Argentina's money grab a threat to personal property rights
by Oct 23rd 2008 12:00PM
As many countries around the world feel the pain from the credit crunch, Argentina is in an even worse position. The country defaulted on its debts in 2001, and has trouble getting credit in the world markets. Another default (which is very close) would devastate Argentina's economy. The government is looking for any way it can to gather up cash to make the debt payments.
But why take away the money that rightfully belongs to citizens? The private pension system was started in 1994 as an alternative to government pension. Three million citizens voluntarily contribute to the private system, and much like U.S. 401(k) accounts, they can decide how and where to invest their money. This private pension system is attractive to government officials in Argentina, as it currently has about $30 billion in assets. Yet this temporary fix to budget problems will certainly have a massive long-term effect if it goes through, as the government will be forced to replace those assets with retirement benefits in the future.
And then there's the issue of the government seizing private property. Governments do this daily with taxing structures that take away the privately earned and owned money of consumers, and redistribute it as the government sees fit. What does such seizure and distribution do? It reduces incentives for individuals to save, invest, and work hard. Why work to create a life for yourself when the government can come in at any moment and take things away from you?
Do you think such a thing could never happen in America? Think again. It's not such a far cry to think that our government could take away our retirement accounts if it believes it's in the best interest of the country. It could easily promise increased Social Security retirement benefits to everyone in exchange for taking away their private retirement accounts.
And this concept isn't limited to retirement funds. A nationalized health care system would "take away" my ability to purchase the health insurance that I choose and replace it with a government-run program that would likely cost me more and offer me less in the way of benefits.
A plan like this is a slippery slope, and Americans need to keep an eye on these things so that our government doesn't go down the path of doing something similar. Our country was founded on free enterprise and the ability to control one's own financial future. Don't let our government take away our right to choose how to spend our own hard-earned money.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.