Start by imagining, if you will, a country that is one of the richest countries in the world, whose most popular politician of all time was a self-proclaimed “social democrat,” elected on a platform of “social justice.” Indeed, the current government’s priority is to provide “low-income housing, infrastructure and transfers to poor families with children,” and the public sector is relatively large. The government pursues its progressive agenda fairly unencumbered by retrograde social forces such as Tea Partiers or gun-toting rednecks.
In this almost ideal progressive setting, what could go wrong? Ladies and gentlemen, we give you Argentina, once one of the most prosperous and advanced countries in the world, now brought to its knees by 60 years of socialism. The country’s income per capita is now only 37 percent of the U.S. level, and in recent years, the country has seen hunger and food riots. And notably, the government is now systematically cheating people out of their pensions.
The pension saga is particularly instructive, and we may start the story in 2001-02, when the government’s massive spending causes a severe economic crisis and inflation. The government defaults on its debt, and as a result, markets will lend to the government only at rates higher than the government can afford. The government, in fact, has issued no new debt for the past five years. Desperate for cash, the government seizes people’s personal, privately managed, pension funds. This would be analogous to the U.S. government seizing people’s 401(k)s. In any event, the confiscation enables the Argentine government to turn the pensions into a “slush fund” used to pay for typical giveaways and boondoggles, and also lets the government off the hook for paying off the government bonds held by the pension funds.
The people who have lost their funds are given an unfunded promise that in retirement they’ll be taken care of by the government–similar to the unfunded Social Security system in the United States. Except that inflation is still raging, perhaps as high as 25% annually, and the government does not want to have to give pensioners such a large cost-of-living adjustment. The Supreme Court rules, however, that the pensions must indeed be indexed to inflation.
To avoid making the full indexed payments, the government proceeds to falsify the inflation figures, reporting inflation of only about 9%. And when economists dispute the phony inflation figures, the government goes full-fascist and tries to intimidate them by levying fines and filing trumped-up criminal charges.
Argentines now speculate that the government is hoping to delay long enough so that enough retirees die off before it has to pay them.
“It’s their sick little game,” says Juan Alberto Suárez, a 79 year-old whose lawsuit has not yet been resolved eight years after it was filed. “They want us to die before they have to give us what’s ours.”
Behold where leads the agenda of “social justice,” very nearly the antithesis of ordinary, plain old,…you know… justice.
But don’t worry! This is Argentina, not the USA. Nothing like that could ever happen here.