Misbehaving in South America

There is much in the news about the uproar in South America, but I think it misses the point. Yes, there is noise about US Secret Service team members hiring “up to 21 prostitutes” (I expect that Obama will announce that he will cut this number to 25 in next year’s budget) — and the real issue of security compromise is being largely overlooked.

But to me, the larger issue is YPF.

Never heard of YPF? That’s okay; you’re about to. YPF is a large energy company based in Argentina, that was mostly owned by RepSol of Spain. That is, until two days ago, when Argentina’s new leftist government decided that it would simply “nationalize” or take over the company and all of its assets. Here’s YPF’s press release, in Spanish, describing their new goals as a result of the “intervention.”

As of this moment, the share price of Spain’s RepSol have fallen by more than half as this major asset’s confiscation has hurt them badly. Spain itself has threatened “consequences” to Argentina as a result.

This theft, this usurpation by a socialist government of private property, has capitalist countries from Europe to China deeply concerned. Oddly, one country that should be concerned is exhibiting a very mild reaction: “We are following developments on this issue. We are not currently aware of any WTO complaints related to this issue,” the State Department said, according to Investors Business Daily. IBD describes the Obama administration this way:

Then, leading from behind after Spain vowed a “forceful” response, Secretary of State Hillary Clinton tried to toughen up: “Having an open market is a preferable model. Models that include competition and market access have been the most successful around the world.”

Which must have provoked a horse laugh from Buenos Aires. After all, Fernandez heard President Obama the first time when he declared that he free market “doesn’t work. It’s never worked.”The move — the largest expropriation since Russia expropriated Yukos in 2003 — not only hit Spain’s biggest company, already hit by a 38% loss of share value this year, it also moves Argentina sharply closer to another big default on its sovereign debt, trading in the debt swaps market shows.

But the U.S. is in for trouble, too, and that’s why the mush from the State Department, along with the weekend’s photos of dancing and drinking at the Summit of the Americas in Cartagena, Colombia, that conveyed no sense of the trouble ahead gives the sense that the Obama administration is asleep at the wheel.

I am reminded of Chile in 1970, when Marxist East German-backed Salvador Allende was elected president with 36% of the vote. (The election posters printed in East Germany, many in German, are now collectors’ items.) Allende’s first actions included confiscating (nationalizing) companies from copper mining (Chile’s main export at the time) to banks to communications. His “Chilean Path to Socialism” was to provide milk to every poor person, to dramatically increase minimum wages, to confiscate and redistribute wealth … as he had decided that at a certain point, they’d made enough money.

Of course, he utterly destroyed the economy, wrecking Chile internally while at the same time butchering its reputation in the world. Why loan Chile money or help them build something? Allende would just rule the debt invalid and confiscate the property again.

When Allende was replaced in a famous coup on September 11, 1973, the new capitalist leadership brought Chile from the worst to the best Latin American economy quickly. And when my Lady and I toured South America a few years ago, Chile alone had people who were excited about the future, where the other countries had people talking about only about the glories and tragedies of their history.

Pinochet was a dictator, and responsible for the deaths of a few thousand Marxist-linked opponents after the coup, but he ultimately wrote himself out of that job, and oversaw the transition to a full democracy. Chile, according to Wikipedia, leads Latin American nations in human development, competitiveness, income per capita, globalization, economic freedom, low perception of corruption and state of peace.[16] It also ranks high regionally in freedom of the press and democratic development. Any problems? Oh, yes, according to the same paragraph: It has high “income inequality” — in other words, some people are too successful.

Perhaps Chile can follow Argentina’s lead (and ignore their own memory) and set about destroying their economy so that they can have less income inequality. Because, as Barack Obama says, “at a certain point, you’ve made enough money.” And he’s willing to sacrifice a country’s economy to put an end to people being “overly” prosperous. At least the ones not contributing to his campaign.

This video contrasts the views of central planners like Barack Obama and the rugged individualism that has made the United States a great country. Our government doesn’t even seem to know, any more, that the theft of an entire corporation by a kleptocracy government is wrong. So, it is time to replace our government with people who remember history and its lessons.

===|==============/ Keith DeHavelle