My final installment on Costa Rica

Louis N Proyect lnp3 at columbia.edu
Mon Sep 30 06:37:29 MDT 1996


For nearly half a century, Costa Rica has had a reputation as the
"Switzerland of Central America," With no army and a stable,
democratic political system, the 3.5 million people of this mountainous
country have grown accustomed to a standard of living that has made
them the envy of Latin America, with benefits that include free
education and health care.

But now that European-style welfare state is being dismantled by the
son of the man who created it. Faced with huge deficits and a creaky
Government bureaucracy that at its peak accounted for one of every six
jobs, President Jose Maria Figueres is slashing away at the traditional
system of cradle-to-grave protectins and warning his people of
continued austerity ahead.

"The people of Costa Rica must understand that, in the words of the
only Milton Friedman phrase I ever use, there is no free lunch," said
Leonardo Garnier, the Minister of Planning and Economic Policy. "If I
don't pay now, I have to pay later."

Since taking office two years ago, Mr. Figueres, a 41-year-old graduate
of West Point, has trimmed the Government payroll, undone the state's
banking monopoly and shut down a Government railroad. He has
agreed to sell some state enterprises and to allow private investment in
others. At the same time, his Government has raised taxes, lowered
tariffs and reformed a pension system once renowned for its
generosity.

"It's not the same country anymore," said Victor Perez Mora, 54. A
printer who worked for the National Lottery for 22 years until
accepting a buyout offer in 1995, he now says he has to scrimp because
the Government has fallen behind on payment of his retirement
benefits. "Costa Rica always had a certain mystique, but now that is
gone," he said.

(From 9/30/96 NY Times, Larry Rohter's "Costa Rica Chafes at New
Austerity")


Louis



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