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mark 1 more message for this thread
The Pomeranian said:tokugawa the sophist said:You do not dispute that privatization would require tax increases of over one trillion dollars.
No one would bother with such garbage.
Quoted message said:Quoted message said:>Argentina would be running a budget surplus now had it not been for their decision to privatize
>their Social Security system. Look at Argentina now. They are an economic basket case.
>
>
This kind of horseshit is enough to make me religious. It really is time for you to shut the [censored]
up. Or take this to
alt.i.believe.what.i.want.to.believe.facts.be.damned.
Quoted message said:Quoted message said:Can you explain to us WHEN Argentina ever ran a budget surplus which would lend you fuel to make
such a bizarre statement?
Do you think there is no cost to privatization? Let me spell it out for you:
1) people who choose to invest their money in securities rather than into Social Security will no
longer pay the full Social Security tax,
2) the number of beneficiaries and their benefits will not change, therefore
3) the government must raise taxes to make up the shortfall.
Argentina did this. They needed to raise taxes to make up the shortfall caused by privatization,
but still ran a budget deficit, because their economy was on a downward spiral. If Argentineans
had still been paying Social Security taxes instead of using the money to invest in securities,
Argentina's budget would now be in surplus. Instead, the decision to privatize has been a
disaster. You didn't think privatization was free, did you?
You are a lying crackpot, or at a minimum, completely full of [censored].
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
How Argentina Got Into This Mess
By Brink Lindsey, author of "Against the Dead Hand: The Uncertain Struggle for Global Capitalism"
(John Wiley & Sons, 2002).
WSJ, www.wsj.com, 1/9/02
Argentina's miseries now cry out in the headlines: riots and violence, a farcical procession of
presidents-for-a-day, and the gathering doom of default and devaluation. But behind the headlines
lurk deeper ills that gnaw away at the foundations of the country's political and economic life.
Those ills helped to bring about the current crisis, and they will persist long after the media
spotlight now on Argentina fades away.
Argentina's woes are many, but underlying them all is the dilapidated state of its political and
legal institutions. According to an annual index of corruption levels published by Transparency
International and based on surveys of business people, academics and risk analysts around the
world, in 2001 Argentina ranked a dismal 57th out of 91 countries. Worse, in other words, than
Botswana, Namibia, Peru, Brazil, Bulgaria, and Colombia, and on par with notoriously corrupt China.
Uncompetitive
The same results came through in the 2000 Global Competitiveness Report, coproduced by Harvard
University and the World Economic Forum, which surveyed business leaders from 4,022 firms in 59
countries on their perceptions of business conditions. Again, Argentina languished near the bottom:
40th for the frequency of irregular payments to government officials; 54th in the independence of
the judiciary; 55th in litigation costs; 45th for corruption in the legal system; and 54th in the
reliability of police protection.
It wasn't always this way. The disrepair of Argentina's institutional infrastructure is a legacy of
its Perónist past. Look, for example, at the crucial question of judicial independence. Prior to
the descent into statism, justices of Argentina's Supreme Court enjoyed long tenures undisturbed by
political interference. At the beginning of Juan Perón's first administration in 1946, Supreme
Court justices averaged 12 years on the bench.
It's been downhill since then. Since 1960, the average tenure has dropped below four years. After
Perón (he left the presidency for the second time in 1974), five of 17 presidents named every
member of the court during their term, a distinction that had previously been limited to Bartolomé
Mitre, the country's first constitutional president (1862-1868). And so, while before Perón, it was
typical for a majority of the court to have been appointed by presidents from the political
opposition, that was no longer the case. The Supreme Court, the supposed bulwark of the rule of
law, was reduced to a puppet of executive power.
The pro-market reforms of the early 1990s brought little improvement. President Carlos Menem, who
deserves credit for stabilizing the currency and privatizing industries, nonetheless persisted in
traducing the integrity of the country's institutions. Faced with a politically hostile Supreme
Court, Mr. Menem responded with a court-packing scheme -- he expanded the court from five to nine
members and filled the new slots with political supporters.
His transgressions did not stop there: Allegations of corruption swirled throughout his two terms
in office. Those charges finally caught up with him in June of last year, when the former president
was arrested for his alleged role in an illegal arms-shipments deal. But after five months of house
arrest, Mr. Menem was set free by his hand-picked Supreme Court.
Corruption in Argentina extends far beyond Buenos Aires. To get a first-hand look at the problem, I
visited the northwestern province of Tucumán earlier this year. During the "dirty war" of the
1970s, Tucumán served as a refuge for pro-Castro guerillas and was roiled by bloody fighting. Today
it is better known as home to the world's largest producer of lemons, as well as a now-declining
sugar industry, and its problems are more prosaic: bloated and corrupt bureaucracy, and a backward
and unreliable legal system.
The public sector in Tucumán, for example, serves primarily to enrich politicians and fund
patronage jobs. Out of a formal work force of some 400,000, there are nearly 80,000 provincial and
municipal government employees and another 10,000 federal government workers. Elected officials
siphon off small fortunes for themselves: The annual salary for provincial legislators is roughly
$300,000.
Tucumán is by no means noteworthy for such abuses. In the impoverished province of Formosa on the
country's northern border, about half of all formally employed workers are on the government
payroll, and many show up only once a month -- to collect their paychecks.
Such profligacy lies at the root of Argentina's present financial crisis. Government spending as a
percentage of gross domestic product climbed to 21% in 2000 from 9.4% in 1989 despite the fact that
sweeping privatizations were alleviating significant fiscal burdens.
And while the country's mess may begin in the capital, free-spending provincial officials bear much
of the blame as well. Operating expenses at the provincial level rose 25% from 1995 to 2000 even
though inflation was nonexistent. The spending binge was financed by an unsustainable runup of
external debt -- the reckoning for which has now arrived.
Meanwhile, as the public sector ballooned uncontrollably, vital government responsibilities
went unfulfilled, among them the provision of a legal system that promptly and reliably
vindicates the rights of the citizenry. As a result, the acute financial traumas that now beset
Argentina are compounded by a business environment that is profoundly hostile to investment,
dynamism, and growth.
In San Miguel de Tucumán, the capital of Tucumán province, I spoke with Ignacio Colombres
Garmendia, the head of a major law firm in town. "The legal system is absolutely vital for our
region's economic development," he noted, "but the politicians are blind to it. It's hard to see
what doesn't happen because of a bad legal climate, and so nobody knows about it. But every day I
see deals collapse -- I see potential investors who decide not to come to Tucumán -- because of the
legal risks. They call and ask me about this or that legal issue, and I have to tell them, and they
say 'Thank you very much' and that's the end of it. 'The world is a big place,' a client told me
once, 'and we don't need Tucumán.'"
It takes an average of five years to foreclose on a commercial mortgage in Tucumán. And given the
punishingly high interest rates that prevail now in Argentina, delays like that can render even
excellent collateral insufficient to cover the amount ultimately due. In a vicious circle, the
risks caused by delay and uncertainty serve to drive interest rates up even higher. And, lo and
behold, the net effect of a system that leaves investors and creditors so badly exposed is simple:
less investment, less financing, and less growth and opportunity.
Market Economy
It is fashionable now to blame Argentina's problems on the free market. The country's latest
president, old-school Perónist and unabashed protectionist Eduardo Duhalde, has joined the
anti-market chorus by vowing to break with the "failed economic model" of the past decade. But
Argentina's tragic crack-up occurred not because pro-market reforms went too far, but because they
did not go nearly far enough.
A healthy market economy requires not just the absence of statist controls; it requires the
presence of sound institutions. And although the reforms of the Menem era made strides toward
meeting the former requirement, they ignored the latter altogether. Today Argentina is suffering
grievously from that oversight. Until it is corrected and the country's ramshackle political and
legal systems are overhauled, there is little hope that a stable and prosperous Argentina can
emerge from the wreckage
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
New York Times on the Argentine crisis.
11/18/01:
"Provincial governments across Argentina are choking from their combined $23 billion debt, the
product of recession and of their large inefficient bureaucracies, known better for corruption and
political patronage than for service ..."
"[M]ost of the provincial financial problems stem from unwieldy bureaucracies, built by
old-fashioned political bosses. Eighty-five percent of the San Juan government's $783 million
annual budget, for instance, goes to wages rather than services. The bureaucracy of 30,000 workers,
combined with their family members, make up a big political bloc that resists wage cuts or trimming
of inefficient agencies.
"'San Juan residents work and produce to allow the state to subsist, even though it does not serve
the purpose for which it was created,' Federico Manrique, an economics writer at the San Juan daily
newspaper Diario de Cuyo, complained in a column this week. 'What is the purpose of having more
police per capita than New York if there isn't enough fuel to keep them on patrol or enough money
to buy them uniforms?'"
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mark 1 more message for this thread<br> <br> The Pomeranian wrote:<br> <blockquote type="cite"
cite="[email hidden]"> <pre wrap=""> tokugawa the sophist wrote: </pre>
<blockquote type="cite"> <pre wrap="">You do not dispute that privatization would require tax
increases of over one trillion dollars. </pre> </blockquote> <pre wrap=""><!----> No one would
bother with such garbage.
</pre> <blockquote type="cite"> <blockquote type="cite"> <blockquote type="cite"> <pre
wrap="">Argentina would be running a budget surplus now had it not been for their decision to
privatize their Social Security system. Look at Argentina now. They are an economic basket case.
</pre> </blockquote> </blockquote> </blockquote> <pre wrap=""><!----> This kind of horseshit is
enough to make me religious. It really is time for you to shut the [censored] up. Or take this to
alt.i.believe.what.i.want.to.believe.facts.be.damned.
</pre> <blockquote type="cite"> <blockquote type="cite"> <pre wrap="">Can you explain to us WHEN
Argentina ever ran a budget surplus which would lend you fuel to make such a bizarre statement?
</pre> </blockquote> <pre wrap="">Do you think there is no cost to privatization? Let me spell it
out for you:
1) people who choose to invest their money in securities rather than into Social Security will no
longer pay the full Social Security tax,
2) the number of beneficiaries and their benefits will not change, therefore
3) the government must raise taxes to make up the shortfall.
Argentina did this. They needed to raise taxes to make up the shortfall caused by privatization, but
still ran a budget deficit, because their economy was on a downward spiral. If Argentineans had
still been paying Social Security taxes instead of using the money to invest in securities,
Argentina's budget would now be in surplus. Instead, the decision to privatize has been a disaster.
You didn't think privatization was free, did you? </pre> </blockquote> <pre wrap=""><!----> You are
a lying crackpot, or at a minimum, completely full of [censored].
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
How Argentina Got Into This Mess
By Brink Lindsey, author of "Against the Dead Hand: The Uncertain Struggle for Global Capitalism"
(John Wiley & Sons, 2002).
WSJ, <a class="moz-txt-link-abbreviated" href="wsj.comwsj.comOpen ↗">www.wsj.com</a>, 1/9/02
Argentina's miseries now cry out in the headlines: riots and violence, a farcical procession of
presidents-for-a-day, and the gathering doom of default and devaluation. But behind the headlines
lurk deeper ills that gnaw away at the foundations of the country's political and economic life.
Those ills helped to bring about the current crisis, and they will persist long after the media
spotlight now on Argentina fades away.
Argentina's woes are many, but underlying them all is the dilapidated state of its political and
legal institutions. According to an annual index of corruption levels published by Transparency
International and based on surveys of business people, academics and risk analysts around the world,
in 2001 Argentina ranked a dismal 57th out of 91 countries. Worse, in other words, than Botswana,
Namibia, Peru, Brazil, Bulgaria, and Colombia, and on par with notoriously corrupt China.
Uncompetitive
The same results came through in the 2000 Global Competitiveness Report, coproduced by Harvard
University and the World Economic Forum, which surveyed business leaders from 4,022 firms in 59
countries on their perceptions of business conditions. Again, Argentina languished near the bottom:
40th for the frequency of irregular payments to government officials; 54th in the independence of
the judiciary; 55th in litigation costs; 45th for corruption in the legal system; and 54th in the
reliability of police protection.
It wasn't always this way. The disrepair of Argentina's institutional infrastructure is a legacy of
its Perónist past. Look, for example, at the crucial question of judicial independence. Prior
to the descent into statism, justices of Argentina's Supreme Court enjoyed long tenures undisturbed
by political interference. At the beginning of Juan Perón's first administration in 1946,
Supreme Court justices averaged 12 years on the bench.
It's been downhill since then. Since 1960, the average tenure has dropped below four years. After
Perón (he left the presidency for the second time in 1974), five of 17 presidents named every
member of the court during their term, a distinction that had previously been limited to
Bartolomé Mitre, the country's first constitutional president (1862-1868). And so, while
before Perón, it was typical for a majority of the court to have been appointed by presidents
from the political opposition, that was no longer the case. The Supreme Court, the supposed bulwark
of the rule of law, was reduced to a puppet of executive power.
The pro-market reforms of the early 1990s brought little improvement. President Carlos Menem, who
deserves credit for stabilizing the currency and privatizing industries, nonetheless persisted in
traducing the integrity of the country's institutions. Faced with a politically hostile Supreme
Court, Mr. Menem responded with a court-packing scheme -- he expanded the court from five to nine
members and filled the new slots with political supporters.
His transgressions did not stop there: Allegations of corruption swirled throughout his two terms in
office. Those charges finally caught up with him in June of last year, when the former president was
arrested for his alleged role in an illegal arms-shipments deal. But after five months of house
arrest, Mr. Menem was set free by his hand-picked Supreme Court.
Corruption in Argentina extends far beyond Buenos Aires. To get a first-hand look at the problem, I
visited the northwestern province of Tucumán earlier this year. During the "dirty war" of the
1970s, Tucumán served as a refuge for pro-Castro guerillas and was roiled by bloody fighting.
Today it is better known as home to the world's largest producer of lemons, as well as a
now-declining sugar industry, and its problems are more prosaic: bloated and corrupt bureaucracy,
and a backward and unreliable legal system.
The public sector in Tucumán, for example, serves primarily to enrich politicians and fund
patronage jobs. Out of a formal work force of some 400,000, there are nearly 80,000 provincial
and municipal government employees and another 10,000 federal government workers. Elected
officials siphon off small fortunes for themselves: The annual salary for provincial legislators
is roughly $300,000.
Tucumán is by no means noteworthy for such abuses. In the impoverished province of Formosa on
the country's northern border, about half of all formally employed workers are on the government
payroll, and many show up only once a month -- to collect their paychecks.
Such profligacy lies at the root of Argentina's present financial crisis. Government spending as a
percentage of gross domestic product climbed to 21% in 2000 from 9.4% in 1989 despite the fact that
sweeping privatizations were alleviating significant fiscal burdens.
And while the country's mess may begin in the capital, free-spending provincial officials bear much
of the blame as well. Operating expenses at the provincial level rose 25% from 1995 to 2000 even
though inflation was nonexistent. The spending binge was financed by an unsustainable runup of
external debt -- the reckoning for which has now arrived.
Meanwhile, as the public sector ballooned uncontrollably, vital government responsibilities went
unfulfilled, among them the provision of a legal system that promptly and reliably vindicates the
rights of the citizenry. As a result, the acute financial traumas that now beset Argentina are
compounded by a business environment that is profoundly hostile to investment, dynamism, and growth.
In San Miguel de Tucumán, the capital of Tucumán province, I spoke with Ignacio
Colombres Garmendia, the head of a major law firm in town. "The legal system is absolutely vital for
our region's economic development," he noted, "but the politicians are blind to it. It's hard to see
what doesn't happen because of a bad legal climate, and so nobody knows about it. But every day I
see deals collapse -- I see potential investors who decide not to come to Tucumán -- because
of the legal risks. They call and ask me about this or that legal issue, and I have to tell them,
and they say 'Thank you very much' and that's the end of it. 'The world is a big place,' a client
told me once, 'and we don't need Tucumán.'"
It takes an average of five years to foreclose on a commercial mortgage in Tucumán. And given
the punishingly high interest rates that prevail now in Argentina, delays like that can render even
excellent collateral insufficient to cover the amount ultimately due. In a vicious circle, the risks
caused by delay and uncertainty serve to drive interest rates up even higher. And, lo and behold,
the net effect of a system that leaves investors and creditors so badly exposed is simple: less
investment, less financing, and less growth and opportunity.
Market Economy
It is fashionable now to blame Argentina's problems on the free market. The country's latest
president, old-school Perónist and unabashed protectionist Eduardo Duhalde, has joined the
anti-market chorus by vowing to break with the "failed economic model" of the past decade. But
Argentina's tragic crack-up occurred not because pro-market reforms went too far, but because they
did not go nearly far enough.
A healthy market economy requires not just the absence of statist controls; it requires the presence
of sound institutions. And although the reforms of the Menem era made strides toward meeting the
former requirement, they ignored the latter altogether. Today Argentina is suffering grievously from
that oversight. Until it is corrected and the country's ramshackle political and legal systems are
overhauled, there is little hope that a stable and prosperous Argentina can emerge from the wreckage
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
New York Times on the Argentine crisis.
3/1/1:
"Provincial governments across Argentina are choking from their combined $23 billion debt, the
product of recession and of their large inefficient bureaucracies, known better for corruption and
political patronage than for service ..."
"[M]ost of the provincial financial problems stem from unwieldy bureaucracies, built by
old-fashioned political bosses. Eighty-five percent of the San Juan government's $783 million annual
budget, for instance, goes to wages rather than services. The bureaucracy of 30,000 workers,
combined with their family members, make up a big political bloc that resists wage cuts or trimming
of inefficient agencies.
"'San Juan residents work and produce to allow the state to subsist, even though it does not serve
the purpose for which it was created,' Federico Manrique, an economics writer at the San Juan daily
newspaper Diario de Cuyo, complained in a column this week. 'What is the purpose of having more
police per capita than New York if there isn't enough fuel to keep them on patrol or enough money to
buy them uniforms?'" </pre> </blockquote> <br> </body> </html>
--------------060407030509040306000202--
