Dear Sirs and Madams,
Last year, I met the wife of the former Argentine minister of transport. Her husband was once imprisoned under Peron’s regime for refusing to consent to the nationalization of the railways. At the time of my meeting with her (of all the places, at the Bahraini embassy), the hotly debated issue was the plan by President Cristina Fernández de Kirchner to nationalize $24 billion of private pension funds. Since then the Argentine senate has passed the project into effect, but it raised serious questions about the role of governments and the intimate relationship between nationalization, populism, and individual liberty.
Populism in Latin America go hand in hand with the policies of industrialization by import substitution (ISI). Many blame this economic model for Latin America’s troubles, yet it is wrong to assume that ISI bears full responsibility. After all, European nations, South Korea, etc. have utilized some form or shape of ISI to establish a robust economy. The problem with ISI in Latin America was the shape it took under politics.
ISI required strict fiscal and monetary policies, applied over an extended period of time while carefully managing foreign loans. What had happened under the helm of populist governments in Latin America was the perversion of ISI for the objective of sustaining political control. Populist governments took advantage of catch phrases like “autonomy” from the economic model and used it to justify expensive projects (like nationalizing the rail which Peron’s minister of transport refused to sanction) in order to rally votes. Evita and Peron presented the most gross example of development derailed by unsustainable and irresponsible public spending. Their policies eventually led to deranged methods of raising revenue such as bullying their own voting base of urban laborers into paying mandatory donations. While the public was squeezed for their every last penny, the ruling elites squandered much of the revenues and loans on private spending. Eva Peron again best represented that abuse of public finances. (which makes me wonder why so many of my female peers admire Evita. Wouldn’t you rather support Mrs. Thatcher, ladies?)
The increasing need for revenue created an over dependency on the ever-less-valuable export of raw materials and development was simply pushed aside. The consequences of the economic disorder permeated into the rest of society making the political atmosphere increasingly unstable. The rest is history.
Returning to the concurrent point on the nationalization of pensions, private pension funds were unpopular, but mainly because the government bullied people into investing 55% of their assets in public debt. The Argentine government still puts on a populist standard by declaring that nationalization will defend future pensioners. Yet, the nationalization was clearly an attempt by the Kirchner administration to grab as much capital as possible for public debt. This is evident in the fact that under voluntary terms only 12% of pensioners opted to return to the state system. This is because Argentines understand the danger of entitling the vital provisions of the many into few hands that are not accountable for their losses.
If it is dignified to make decisions and take responsibilities for one’s own means of survival, then Kirchner’s government has sapped a major element of self worth from the Argentines. Without self worth, is every individual still equally entitled to life, liberty, and justice?
It is a point not just for Argentine pensioners.
Best,
Yong Kwon
Last year, I met the wife of the former Argentine minister of transport. Her husband was once imprisoned under Peron’s regime for refusing to consent to the nationalization of the railways. At the time of my meeting with her (of all the places, at the Bahraini embassy), the hotly debated issue was the plan by President Cristina Fernández de Kirchner to nationalize $24 billion of private pension funds. Since then the Argentine senate has passed the project into effect, but it raised serious questions about the role of governments and the intimate relationship between nationalization, populism, and individual liberty.
Populism in Latin America go hand in hand with the policies of industrialization by import substitution (ISI). Many blame this economic model for Latin America’s troubles, yet it is wrong to assume that ISI bears full responsibility. After all, European nations, South Korea, etc. have utilized some form or shape of ISI to establish a robust economy. The problem with ISI in Latin America was the shape it took under politics.
ISI required strict fiscal and monetary policies, applied over an extended period of time while carefully managing foreign loans. What had happened under the helm of populist governments in Latin America was the perversion of ISI for the objective of sustaining political control. Populist governments took advantage of catch phrases like “autonomy” from the economic model and used it to justify expensive projects (like nationalizing the rail which Peron’s minister of transport refused to sanction) in order to rally votes. Evita and Peron presented the most gross example of development derailed by unsustainable and irresponsible public spending. Their policies eventually led to deranged methods of raising revenue such as bullying their own voting base of urban laborers into paying mandatory donations. While the public was squeezed for their every last penny, the ruling elites squandered much of the revenues and loans on private spending. Eva Peron again best represented that abuse of public finances. (which makes me wonder why so many of my female peers admire Evita. Wouldn’t you rather support Mrs. Thatcher, ladies?)
The increasing need for revenue created an over dependency on the ever-less-valuable export of raw materials and development was simply pushed aside. The consequences of the economic disorder permeated into the rest of society making the political atmosphere increasingly unstable. The rest is history.
Returning to the concurrent point on the nationalization of pensions, private pension funds were unpopular, but mainly because the government bullied people into investing 55% of their assets in public debt. The Argentine government still puts on a populist standard by declaring that nationalization will defend future pensioners. Yet, the nationalization was clearly an attempt by the Kirchner administration to grab as much capital as possible for public debt. This is evident in the fact that under voluntary terms only 12% of pensioners opted to return to the state system. This is because Argentines understand the danger of entitling the vital provisions of the many into few hands that are not accountable for their losses.
If it is dignified to make decisions and take responsibilities for one’s own means of survival, then Kirchner’s government has sapped a major element of self worth from the Argentines. Without self worth, is every individual still equally entitled to life, liberty, and justice?
It is a point not just for Argentine pensioners.
Best,
Yong Kwon
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