Slovakia Vs. The Cato Institute

Class War Report / March 12, 2012

By Mark Ames

This article is first published at ConsortiumNews.com on March 12, 2012

On Saturday, the tiny EU nation Slovakia held parliamentary elections, and the results surprised the “experts”: The center-left party Smer, derisively described as “populist” in the American media, won in a record landslide, the first time a single party will control the majority in parliament in Slovakia’s post-Communist history.

The “populist” Smer won on an unexpectedly large turnout of 60 percent –the so-called experts had been assuring readers there’d be a low turnout of 40 percent.

The high turnout reflects real suffering for the people of Slovakia that goes well beyond mere cynicism — they’re suffering from real, mass impoverishment, brought on by a decade of brutal free-market reforms, which hit the privatized pensions especially hard. That’s where we Americans come in, specifically the Cato Institute — but I’ll get to that in a moment.

Although there’s been almost no coverage of Slovakia’s mass protest movement, the country has seen the largest demonstrations since the Velvet Revolution. The protests were sparked in part by the “Gorilla” scandal, leaked recordings of Slovakia’s free-market politicians negotiating their bribes with bankers from a top hedge fund, Penta, in exchange for Penta’s lucrative privatization deals.

But what’s sustained the protests, and what brought people out to vote in droves for the “populists,” is the mass impoverishment that’s worsened life for most of Slovakia’s citizens — and first to suffer have been Slovakia’s pensioners, who are forced to subsist on roughly $400 per month.

Here’s where the Cato Institute, the libertarian think-tank founded by the Koch brothers, comes in — and where Slovakia’s problems become our problems.

In the early 2000’s, the co-chairman of the Cato Institute’s Project on Social Security Privatization, José Piñera, played a key role advising and overseeing Slovakia’s mass pension privatization, which passed in 2003 under the free-market government of Mikulas Dzurinda. Today, Slovakia’s retirees are groaning under the austerity pain administered to them by the Cato Institute.

José Piñera, who has led Cato’s Social Security Privatization Project since the 1990s, has a dark history of administering pain on a nationwide scale: Piñera served in the military junta under Chile’s Generalissimo Augusto Pinochet, first as Pinochet’s Minister for Labor, helping suppress unions in one of the most brutal dictatorships in the world; later, Piñera oversaw Pinochet’s radical privatization of Chile’s pension program.

Today, Chile suffers one of the worst wealth inequality problems in the developed world. And for the past two decades, José Piñera, working at the Cato Institute, has been trying to impose the same pension austerity on Americans.

It’s a match made in Hell: Cato and the Koch brothers have been pushing to dismantle Social Security since the Kochs set up the Cato Institute in the late 1970s. Thanks to the Cato Institute’s tireless efforts, today dismantling Social Security is practically gospel in the Republican Party — and not far off the top of the “To Do” list for some “centrist” Democrats either.

Sacking Slovakia

Cato’s José Piñera was brought in to oversee Slovakia’s pension privatization only after the 2002 elections put in power the free-market rightwing Democratic and Christian Union Party, led by Prime Minister Mikulas Dzurinda. The pensions were privatized in 2003, along with a free-market program that lowered the top tax rate to a flat 19 percent, eliminated inheritance taxes, and generally shifted the burden down the economic scale.

The reforms were wildly unpopular with Slovaks, to the same degree that they were popular with Western bankers and banking institutions like the World Bank, which named Slovakia the world’s top economic reformer in 2004, and one of the top 20 business-friendly nations in the world.

In 2005, Bush’s ambassador to Slovakia co-authored a glowing article with Cato’s Marian Tupy, praising Dzurinda’s pension privatization, and noting Cato’s José Piñera’s role in making Slovakia’s pension reforms happen. In their article, they ominously compared Slovakia’s pre-reform pension “crisis” to America’s “crisis” in Social Security.

The timing of the joint Cato-Bush praise for Slovakia’s pension privatization was interesting for a couple of reasons:

First, because the same free-market government that Cato advised and Cato-Bush praised has now been implicated in cutting secret kickback deals with a leading hedge fund to sell off Slovakia’s state assets in exchange for millions in bribes; and secondly, that year, 2005, was the year President Bush made his big push to privatize America’s Social Security program, with the Cato Institute as both the lead adviser and promoter.

The Bush-Cato plan to privatize Social Security began over dinner in 1997, when Bush was still governor of Texas. Ed Crane, the president of Cato, and José Piñera, Cato’s co-chair of the Social Security Privatization Project, flew to Austin to sell the future president on their plan to privatize Social Security.

According to the Washington Post: “Crane said that after Pinera’s presentation, Bush declared, ‘This is the most important policy issue facing the United States today.’”

As soon as Bush was elected President, he set up a commission to privatize Social Security, and staffed it with the Cato Institute’s free-market zealots. Unfortunately for them, the 9/11 attacks distracted the Administration. But in 2005, Bush made Social Security privatization his top priority for his second term — and once again, he put the Cato Institute in charge.

By the end of 2005, however, Bush’s presidency was practically in tatters as the country turned against his wars, and Hurricane Katrina made privatizing Social Security politically impossible. The project to do to America what Cato did to Slovakia was essentially abandoned, and the Cato Institute turned critic of Bush’s war on terror policies.

Bush pays attention to his Social Security privatizer and former Cato flak Andrew Biggs

A Family Project

Lately, Cato’s José Piñera has seen his younger brother, billionaire Sebastian Piñera, making international news as Chile’s most unpopular president since democracy replaced the free-market military junta of Generalissimo Augusto Pinochet in 1990.

Thanks to younger brother Sebastian’s free-market privatization of Chile’s education system, the country has erupted in nationwide protests and violence on a level not seen since, well, Generalissimo Pinochet overthrew Chile’s democratically elected government in 1973, and installed a brutal regime that crushed dissent and murdered and tortured thousands — handing the economy over to free-market fanatics including Friedrich von Hayek, Milton Friedman, and Sebastian’s brother, José Piñera.

Neither age, nor time, nor working at the American-based Cato Institute, dining with future presidents and convincing them to gut the population’s Social Security, has mellowed this former Pinochet sidekick’s distaste for democracy. As Piñera wrote in 2003,

“To hand over a blank check to inherently unstable majorities concerning virtually all the major economic, social, and political issues of a society is to institutionalize instability, open the way to more serious abuses, and condemn a country to underdevelopment. How is anyone to make rational decisions about work, savings, and investment if key variables — such as taxes, labor legislation, and regulations — can be altered by 50.01 percent of the citizens through a vote that, in countries with low levels of education, can almost never be said to show the characteristics of an ‘informed vote’?”

On Saturday, the Slovaks voted overwhelmingly to reject the damage and plunder that the Cato Institute’s advisers wreaked on that tiny country’s citizens. Naturally, to free-market zealots like the Piñeras, the Kochs, the Cato Institute and the rest of the oligarchy’s minions, this only proves their point about why democracy must be “limited.”

The people can’t be relied on to vote the way oligarchs want them to — they can’t be relied on to react with cynicism and defeatism to all the news of political and corporate corruption.

The hope among the elites in Slovakia and elsewhere was that the voters’ mass impoverishment and anger would lead to a withdrawal from politics — but the high voter turnout turned out to be perhaps the greatest victory for the people of Slovakia. The politicians are to be expected to sell out and disappoint — but the more engaged in their democracy the people are, the more power they’ll have to eventually change their politics for the better, and finally bring an end to the rotten politics of oligarchy and plunder that mark our age.

Mark Ames is the author of Going Postal: Rage, Murder and Rebellion from Reagan’s Workplaces to Clinton’s Columbine.

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34 Comments

Add your own

1. Jozo | March 12th, 2012 at 2:35 pm
Sadly I’m a troll who will pretend that this vote for the corrupt left is even worse than the vote for the corrupt oligarch-right. Hey, it’s what I get paid to place in social media, give me a break will ya?
2. Zhu Bajie | March 12th, 2012 at 3:51 pm
So what’s happened with the Czech pension plan?
3. DeeboCools | March 12th, 2012 at 5:29 pm
I just realized the word play possible with “Mark Ames” in your last sentence when you said “mark our age.” Ames Aims, Mark’s on the mark, etc. Ok, drunk, bedtime
4. Matt | March 12th, 2012 at 8:39 pm
Zhu Bajie
you even need to ask. It’s putting your money on the stock market,basically handing it over to financiers. Pensions are supposed to be a fallback from the market,or your 401k or whatever. Not five years ago we had a massive financial crisis and people got screwed over if you had in the stock market.
5. ngonz | March 12th, 2012 at 8:56 pm
the education system was also privatized under Pinochet 30 years ago but exploded in Piñera’s face. The privatized social security is probably another timebomb waiting to go off.
6. VZM | March 12th, 2012 at 9:10 pm
The type of plunder disguised as “free market” reforms has been the rule throughout the former eastern block. I am Bulgarian by birth and remember how the fall of the wall was quickly followed by the arrival of CATO and Chamber of Commerce types, in Bulgaria’s case Richard Rahn and Ronald Utt. The consequent fleecing of state enterprises and the introduction of 10% flat tax with a highly regressive 20% VAT has left the country in tatters. The Slovak pensioners have it absolutely easy in comparison to their BG counterparts who make do with $100 a month on average and the pension funds are facing insolvency. The CATO types are sociopaths, plain and simple.
7. Patriot | March 12th, 2012 at 9:31 pm
Fuck yeah! Slovakia, we salute you!
8. Urda | March 12th, 2012 at 10:11 pm
In order for people to make valid decisions they have to strive to be informed,anything else is kissing their future goodbye.
9. LLL | March 12th, 2012 at 11:29 pm
Oh Kira from Death Note, why can’t you be real? Because you need to slap some Kochs inside that notebook of yours!
10. anonymous coward | March 12th, 2012 at 11:57 pm
Bear with me here, but the weird thing is that horrible Cato twat is kind of right about democracy, just not in the way he thinks. Here in Britain we have rule by complete idiot, a political system that only seems to count the votes of uninformed right wing morons. Dur, I voted Tory cos it said so in the Sun. It’s a working man’s paper… Duuurrrrrrr…
Sometimes they get a clue and thrash around trying to deal with the cognitive dissonance of the aforementioned, a pornographic birdcage liner which is our best selling newspaper of record, loudly defending horrible policies such as “work experience” where people have to work for no wages or campaigns to inform on your neighbours. They usually end up blaming immigrants, though, which must cheer the bastards in the govt. up no end…
As for Slovakia, it’s definitely a step forward, but I see they’re still following the policy of doubling down on Euro-blivion. But yeah, it’s definitely an improvement that the elite that benefit the most from the single currency are actually going to have to pay for the sucker.
http://www.businessweek.com/news/2012-03-11/slovakia-elects-government-backing-merkel-s-euro-crisis-plans
11. gc | March 13th, 2012 at 12:20 am
So this is what it feels like to be living in a time when the momentum is against the forces of evil.
I like it.
Now if only it weren’t for the whole standard-of-living-set-back-by-four-decades-of-neo-liberalism thing.
12. Jozo | March 13th, 2012 at 1:28 am
I’m not getting paid by anyone, everybody who can speak proper English has left the country already :)) I don’t give a fuck. I’m a leftist, but the Slovak “left” is not the Western progressive left…it’s just cheap populist bunch of kids of former communist party oligarchs trying to steal and fuck things up. They have to pay their backers back for the ultra expensive campaigns or they’d be hunted down. In these post-communist countries the natural order is reversed, the right is more progressive than the conservative corrupt left. Elsewhere it’s the other way around.
In case of Slovakia both are corrupt, but the centrist-right bunch was the only one who actually improved things in the country and got some money back in. These fuckers will only steal and fuck things up even more. Stagnation at BEST. Making cheap promises to get the old fart dumb votes. The sad thing is that its us, the young who get fucked.
Look at the situation there – you can only but 0.5m2 of property in the capital from your entire gross monthly salary?? Who got things there, these fuckers who also been ruling between 2006 and 2010. What the fuck, no wonder everybody intelligent already left. One party rule, back to 1948.
You should research this shit more before jumping to conclusions, it’s really disgusting stuff. You guys think this is a progressive left win, but its just another spin, just as bad as the Kochs…
13. Strelnikov | March 13th, 2012 at 3:16 am
That Chilean subhumanoid mouthbreather needs to be sent back to his country and be tried and beaten to death by the widows of disappeared Leftists, or at least beaten badly and then dragged to death behind a truck.
Do the same to the Koch brothers, and the world is our oyster.
14. Michal | March 13th, 2012 at 4:04 am
This is a really ill-informed article. You talk about a free-market Gorila, but hey Mark, did you actually read the file? Not only did Haščák, the fix man for Penta, had frequent personal meetings with Fico’s assistant, but Fico PERSONALLY met up with Haščák to debate cadre cleansing within the party.
Fico’s name is mentioned 142 times in the file exactly.
And it’s not just American media describing Smer as populist, you make it sound as if it were just free market American looters who would dislike Smer. It’s also Czech and Slovak media.
15. Michal | March 13th, 2012 at 4:06 am
Oh and Fico’s assistant, Határ, was debating a way with Haščák to get the money to Smer.
The voters punished the right wing gorilla, but obviously they don’t mind left wing gorilla.
16. Alexei Belyaev-Gintovt | March 13th, 2012 at 6:28 am
hairy bear U mih\ght have heard that marketing dicks setup human wifi hotspots at sxsw
http://www.nytimes.com/2012/03/13/technology/homeless-as-wi-fi-transmitters-creates-a-stir-in-austin.html
in case U didn’t know its offensive/morally wrong to use another human being as an instrument
17. adam | March 13th, 2012 at 6:42 am
@9
I’m with you on that one, friend. I’d write two names, Charles and David Koch.
18. manure manoeuvre | March 13th, 2012 at 10:07 am
Good article. Thank you, well done.
the finishing line in particular:
“…but the more engaged in their democracy the people are, the more power they’ll have to eventually change their politics for the better, and finally bring an end to the rotten politics of oligarchy and plunder that mark our age”
19. STALLION SEMEN SLINGER | March 13th, 2012 at 2:17 pm
can U guys bring back byline pictures again
yasha’s will be badass picture in which he looks like taxi driver
mark’s will be him all dressed in his old punk rock clothes
uncle dolan’s will be after he finishes eating cheese puff bag while wearing old white undershirt
20. Mike | March 13th, 2012 at 3:04 pm
@12
@15
Ahoj Jozo, Michale, I’m inclined to share your skepticism regarding this election. I don’t follow Slovak politics too closely, but I’ve heard of Fico before, and would be surprised if he wasn’t completely corrupt.
That said, such a strong rebuke of the current government might persuade směr to do some useful things for normal people, even if just to stay in power.
I don’t know whether they will actually carry them out, but some of the ideas mentioned here http://www.literarky.cz/svet/evropa/8658-fico-o-jednobarevne-vlad-pro-opozici-budeme-snadnym-terem sound reasonable. I particularly like Fico’s statement that they are willing to consider ending the ridiculous flat tax, and that they won’t increase VAT. I certainly wish the current Czech government was saying things half as intelligent.
21. Ash | March 13th, 2012 at 9:45 pm
Hey Mark/AEC
check out this:
http://littlegreenfootballs.com/article/40034
Our friend Joel Pollak being completely demolished by a journalist. If only they’d all give cretins like this as hard a time as they deserve.
22. HamsterFist | March 13th, 2012 at 9:48 pm
No mention of the Shock Doctrine?
23. CensusLouie | March 14th, 2012 at 1:00 pm
Don’t put your faith in anime! Kira spent most of his time killing petty incarcerated criminals.
24. nampa | March 14th, 2012 at 3:02 pm
“Misinformed voters”, being unable to make informed decisions jepordizing democracy? Representative democracy’s only reason to exist is its ability to be corrupted by money influencing misinformed boobs. That’s all Jose ever had here. That he is upset about it just shows how evil he is: “my reforms aren’t being passed quick enough.”
25. arras | March 15th, 2012 at 6:03 am
What is not know widely outside of Slovakia is that prime minister mentioned inside article, Mikulas Dzurinda and leader of Slovak “right”, one who was most heavily engaged in corruption according to “Gorilla” scandal came to power in 1998 in first “colour revolution” organised by US corporate elite in Easter Europe. It is rumoured that US ambassador in Slovakia at the time Ralph Johnson personally choose him and arranged for fragmented opposition to unite. Of course with usual help of Soros, his Open Society fellowship, National Endowment of Democracy and other friends of foreign interests of US corporate elite. And media which were by that time all owned by same Western corporations and their local puppets.
What followed is classic: Slovak industry, banks, infrastructure, social services, public transportation, health care, media was “privatised”, “reformed” and “transformed” …in other words sold for nothing to local oligarchs and western corporations. While political class received bribes and people were fired from the work.
So called “Gorilla” corruption scandal describes one of the stages of this process in 2004-2006 when state owned oil distribution network, electric production and distribution and others were “privatised”.
26. Lanius | March 19th, 2012 at 12:25 pm
Pensioners…
Fuck them. You have not brought up children who would take care of you in your old age?
You have not helped anyone enough they they’d do the same?
You deserve to die alone, in penury.
Also, I’m from Austria and have lots of friends in Slovakia.
Jozo is spot on.
27. Dimitri Ratz | March 19th, 2012 at 7:10 pm
Congrats to first Hungary, and now Slovakia. Some countries never get tamed by the vile putrid creature Hilary that shun Syrian Orthodox Christian community at Cairo Enemies of Syria Meeting, because 15% of a country doesn’t matter, nor the 20% of Shiite Syrians, or Kurds or even those Sunni that support a secular state. Their voice had no echo at those halls, because the monstrosity, the hideous fibal leprosy left footed Secretary supports the suppression of individual freedoms. Under the cover of majority, the lying gutter wet leech ridden dwarf Clintoniha makes unverified claims of majority without a single poll, not even a poll agency one, and when events on the ground show Sunni Syrians not going over to the side of evil, obsessed evil that would shun constitution that allows all parties, just not based on religion, not dictating one’s personal religion even a majorities religion on those less numerous. Hilary Clinton doesn’t know anything about freedom. That’s why all she can do is go back to strap on dildo fucking Saudi King Abdullah bin Abdul Aziz while Qatar Crown Prince Tamim bin Hamad Al Thani licks it with his tongue. That penetration really stays on King Abdullah’s mind even now, frightened by a woman at a soccer stadium.
28. boson | March 26th, 2012 at 1:46 pm
I’m sorry but this time I cannot agree with Mark.
You just cannot understand Eastern Europe with the rationalistic political science concepts of the West.
First off, there is no left in Eastern Europe eg Slovakia. Not in any sense, not even of the superdiluted Democratic Party sort of variety of the left.
Fico won NOT on a progressive platform, but because of cheap, ressentiment-fed nationalistic (anti-Western, anti-Hungarian, anti-Roma) crap and yeah sure some completely ridiculous social promises which he will not deliver.
Eastern European chauvinist assh.les like Fico USE anti-Western, anti-“big capital” rhetoric to get some votes but they NEVER deliver anything on this note.
The whole thing has NO class content to it at all. The difference between these political groups (Fico vs. Dzurinda, or Orban vs. the Hungarian “left”) has nothing to do with class conflicts – it is merely an infighting of different investor groups: domestic mobster capitalists (represented by “populists”) vs. multinational capitalists.
When “populists” win, the people will be just as screwed as under the reign of pure neoliberals (grotesquely, in the case of Hungary and Poland, it is often the Cato-types who are called “the left”, lol! you know why? cause they are not anti-Jew. that’s about it), or even more, because of the ensuing macroeconomic mismanagement which can go very far, believe me.
Eastern Europe is a clusterfuck basically that’s not worthy of analysis, but if you still wanna do it, you have to stop projecting your US/Western EU-based hopes on the political landscape of that morass.
29. Brad | March 29th, 2012 at 9:22 am
This article is totally wrong. As a Slovak I thank that Chilean economist for giving me property over my savibgs for old age. I prefer 1000% times a prvate pension system to the bankrupt and corrupt state pension system.
30. Brad | March 29th, 2012 at 9:44 am
Because of a mistake, I withdraw the comment I just sent. This wrong email was put automatically. I apologize.
31. Dimitri Ratz | March 29th, 2012 at 8:59 pm
American rich used to have a responsibility to the places they lived and that with great wealth comes responsibility of supporting and building the community. Somewhere in the internationalization process of business this was lost mostly by the free trade benefits propaganda that was embraced by the masses after constantly, repeatedly being shoved down their throats by government connected media that made anything resembling investing here embarrassing, and labeled detrimental to the natural health of American economy to base any business decision above profit.
Now we have the braindirters spilling this gutter trash on local businesses in pockets of Eastern Europe while making a clear distinction that they are in fact against the international elites out to snuff out anything resembling an alternative to profits at all costs ideology.
Mark is right on with this article. The braindirters can go fuck Saudi Abdula hainy with Crown prince Thani Clinton threesome that was isolated at Baghdad where they wee trying to do a screw driver, but none of tthe
32. Dimitri Ratz | March 29th, 2012 at 9:25 pm
But none of the attendants appretiated the moving forehead wrinkles and flubs of fat transgressing on Hilary Clinton on her side, because of the stench coming off of her only 10 of the 22 Arab leaders dared stay within a countries distance. The methane spewing out of her ass was so severe and sewer like that it caused an explotion down the street at the Iranian embassy. Crown Prince Thani seemed to be the only one really happy, natural salad tosser, in a dog house with his two wives as they don’t want to touch someone getting it doggy style by old hag Clintoniha while of all things touching her hands as she had Thani’s hands back while giving it to him.
33. Jim Vail | March 29th, 2012 at 10:36 pm
This article reminded me of one Ames wrote in Moscow about the problems with the Palestinians, Mark you remember? He later recanted, disowning any zionist fantasies immediately afterwards.
To believe in the vote in a corrupt system worldwide, is almost like the poor Ukranians embracing their Nazi ‘liberators’ – sorry guys, ain’t goanna get much better if you read up a little on us.
But I don’t know enough of the facts on the ground in the land of Slovakia. It was a protest vote, with a twinge of populism, you say? Well, that’s a bit better than the Russian fake opposition and protests against Putin under the slogan of ‘we want a pure vote’, nothing populist, like we want bread and jobs (you know stuff that really connects to the masses.)
Now, we need to follow this country after the so-called ‘vote’ to kick out the free market people. What exactly is the new government’s platform? Will they fight it? Make me believe Mark, but with facts and proof.
The US is fully controlled by the corporate power state. A vote here is an exercise in futility. How Slovakian ruling class actually allowed an alternative to the public I’m highly skeptical about, and Mark should be too.
Mark knows better than to say the zionists can make sense. Slovak opposition parties?
Convince me Mark on this one, and I’ll perhaps be the first ex-Moscow Trib. staffer to send you a well deserved donation for your great journalism. Cheers! Jim Vail
[THE A.E.C. HAS NO FUCKING IDEA WHAT AMES ARTICLE ABOUT PALESTINIANS YOU’RE TALKING ABOUT, NOR DOES YOUR INTERPRETATION OF THE CATO-SLOVAKIA ARTICLE CORRESPOND TO THE ACTUAL ARTICLE, BUT HEY, MORE POWER TO YUH.]
34. boson | April 2nd, 2012 at 3:15 pm
just one more thing to illustrate my point: Fico just announced that one of his bright new policy ideas is to replace cash benefits with benefits in kind (or in coupons). so that all those parasites on welfare can spend it only on the right kind of things.
see what I mean?