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Uruguay Divided over How Best to Steal Others’ Wealth

By: Hana Fischer - @hana_fischer - Mar 17, 2015, 9:21 am
Mujica and Vázquez have different views about the Development Fund, viewed by the former president as a "step towards socialism."
Mujica and Vázquez have different views about the Development Fund, viewed by the former president as a “step towards socialism.” (Diario UChile)

EspañolInjustice is one of the most undignified things. We don’t have to be versed in political philosophy to realize something is unjust. Even small children immediately perceive the immorality of taking something from someone that doesn’t belong to you and giving it to someone else.

Throughout history, injustice was the norm. Those who ruled the state used it to benefit from the fruit of others’ work. The mechanisms to do so were various, but all used force as a method, both naked violence and legal forms of control. In this way, honest and industrious people were condemned to live in poverty. And, simultaneously, there were those who enjoyed goods and commodities that, in truth, didn’t belong to them.

In the past, these abusive relationships were implanted to cement individuals in social strata. The nobility and the clergy were the privileged sectors, and the so-called third estate consisted of those not favored by the authorities.

It was a huge struggle to put an end to this enraging situation. And to a degree, progress was made, thanks in large part to the ideas of the thinkers of the Enlightenment. These philosophers made it clear that the institutionalized exploitation that comes from government is not only a great injustice, a despotic act that confines the individual, but also a general state of things which impoverishes the entire nation surrounding him.

The reason is clear: the individual strives to improve his own condition and that of his family. But if he doesn’t obtain any benefit from his efforts, sooner or later he’ll stop trying. In this way, the most capable stop producing and the mediocre or incapable, but with good political contacts, take control of the economy. Would it be a surprise if such societies gradually crumbled?

Those peoples who understand this simple and evident truth, progress. Among them, social relationships are based on voluntary exchange, contributing to peaceful cooperation. If people are convinced that they can climb the social ladder through their own efforts, extremists have little echo in society.

People often remark that the past was a terrible place, where “man was wolf to man.” But nowadays, under a different banner, this iniquity is just as robust as yesteryear. The members of the “privileged castes” have changed and today’s flagrant injustices are tinged with pseudo-moral arguments to try and disguise them.

Before, this situation was justified in the name of the “order of birth.” In our own times, injustice is defended under the aegis of socialism or “developmental” theories. This confirms the Leopard’s assertion in the 1958 novel: “If we want things to stay as they are, things will have to change.”

Industrious people are becoming impoverished when rulers steal the right to direct the economy for political ends. Along the way, interest groups will inevitably pile the pressure on for the institutional exploitation to be legalized. Frédéric Bastiat signals that to know if we’re facing this situation, “it will be enough to examine if the law takes from someone what belongs to them and hands it to another that it doesn’t belong to. It’s enough to ask if the law provides, to the detriment of another, an act which rules that the citizen can’t exercise the right to personal property without committing a sin.”

One example of this is the recent news in Uruguay of a disagreement between former and current presidents José Mujica and Tabaré Vázquez about the future direction of the Fund for Development (Fondes).

Fondes was created in 2011 by a presidential decree issued by Mujica. Its principal characteristic is that the companies that it supports are managed by former workers of industries that have closed (in some cases due to the impact of distorting measures made by these leaders themselves) and with governmental support, are revived as cooperatives. Mujica at one point said the Fondes is a model for a “transition towards socialism.”

Vázquez sent a legislative bill to parliament with the intention of modifying the fund’s foundational bases. The text stipulates that from now on the workers’ business initiatives must be sustainable in order to receive financing.

Economy Minister Danilo Astori declared: “What I don’t like is that Fondes appears to be permanently associated with frustration and failure, that is, with experiences that aren’t structurally viable. There are experiences which are structurally unviable, that are unviable today and will be in the future.”

Uruguay’s principal workers’ union, the PIT-CNT, reacted with horror in the face of the proposed changes. Sharing the posture of Mujica and his fellow party members, they argued that Fondes shouldn’t be conducted according to economic logic.

Mauro Valiente, who heads one of the cooperatives currently favored with state loans, argued that this fund constitutes the “principal tool” which workers are relying on, given that there’s “no other way of securing capital.” Union leader and communist Marcelo Abdala meanwhile argued that “the success or otherwise of these projects can’t be measured in terms of profitability.”

Common sense suggests that no one wants to voluntarily give their own money to the cooperatives, because they know they’ll only fail. No one in his right mind wants to lose his wealth or impoverish himself. And that’s why the government has to resort to legal force.

The result of this way of administering public money was that — in a full growth bonanza — Uruguay’s consolidated debt ended 2014 at 3.5 percent of GDP, with a structural deficit of around 4 percent. These figures show that there are people who are financing — albeit not freely — Mujica’s political projects.

This will inevitably lead to an increase of indirect or discreet fiscal pressure, which will punish the genuinely productive sectors of the country. In fact, it’s already started.

What injustice indeed!

Translated by Laurie Blair. Edited by Guillermo Jimenez.

Hana Fischer Hana Fischer

Hana Fischer was born in and resides in Uruguay. She serves as a writer, researcher, and international affairs columnist in different media outlets. A specialist in philosophy, politics, and economics, she has written several books and received honorable mentions. Follow her @hana_fischer.