Overtaxing the economy

Oh, taxes. We cannot avoid them. And the fact is that the wealthier your country is, chances are that your government's revenue as a portion of GDP is higher, too.

A Lower Minimum Wage

it is relatively more expensive to hire people in Colombia than in any of the other South American nations. It is no coincidence that Colombia has South America’s highest unemployment rate.

Comparing Neighbors

Venezuela and Colombia have followed very different economic policies in the past decade. See how they have done in 11 cool, educational graphs.

Destituir Congresistas

¿Puede el Procurador General de la Nación destituir congresistas? Se puede decir de todo acerca del Procurador Alejandro Ordóñez menos que ha no trabaja con dedicación

Salario y Desempleo

los datos entre 1990 y 2007 no están en contra de la hipótesis de que salarios mínimos más altos han afectado negativamente la tasa de empleo en Colombia.

Tuesday, October 20, 2009

Cops on campus: an absurd controversy

Publicado por Gusilcan
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Last week, Moises Wasserman, headmaster of Colombia’s National University, was kept inside his car against his liberty for six hours. As he attempted to leave campus, a group of 300 students surrounded Mr. Wasserman’s vehicle, and reportedly yelled insults and threats. The crowd demanded Mr. Wasserman’s presence at an auditorium so that he could explain the state of the University’s finances to the student body.

I know no professors who would accede to give presentations through coercion, so naturally, as most rational people would have done, the headmaster decided to stay inside his car (which happens to be armor-plated) and call for help from his cell phone. Being the head of Colombia’s largest public university, Mr. Wasserman’s SOS call was promptly responded by President Alvaro Uribe himself.

What happened later has been a source of controversy and bitterness between the national government and Bogota’s mayoralty. President Uribe ordered the police to enter the campus of the National University in order to protect Mr. Wasserman. Soon after, the crowd was dispersed and the headmaster returned to his office, where he gave a press conference.

In his statement, Mr. Wasserman qualified the situation as “a kidnapping” and “an infringement of rights”. President Uribe, who later visited the University, used stronger words in reference to the incident: “There was an act of force that deprived a person of his liberty, and that is understood as a kidnapping, and there were death threats […] When faced with a kidnapping the government has the obligation to intervene…” Members of Bogota Mayor Samuel Moreno’s administration see things a little bit differently. Clara Lopez, Bogota’s government secretary, was upset by the fact that the police was allowed to enter the campus. She also complained that a number of students who were in the crowd were taken into custody.

University independence is a sensitive topic in Colombia, as in many other places. In the name of keeping students safe from state coercion, the police and the army are barred from entering university campuses. Whenever they are trying to control a riot by National University students (and trust me, there are plenty of those), the police are obligated to do it from the outside –stepping in would create a legal and political storm of considerable proportions. Even if this makes the job of the police much more difficult, this is a healthy practice to an extent: it keeps the state out of the classroom, which makes us all better off.

But all rules have exceptions, and this week’s event was one of them. The restriction on police action in university campuses cannot be valid whenever a crime is being committed inside a university. To affirm the contrary is simply preposterous. If the property, integrity, liberty, or life of someone are in danger, the police has the obligation to intervene, even if this is occurring within the territorial limits of a university. At all times, rights to life, property, etc. supersede the universities’ right to be free from police presence, so that the infringement of the first one invalidates the second. There is clear evidence that Mr. Wasserman’s liberty was being violated by the angry mob, and the threats he reportedly received would indicate that his integrity was also in danger. Therefore, the police had the duty to act in order to return Ms. Wasserman to safety and capture those involved.

The issue is so clear to me, that I find it difficult to understand why there has been so much controversy. Ms. Lopez is clearly wrong in being more upset about the police entering to control the situation than she is about Mr. Wasserman having had to spend six hours confined in his car, the doors locked, wondering whether the people outside were going to lynch him. I am certain that if a multitude of citizens were to surround Ms. Lopez’s vehicle in anger, due, say, to the inefficiency of Bogota’s mayoralty, she would want the police to act as swiftly as possible regardless of her being inside or outside a university campus. In her statements on the situation, Ms. Lopez underscored that she was worried for those taken into custody because it wasn’t clear “where they had been taken, or what [the police] will do to them”. No need to worry, Ms. Lopez: the police probably drove them to a police station, where their names and declarations were taken as part of the investigation. If there were minors detained, as it indeed occurred, it is very likely that their parents were notified very soon. As a matter of fact, all of those taken into custody have been freed by now, although the investigation continues.

Two final reflections: First, the fact that the police entered the National University will probably work as a deterrent for future actions of this kind. No longer will anyone believe that the campus is completely out of reach for the police, and those interested in creating disorder will think twice before carrying out acts of violence or coercion. I applaud the President’s swift response. Second: although I understand the rationale behind the ban on police presence in universities, it is evident that the liberty campuses enjoy has had its own bad effects. This year, there was cocaine served at a public event at the National University, and attendees were videotaped sniffing it, encouraged by the main lecturer. The guerrillas have also infiltrated Colombian universities, indoctrinating students and using them as places to hide weapons and propaganda, as it was discovered a few years ago.

Nobody wants to see the police going into public universities. It is a bad sign when guns and anti-riot tanks are used in the very place where the future leaders of Colombia are being educated. As I said, keep the cops out of the classroom. But the universities must understand that their liberties, besides serving a purpose, have clear limits. When this purpose is being bypassed, and these liberties abused, corrective actions are necessary. I hope Colombia’s universities are wise enough to understand this simple fact.

This article first appeared in Colombiareports.com

Monday, October 12, 2009

Free Money for the Rich

Publicado por Gusilcan
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Agricultural subsidies are a nasty thing. They are a source of government waste, inexplicable tax money handouts for a few, an affront to the free market principles that are essential for economic growth. The European Union and the Unites States have bloated and complex systems of farm subsidies, which, among other things, impede fair and free competition in world markets for products grown in the developing world. In Colombia, subsidies of all kinds are relatively small due to budgetary constraints, although the government in recent years devised a large program designed to give citizens’ hard earned pesos to agribusinesses. Agro Ingreso Seguro (AIS), as the program is called, has the aim to “promote the competitiveness and productivity of [Colombia’s] farming sector” according to the official website. Between 2007 and today, the Colombian state has spent around 1.26 trillion pesos (around US$630 million again, according to SIGOB.gov.co, another official website) in AIS subsidies.

That is a huge number. When you have such large, arbitrary transfers of taxpayers’ money to private individuals, the least one expects is some transparency and accountability. And there has been very little of that. Cambio, a leading news magazine, ran a story that says how some AIS subsidies ended in the pockets of a few rich agro-entrepreneurs in northern Colombia. According to the article, that has created a scandal of enormous proportions, four wealthy families in the department of Magdalena received around 25,000 million pesos (12.5 million dollars) in handouts. The news became scandal material, in part because one of the recipients of the money was Valerie Dominguez, a former Miss Colombia. The article claims that members of these four families divided their farms in smaller parts among themselves in order to qualify for more AIS funds.

Ever since the Cambio article was published, more information on AIS recipients has come to light. Caracol, a broadcasting network, has it that 18 “rich families” in the department of Santander received around 9 billion pesos (4.5 million dollars). According to newspaper El Espectador, Ismael Pantoja, a drug lord better known as ‘El Negro’ who is now imprisoned in New Jersey, received 200 million pesos (US$100,000) in AIS subsidies.

Now, all eyes are on Andres Felipe Arias, the former Minister of Agriculture and a presidential hopeful from the Conservative Party. The subsidy program was designed under his tenure, and he is coming under attack from many quarters for it. Rudolf Hommes, a former Minister of the Economy, wrote recently in El Tiempo that Arias’ AIS amounted to an application “of the idea, popular among the noblesse prior to the French Revolution, that in order to help the poor one has to give money to the rich.” With presidential primaries for the Conservative Party coming soon, Arias wants to get rid of the scandal before it affects his image any further. Whether he will be able to do it remains an open question –and Arias does not have much in his favor. Nobody wants the president to be a brazen benefactor for the wealthy on top of young and inexperienced.

President Uribe has already ordered that all the names of AIS beneficiaries be revealed to the public. An investigation may follow. Will it change anything? Of course, the recipients who have come under scrutiny due to the scandal claim that they got the funds through legal means, and not through corruption or wrongdoing. They may be right. As a matter of fact, the law and the regulations of the AIS allow such high amounts of money to be allocated as they have been –the law has not been violated. And that is precisely the problem: the fact that AIS was designed in a way that lets wealthy entrepreneurs seize millions of dollars in taxpayers’ money is simply outrageous. The program must be overhauled and the funds going to the well off ought to be frozen or returned.

This AIS scandal is the perfect example of what is so wrong with agricultural subsidies: besides distorting the market (prices for subsidized products become artificially low giving them an unfair advantage over unsubsidized products), they benefit very few people, who end up getting paid to produce crops that people neither need nor want. As with all government spending, once these subsidies are put in place, it is virtually impossible to get rid of them in the future, no matter how inefficient and wasteful they are. Moreover, the fact that so many rich people ended up receiving government money in a country so ridden by poverty and inequality, makes the whole affair even more disgraceful. I even do not want to think about the growing fiscal deficit, or the many important things in which that money could have been spent instead.

The beneficiaries defend themselves by saying that without those AIS funds they would have been unable to complete their projects, that the subsidies have helped them expand production and hire more workers. But of course! You guys are getting free money! It is simply natural that these people are better off, and some benefit for a few others is also expected. The real question is whether AIS is good for the Colombian economy, for the treasury, and for Colombian agriculture.

I seriously doubt it.


This article appeared first on Colombiareports.com
 

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