This is the third installment in a series. Check out the first installment here, and the second installment here.
Linieros are traveling salesmen that sell common everyday household items on credit (the purchaser pays in regular installments, which the linieros goes back to pick up).
It is said that linieros charge up to three times the wholesale price on the items they sell. So, who is buying irons for twice as much as they would pay in a store? Well, it tends to be the poor. (Clarification: its twice as much as in a store, but three times as much as the wholesale price, because the retail price [the cost of the individual item at a store] is normally higher than the wholesale price [the cost of buying goods in bulk].)
Linieros go everywhere, from neighborhoods in Managua to tiny communities hidden away in far off hills. They offer products that some people would only be able to acquire by traveling to the big city (which can sometimes be a long walk, and several multihour bus rides away). Many people in the tiniest of communities have probably never visited a city, and to them the linieros and their array of goods must look a lot like the traveling gypsies and their ice in One Hundred Years of Solitude.
The linieros, therefore, hold a monopoly on the goods they sell in small communities, because their competitors (retail stores) could just as well be located on some remote island in the middle of the Pacific Ocean, as far as the villagers are concerned. Being the only person in town selling an iron, means that you can pretty much sell to the highest bidder (as opposed to city folk who get to pick the cheapest supplier). The linieros can dictate the price.
The issue of credit is also relevant. Linieros are notoriously persuasive and aggressive salesmen (the traveling salesmen stereotype is pretty universal), and credit can be a foreign concept (or a poorly understood one) for some in low-income communities (this is true around the world). Put the two together and you get people being convinced that paying ten cordobas a week for two months sounds better than giving up fifty cordobas today, even though with the former you pay sixty percent more. Finance has a way of making mush of the human brain, of highlighting illogical behavior. It toys with people’s valuation of time, which is notoriously unreliable. Today’s money always seems far more valuable (and emotionally satisfying) than tomorrow’s money. So, spending tomorrow’s money is always easier than spending today’s money. It could be said that linieros take advantage of and benefit from the illogical behavior that arises as a result of introducing credit into the equation.
(Side note: Whether the concept of credit is not understood by the poor, or is simply used as a last resort by people with no other alternatives is up for debate. Whether the people who run up credit cards or go to Check-in-to-Cash have difficulty comprehending the financial instrument they are using, are being manipulated by the suppliers of credit, or are forced to pay incredibly high interest rates because they desperately need the money is something I don’t know. If I were to guess I’d say it was all three.)
For these reasons (the linieros’ monopoly on the goods being sold, and the use and abuse of the concept of credit), the initial reaction of most foreigners when confronted with the liniero business is one of disgust. How could they do that to the poorest amongst them?
But there is another side to the argument. Linieros should be credited with making accessible to poor communities a variety of household goods that in the past only people in big cities enjoyed. Irons, blenders, mirrors, portable gas stoves, fans. For many, these items can only be found in far off places they don’t have the means (or inclination) to visit. Linieros bring them right to their door.
And dragging the items out to remote villages is not the only way linieros make the goods accessible; they also let the people pay in installments. Lets say, the one cooking pan you own is broken and you need to buy a new one. You don’t have enough money to pay the retail price, and you would need to save for at least a couple of weeks to be able to purchase a new pan. But you need the pan today, you need it to cook. In such a circumstance, the credit offered by the liniero seems like a blessing. You give him a small down payment, and he gives you the pan right there.
Linieros also have to deal with the possibility that their customers will not make their payments. The liniero business is an “unofficial” business. An underground business. They don’t ask for your ID or your credit history, they don’t demand collateral, and their agreements are not binding under the law. The worst they can do is bug you to death, or repossess the item in question (if it can be repossessed; soap and shampoo [which they also sell] cannot be repossessed after it’s been used). This forces the liniero to charge a risk premium. That way, even if the customer doesn’t make all his payments, the payments he or she has made might already cover the cost of the item.
So a liniero can defend the tripling of the wholesale price by saying that, one, the liniero has to lug around the goods and brings them directly to the customer, two, he has to charge interest because he is letting the customers pay over time while they get to use the good, and three, he faces the risk of non-payment.
Is the liniero hurting or benefiting the poor? Most people in Ciudad Dario will answer the question with a shrug. It’s a job. A job in a town where jobs are hard to come by. Plus, they’ll say, it all depends on the character of the liniero. Some linieros are honest and hard working, others are swindlers.
In the fourth and final installment we will talk about the lives of the linieros.
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