The
foreign companies’ problem in Argentina
Ezequiel Eiben
November 2012
In Argentina there is a big problem as
regards foreign companies which
can be divided in two parts: the activity of foreign companies itself,
and the pollution that many companies’ activities produce.
First of all, we have to understand that nationalism is a very strong element
in Argentina´s political parties, therefore
it´s usual to hear speeches claimed by politicians full of rage and xenophobia.
Here comes the problem with foreign activity itself. Some politicians and their
intellectuals are always trying to convince people that citizens must support
local industry, that foreign
enterprises are a threat, and that “imperialism” or the “international capital”
are trying to make a fortune and leave Argentineans in poverty. There are three
reasons why politicians do this:
1) They have dark contracts with some local businessmen which consist of legal privileges in
exchange of favors. So, they want to protect some local companies from foreign
competition, and keep making illegal and immoral profits.
2) They are convinced of the statist ideology. So, they use the concept of
“national sovereignty” in order to justify that the State owns natural
resources, no matter if human intelligence has been applied by a company that
is transforming them into a useful social product.
3) Without some kind of political control over the resources, they can’t
survive as they wish in a system called “populism”, where they dress up as “heroes”
who protect some “national
interest” for the welfare of the people.
So here we have the scenario of
our first problem: foreign companies are seen as a modern picture of
colonialism, and despite the fact that they can bring jobs and wealth, a lot of
people reject them and try to boycott them. It´s not unusual that, if you support foreign
companies, you may be pointed out as a “traitor to your homeland”, and as an “imperialist agent”.
Nationalism is not an archaic concept in Argentina; it’s an always useful
platform for demagogy.
Now we have to focus on the second problem: pollution. There are some
activities that companies develop which produce contamination. The open cast
mine methods, the toxic waste thrown into rivers, etc. are examples of it. Of
course, I´m not suggesting that they contaminate because they are foreigners
(local industry does that too), I´m just pointing out that they do it. We have
to ask ourselves: why does this happen? We will find that the answer is related
to the lack of strictly determined property rights. Government does not
recognize full property rights over the resources and lands where they are
located; only property rights on the product that the company produces. So,
there is no absolute property right that stimulates an ownership to maintain its
property. Therefore, there is no economic stimulation for companies in order to
maintain the capital value of the resource, since they don’t own it; and they
don’t have to worry a lot about the future, so they want to produce as much as
they think they should today without thinking they could sell the resource in
the market tomorrow. Also, if property belongs to the government, we know that
bureaucracy members don’t have economic stimulation neither, because they don’t
personally own the resource, so the result is that they don’t care about
fighting pollution as a true proprietor would do.
On the other hand, we have local governments that make contracts with companies
in order to exploit resources. This situation leads to the sanction of laws
that protect the companies’ current methods, even if they generate pollution
that affects property of other people, because government businesses are at
stake. So, the result is legal protection for pollution, instead of the defense
of the property rights of those who suffer contamination in their person or
goods. This does not stimulate
the search for better methods, but the continuation of the current
technology.
The issue is that
nationalists and environmentalists take advantage of this situation and declare
that we should not allow the activity of foreign companies in our country
because of pollution. They criticize the activity itself, not just the pollution.
Nationalists want us to live with local products, more expensive and of lower
quality; and environmentalists want us to live in caverns like in the Stone
Age. They don’t recognize the importance of defining property rights for those
who produce and for those who may be affected with the bad effects of the
production methods. If we concentrate on the property rights, we will be able to solve the problem of
production and pollution by stimulating the search of new technologies, not by interrupting the full
activity of companies because of troglodytes’ whims, and allowing the ownership
of resources that encourage their preservation.
To conclude, Argentina must move on from xenophobia and anti-industrial positions,
allow the activity of foreign companies in the country but keep government out
of the economy so their members don’t use their positions in the wrong way, and
recognize full and absolute property rights on natural resources to generate
the conscience of preservation and environmental care.
Bibliography:
The Libertarian Manifesto; Murray N. Rothbard.
Capitalism: The Unknown Ideal; Ayn Rand.
