Confessions of a Communist Taxi Driver in Laos: A Lesson in Free Markets

Mekong River in Vientiane, Laos
Click to enlarge
While on our family adventure around the world, we had an interesting encounter with a taxi driver in the capital of Laos, Vientiane. This jovial local with excellent English aspired to move to America, and was ultra inquisitive of our first-hand experience as Americans.

First, our initial observations about Laos are important to help frame this story. After crossing into Laos from Thailand we noticed a distinct difference between the two countries. The rawness of Laos was evident. Not in a way that reeked of desperation, though, but in a way that is unspoiled by multinational corporations (you can always seem to get a Coca-Cola though).

Laos seemed every bit as peaceful and beautiful as Thailand, but Thailand was clearly more civilized, if that’s what you call having a 7-11 store on every other block. It’s almost the identical contrast experienced when crossing into Nicaragua from the more developed and “open” economy in Costa Rica.

Besides the similarity in the lush tropical landscape shared by Thailand and Costa Rica, they also share longer tradition of trading with the West than does Laos and Nicaragua. In short, they’d be considered “more developed.”

The other thing we noticed in Laos was the communist flag flying everywhere, including on the Best Western Hotel -- the lone Western hotel we saw in Vientiane. We could read all about the history of Laos to learn about what these labels like “communism” are supposed to mean, but we thought asking people in the trenches would be more enlightening.

So, in the taxi ride to visit the Buddha statue park, our driver was thrilled to practice his English and learn about America. His perception was that America was so free, and that everyone has an opportunity to make lots of money. He longed to move there to experience that which he’d likely learned on TV.

We then began to ask him about the system in Laos. “Can you vote for the leaders here?” He laughed heartily before replying “No.”

“How does healthcare and school work?” we asked. “The government provides it, and it’s good enough,” he answered vaguely. However, everyone told us that Thailand’s healthcare is far better -- much like Costa Rica’s is far superior to Nicaragua’s.

“We don’t notice much desperate poverty here,” we led with. He said, “Most have what they need and the homeless children are taken in by the monks.” To which he admitted he’d been a monk…for a week. “It’s really hard. They can only eat in the morning,” he complained. And it’s food that is donated as offerings when the monks parade the streets at dusk.

We asked him what he’d do if he was able to get America. “I don’t know. Maybe open a shop or a food stand.” And this is where the conversation got interesting.

We explained that you can’t open a food stand in America without a license, various permits, insurance, and a tax number from the government. He was flabbergasted. “Really! Anyone can open a stand here with none of that.”

He asked us what happened when businesses are caught operating without those things. We told him they’re shut down by the government, and sometimes their equipment is confiscated and they’re arrested.

He couldn’t believe that the U.S. government would be that controlling of small businesses. “People don’t need permission to survive in Laos.”

This became very noticeable as our journey in Laos progressed. There were countless makeshift food stands selling all sorts of cuisine including grilled bats, bugs, and fried baby chicks – the whole chick! We went to restaurants where we literally used the bathroom in the owner’s living room. There were no health department regulations, no business licenses framed on the wall, and never any taxes calculated on our bill.

Deep-fried baby chicks and grilled bats
Choosing which restaurants or food stands are safe while traveling follows the golden rule of the free market; eat at places that are frequented by locals -- because a busy place is a proven place -- or get firsthand recommendations of a good place.

The ability to obtain licenses and permits or to meet mandatory regulations plays no role in food quality. Sometimes you win and sometimes you lose and spend a day or two on the toilet. But, ultimately, the free market weeds out the overpriced or unsanitary competition.

There were also dozens of makeshift taxi services without licenses, insurance or standardized meters. There are tuk-tuks powered by motorbikes; song thaew, which are pickup trucks with bench seats in the bed, and our personal favorite, the modified rototiller with a wagon.

Makeshift rototiller taxi crosses private toll bridge in Vang Vieng Laos
The rototiller taxi is an example of the how people can use ingenuity to figure out ways to survive in an unregulated marketplace. As cool as it is, though, the lack of conformity or insurance seems very unsafe to the conditioned mind of a Westerner. But just like with the restaurateurs whose livelihood depends on the quality of their vittles, the taxi driver’s livelihood depends entirely on keeping his vehicle clean, serviced, and out of accidents.

By the time we finished our brief taxi ride in Vientiane; we, including our driver, got the sense that the everyday individual in Laos has more freedom and flexibility to provide for themselves than people in the US, and that regulation is governed by the free market. Our driver’s deflated perception of economic freedom in America was evident. It’s an ironic conclusion to come to in a communist country.

Perhaps these regulations exist and the government simply doesn’t have the capacity or the will to enforce them unless a business becomes large enough to care about extracting protection money from. And perhaps the free market can only regulate quality when the vendor’s absolute livelihood is at stake.

Regardless, what we’d call the working class definitely appeared to have more freedom, and there was noticeably less desperation than their nominal poverty would suggest.

See our budget hotel in Vang Vieng Laos.

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  1. Loved your story and hearing from the taxi driver's perspective. Your post is eye-opening at how defeating government over-regulation can be on small businesses - (especially here in CA!) The cool thing was that your post wasn't really saying anything political about it're just telling an interesting story. Great skill!

  2. Thanks Krista. Indeed CA and the US have massive challenges which I think will only be solved with more freedom across the board, not just economically.

    Thanks again for you kind words and readership!

  3. Good post and thanks so much for this perspective. I've often commented about how it is here in America, you can be someone else's employee (if you have the right numbers and pay the right taxes) but you cannot start your own business... and isn't starting a business to make money to feed your family one of the MOST basic and necessary freedoms? How can they NOT allow someone to have a livelihood, and then say "this is the freest country on earth"?
    Or the lovely "building permit" without which you can't build a house to keep the rain off your head... oops, better not get started :-)