Artistic trash cans in Casco Antiguo 

    According to one report I perused (as of 2024 when I am reediting this post, the website is not longer valid), in the first thirteen years of canal administration by La Autoridad del Canal de Panamá (ACP), beginning in 1999, over $7 billion were paid to the state in fees, excesses, and public services. The editor comments, "This is the best kind of money there is for a national economy, fresh, new, and coming from somewhere else." He goes on to say that practically all of this money is pumped into the Panamanian economy: (1) in purchases by canal employees of everyday necessities such as groceries; (2) by the ACP to maintain the canal and its equipment, such as fleets of trucks and tugboats; and, (3) through the support of numerous entire ministries by the fees paid to the government. He further states that since the population of Panama is small, these infusions into both the local and national economies do trickle down, pointing as evidence to the steady improvement in the gross domestic product (GDP) on the purchasing power parity (PPP) per capita, since the United States turned over management of the canal to Panama in 1999. 

Street scene from Granclément Ice Cream Parlor, an upscale French establishment in Casco Antiguo 

    After a bit of internet research, I have only a basic understanding of GDP (PPP) per capita. It is a figure used to compare welfare, living conditions, and use of resources in the world's countries. GDP is the value of all goods and services produced in a country in a year. GDP (PPP) per capita takes a typical basket of those goods and services and compares what it would cost in United States dollars in each country. As the CIA points out, it gets a little tricky at times assigning a United States dollar value to a good or service—an ox cart, for example—that does not exist in the United States. Using the CIA World Factbook (this information is also reported by organizations such as the World Bank and IMF), we learn that the world GDP (PPP) per capita for 2011 was $12,000, up from $6,800 in 1999. The United States ranked 11th with a GDP (PPP) per capita of $49,000, up from $33,900 in 1999. Panama ranked 90th at $14,300, up from $7,600 in 1999. Peru ranked 111th at $10,200, up from $4,400 in 1999. The world increase from 1999 to 2011 was thus 76%, the United States 45%, Panama 88%, and Peru 132%. In other words, Panama grew at slightly more than the world rate, while Peru grew at 1.75% of the world rate.

    Encyclopedia of the Nations states that the government of Panama listed a poverty rate in 1999 of 48%; so from 1999 to 2011, an additional 11% to 18% of the population rose above the poverty line, depending on whether one uses the 30% or 37% figure for 2011. This is not to argue the positive impact on Panama's economy of the canal being under Panamanian control, but one might expect a greater impact on the poverty rate.

Revolution (officially F and F) Tower rises above the growing number of modern skyscrapers in Panama City's financial district.

    Further, what one sees confirms the World Bank statement that, of the 37% of Panamanians living in poverty, 19% live in extreme poverty: crowded slums—dotted of course with red Claro satellite dishes—huddle next to modern freeways that skirt Panama City and pass by an ever-growing number of shiny, modern skyscrapers in the newer financial district. Further, Panama is one of the most unequal countries in the world: the rich are very rich and the poor are very poor. By comparison, the poverty rate in Peru decreased from 60% in 2004 to 31% in 2010. Like Panama, however, Peru has a great disparity in income between rich and poor, and unemployment continues higher in Peru's rural than urban areas.
    The Panama Canal lock expansion project, scheduled for completion in 2014, is expected to double the annual tonnage passing through the canal—and thus the amount of money pumped into the economy. Will this promote the creation of a middle class?
    I noticed a great difference in the Panamanian and Peruvian character. There seemed to be a lot of sitting around in Panama, not a lot of animation or ambition. There was not necessarily discontent—we experienced many smiles—but there was a certain sullenness, an absence of effort. For instance, the hotel bellhop was eager to help, for a tip—not that he should not be tipped, but if we did not think a tip was in order or did not tip as well as he desired, the service bordered on resentful. Taxi drivers would rather give up a fare than accept a lower fare. An exception was the driver who brought us home from the Amador Causeway and quoted us a good price to take us to the airport. Two days later, he showed up early, chatted during the ride, and helped us with our bags. The hotel staff were also quite entertained when I showed them how to make iced coffee with milk—the whole idea was a bizarre novelty to them. And, whether impromptu or planned, for our bus or another purpose, delightful was the large steel drum group lining the street and playing with abandon as we left the dock in Colón.
    The Peruvians, in contrast, were almost universally warm, friendly, generous, enthusiastic, hardworking. I cannot imagine Panamanians pulling and pushing huge, heavy loads uphill on carts and dollies as we saw Peruvians doing in Cusco and Aguas Calientes. Are Peruvians more confident of their ability to escape poverty through hard work, or is it more a cultural valuing of hard work regardless of economic position? Is it a climatic difference? political? historic? Peru also seemed much cleaner—we occasionally saw trash piled by a road, but not the heaps we routinely saw in Panama.
    Then, too, there is a certain charm to the Panamanian and Peruvian way of life, a difference perhaps symbolized by having to watch every step you take on the sidewalks, which may be narrow or steep or pocked with holes and bumps. It is a lifestyle that seems more intensely focused on the present than the future.