Fletcher: Argentina is better in song than in economic policy
In Argentina, there is a very strong populist movement. This political manifestation is characterized by class warfare and the demonization of the more affluent economic classes for political gain.
We really wouldn’t have much knowledge of Argentina in this country if it hadn’t been for the enormously popular musical “Evita.”
“Evita” is the story of a beautiful young courtesan of the same name who was the consort and later the wife of Argentine Army Col. Juan Peron. In the pre-World War II years, the Argentina Army modeled itself after the army of the Third Reich of Germany.
There is a long political history in Argentina of political repression and dictatorships. There is an equally long history of government corruption and political repression. A truism in Argentina is that “no man’s freedom nor money are safe while Congress is in session.”
On Nov.21, 2008, the Argentina government nationalized all private pensions ostensibly to pay its out of control national debt. Government just took the pension assets, promising a retirement stipend when and if citizens reached retirement age. If you didn’t make it to retirement, they just kept your money.
It works pretty much the same way with Social Security here where, to use an example of a single person for simplicity, you pay in during your career and if you die one day before your retirement date, then the government keeps your contribution. But, this wasn’t Social Security in Argentina, it was money in savings accounts and in stocks and bonds owned by private individuals like you and me.
As it happens, our cumulative savings outside of Social Security in this country is roughly equal to our national debt.
Now back to that community organizer Eva Peron. She got her husband Juan elected as president and virtual dictator of Argentina by promising wealth redistribution to the masses of poor, largely urban folks. She was the darling of the people. Fast forward to Christina Kirchner, the current president of Argentina, who is commonly compared to “Evita” because she has a similar history all the way back to her college years when she belonged to the Peronist Youth movement.
The question comes up, would our community organizer, redistributionist president be thinking about our IRAs, 401(k)s, and private (Company sponsored) pension plans as a source to pay off our national debt? Remember, we now are in the same league as Portugal, Italy, Ireland, Greece and Spain. After all, we would still be getting a pension guaranteed by the U.S. Isn’t that really the same thing?
Well, actually not. Most of us with private pension and retirement holdings plan to pass on some of the principal associated with those holdings on to our heirs. We aren’t planning so closely that we will have expended the last cent of our savings to pay for our last gasp of oxygen. We have a buffer in there for the contingency that we might outlive the actuarial tables and need the cash which we earned and which we saved to live in a comfortable lifestyle considering our age at the time.
What did Mrs. Kirchner do with the expropriated money in Argentina? She paid off the very large, over hanging debt, didn’t she? Well, actually not. The debt still plagues Argentina and the money was used for current infrastructure repairs. It just got redistributed.
At its current rate, all of our private retirement savings in America won’t cover the projected national debt by the end of the Obama Administration.
“Don’t cry for me, Argentina.”