Monday, January 11, 2010

More Drama In Argentina

I used to think that modern-day heads of state operated within the basic confines of their constitution, but that was before I read Mary O'Grady's article, "Constitutional Showdown in Argentina," in the Wall Street Journal.

In what seems to be traditional Argentine autocratic fashion, the president, Cristina Kirchner, has sacked the central bank president, even though the constitution specifically forbids it. She has issued a decree to amend the bank's charter to force him out legally, but the court system is ruling in favor of the central bank president. Here, as O'Grady puts it, "the constitutional battle lines were drawn."

This development is very serious. What little economics I have studied has repeatedly emphasized the importance of maintaining the independence of the central bank—lest it be exploited by the government for easy money, which is exactly what has happened throughout Argentina's rocky history, and exactly what President Kircher seems to be doing now. Just as Argentina is getting its wind back after the financial meltdown of 2002-2003, President Kirchner seems to be poised to repeat the mistakes of the past.

More fundamentally, it seems Argentines have a hard time figuring out constitutional democracy. Military governments have suspended the constitution numerous times as they've come and gone. Perón came up with his own constitution when he came to power. Between 1999 and 2003 Argentina went through 5 presidents. In their press conferences, you can see that Argentines demonstrate an overt concern with following democratic principles; they talk about democracy in the abstract, as a set of values to live up to, in a way that reminds me of a recovering alcoholic who talks about the virtues of sobriety after hitting rock bottom.

Amidst this institutional fragility, a "constitutional showdown" is the last thing the country needed. Let's see how they pull through.

[For those who understand Spanish, you can find a video of President Kirchner defending her actions here.]

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