Etchemendy 2005

"Old Actors in New Markets: Transforming the Populist/Industrial Coalition in Argentina, 1989-2001" Sabastián Etchemendy, p. 62-87

in Levitsky, Steven, and Maria Victoria Murillo. 2005. Argentine democracy: the politics of institutional weakness. University Park, Pa: Pennsylvania State University Press.

• Introduction
• rather than being unambiguous losers in the neoliberal reforms, some key industrial and labor actors within the old ISI coalition can and do preserve their existing market power in the new "liberal" order (62-63)
•  argument: dominant unions and certain established industrial players were actually part of the reform coalition (63)
• two goals of chapter
• explain why Menem chose to rewared some industries and unions
• assess the consequences of this pattern of transformation of the populist/industrial coalition
• ISI past generated very strong industries that were also potential losers in turn to neoliberalism (64)
• unions had a very clear goal of preserving the corporatist institutions -- ((induced them to be willing to trade liberalization for maintaining this bastion of power))
• Results of Menem's bargains (65)
• Business
• compensations eventually led to a high exchange, which undermined business's ability to compete
• no strategy in the face of global competition was developed...once the side payments were gone, business still couldn't compete on open market
• labor
• benefits funneled only to formal sector
• bureaucratization of unions allowed room for the creation of large, autonomous, powerful groups of unemployed and other actors
• Industry: Political Winners
• the government compensated firms from four tradeable sectors: oil extraction, petrochemicals, autos, and steel (66)
• privatization usually meant directly rewarding state assets to these businesses
• and the pace of deregulation was consistently slowed
• why firms in these sectors?
• mixed sectors, meaning these firms had a higher lobbying capacity because they were partially public (69)
• these firms were the largest and most powerful in economic terms
• these firms were also relatively more concentrated (fewer firms and more economic value per firm) (70-71)
• all of these firms had monopolistic industry associations through which they could bargain (72)
• Working Class: Compensating Leaders and Insiders in the Formal Sector
• the politics of compensation focused on teh leaders (74)
• unemployed and laid off were left to their fate
• there were four payoffs:
• maintenance of corporatist union structure
• while government did get some flexibilization of contracts (75)...
• unions maintained their monopoly of representation in privatized firms 
• preserving labor's administration of healthcare
• deregulation only went so far as to promote competition within the union-run system
• granting unions privileged position in private pension market (76)
• unions were allowed to create/control their own pension funds to compete on the market
• but unions abandoned most of these by 2000 (no explanation given by author)
• granting unions share of privatization
• employee stock ownership programs (76)
• these rpograms were only offered to formal employees (77)
• and the stocks were monaaged by hte unions
• and the stock value totally soared
• generally all four of these payoffs converged on maintaining union leaders' control of unions and increasing the amount of money they controlled (79)
• they faced little danger of being uprooted by competing organizations or their own rank and file
• The Consequences
• the compenstations porlonged the fixed exchange rate (80-81)
• disregarded any strategy for actual export competition (82)
• compensation was based on teh control of domestic markets (82)
• this ended up being a short term strategy, and no one sought a longer term one
• when the compenstations, which were based on the strong exchange rate, were consumed by the end of the decade, firms still could compete on the global market! (83)
• offered nothing to the unemployed (83)
• there was no antional policy to attenuate hardships of neolibreal transformation, specifically focused on working class/poor who lost jobs and purchasing power (84)
• government chose to support unions over the unemployed
• and the unions chose to take their compensations and similarly ignored the poor, which just paved the way for the piquteros and other groups (85)
• Conclusions
• the configuration of labor and industrial interests befor ethe reform determined the pattersn fo compensations during and after the reform (86) ... my take: the rich get richer, sort of
• the compensatory policies were a double edged sword (86-87)
• on the one hand, they made the reform politically viable (87)
• on the other hand, these compensations sowed the seeds of future economic and political instability, which erupted in 2001