Rural revolt in Argentina

NY Times:

Mayor Fernando Fischer was beaming in early March when this small town in Santa Fe Province hosted 200,000 visitors for a giant international farm show. Vendors fanned out over 1,200 acres of farmland, displaying everything from harvesting combines to the latest crop seeds. Sales for local companies were brisk.

It was a proud moment for Dr. Fischer and for Argentina’s booming agricultural industry. But less than a week later the government raised export taxes for farmers to levels they could no longer stomach, setting off a political crisis that now threatens the government of Cristina Fernández de Kirchner, Argentina’s Peronist president, after a little more than six months in office.

Today Dr. Fischer is one of dozens of politicians who have transformed rural provinces that were once Peronist bastions critical to getting Mrs. Kirchner elected in October into centers of fervent political opposition.

Their revolt shows how deeply the president’s decision has divided even the Peronists, leaving politicians from the interior torn between their party loyalties and their furious constituents.

It also reveals the source of much of their anger: the fact that the growing economic clout of Argentina’s rural provinces has not translated into greater political say, not least over how their taxes are spent.

Dr. Fischer, a lifelong Peronist party member and the mayor for 19 years, is a good example of the discontent now roiling the Peronist ranks. He calls Mrs. Kirchner’s government “deaf and blind” to the damage it is doing to the farm economy of Santa Fe, the northeastern province where Armstrong is situated.

“Like Bill Clinton said, ‘It’s the economy, stupid,’ and that’s why we voted for her,” said Dr. Fischer, who is also a physician. “And we really were stupid. Now we feel deeply betrayed.”

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It is a safe bet that Kirchner did not run on a platform of raising export taxes. If she had been that honest she would have lost. The farmers and those in the rural area have every reason to feel betrayed. The government is screwing them to give money to those who have not earned it.

A wiser policy would be one that encouraged exports which would not only raise more revenue, but would increase the income of farmers allowing them to purchase more equipment and become even more productive. What Kirchner is doing is the opposite of wisdom.

By putting her bad tax policy to a vote of the legislature she will only compound her parties predicament. She will either suffer a humiliating defeat, which she deserves, or she will put her party in the position of having to defend this bad tax policy at the next election. It is basically a lose0lose proposition.