May 12, 2013 10:45 PM UTC

Argentine and Colorado Pension Piracy . . . Morally Equivalent?

• 2 Comments
• by: PolDancer

In 2008, the Argentine Legislature passed a bill taking $25 billion in pension assets in which millions of Argentines held a property interest.  This taking bolstered Argentina's financial condition.

In 2010, the Colorado Legislature passed a bill abrogating the contractual obligation of Colorado PERA employers to pay approximately one-third of a PERA member's accrued PERA pension benefits.  Thousands of Colorado pensioners hold a property interest in this PERA contracted annuity.  This taking bolstered Colorado's financial condition.

Which government has the greater respect for property rights?  How is Colorado's taking of pension property rights not the moral equivalent of Argentina's taking of pension property rights?

From the organization "Friends of PERA":

“There is a misconception that the ‘taxpayers’ are owners of the (PERA pension) fund; the trust fund is owned by the beneficiaries of the fund . . .”

http://www.friendsofpera.com/facts/index.html

These two instances, in which pension contracts were breached by a legislative body (the Argentine National Congress and the Colorado General Assembly), are not factually identical, but they are quite similar.  In both cases pension contracts were violated to make additional funds available to a government for that government's discretionary expenditures, and to curry political favor.

If contracts are meaningless in the United States, if U.S. state and local governments are permitted to take accrued pension benefits with impunity, the moral standing of our nation is diminished.  We will find ourselves on the same moral plane with governments that brush aside the rule of law.  How exceptional will we find a United States that takes, by force, property earned by its citizens over decades?  Does the theft of contracted pension benefits not somewhat diminish the luster of that "shining city upon a hill"?

The Wall Street Journal on the Argentine pension taking:

"'With the [latest, Argentine] announcement, the custom of violating the rules of the game has been repeated, which deepens the lack of confidence,' political analyst Rosendo Fraga wrote in the Buenos Aires daily La Nacion."

http://online.wsj.com/article/SB122460155879054331.html

Professor Secunda of Marquette University on U.S. state government takings of accrued pension benefits:

"What the states are trying to do is change the rules in the middle of the game."

http://truth-out.org/news/item/13498-pensions-a-promise-is-a-promise-unless-its-inconvenient

Colorado Supreme Court in Bills:

“Whether it be in the field of sports or in the halls of the legislature it is not consonant with American traditions of fairness and justice to change the ground rules in the middle of the game.”

Wall Street Journal:

"Buenos Aires economist Aldo Abram, among many other economists, wasn't buying that argument. 'They were in a tight situation and this was an accessible source of funds,' he said."

"Opposition leader Elisa Carrió vowed to contest it, saying, 'The government measures aren't designed to better the retirement system but rather to plunder the funds of the retirees.'"

Washington Post:

"The proposal by (Argentine) President Cristina Fernández de Kirchner last month to nationalize about $25 billion in private pension funds provoked an outburst of criticism that the government was seizing retirement savings for cash to shore up its finances."

"'The announced nationalization-expropriation of the Argentine pension funds constitutes one of the most blatant acts of financial piracy in the country's recent history,' wrote Claudio Loser, senior fellow at the Inter-American Dialogue, in the Latin American Advisor newsletter."

"Sen. Ernesto Sanz of Mendoza, who opposed the nationalization, said: 'We don't have any doubt that this is violating the right to private property.  Not just for us, but for all society and the world. This is clearly confiscation.'"

http://articles.washingtonpost.com/2008-11-21/world/36794754_1_pension-system-pension-funds-private-pension

Colorado Court of Appeals on PERA pensioner property rights:

"See Lynch v. United States, 292 U.S. 571, 579 (1934) (contract rights can constitute property interests protected by the Takings Clause) . . . In light of our conclusion that the court erred in that regard, we also reverse the summary judgment on the Takings Clause claim."

http://saveperacola.files.wordpress.com/2010/01/2012-10-11-judgment-reversed-and-case.pdf

New York Times:

"The (Argentine) measure . . . was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009 . . ."

"The announcement . . . led analysts to question whether the nationalization, which is subject to approval by the Argentine Legislature, puts property rights at risk and threatens the rule of law in the country."

"It may be the first time a Latin American government has expropriated cash."

Argentina's President, Mrs. Kirchner: " . . . we are protecting our retirees and our workers."

"She dismissed criticism that the move was simply a grab for cash . . ."

"The opposition leader Elisa Carrio . . . told radio Mitre on Tuesday that the government was trying to 'loot the funds of retirees.'"

"By taking over the pension funds the government can continue to spend on programs that help it retain political support."

"If the move is approved, her government may have secured an important electoral asset, which could help guarantee Mrs. Kirchner's political survival."

http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html

Lebanon, Pennsylvania Daily News Editorial:

"The reasons for the pirating of deposits or the nationalization of pensions don't matter nearly as much as the demonstrated willingness of government to treat money – privately held money, money earned by individuals – as a state resource, as needed."

"And we have to wonder, again, who might be paying attention in this country (the USA); how good are our protections against such a thing.  Forget lip service and what anyone may claim 'could never happen.'"

(My comment: As we have seen, it not only can happen, it is happening . . . in Colorado.)

"How good are our protections? How strong are the underpinnings of our individual rights against such demonstrable government-first thinking?"

http://www.ldnews.com/editorial/ci_22872828/argentina-private-pension-holders-well-just-take-that

The Colorado Legislator’s Oath of Office: “I do solemnly swear by the everliving God, that I will support the Constitution of the United States and of the State of Colorado . . ."

The Colorado Constitution: “No ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation . . . shall be passed by the general assembly.”

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