Alan Garcia's Dog in the Manger

It's always good to see governments be open with the public about the vision that drives their policies and actions. It's also relatively rare that they attempt to persuade by written arguments that can be analysed and critiqued. For this reason, it's quite impressive to see Peruvian president Alan Garcia publish a lengthy op-ed in Lima newspaper El Comercio, in which he argues that Peruvians opposing greater exploitation of the country's natural resources are 'dogs in the manger' who are impeding progress.

So I've translated the entire article and posted it below. Even for those who aren't especially interested in Peru, this is an interesting contribution to the debates about economic development, environmentalism, sustainability and democracy. This is not to say that I agree with all or even most of Garcia's argument: in many respects it's disappointing, out of touch and even perplexing in its choice of theme. In another post I'll discuss some of these criticisms.

Translation note: I've kept it pretty literal, so it has a slightly awkward feel in places. Garcia uses in several places the expression 'poner en valor' (literally to 'put into value'), which I understand has no real English equivalent, being a Spanish transliteration of the French phrase 'mise en valeur'. I've generally translated this as 'to make productive'.

By Alan Garcia Perez, President of the Republic

There is great demand for legal titles to family homes. Every Peruvian knows that a legalized property that can be sold, mortgaged, or passed on through inheritance, can improve their situation. But Peru as a whole has the same problem and doesn't know it. Many of her goods can't be made productive, can't be sold, invested in, or made to generate employment.

There are millions of hectares for forestry that are idle, millions of hectares more that communities and local associations haven't cultivated nor will cultivate, as well as hundreds of mineral deposits that can't be exploited and millions of hectares of sea that are never commercially fished. The rivers that run down either side of the cordillera are a fortune that goes to the sea without producing electrical energy. There are, as well, millions of workers that don't exist, although they labour, since their jobs don't provide them with social security or a pension for later on in life, because they don't contribute what they could to building national savings.

So there are many unused resources that aren't tradeable, don't receive investment, and don't generate employment. And all that because of the taboo of left-behind ideologies, because of idleness, indolence, and the law of the dog in the manger who prays: “If I don't do it, let nobody do it”.

The first resource is the Amazon. It has 63 million hectares and abundant rainfall. Within it forestry could be established, especially in the 8 million hectares already destroyed – but for that, property rights are required; that is, a secure plot of land of 5,000, 10,000 or 20,000 hectares, since on smaller areas of land there won't be formal, long-term investment with high technology.

At present the only concessions that exist depend on the will of the Government and the bureaucrats who can [later] modify them. For this reason nobody invests, nor creates one job for every two hectares, as should be the case; nor is there wood processing or furniture exporting. For the most part, these concessions have only served to extract the finest wood, deforest and abandon the land. In contrast, formal property ownership by large collective businesses like pension funds will allow long-term investment, from planting through to harvesting, years later.

Those who are opposed say that property rights cannot be granted in the Amazon (and why so in the coast and the sierra?). They also say that granting property in large lots would give profits to big business; sure, but it would also create thousands of formal jobs for Peruvians who live in the poorest areas. It's the dog in the manger.

Let's respect the virgin native forests, but let's start with the 8 million hectares that have been turned into deserts and destroyed in recent years by the scorched-earth concessions, the [cultivation of] coca and indiscriminate logging. There, a million jobs can be created, as well as employment in the manufacture of furniture.

It's an embarassment that Chile exports US $2 billion in wood without having a hectare of the Amazon, Uruguay $1 billion, Brazil $8 billion, while Peru barely exports $200 million.

The same is true in a second area – the land. For there to be investment, secure property rights are needed, but we've fallen into the trap of granting small plots of land to poor families that don't have a cent to invest, so apart from the land, they have to ask the State for fertilizers, seeds, and irrigation technology as well as guaranteed prices. This 'minifundista' model without technology is a vicious circle of misery. We must support medium-sized properties, and an agricultural middle class that knows how to obtain resources, find markets, and can create formal employment.

But what do we see in this country? When someone sees a beautiful beach, someone else already claimed it years ago and hasn't invested a cent to make a nice swimming area, so it will stay for decades more without value. The hills that surround Lima are like that – where investment could work miracles. So are all the cement quarries claimed but never worked.

In addition, there are true peasant communities but also artificial communities that have 200,000 hectares on paper but only use 10,000 hectares while the rest is idle property, 'dead handed', while its inhabitants live in extreme poverty waiting for the State to bring them help instead of making their hills and land productive, leasing them, trading them. Because if this land is unproductive for them, it would be productive with a high level of investment and the know how that a new buyer brings.

But the rhetoric and deception says that these lands can't be touched because they are sacred objects and that this communal organization is the original organization of Peru, without realizing that it was a creation of Viceroy Toledo to round up the indigenous people into the unproductive lands.

The third area is mineral resources, of which Peru has the greatest riches in the world, not only for the quantity but also the variety of minerals, so that if there's a drop in price it can be compensated for with other products. However, barely a tenth of these resources are being exploited, because here we still debate whether mining techniques destroy the environment, which is an argument from last century. Of course it destroyed [the environment] in the past, and the environmental problems of today are basically because of the mines of yesteryear, but currently mines exist alongside cities without problem. And in any case it depends on how strict the State is in the technological requirements placed on mining companies and in negotiating greater economic and labour participation for the regions where the mines are.

When I go to the city of Ilo and see its urban development, which is the most advanced in Peru, I know it's the product of mining and the fishing industry, and it pains me to compare this with the town of Ayabaca, which has more mineral resources than the Cuajone mine in the south, but lives in great poverty. And it's there that the old anticapitalist communist of the 19^th century disguised himself as the protectionist in the 20^th century, and changed his shirt once more in the 21^st century to be an environmentalist. But always anticapitalist, against investment without explaining how, with a poor agriculture, a leap forward can be taken to greater development.

And against petroleum they've created the figure of the 'isolated' jungle native; that is, unknown but presumed [to exist], because of which millions of hectares must not be exploited, and Peruvian oil must stay in the ground while the world price of oil is US$90 a barrel. It's preferable that Peru continues importing and improverishing itself.

A fourth area is the oceans: Japan has fewer marine riches but eats five times more fish per capita per annum than Peru, because it has developed its aquaculture. But here, whenever it is proposed to grant an area of sea for an investor to put their fish farms, this is opposed by the local small-scale fishermen who see the birth of more modern competition and say that it will block their free access and pollute the ocean, while others invoke the Sacred Sea of [Peruvian war hero Miguel] Grau, instead of accepting this activity that could generate hundreds of thousands of jobs.

In addition, Peru has enormous riches from the rain that falls in the cordillera. It's calculated that 800 billion cubic metres of water annually flows down in the rivers that head towards the Pacific and the Atlantic. Of that which goes to the Pacific, we use a small amount for agriculture and electrical generation, but with the water that goes to the Atlantic, we do practically nothing.

How to make the most of it? Now that the price of oil keeps going up, we must think about electrical generation that is renewable, almost inexhaustible, and clean. And to think about its use and sale in continental terms. Large electric plants on the Marañón and in the rapids of the lower Urubamba would allow us to sell energy to Ecuador, Colombia, Chile and Brazil. For this it would be necessary to obtain large amounts of private or international capital that needs long-term security to invest billions and be able to achieve a return on the investment. But the dog in the manger says: 'Why are they going to make money from our rivers? Better that the regional government does it' But they don't say with what money.

In fifth place, people's own labour is not made productive for those who work. Informal employment is dominant, which is work not incorporated into the economy and without legal status; it doesn't provide social security because payments are not made, and it doesn't contribute to any pension system. To give value to this work and benefit the individual, the logical thing would be to make progressive advances so that the employees of small business, who number in the millions, have in the first place the fundamental minimum rights – health insurance, a pension, and an eight hour day. That's more than they have now. This would strengthen the pension fund and health insurance fund.

But the demagogues oppose this progressive access, saying: “Full rights must be given immeidately to all the employers of small family or informal businesses”. But they don't know (or perhaps they do) that the only thing they'd achieve is that the small businessman, unable to pay these costs, would close the business and lay off lots of employees, so the cure would be worse than the sickness.

There are also others who say: “If it's not possible to provide workers all the fringe benefits and 30 days holidays just yet, the State should provide full health cover and a minimum pension without them having to contribute. But it turns out that these are the same ones who are against investment in forestry because the jungles are sacred, against opening more mines because Peru should only be agricultural, and that don't want aquaculture in the oceans. And so, without investment, without jobs created, they think that the State is a bottomless well from which all resources can eternally emerge, and they end up saying: “Cut the work day to 6 hours, pay more salaries, even if Peru doesn't produce any more”.

As a final point, I could add that neither are the brains of our students and childrens made productive. Education is delivered in the majority of cases to pass with an 11 [out of 20] instead of promoting excellence and to aim at an 18. A group of bad teachers and bad bureaucrats refuse to be evaluated in order to hide their mediocrity and so the system carries on producing worthless results. And the same ones as always say: “Give me more, without me changing or making any effort”. So, they are allies of informal mining, clandestine logging, peasant poverty, informal employment and lack of merit or effort.

Faced with the philosophy of the dog in the manger, reality tells us that we must make productive the resources that we don't use and work with more effort. We have the example of successful peoples: the Germans, the Japanese, the Koreans, and many more. And this is the bet for the future, the only thing that will make us progress.

Categories: Alan Garcia, economic development, Peru, el perro del hortelano, Amazon