CORRUPTION
We stated in a previous article that bribery is actually good (see Bribery The Universal Equalizer), however, we did not said that corruption is. There is a difference. Bribery simply acts as an enabler for people to have access to what was denied to them through the denial of their right to contract freely. Corruption, on the other hand, is theft plain and simple. Corruption happens at a high level and the enabler is always the government because the target is the government. Typically, corruption occurs when governments take on debt and give it away to their "friends" in shady contracts and other arrangements. If said money would be 100% private, we would have no problems whatsoever with their dealings, however obscure they may be. The problem is that they are stealing money that do not belong to them through government actions.
Even today, Paraguay is considered the 25th most corrupt country in the world. This is not a surprise considering that Stroessner's activities were described as:
"The ennoblement of corruption and illicit activities as the cornerstone of the political and economic Paraguayan system."
"Stronism is the embodiment of systematic and methodical corruption which contaminates everything."
"It is impossible to understand Stronism if it is not from the corruption angle. The breaking of fiscal, accounting, labour, environmental and administrative regulations became the norm and not the exception."
"The regime supported the corruption and illicit accumulation of wealth by "entrepresaurs" who "hanged" from the government. This cast or group became the fraudulent bourgeoisie whose primary enrichment was performed through the use of various legal and illegal mechanisms implemented by the same structure as the basis for their internal support."
"These "entrepresaurs" were a caste of white collar political fraudsters transformed into entrepreneurs by the regime."
"Among this caste there was a preponderance of high level military personnel and heads from the Colorado Party. They benefited with land, credits, high government positions, contracts and so on."
"A Kleptocracy."
DEBT
As previously indicated, most of what the Stronism did was due to the fact that it was borrowing against the future of Paraguayans. The following plot shows just how much debt per capita in USD was accumulated during Stronism.
These numbers do not seem like much, but if one considers that about 30% of the population in 1989 was below the poverty line and that 20% was below the extreme poverty line, one realizes that those numbers are absolutely of galactic proportions for Paraguayans. A grand total of 50% of the Paraguayan population was poor in 1989 and this number has barely changed in the last 15 years after the Stronism.
STATE TERRORISM
Right-wing politics are designed to subdue the people in order to impose draconian economic measures destined to benefit a few oligarchs. As such, a fine-tuned repressive machinery is required. In Paraguay this task was assigned to the Police attached to the Ministry of the Interior and selected sectors of the Armed Forces. This repressive state of terror was the same exercised during similar dictatorships in Chile, Argentina, Brazil and Uruguay but Stroessner's regime was by far the longest in duration. The list of horrors is endless. If you are interested go to Google and search for "Archivos del Terror" or Terror Archives. These are documents surviving the Stronate mostly related to the "Operation Condor" which was a multi-country repressive agreement.
Furthermore, developed countries offered assistance to such regimes, such as finances, weapons, training, advice and so on as US did with Paraguay in order to increase the repressive efficiency.
AUSTRIAN ECONOMICS
In our article Austrian Economics In Pictures we provided the following picture describing why right-wing economics is a disaster:
As you can see, this is exactly what happened in Paraguay. So-called "Friends" of the regime (in red above) became immensely wealthy. But the price of such riches was that Everybody Else (in green above) became unbearably poor.
LEGACY
The problem with right-wing politics and economics is not only the damage it inflicts on the entire population, but the pervasive and permanent state of affairs it leaves behind. In Paraguay the 500 or so families who control the country will continue to do so for the foreseeable future. The Partido Colorado keeps winning election after election and very little -if any- of real change has occurred. Basically, the entire country continues to be controlled and managed by 500 or so families, even after 15 years of Stronato's end.
Poverty levels are now about the same as they were during the Stronato and although the levels of corruption have decreased a little, people who were schooled in the ways of right power during the regime, continue with their practices. Take a look at the Debt graph above. As you can see since the end of the regime, debt has continued to increase and it has even skyrocketed in the last couple of years. This is no coincidence. What this is reflecting is Stronato's lessons being put in practice with a light coat of socialism.
IS THERE A SOLUTION?
In a short word, no. Paraguayans are screwed. Their democracy is utterly broken. Their economic system is decimated. They live in extreme poverty to the point that Asuncion (the capital of Paraguay) is one of the cheapest cities in the world (Paraguayans can barely afford otherwise). Their lives are controlled by 500 or so families. They have no future. Those few Paraguayans not related to the 500 who can, have been leaving the country since the 50's. The brain drain is irreversible and a killer. Paraguayans have no future for as long as there is a government in Paraguay. At the same time, Paraguayans are "docile" people. It could not be otherwise after being controlled by dictators or in wars for the last 177 years. There will be no public uprising short of skirmishes at the very top camouflaged with a thin veneer of populism. The only real solution for Paraguayans is political evolution. Unfortunately, they are just barely entering the "democratic" phase of their evolution. This means that they have many decades ahead of them before becoming utterly disillusioned with democracy. The only true advantage Paraguayans have is that they have so completely embraced the alternate economy. This is of critical importance because it gives them the confidence to develop self-reliance and at the same time, the practice to ignore governments (which is the fundamental step towards Libertarianism - see When Countries Dissolve).
CONCLUSION
We chose Paraguay because it is one of the most recent, clear-cut and textbook examples of what happens in right-wing political regimes and their economic policies. Basically, it is not good for the vast majority of the population. Let it never be said we are right-wing. We are not. We are not even within the political spectrum. Let's be clear. We believe in you, not governments. We believe you have the most basic right to decide what it is that you want to do with your property without any outside influence. We believe that other people hold the same right. And we believe that the only manner in which we may interact with each other is through voluntary agreements. Simple. Understandable. Clear. But unreachable. For now. We will keep you posted.
Note: please see the Glossary if you are unfamiliar with certain words.
