The Real Deal
By John Holtz*
Nine ministers and cabinet heads have been
named by president-elect Laura Chinchilla.
They are pretty much the same recycled group
of people that have held the reigns of power
whenever a member of the Liberacion Nacional
party got elected president.
If anyone was expecting change, forget it.
This is a continuation of the Oscar Arias
administration except possibly for one very
important sector; Banco Central. (Central
bank)
Wednesday, March 17th, president-elect
Chinchilla made an on the record comment
that the currency exchange band system, now
in effect, would be dropped in favor of a
free floating currency exchange rate. Jaws
fell open by business people all over Costa
Rica as they inhaled semi-fresh air deeply
to keep from passing out. Imagine, with the
dramatic ups and downs of a controlled colon
under the simple band system since year end
what it would be like without a predictable
ceiling and predictable floor price?
But, good news! After that she received the
acceptance of Dr. Rodrigo Bolaños Zamora to
be the next director of the Central Bank (Banco
Central) and quickly reversed her position
and went back to assuring all that the
current band system would, in fact, continue
to rule.
Phew! A collective sigh of relief could be
heard all over the Central Valley as the
collective hyperventilation subsided.
However, considering the background of the
new Banco Central director, she may have
spoken the correct words on March 17 and the
dollar – colon exchange system might soon be
based on supply and demand? Free floating so
to speak.
This would also be in sync with her most
ambitious goal of turning Costa Rica into
the first “developed country” to originate
from Latin America. (We would need to fix a
lot of potholes, and bridges to do that.
And, what’s so bad about not being as
developed as the developed countries, huh?)
Consider that Dr. Bolaños did both his
masters as well as his doctorate at the
University of Chicago making him one of the
“Chicago Boys” who studied under the
influence of arch conservative and Nobel
Laureate, Milt Friedman. Typically, the
“Chicago Boys” are almost religious about
the free market system and getting away from
any kind government intervention. (You know,
the same deregulated free market philosophy
that resulted in the millions of subprime
loans, massive foreclosures, billions in
toxic bank assets, more billions in tax
payer relief, a 10% US unemployment rate and
collectively the mother of all recessions.)
However, Dr. Bolaños’ educational background
certainly supports the president-elect’s
March 17 comment.
The results of a free floating currency?
Pure chaos for the entire Costa Rica
business world and albeit, population.
We are a country that has historically
embraced government as being paternal and
friendly, even all knowing at times. To
eliminate that special relationship with
society, especially as it relates to the
value of money and what it can buy or sell
would be Draconian in nature. What little
planning we do now will simply disappear
into the sunset.
It is important for Costa Rica to be itself,
as social democracy, and not an imitation of
any other country or culture. We should and
need to depend on our government to support
the people of Costa Rica as historically it
has in the past. Let us be the best we can
be rather than guide us into a so called
“developed world” that becomes less
attractive every day, if not by the hour.
*John Holtz is the Executive Director of the
Center for the Studies of Modern Management
www.modernmanagement.org and can
be reached at: can be reached at
[email protected]. |
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