The sacking of Bolivia (Translated by: Mónica Albornoz)

James M. Buchanan was quite right when he stated that Keynesianism is the culprit for the decline of the strong Victorian tax morality. Do let me explain. Ever since “The General Theory” was published in 1936, Western nations have advanced in an endless whirl down the treachorous path of deficit spending, not only this but it swayed the spurring of  the extinction of any institutional framework that allows healthy coexistence.  The  respect for private property is a clear example.

Sadly, the question that neither Keynes nor his disciples ever asked is from where does the state obtain its resources? Should they be true to their convictions, the answer would be “We seem to care less”; to put it bluntly, they do not care at all as their main concern is building equations with incomprehensible jargon. Just don’t let me get started with this.  It is better to put it at rest since it is the subject of another debate.

However, in absence of their own response, I will proceed give thee a simple answer:. States can obtain their resources only in three ways: 1) Taxes, 2) Debts (external or internal) 3) Monetary issuance.

Now, as in Bolivia prudence is not something that swarms within politicians -being  the period 1985 – 2005 such exception-  the government of Evo Morales and Arce Catacora was portrayed by the accelerated increase in public debt, tax pressure and interest rate manipulation. That’s right, the productive community social economic model – which Arce Catacora boasted so much about – was nothing more than a repetition of the old Keynesian mistakes.  One example, in March 2017 the Bolivian government issued sovereign bonds for 1 billion dollars. Money, which in theory, (according to the former minister Arce Catacora´s statements) was destined for the construction of hospitals.

Nevertheless,  that was not the first time the Morales regime had issued bonds. Well, they already did so in 2012 and 2013, under the lame excuse of investing in the «strategic» companies that the national government had created. Despite all the rhetoric used to justify the debt, the reality is that the Bolivian health system is now collapsed, and several of the «strategic» companies produce nothing at all, although they cost $ 1.03 billion american dollars.

Of course, Luis Arce Catacora and Marcelo Montenegro argue that these companies helped strengthen the macroeconomic growth figures. For this reason, they will state that a new increase in debt and public spending will reactivate the economy. Nevertheless, if Bolivia had not spent in such a relentless way during the previous commodities boom, today She  would have greater capacity to face the presente health and economic crisis.

Unfortunately, the problem does not end with inefficient companies, it is just a sample of the appalling management system that branded the fourteen years of el MAS. Well, in its eagerness to spend by the handful, the regime did not hesitate for one second to take the workers’ pensions. Although, Arce Catacora and Morales tried to justify this intervention with various semantic twists and turns, the reality is this: the national government forced the AFP´s to invest in state bonds. What most people do not know, though, is the catch 22 of  Law 065.  It restricts all possible fields of investment of retirement funds (it even prohibits allocating money in real estate), but leaves open the possibility of a limitless investment  in government financial instruments.

Unfortunately, for millions of Bolivian workers this abuse doomed the retirement funds; in 2020, they had an extraordinary poor yield of 4%. To put it in the words of Mauricio Villafane (an expert in retirement and pensions): «today it would be preferable to invest your savings to retirement in an ordinary DPF than leaving it in an AFP ».

As we can see, those who «rule obeying the people» permanently condemned our workers since they, as of  now on, shall receive a miserable pension; also, adding sorrow to misery our future generations are obliged to pay a colossal foreign debt (the highest in Bolivia´s history). Yes, ladies and gentlemen, they are the ones  responsible for the sacking of Bolivia.