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Argentina Shows Chile What Not to Do

By: Iván Cachanosky - @ivancachanosky - Jul 31, 2015, 2:15 pm
Tras el gasto en educación en Argentina se esconden altos niveles de deserción. (Tiempo Fueguino)
Argentina’s burdensome education spending has failed to curb high drop-out rates. (Tiempo Fueguino)

EspañolSurprisingly, many Chileans look up to Argentina as an example they must follow.

They often argue that support is warranted based on “free” education and health care. They also support Argentina’s nationalization policies and the incarceration of the late Argentinean dictator Jorge Rafael Videla. But when they mention ‘free’ services as reasons to look up to Argentina, I wonder whether they know how these services work. In addition, have Argentina supporters even considered what happened to nationalized pension funds? What about Videla’s incarceration, was it good for the country?

In Argentina, taxpayer-funded education is tuition-free, but public spending is substantial. The government dedicates more than 5 percent of its GDP to education. When analyzing the results, we must ask whether the money is spent efficiently. While Argentina beats Chile in terms of high-school student enrollment, its drop-out rates are the highest in the region.

According to UNESCO statistics, only 43 percent of the students finish high school at the expected time. Based on this information. So it’s hard to see why Chileans prefer to follow a model that requires so many resources for mediocre results. Meanwhile, Argentinean President Cristina Kirchner brags about education spending, but UNESCO statistics are seldom acknowledged.

When it comes to hospitals, access to care is also free of cost to the patient, which reminds me of the Spanish proverb that says “what belongs to everybody belongs to nobody.” Without incentives, nobody picks up the slack, and the current state of care in the country is substandard. A local TV news report shows that despite high investments in the public health system, the services are worse than in countries that spend half of the resources.

In many cases, surgeries have been delayed because there weren’t enough medical supplies, or because the hospital lacked an anesthesiologist. Due to shortages of materials, patients have used plastic wheelchairs. In some cases where delays were observed, broken equipment were to blame.

The surge in medical spending hasn’t prevented the country from experiencing similar situations as those in Chile. Patients often wait four to six months between medical appointments and treatments. For ordinary surgeries, delays reach up to nine months. What’s ironic is that Buenos Aires has the highest health-care budget in the country. In 2014, the capital increased its health care spending by 33 percent, but with no positive results regarding the quality of services were observed. Chile, don’t follow Argentina!

Further, nationalizing the social-security system and pension funds wasn’t a wise choice. While there is an ongoing debate about whether pension funds should be private or public, a mixed system that gives citizens at least limited the freedom of choice is the most practical solution. Those willing to go to a private company should be able to do it. Likewise, those willing to embrace the state-run social-security scheme should also be free to do so.

Still, funding populism is far from being inexpensive in Argentina. Savings put aside by millions of Argentineans for several years are now gone. In addition, the freedom to choose has also been taken from their hands. Chile, don’t follow to Argentina!

Translated by Adam Dubove.

Iván Cachanosky Iván Cachanosky

Iván Cachanosky holds a bachelor's degree in business administration and a master's degree in applied economics. He's currently an instructor at CMT-Group. Follow him on Twitter at @ivancachanosky.