Like monarchs who claimed a direct line to God, central banks and the International Monetary Fund do not provide for a review of their policies. In the interests of “free competition” they erase even the memory of any alternative policy. Margaret Thatcher summed it up in the acronym TINA “There is No Alternative.” The Iron Lady was credited with having invented TINA, but it is as perfect a synonym for “monopoly” as you could contrive. Joe Stalin had imposed the principle some decades earlier. Not only did he rewrite history to his liking, with faked photos where needed, but he shot all prominent witnesses to what actually happened that he could lay hands on.
When in the eighties the IMF moved into New Zealand to wipe out its unique social security it was to the accompaniment of a burst of media attention. However, we have had no follow-up on the success of that initiative. For good enough reason. Unemployment, youth suicide rates, and other nasty statistics have jumped like Olympic athletes. Key assets have been sold off for a song. The unhappy little land has turned to a left-of-centre government again to clean up the mess.
Likewise, the Argentine was hailed as the model of the future when it adopted the US dollar as the reserve currency. Distinguished Canadian economists like Tom Courchene of Queen’s no longer were reduced to citing the Republic of Panama as a fit example for Canada to follow. Panama never had its own currency. As the Lord made Eve from a rib of Adam, so Washington contrived Panamanian independence from Colombia. Teddy Roosevelt organized the deed to avoid paying what they considered too high a rental for the route he needed to build the canal.
But why has there been a brown-out on news from the Argentine in recent years?
The Wall St. Journal (1/02, “Hard Times Squeeze Millions of Argentines Out of the Middle Class” by Matt Moffett and Pamela Druckerman) tells the story.
“The latest emerging drama couldn’t have a more elegant setting: the Argentine’s vast middle-class enclaves with their mission-style houses and fields dotted with rugby goal posts. For decades, these suburbs had set Argentina apart from most of Latin America, where there is less of a bufer be tween the small, monied elite and the large under-class. Argentine has long been home to a broad and relatively affluent professional class, a legacy of the European immigrants who began settling here more than a century ago. They built a prosperous nation that reflected their egalitarian values.
“Argentina’s middle class enjoyed its first flowering in the 1930s when this was one of the wealthiest nations. It had more telephones than France and more autos than Japan. Its per capita income grew to be the highest in Latin America and its quality-of-life indicators for literary and health topped those in parts of the US. But as the century progressed Argentina drifted into an inflationary morass.
“In 1991, the government introduced its vaunted convertibility policy, as well as a series of “free market reforms.” It pegged its peso to the dollar, guaranteeing that pesos could be exchanged for dollars at a 1-to-1 rate. Initially the policy sparked an economic boom. Later in the decade, as the dollar strengthened and countries in Asia, Europe and elsewhere in Latin America devalued their currencies, the policy became as much an albatross as an anchor. The overvalued peso hurt its exports.
To convince short-term foreign funds that had poured into the country that it had the “fiscal discipline” to defend convertibility, President Fernando de la Rua repeatedly slashed social programs. Increased taxes fell hardest on the middle class, Legislation was brought in that gave employers greater freedom in shedding workers, and setting wages. Mr. De la Rua’s vice-president resigned in protest when accusations were made that senators were bribed to vote for the labour bill. The political crisis frightened investors who availed themselves of convertibility to flee the country. De la Rua sought help from the IMF. Supporting convertibility became the main concern.
“By December almost $40 billion had been received from the IMF in emergency aid. That helped the stock market in the entire region. But it was at the expense of the middle class. In the 1990s some 35,000 small enterprises went under, by the reckoning of one small-business group. Interest rates - in convertible pesos! -average some 23%. Widespread privatisations done in the 1990s in electricity, telephone and health have eliminated numerous government jobs and have doubled the share of family income that goes for basic services.
“About a third of families that had servants, are doing without them. Auto sales are down 20% from last year. Vacations that used to average two to three weeks, now run a single week. A leading synagogue–Comunidad Bet-El –opened a soup kitchen in 1994, The –lines at times stretch all the way around an elegant city block.
“Professionals are reduced to taking me nial moonlighting jobs to make ends meet. Doctors drive taxis after completing their medical rounds, or work at candy stands. Personal achievement has been the hallmark of Argentinians–to such an extent that a play titled My Son the Doctor about an immigrant farmer who sends his son off to medical school is on school curricula. Today, however, a best-selling non-fiction work catches the current mood. Its title: The Error of Being Argentine.”
The Argentines have been conned into a plight where TINA has really taken over. A nation that was in the van of Latin America and is today in the position of a fly in a spider’s web.
Humanity’s engine for progress and even survival is our ability to learn from errors made.
That has been taken from us. Central banks and the IMF and the Bank for International Settlements simply don’t make any errors. They control the media and the universities and even the history books. There is nothing to learn from. The slate of those in power is always wiped clean.
–from Comer, March 2001
(–a good argument for monetary reform and Citizens’ Incomes? – BL)