Pentagate Corruption Scandal Rocks Chile


According to Transparency International´s Corruption Perceptions Index Chile ranks as one of the least corrupt countries in the world, ahead of the likes of Austria and France and similar to the United States and Ireland. The World Bank’s governance indicators suggest corruption in 2013 was under better control in Chile than in the U.S. and neared that of the United Kingdom and Canada. Note that we are talking about a country in Latin-America, a continent whose governments are not exactly known for their incorruptible politicians. Consistent free-market policies have made Chile the rare exception.

However, a major political scandal that broke last week is threatening that status. Known as Pentagate the campaign finance scandal currently making headlines in Chile allegedly involved dozens of politicians from across the political spectrum, although the majority are said to be members of the Independent Palacio-de-JusticiaDemocratic Union (UDI) party. Some of the more prominent individuals being investigated include former Finance Minister Andrés Velasco, who served one term under current president Michelle Bachelet during her first four years in office, officials of the previous Sebastián Piñera administration, as well as several former presidential candidates.

It was the privatization of state corporations after the fall of the Pinochet military dictatorship in 1989 that gave birth to the Penta Group. Formerly known as the Instituto de Seguros del Estado the insurance company was bought by two investors – Carlos Alberto Délano y Carlos Eugenio Lavín – who incidentally both used to work for the government during the regime. The former is known as a big political donor and a friend of former president Piñera, while the latter tends to keep a lower profile. Last August their holding company came under investigation by Chilean authorities for tax fraud, which besides several arrests lead to the laying off of the Group’s director. And while many a libertarian may not raise any moral objections to these sorts of practices, it now seems the increased scrutiny of the Carlos duo has brought other, more reprehensible facts to light.

While the revelations may have shocked some Chileans, for proponents of the free market there is arguably a very bright side to the story. After all, what better libertarian arrows could one possibly wish to have in his quiver than the sort of widespread political scandal that reads like a novel? Besides, if this is what is happening in a country whose government is regarded across the continent as the most effective and efficient, just imagine what is going on in all those other countries!

Admittedly some on the left will seize the opportunity to espouse the supposed virtues of government-run enterprise as compared to the greedy capitalists only out to make a buck. Yet this argument is easily refuted; since few people are in favor of a completely centralized economy all they need to be convinced of is that interventionism invariably leads an economy down that very path – two prominent and current examples being Venezuela and Argentina.

The better alternative, then, is to start from the premise that a government big enough to “regulate” an industry is a government big enough to award the well-connected within that industry special favors. It should be concluded that privatizing some industries is not sufficient to achieve a free society. So long as government is allowed to drive the economic bus, it will always determine who gets to sit in the front and who is relegated to the back – before ultimately driving over a cliff.

[N.B. Some of you may have noticed I (unexpectedly) took a bit of a hiatus at the end of last year. If you missed seeing regular articles on here rest assured things are back up and running, so be sure to look for those weekly posts again in 2015!]

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The European Union: Bailing Out Banks, Politicians While Sticking It to the People


– May 2010: Greece receives an initial €110 billion bailoutEuropean Soviet Union
– November 2010: European governments bail out Ireland to the tune of €85 billion
– January 2012: Second €145 billion Greek bailout deal announced
– November 2012: Spain borrows €37 billion to restructure four of its weakest banks
– March 2013: Cyprus narrowly avoids exiting the euro, securing a €10 billion loan

Who’s next? That question seems to be on everyone’s mind as the fundamentals under the eurozone appear weaker and weaker with every new bailout; what country will the European Financial Stability Fund provide “stability” to next?

Meanwhile youth unemployment in Greece is over 60 percent, with Spain not far behind at 55 percent. Nearly 4 out of every 10 young Italians and Portuguese are unable to find a job, as well as 3 out of every 10 Irish. Young jobseekers in France are struggling too, with 1 in 4 being unemployed. Slovenia and Cyprus are in the same boat – or should we say life raft?

The old continent is facing a crisis on multiple levels and much of it can be traced back to the behemoth known as the European Union – or, as I like to call it, the European Soviet Union (see here). I won’t go over the catastrophe of the single currency again as I don’t want to repeat myself. Still, much more remains to be said about the ongoing crisis in Europe, the central question being: where do we go from here? Needless to say, the power-hungry EU bureaucrats’ solution is more “harmonization” i.e. more power in their hands to exercise still further control over the people. Never mind that the incessant centralization of power in Europe is at the very heart of the problem.

The European Union was supposed to bring “peace, prosperity, education, justice” and whatever other rosy buzzwords politicians and EU advocates could dream up. Today it is obvious that it has done a lousy job at that. From Athens to Madrid, people are taking to the streets to voice their discontent with the EU overlords that want to control every aspect of their lives while dodging taxes and receiving generous pay and benefits.

Considering the growing hatred of and intolerance towards immigrants, the flaring up of anti-Semitism in countries like Hungary and German Chancellor Angela Merkel recently being portrayed as Hitler by Greek protesters; to claim that Europe has become more peaceful since the inception of the EU would be quite a stretch. Much of this, it can be argued, is due to the economic misery evidenced by the aforementioned statistics. The initial increase in (fake) prosperity artificially created by the policies devised in Brussels came to an abrupt halt years ago.

As far as education goes, let’s hope the current crisis will stimulate young people to educate themselves in an effort to better understand why they are struggling to find a job and make a living. This kind of education might well turn out to be more important than anything they could ever hope to learn in college. The word justice is unlikely to come up in any scrutiny of the workings of this tyrannical system we call the European Union.

Martin Schulz, member of the European Parliament, was quoted by Reuters as saying: “If we have €700 billion to stabilize the banking system, we must have at least as much money to stabilize the young generation in such countries [referring to Spain]”. Well guess what Mr. Schulz? We don’t have that money. In fact we never even had the first €700 billion to begin with! The last thing we need to remedy this problem is for the European Union to step in and “solve” the issue. All we need the government – whether national or supranational – to do is to get out the economy and get out of our lives. Doing more of the same while expecting different results is what Einstein rightly defined as insanity.

“Union” is not exactly the first word that comes to mind in describing current events in Europe.  The EU is the brainchild of a small elite and has never enjoyed the widespread support of the European people. More recent events must lead even the staunchest supporters of European integration to have serious reservations as to the feasibility of this grand European experiment. The fate of that experiment will be sealed by the people deciding whether or not to put up with playing the role of guinea pigs.