The Privileged Announce They Will Strike

Like lemmings running towards a cliff, Costa Rica repeats the kind of actions that underscore the definition of a society incapable of stopping on the road to a terminal crisis.

Monday, September 3, 2018

EDITORIAL

Two years ago we wrote a bitter fairy tale about acquired rights, reducing to its essence an article by Juan Carlos Hidalgo published at the time on Elfinancierocr.com.

Now unions made up of Costa Rican public officials are threatening to strike for an indefinite period, in order to obstruct the legislative approval of a tax package that seeks to reduce a fiscal deficit that exceeds 50% of GDP. This deficit in the accounts of the State has as its main origin the disproportionate growth of the amount paid as state salaries, which are double those paid in the private sector. In addition, in previous years, in order to pay this exorbitant state payroll bill, the State was forced to borrow money which it now has to pay back, for which it is asking for more loans to be taken out, at naturally higher interest rates. It is a pernicious process that we have already seen in other countries with similar governmental irresponsibility, such as Greece and Argentina. 

Even if this minimum package is approved, the Costa Rican economy is so affected by this fiscal deficit and by the loss of competitiveness of the goods and services it produces, that a bonanza cycle of more than 5 years of growth of more than 5% a year would be needed - something unthinkable in the current global context - in order to nurse the State's accounts back to health. The patient now has little hope of a cure, and is approaching the terminal phase. Of course countries do not die, and of course it is not the richest sectors that suffer when entering a terminal crisis.  It is the poor who increase to 50 or 60% of the population, while the general development of the economy goes back 10 or more years.

The diagnosis of the Costa Rican disease is clear, and Juan Carlos Hidalgo explains it by quoting the Frenchman Frédéric Bastiat: the State is "the legal fiction by which everyone tries to live at the expense of others". Large sectors of the civil service have fortified this aim, self-prescribing privileged salary packages which bear no relation to criteria of productivity or effectiveness. And that status quo they call "acquired rights", a fiction by which the judicial estate also benefits, shamelessly guaranteeing its legality as absolute. As an example of the irrationality of the current state of things, suffice to say that the officials who go on strike will continue to receive their salaries without any reductions, while Costa Rican citizens, not public officials, will be harmed, not only because they will not receive services from the workers to whom they pay taxes, but from the general impact on the economy caused by the strike.

To put those "acquired rights" in the correct perspective, we simply have to consider those who do not have them, especially those who work in the private sector, those whose remunerations depend on their productivity and the good health of the company they work for. These workers in the real economy, those who do not have "acquired privileges", do not have strong unions in Costa Rica to defend them.  They are the "nameless mute" in the allegory that we are publishing again, seeing as it remains completely valid today.

"Acquired Rights" or The Garden of Fools

One bright spring morning a garden flourished gloriously and everybody wanted flowers. John said "I deserve 10" and the gardener gave him 10 flowers. "I want to take 11" said Peter, and 11 were handed over to him. "I demand 12" protested Manuel, and he got 12. "I want 13" shouted Joseph, and he received his 13 flowers. A lot of people called out their demands and got what they asked for. In the end there was only one somewhat wilted flower left that was given to a mute person with no name. And the gardener was acclaimed for his generosity.

But the following spring the garden produced much fewer flowers, in spite of this, John tried to take his 10, Peter his 11, Manuel his 12 and Joseph his 13 flowers. "That is what corresponds to us," they shouted. "It is our right" they claimed. And they hired a lawyer who filed a lawsuit to force the gardener to deliver what belonged to them by "acquired right". And the judge, who was Manuel, ruled in favor of the plaintiffs.

The first to go crazy was the gardener, who did not have enough flowers to comply with the court ruling. After that all of the others began to wander around crying "acquired rights!" roaming through the garden punching each other in the scramble for the few available flowers.

The nameless mute, sat to one side and with empty hands, stared uncomprehendingly.

By Jorge Cobas González, Founding Director of CentralAmericaData.


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One bright spring morning a garden flourished gloriously and everybody wanted flowers. John said "I deserve 10" and the gardener gave him 10 flowers. "I want to take 11" said Peter, and 11 were handed over to him. "I demand 12" protested Manuel, and he got 12. "I want 13" shouted Joseph, and he received his 13 flowers. A lot of people called out their demands and got what they asked for. In the end there was only one somewhat wilted flower left that was given to a mute person with no name. And the gardener was acclaimed for his generosity.

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