Argentina Farmers Strike: Refusing to Foot th...

May 27, 2008
Argentina Farmers Strike: Refusing to Foot the Bill for the Kirchners’ Populist Politics
byJames M. Roberts
WebMemo #1938
Peronists Néstor Kirchner and Cristina Fernandez de Kirchner, the presidential couple who have ruled Argentina since 2003, have exploited record-high commodity prices to finance their leftist-populist policies. Keeping the peso artificially low, they have overheated the economy and stoked exports and inflation, heavily taxing the former and attempting to conceal the latter. Now their soybean-stuffed chickens have come home to roost.
When President Cristina Kirchner's now-former Finance Minister Martín Lousteau raised taxes on agricultural exports to 44 percent earlier this year (the third increase in six months), the farmers said "basta!" (enough!); staged a 21-day strike; and blocked shipments of food, both for export and to Argentine cities. The farmers demonstrated peacefully, but the government responded at times with police brutality and deployed their usual populist weapon--Communist rent-a-mobs.[1] A 30-day truce ended May 2, but the Kirchners have refused to negotiate a lower tax rate with the farmers. On May 7, the farmers resumed the strike with little hope of a settlement.
Instead of perpetuating wasteful welfare state handouts and income redistribution based on an unsustainable economic model, the Argentine government should look west and emulate the success that Chile has enjoyed from a combination of neoclassical economic reforms, privatizations, and limited government.
Farmers vs. Fascists
There is an old political economy joke about cows:
SOCIALISM: You have two cows. The [S]tate takes one and gives it to someone else.
COMMUNISM: You have two cows. The State takes both of them; gives you the milk.
FASCISM: You have two cows. The State takes both of them and sells you the milk.[2]
Then there is the current version of PERONISM: You have two cows. Néstor and Cristina Kirchner take the milk, export it for record-high world commodities prices, and give the farmers whatever money is left over after the Kirchners pay off their political cronies and subsidize their urban-poor political base. If the farmers can't cover their costs, too bad.
Reduced Economic Freedom
Néstor Kirchner (President from 2003-2007) and his wife and successor, former Senator and current President Cristina Fernandez de Kirchner, have used revenues from commodities exports to finance the leftist-populist policies that have kept General Juan Peron and his political progeny in power in Argentina more or less continuously since the 1940s with a simple but economically destructive formula: wasteful welfare state handouts, a swollen bureaucracy to redistribute wealth, and powerful closed-shop trade unions protected from foreign competition, all of it generously lubricated with corruption. Anyone raising serious objections risks a visit from political thugs.
Of course, the Kirchners' policies have exacted a terrible human toll: Some families in poor Peronist barrios have been unemployed and on welfare for three generations.[3] As the CIA World Factbook reports:
Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight. A severe depression, growing public and external indebtedness, and a bank run culminated in 2001 in the most serious economic, social, and political crisis in the country's turbulent history.[4]
At the Mercy of the State
The structural problems in Argentina's economy are outlined in the 2008 Index of Economic Freedom, published by The Heritage Foundation and The Wall Street Journal, which reports low scores on property rights, labor freedom, freedom from corruption, and especially financial freedom:
The [2001-2002] foreign debt crisis remains unresolved, and local capital markets are not healthy for entrepreneurs. Political interference with an inefficient judiciary hinders foreign investment, and numerous popular and official obstructions of due process make international courts preferable to Argentine courts.[5]
Argentina scored only 55.1 out of a possible 100 (with zero being "least free" and 100 indicating "most free"), making it only the world's 108th freest economy out of the 157 countries ranked in the Index. Its low rank (23rd out of 29 Western Hemisphere countries) reflects how far behind Argentineans are from those they consider peers: Canada, the U.S., and Chile.[6]
The 2008 Index of Economic Freedom specifically praises the Chilean government's openness to foreign investment as well as its effort to fight corruption and protect property rights. Overall, rule of law in Chile is "remarkably open and transparent."[7] Rather than reviving Juan Peron's disastrous 1960s-era protectionist "import substitution" policies,[8] the Chileans are leading South America in seeking free trade agreements with any and all potential trading partners. They see the value of globalization and are not afraid of it.
Even fellow leftist and President of Brazil Luiz InacioLula is doing a better job of governing than the Kirchners. Lula has called inflation a "degrading disease," preferring fiscal restraint and support for Brazil's central bank anti-inflation measures. "Foreign direct investment to Argentina rose just 12 percent last year, compared with an 84 percent increase (to a record $35 billion) in Brazil."[9]
The Kirchners' Smoke and Mirrors
To launch Argentina's economic recovery in 2002, the government devalued the peso and defaulted on foreign debt. As The Economist notes, "Devaluation worked: the economy roared back to life."[10] President Néstor Kirchner assumed office in 2003 and continued the weak-peso policy "mainly to protect local industry," but foreign investors, having been burned before, did not rush to return.[11] The U.S. State Department reports that continuing Argentine arrears include over $20 billion in default claims by international bondholders and over $6 billion owed to official creditors, "legacies of the 2001/2002 economic crisis that remain to be resolved and adversely impact Argentina's investment climate."[12]
Mr. Kirchner's solution to insufficient new private investment was to increase government spending and raise wages and pensions. Growth continued, but inflation skyrocketed.[13] The Kirchners "whitewashed the effects of inflation" by canceling publication of poverty statistics by the government.[14] Their ideological soul mate, Venezuelan President Hugo Chávez, helped by paying off much of Argentina's $5 billion-plus official debt.[15]
Néstor Kirchner turned over the reins of power to Cristina Kirchner in late 2007, but his heavy hand remains visible. Most of her ministers are holdovers. The Economist Intelligence Unit summarizes Cristina Kirchner's current policies: "continued commitment to a weak currency policy…and to the heterodox measures, such as price caps, cross-subsidies and export taxes, which have been used to contain the resultant acceleration of inflation."[16]
Farmers Have Had Enough
Leaders of the striking farmers maintain that the real source of economic growth since 2001 is increases in prices and quantities of soybean exports. "Cultivation of soy has nearly quadrupled since 1990 and now consumes about half the country's farmland, generating nearly $25 billion a year in export income."[17] Farmers complain that they "are being asked to carry an excessive burden by a populist government that is unable to get its spending in line."[18]
Cristina Kirchner has managed to make the farmers more united than at any other time in the past 50 years.[19] During their 21-day protest in March, "thousands of farmers erected some 400 road blocks in central Argentina, leading to unprecedented shortages of food and raw materials in major urban centers."[20]
Although they declared a 30-day truce to allow the government to climb down from Cristina's initial "authoritarian and unstatesmanlike"[21] response to the strike, the Kirchners apparently did not like the advice on how to resolve the situation from their bright young Finance Minister, Martin Lousteau--one of the few new faces in their government. He resigned on April 24, reportedly frustrated that the Kirchners blocked his efforts to "restore credibility to official statistics" by announcing that the true rate of inflation in Argentina is 25 percent (versus the official figure of 9 percent).[22]
After encountering continuing intransigence from the Kirchners since suspending the strike, the farmers returned to the blockades on May 7. Cristina Kirchner's popularity has fallen dramatically since the strikes began and is now down to only 23 percent.[23]
Conclusion
Instead of wasteful welfare state handouts and income redistribution based on an unsustainable economic model, the Argentine government should look west and emulate the success that Chile has enjoyed from a combination of neoclassical economic reforms, privatizations, and limited government.
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics (CITE) at The Heritage Foundation.
[1]Author's notes, visit to Buenos Aires, Argentina, March 25-April 2, 2008.
[2]John J. Stiver, Ph.D., "Economic Jokes," University of Notre Dame, Mendoza College of Business, athttp://www.nd.edu/~jstiver/jokes.htm (April 29, 2008).
[3]Author's notes, visit to Argentina, March 26, 2008.
[4]U.S. Central Intelligence Agency, The World Factbook, "Argentina," April 15, 2008, athttps://www.cia.gov/library/publications/the-world-factbook/geos/ar.html (May 2, 2008).
[5]Kim R. Holmes, Edwin J. Feulner, and Mary Anastasia O'Grady, 2008 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc. 2008), pp. 83-84, athttp://www.heritage.org/index/countries.cfm.
[6]Ibid.
[7]Holmes, Feulner, and O'Grady, 2008 Index of Economic Freedom, pp. 137-138.
[8]Daniel T. Griswold, "Open Trade: An Important Milestone," in Marc A. Miles, ed., The Road to Prosperity: The 21st Century Approach to Economic Development (Washington, D.C.: The Heritage Foundation, 2004), pp. 82-84.
[9]"The Tortoise and the Hare; Brazil and Argentina," The Economist, March 22, 2008.
[10]Ibid.
[11]Ibid.
[12]U.S. Department of State, Bureau of Western Hemisphere Affairs, "Background Note: Argentina," February 2008, athttp://www.state.gov/r/pa/ei/bgn/26516.htm (May 2, 2008).
[13]"The Tortoise and the Hare; Brazil and Argentina."
[14]Monte Reel, "Argentina Tries to Reconcile Exporting Food with Prices at Home," The Washington Post, April 26, 2008, p. A8.
[15]Daniel Helft, "Argentina Pays Off Entire $9.5 Bln Debt to IMF (Update3)," Bloomberg News, January 3, 2006, athttp://www.bloomberg.com/apps/news?pid=10000086&sid=aHzqoAPRdVKw&refer=news_index (May 5, 2008).
[16]Economist Intelligence Unit, Argentina: 2008-2009 Country Outlook, EIU ViewsWire, February 1, 2008.
[17]Reel, "Argentina Tries to Reconcile Exporting Food with Prices at Home."
[18]Drew Benson and Matt Moffett, "Argentine Farmers Find Voice: Alfredo De Angeli's Folksy Style Looms Large in Tax Fight," The Wall Street Journal, April 28, 2008, p. A13, athttp://online.wsj.com/article/SB120934065973348401.html (April 30, 2008; subscription required).
[19]"Cristina in the Land of Make-Believe," The Economist, May 3, 2008, p. 46.
[20]"Argentine Economy Minister Fired," Agence France-Presse, April 25, 2008.
[21]"Cristina in the Land of Make-Believe."
[22]Ibid.
[23]Bill Faries, "Argentine Farmers May Suspend Strike to Revive Talks,"Bloomberg,com, May 20, 2008, athttp://www.bloomberg.com/apps/news?pid=20601086&sid=aiHlR1gW7QJ8&refer=news (May 20, 2008).
习语注解：
"foot the bill"
泱泱大国，礼仪之邦。和外国朋友喝酒聊天是件很愉快的事情，但酒足饭饱之后总不能让你的客人来买单吧。这个时候，赶快说一句: "I will foot the bill"，以体现我们热情好客的好传统。这里的"foot the bill"可不是指“踩着帐单，赶快开溜”，而是“付帐”的意思。
可能有人会奇怪，付帐跟"foot"(脚) 有什么联系呢？
这里面还有一段历史呢！早在15世纪，人们便开始使用"foot the bill"这个短语，但当时指的是把所有的帐目加起来算出总金额，然后写在帐单的底部（foot of bill or account），foot的意思相当于bottom。很显然，这是店家的工作，没消费者什么事。但是到了19世纪，则轮到消费者"foot the bill"了，因为这个短语已经变成了“付帐，买单”的意思。这种用法一直沿用到现在。
（中国日报网站译）
chickens come home to roost
“善有善报,恶有恶报,不是不报,时候未到。”一看到这句话，就想起武侠剧里一位面无表情、修行颇深的方丈在开导某位施主。那么，这个“恶有恶报”该怎么用英语表达呢？那就是：“chickens come home to roost”。
这句话的字面意思是“鸡回家睡觉”，怎么就变成“恶有恶报”了呢？是这样的：小鸡们白天在院子里刨食，晚上回到鸡舍里睡觉，这中间隔了一定的时间。而如果一个人做了不好的事，也许他不会马上得到报应，但是总有一天他会得到应有的惩罚的，正如鸡总会回家睡觉的。
看下面例句：
You have been too arrogant since getting your new job, and your coworkers now don't like you. The chickens have come home to roost. （你接手新工作之后表现得太傲慢了，同事们现在都不喜欢你，遭报应了吧。）
smoke and mirrors
在这次节目里我们要讲的两个习惯用语都是形容有的人用来欺骗别人的手法。美国人有许多有关欺骗的习惯用语，但是像其他的习惯用语一样，有的随着时间被淘汰了，而新的习惯用语又不断出现。最近几年来，在形容欺骗方面，人们经常用下面这个习惯用语：Smoke and mirrors. Smoke就是烟，mirrors是镜子。Smoke and mirrors这个说法是从那儿来的呢？
实际上，这是从变魔术而来。魔术师往往让观众们相信他能使得一个人突然不见，然后又突然出现。要使人产生这么样的幻觉，魔术师一般都是用烟和镜子作为手段。所以，smoke and mirrors就成了欺骗别人的常用语。换句话说，也就是使用不真实的消息来蒙混别人。克林顿总统曾经在一次讲话中也用了smoke and mirrors 这个说法。他说，在他的发展经济和减少预算赤字方面，他不会用欺骗手段来蒙蔽全国人民。
在看魔术的时候被骗倒是很好玩，但是在实际生活中被人欺骗，那绝对不是好玩的事。下面是一个例子。这是一个参加竞选的人在批评对立党内的一个竞选对手。
例句1: My opponent's plan is nothing but smoke and mirrors: he's simply pulled his numbers out of the air to make it look like he can balance the budget without new taxes.
他说：我那竞选对手的计划根本就是一个骗局。他只是毫无根据地提出几个数字，让人们觉得好像他可以不增加新的税收就平衡预算。
******
我们再来举一个例子。这是一个人受了他朋友的骗，正在发泄心中的不满。
例句2: I told Mark about my plan to merge with a company in New York and asked his help. He promised to do all he could and even offered some ideas. But this was all smoke and mirrors. He bought that New York company himself last week - what a nasty trick!
这个人说：我告诉马克有关我想跟纽约那个公司合并的计划，并希望他能给予帮助。他说他一定尽力帮忙，甚至还给我提了一些建议。可是，结果这些全是骗人的。上个星期他自己把那个纽约公司买下来了。真下流。
******
现在我们来讲第二个意思是欺骗的习惯用语。Bum steer. Bum就是不好的，或者是错误的。Steer就是引导向某个方向发展。把bum和 steer两个字合在一起就成了一个习惯用语。意思是：假的信息，或者是使人迷惑的信息。下面是一个例子，这是一个受害于假信息的公司总裁。
例句3: I flew out to Los Angeles when I heard this company wanted to buy a million dollars worth of our equipment. But it turned out to be a bum steer, just a rumor spread by one of our competitions to make trouble for us.
这个总裁说：我搭飞机到洛山矶去，因为我听说这个公司要买我们的设备，价值达一百万美元。但是，这个消息结果是假的，是我们竞争对象之一为了给我们制造麻烦而散布的谣言。
******
下面这个例子是一个人在说他认识的一个女孩。
例句4: I really feel sorry for Mary. She moved all the way from San Francisco to New York believing that Frank would marry her as he promised. But his promise was a pure bum steer. Mary found out he's already married and has two kids.
这个人说：我真是为玛丽感到难受。她老远的从旧金山搬到纽约来，相信弗兰克会跟她结婚，就像他保证的那样。可是，他的保证全是假的。玛丽发现他是结了婚的，还有两个孩子。