QCOSTARICA BLOG – Possibly it is my overly active analytical legal mind, coupled with a keen desire to see Costa Rica, as my adopted Country, progress in some orderly fashion, that inspires me to write and post these blogs. There are probably other factors as well, but I will stay with these two as my main driving force.
At this moment, I see the rhetoric heating-up with respect to the current economic crisis being experienced in Costa Rica, to the extent that violent acts may not be far off. The threats against the media issued by ICE Union boss Fabio Chaves earlier this week are a case in point.
Certainly, the Public Sector wages and benefits currently paid under various Collective Agreements are the main cause of the problem. Former President Oscar Arias and his brother, Rodrigo Arias, who occupied the position of Minister of the Presidency during the Arias Administration, have stated publicly, that the root cause of these excessive wages and benefits being paid in the Public Sector was a mistake made by their Administration in 2008.
Apparently, a decision was made by the Arias Administration, during this time of world economic downturn, to increase the wages and benefits for a certain number of upper echelon employees then in the Civil Service, without taking into account how this would affect the wages and benefits paid to members of the Civil Service as a whole over time, under the terms of the various Collective Agreements in effect.
Although I consider Oscar Arias to be one of the true Statesmen and Presidents of Costa Rica, I can’t help but wonder if this was indeed a mistake that was made by his Administration, or was it a part of a larger plan to develop an issue with the Costa Rican Economy, which would eventually lead to the Economy having to be managed externally by way of an intervention by the International Monetary Fund, much as we are now seeing as being the case in Greece.
Ultimately, foreign funds would have to come to the rescue in Costa Rica, which, in my opinion, would probably never have to be re-paid in full, or at all, much in the same manner that I don’t expect the Greeks to re-pay the IMF bailout funds advanced to them either. Being forced to sell, or concession public infrastructure, as the Greeks have been made to do as a condition of receiving the bailout monies, is, in my opinion, a virtually meaningless gesture of offering security for their repayment.
It will be interesting to see how the Greek situation plays-out in the future and I wouldn’t expect the scenario to be any different in Costa Rica, if it comes to an IMF intervention.
In any event, I believe that in the circumstances of what I consider to be of the nature of a national emergency and in the Public Interest, it behooves Oscar Arias to take to the air waves and other media outlets in Costa Rica, to offer a full explanation to the citizens of Costa Rica, as to how, what has been referred to by him as a mistake of his Administration, has led to this current economic crisis.
In the least, it would have the effect of “quieting the masses” and possibly give rise to some patriotic fervor amongst members of the Public Sector, that would lead to an opportunity for a more toned-down, but effective resolution of the economic problem being implemented.
The two main assumptions in this article are that Costa Rica is experiencing an economic crisis and that the cause of this crisis is the high wages and benefits paid to the public sector.
Both assumptions really ought to be demonstrated rather than asserted.
As I’ve pointed out before, current government debt as a percentage of GDP is actually only a few percentage points higher than it was a decade ago, unemployment rates are not the highest they’ve been in recent years, and there are lots of new businesses opening and new investments coming into the country. Are things great? Of course not. But are they a crisis? It’s a matter of opinion.
But OK, let’s call the economic situation a crisis. The next unverified assertion is that the cause of the crisis is high wages and benefits in the public sector.
OK, there are some obvious (I think) examples of overly high wages and benefits in the public sector, but thus far I’ve only seen anecdotes establishing this. Has anyone (perhaps with an analytical mind) done a study that shows how big of a burden these anecdotal high salaries place on the public budget? Has that study shown that this factor is more economically harmful than corruption–or the handouts to businesses in the free trade zones that close up shop as soon as their tax breaks end? Has it shown that this factor contributes more to the economic crisis than the shift of foreign investments from industry to financial services and real estate?
I don’t doubt that overly high salaries and benefits for some (but not all) public sector employees are a problem, but I have yet to see a shred of evidence that they are the main source of the country’s economic crisis. I’d think that anyone who wants to see Costa Rica progress would want to first find out how big of a problem this is, rather than simply assume it is the biggest problem.
What you therefore have is the argument is that overly high wages and benefits paid to some public employees are a problem, though how big of a problem you don’t know. You’d therefore like to ask Don Oscar to take to the airwaves and explain why he created this problem.
Not a bad idea, actually. A little forthrightness from Arias wouldn’t hurt, and while I doubt he’s held in as high regard by Ticos as you suppose, a third or so probably like him and most of the remaining two-thirds would certainly listen to what he has to say about his own complicity.
But I seriously doubt he would do it. He’s not known for his humility, after all.
Buying Oscar a beer, though, makes good sense. He was president the last time Costa Rica endured a real economic crisis, and might have some pointers to offer. Mind, he failed to manage the 1980s’ crisis, but maybe that wasn’t his fault–or maybe age has made him wiser. Even though the wisdom didn’t reveal itself during his second administration, it might bubble up over suds.
I believe that today’s issue of La Nacion explains the circumstances of the current economic crisis being faced in Costa Rica in much the same terms as does my article here. The payment of Public Sector wages and benefits at the current levels is based on a mistake made in 2008 during the Arias Administration, with the current results never being intended. It seems that you are the only person living in Costa Rica that doesn’t understand the current economic situation for what it is, with the Country existing primarily on borrowed money to finance its Public debt, funds, which in all likelihood, cannot be repaid based on the current state of the GDP. The mainstream media in Costa Rica agrees with what I am saying. The current economic circumstances in Costa Rica do constitute a crisis and it obviously cannot continue in the present manner indefinitely without resolution. I would suggest that the resolutions that I have proposed in this and my previous blog, are prudent and practical resolutions in the circumstances.
Congratulations on being able to prevail in this discussion with the aid of your moderator.
I read the article in La Nación and replied with an analysis of it, as well as commentary on your other points, but received the message that my post was awaiting approval by the moderator, which never came.
Whatever, if you and Rico want only your own opinions expressed, I guess that’s your right. It’s after all Rico’s blog of mostly assembled pirated articles, not mine.
Hasta luego.
Ken, will repeat it over, to cut down on spam and abuse of the comments, whenever a link is added to a comment, it requires moderator approval. I am the moderator and approve everything that is not an outright spam. However, I don’t always get the emails to moderate quickly, or get lost in the volume of emails I get daily. No attempt to control what is said here. A question of a few who use comment sections to spam the s+++t out of sites. BTW your comment is now approved. PS, had seven “spam” comments in the approval queue.
Spam? This is the pot calling the kettle black. And repeating what over? See ya.
Never suggested you were spamming.