Déjame Trabajar
Just give me the freedom to work
“The more corrupt the State, the more numerous the laws…” – Tacitus
“In order to work, one must work—a lot.” This otherwise innocent truism embodies the excruciating trials and tribulations that everyday people across Latin America must endure in order to prosper and get ahead, in the face of the complex web of regulations imposed by the expansion of administrative bureaucracy. This drama does not discriminate between small and large enterprises, imposing high transaction and opportunity costs amid an institutional climate that severely inhibits commerce, entrepreneurship, and innovation.
No wonder the chant among small-size concerns across the region is “déjame trabajar.” Let me work. Let me be. This is not millennial ideology, nor a cry of popular revolt, but common sense in its most basic form. To prosper, to be competitive and seek a better life, small businesses (the principal source of employment opportunities in Latin America) need what Richard Epstein calls simple rules for a complex world—an agile, adaptable government that facilitates economic activity. Instead, the norm is regulatory suffocation and unbearable bureaucratic compliance.
On a bright note, addressing “red tape” has become trendy in recent public policy. As The Economist describes, everywhere from “Buenos Aires and Delhi to Brussels and London, politicians have pledged to slash the red tape that entangles the economy.” Javier Milei’s chainsaw has become a powerful symbol not merely to reduce wasteful and excessive government spending, but also to streamline regulatory procedures in setting up and running microenterprises. This “could usher in greater freedom and faster economic growth,” concludes the editorial.
This claim is nothing new to advocates of economic freedom, who have long insisted that sustained economic growth, technological progress, and the Great Enrichment are all outcomes of open markets, entrepreneurial virtue, and a free society. Indeed, an untold quantity of ink has been spilled on poverty in Latin America, on why nations (in the region) fail, or on government misadventures in finding a “narrow corridor” that would free the entrepreneurial spirit—the same spirit found in Latino populations abroad, across developed countries. Other theories blame historical tradition, culture, or income inequality.
Most mainstream policy research contends that persistent low productivity among workers in Latin America is a result of a combination of factors, including lack of education, an insufficient stock of investment, and corruption. The prevalence of informal or “shadow” economies (in truth, there is nothing shadow about extralegal street commerce visible to everyone) is, according to this wisdom, a driver of chronic low productivity levels.
Yet, this line of reasoning seems to conflate causes with consequences. A more plausible proposition is that, educated or not, everyday agents face very high transaction costs of complying with a massive and expanding bureaucracy. Entrepreneurial virtue is as creative and constructive in Peru, Mexico, Argentina, Brazil, and even Venezuela, as it is in India, New Zealand, the Nordic countries, Vietnam, or the US. Yet, to get ahead and prosper, small businesses and micro enterprises in Latin America must first climb a steep mountain of rules and regulations, procedures, and legal requirements, imposed by all-mighty bureaucracies purporting to determine how to produce, when to do so, and what filings must be registered, so that, at last, people can work.
An important multi-institute study just published by the Adam Smith Center for Economic Freedom, the Index of Bureaucracy 2025, highlights the swelling bureaucratic burdens that small- and medium-size business must withstand in terms of time and effort, and the enormous opportunity costs involved in the “time-tax” imposed by bureaucratic largesse. It also reveals key policy changes required to make doing business easier, facilitating work, promoting innovation, and ultimately a better opportunity to foster inclusive prosperity across Latin America.
This analysis involves an ample range of primary empirical data to determine the number of working hours in a labor calendar year that small- and medium-size concerns must dedicate in order to meet the requirements imposed by reigning administrative procedures. It is, therefore, a verifiable metric that helps to quantify the opportunity cost of excessive bureaucratic compliance, both to start a business venture, and also operate it within the formal regulatory framework of the economy under scrutiny. The 2025 edition, which is the fifth in the history of this research project, encompasses a universe of 21 countries, mostly throughout Latin America and the Caribbean.
The key findings are stunning. In order to open up shop, a firm requires a weighted average of 1,850 hours, or 231 workdays in a calendar year, of full-time administrative work. This entails nearly eight months of preparation. The compliance requirements to operate within the legal bounds of the formal economy requires an annual average of 1,577 hours, or 190 workdays—which is the equivalent of over 75% of an employee’s labor per annum. According to the Index, the financial average costs per firm to open a business is equivalent to 4,000 USD, whereas to meet operational compliance amounts to 5,800 USD per annum. (This, naturally, does not include the predictable “costs of understanding,” namely, the bribes that must be paid to stay alive.)
In earlier versions of this research project, focused on micro-enterprises (businesses with an average of 2.8 persons per venture), the study found that such firms devoted an average of 548 labor hours per year to comply with bureaucratic requirements, and up to 1,000 hours in countries such as Argentina (pre-Milei) and (of course) Venezuela. Yet, the annual labor calendar of these countries ranges from 1,300 to 2,200 hours. Imagine spending a third (or more) of an eight-hour workday on compliance, figuring out the intricacies of a highly convoluted bureaucratic labyrinth standing in the way of everyday trade. How can selling peanuts, tacos, paperclips, or pencils require such a vast complexity of permits determined by enlightened bureaucrats who never have to worry about fixed costs, payrolls, and inventories? So construed, a small-size entrepreneur from Baja California to Patagonia virtually requires a Ph.D. in strategic planning, or applied mathematics, simply to get ahead.
The expansion of bureaucracy in Latin American countries represents more than mounting red tape. The data speaks for itself: to the extent that bureaucratic procedures become more complicated and less predictable, small and micro enterprises are forced to hire outside “gestores,” or experts in the field, that can help navigate bureaucratic black holes. Naturally, those who cannot spare this unforeseen expense resort to informal ways of doing things, and thus to a network of corruption and rent-seeking where bribes become an extralegal tax that are required to sustain and survive. The massive expansion of administrative law under the modern state has thereby led to a flood of rules and regulations that seem to serve a single purpose—consolidate a mechanism whereby the bureaucratic establishment can extract rents from everyday citizens. This effectively reverses the aims of stable rule of law, inhibits economic freedom, and undermines the very basis of a prosperous society. The rent-seeking practices also breed the image of a privileged few discriminating against lower-income members of society—something the lead author of the Index, Sary Levy-Carciente, characterizes as a phenomenon akin to “black tape.”
No wonder, therefore, that Latin America is depicted as a “land of useless workers.” The results of this study suggest a dire need to re-imagine the form in which bureaucracy functions, and tailor a policy approach consistent with the requirements of making life easier, facilitating innovation and progress. This, in turn, requires putting the needs of citizens as first and foremost priority. As Jerry Haar says in a compelling reflection of the impact of bureaucracy on international trade, “improving efficiency and transparency… pays off.” This requires imagining the conditions that can enable everyday people to work, produce, invest, and prosper.
As Montesquieu’s famous proposition suggests, “useless laws weaken necessary laws.” The Index of Bureaucracy constitutes a welcome step forward towards the broader effort to rebrand the classical liberal point of view as sensitive to the needs of everyday citizens to be free of regulatory asphyxiation—a phenomenon which, as we know from earlier research on informal markets, keeps the majority of Latin communities in the region trapped in a chronic state of under-development and day-to-day livelihood, without an opportunity for greater social mobility and the emergence of dynamic middle classes.
Matt Kibbe has a terrific way to encapsulate the essence of the ideas of liberty: “Don’t hurt me, and don’t take my stuff.” Perhaps we should also add: “déjame trabajar.”
Roberto Salinas-León is Director of International Affairs at the Universidad de la Libertad, in Mexico City, and Senior Fellow for Latin America at Atlas Network.