THIS column concludes a three-part series on the creation of a populist welfare state as the precursor of the downfall of empires and governments. Rome is a case in point in the first half of the 1st century A.D. and Argentina from 1930 onward. Their experiences will be briefly narrated in the hope that our country’s own political and economic leadership will mull over the antecedents surrounding the circumstances that brought about their societal decay. This columnist will not attempt to provide our leadership a menu of solutions as the political-economic realities in the Philippines are as much complicated as the other two. But surely, our leadership, whose patriotism may not be questioned, can extract lessons to be learned from the fall of Rome and the decadence of contemporary Argentina; and perhaps save our country from a similar fate.
Rome as a sample is logical in that the empire had so influenced the West in its concepts which are dominant but waning, among them, the ideas of democracy and the rule of law handed down from Greece but honed at the Senatus Romani; and freedom and individual liberties, notions so ingrained and cherished by America that they propelled its drive for hegemony in the earlier part of the last century.
Why Argentina? Because this country has intrigued me since I was privileged to be invited as a consultant to Industrias Metalurgica Pescarmona (Impsa) by its Harvard-trained principal, Francisco Ruben Valenti, who from the mid-1990s has been a close friend, a confidant, a confrère who provided me excellent and valuable insights into this beautiful yet complicated country’s history, it’s culture, the nuances of its politics and its contradictions.
Argentina’s trajectory leading towards its apex was the successful results of the application of “…consistent liberal economic policies starting from 1880 and to the opening of its borders to a wave of European immigrants” (“Argentina — an enigma,” The Manila Times, Nov.13, 2019). By 1910, Argentina was at the top of the world boasting of its honorific as “Granero del mundo,” capable of feeding many countries. But from that dominant position as the leading “European City” in Latin America, the policies introduced by subsequent populist administrations were pushing the country toward a welfare state, its economic-political and cultural flight plan plateaued circa 1930s, eventually hurling the country down looking at the gaping abyss of economic oblivion. The demands for entitlements were aggravated during the reign of the charismatic couple, Juan and Evita Peron, which personified the essence of “Peronismo,” an ideology that was masses-bred and -directed but evolved away from its roots. Its popularity driven by the ghost of its past is so compelling that even subsequent Argentinian presidents must claim the badge of a Peronista simply to entice the millions of the poor for their votes.
Argentina’s recent past
Transiting to the recent past, President Carlos Menem in the 1990s at first tried to correct the iniquities, from taming runaway inflation to disciplining the government’s parastatals. But the corruption in his administration and the persistent loss of jobs intensified the economic hemorrhage. With his term running out, the undisciplined populist compromises Menem crafted kicked in, jeopardizing his ambition for an unprecedented third term. He did not get it but in the process, Argentina’s fate was imperiled.
Argentina was in a mess, its international reputation in tatters and the bond market gave its harsh verdict, pricing their bonds at $0.30 to $1. This, even before the international financial collapse.
Argentina did not learn from its mistakes. Still continuing its welfare state-propelled social agenda, modest subsidies on monthly salaries were granted — for survival. An emergency measure at best, this was extended and become permanent during the 12-year conjugal authoritarian-nepotism of President Nestor Kirchner and later his wife Cristina Fernández de Kirchner (currently vice president). President Mauricio Macri, a liberal turned socialist, has abetted this vicious cycle.
Trying to stem the tide
Perhaps Macri’s initiative for changes may be honorable but the populist dreams and mindset for government entitlements are so ingrained as to demand immediate satisfaction now — and let the future generation fend for itself. And the leadership, including the opposition, are totally clueless as to how to balance the voters’ demands of today as against the exigencies of tomorrow.
These series of failed policies towards sustaining a welfare state and irresponsible direct subsidies toward its citizens will result in a complicated set of generational problems. As translated from Spanish “…the present crop of youth that has not witnessed and appreciated the values of hard work and diligence of their ancestors will produce the next generations, ignorant of the value of work ethics.”
Thus, Argentina’s recent past policy choices have endangered its youth today. They are fertile grounds for drugs — which is prevalent in Latin America; witness Columbia in the time of Escobar and the drug cartels in Sinaloa, Mexico. A dealer in a barrio makes more money than a worker but destroys his life and the lives of others.
Many of the frantically concerned citizens in Argentina may have the seeds of a solution — only if government, which is now seemingly detached from its people, will listen. Among the many immediate ones they propose are the reiteration of down-to-earth proposals harking back to their successful past from 1880 to circa 1925.
In lieu of direct subsidies, the private sector is ready to help government create massive jobs with investments from investors abroad, but only if corruption in government is eradicated or minimized and the bureaucracy is trimmed. For its part, the local investors having been ravaged by the economy in the recent past, may have to compromise to work with government on new politico-economic initiatives.
Special attention should be given to the banks and financial institutions by restructuring and refocusing operations to serve the interest and welfare of business and local entrepreneurs — especially in the agricultural sector, producing goods and services rather than redirecting capital to speculative markets.
A jobs-creation program is a must to cover an ample spectrum ranging from low to higher skills in order to provide ascendant mobility. The vast natural resources of the country could be developed to exploit its competitive advantage (only a population of 44 million in an area almost two-thirds the size of the US).
Hope and deliverance
Could this be achieved? Argentina may have to recapture the spirit of its salad days during President Domingo Sarmiento’s regime when free education was imposed, resulting in the best educational system in Latin America, producing five Nobel Laureates and catapulting Argentina among the best economies in the world. The seeds of Argentina’s resurgence are there. With one caveat. The political leadership and the private sector, particularly the banks and financial institutions, must begin to look inward into themselves and germinate that which is drastically needed today: Argentina and her people’s common good must prevail.
Our Philippine leadership could look at as an exemplar of what not to do after its heyday in the 1910-1930s, from whence it nosedived when the welfare state was put in place. Filipinas is at this crossroad. Where do we go from here?
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