Economics focus - the ultimate blog

30 The Americas The Economist January 2nd 2010
2 displaced people to recover their land by
reversing the land seizures by paramilitaries
over the past two decades.
The security forces have their own problems.
The attorney-general’s oce is investigating
claims (most unproven) that
the army murdered up to 1,800 civilians
and passed them o as dead rebels (a practice
dubbed false positives). When this
scandal came to light after the kidnapping
of several young men in Soacha in 2008,
Mr Uribe sacked 27 ocers, including three
generals. Army units are no longer judged
by their body count. Detectives are now
own in to investigate all deaths reported
Reforming Canada’s Senate
Adapt or die
Ottawa
Stephen Harper prods a relic
NOBODY can accuse Canadians of
haste in reforming the Senate, the
105-seat upper chamber in their Westminster-style
Parliament, modelled on
Britain’s House of Lords. Debate on
whether senators should be elected or
named by the prime minister began even
before the rst senators took their appointed
seats in 1867. It continues to this
day. The only change (in 1965) has been to
require senators to shue out of the door
when they turn 75 rather than waiting to
be carried out feet rst.
Stephen Harper, the Conservative
prime minister, wants to overhaul a body
he calls a relic of the 19th century. This
month he is expected to name Conservatives
to ll ve senate vacancies, making
his party the largest in the upper house.
Further retirements should give it a majority
before the end of the year. But to
reform the Senate Mr Harper, who leads
a minority government, needs the support
of at least one of the three opposition
parties in the House of Commons.
The two smaller parties, the New
Democrats and the Bloc Québécois,
neither of which have senators, want to
abolish what they see as an expensive,
unrepresentative body. In theory the
Liberals, the main opposition, are open to
reform. In practice they have used their
control of the Senate to stymie Mr Harper’s
eorts to achieve it. Sweeping
change would also need the support of
seven provincial governments representing
at least half of the population.
But the ten provincial premiers are divided
between abolition and reform.
Mr Harper tried a short cut in 2006,
with modest bills that would limit senators
to eight years and allow the prime
minister’s choice of appointments to be
guided by national advisory elections.
He saw this as a rst step to persuading
in combat. CINEP, a human-rights group,
found only two incidents of false positives
in the rst half of 2009. But the aair
damaged the army, and according to some
reports, has undermined its morale. Similarly
damaging have been repeated scandals
at the civilian intelligence agency,
where some ocials have been charged
with colluding with paramilitaries. The
agency is belatedly being wound up.
In security, the task of the next government
will be to consolidate Mr Uribe’s
achievement while adjusting his policies
to new threats. It’s no longer just giving orders
from the top but developing and im-
the provinces to back more radical
change. But the bills failed to gain opposition
support. So Mr Harper reversed his
earlier decision not to ll a growing
number of senate vacancies, naming 27
Conservatives in 2009.
The Senate’s defenders argue that it
works well as a revising chamber, applying
greater thought and less partisanship
to legislation than does the Commons.
Senators tend to do much of the work on
the joint committee that ensures government
regulations match underlying
legislation, an important if unexciting
job. But polls suggest that 75% of Canadians
want the Senate reformed.
Should the Liberals continue to block
Mr Harper’s reform bill, he may opt to
seek the Senate’s abolition. Canadians
understand that our Senate, as it stands
today, must either change orlike the old
upper houses of our provincesvanish,
he said when addressing the Australian
Parliament in 2007. The do-nothings have
been warned.
plementing plans to control territory and
protect the population, says a former ocial.
And Colombia now needs police on
city streets as much as troops in its jungles.
It also needs jobs, if it is to prevent its
youth joining the illegal economy of drug
gangs and armed groups. The economy
has suered only mild recession. But open
unemployment stands at 11.8%, compared
with a Latin American average of 8.3%.
Some 60% of Colombians work in the informal
economyagain, more than the regional
mean. Alejandro Gaviria, an economist
at Bogotá’s University of the Andes,
points out that there are fewer formal jobs
for people without higher education than
in 1995. Public policy has contributed to
this dismal trend. Steep payroll taxes discourage
employment. So does a minimum
wage that is disproportionately high in relation
to the country’s income levels.
Part of the blame belongs with the constitution
approved in 1991. This introduced
some welcome democratic reforms. But it
also empowered everyone and created
chaos, as Roberto Steiner of Fedesarrollo,
a think-tank, puts it. Much social and economic
policy is now dictated by the judiciary.
Court decisions have helped to
bankrupt the national health-insurance
system, only 45% of whose members now
pay full contributions. That obliged the
government to announce emergency nancing
measures last month.
Sluggish recovery
But Mr Uribe has himself undermined the
tax system, decreeing tax breaks for favoured
companies and then making these
permanent through tax stability contracts.
He defends these as necessary to attract
investment. Guillermo Perry, a former
nance minister, argues that this would
have come anyway because of better security
and high commodity prices.
These problems may weigh heavily in
the coming years. The economy is recovering
more slowly than others in the region.
Half of Colombia’s exports went to the
United States and Venezuela in 2008: but
American demand remains sluggish and
Venezuela’s government has imposed
trade sanctions on Colombia in protest at a
recent defence co-operation agreement between
Mr Uribe and the United States.
Back in 2002 Colombia was in serious
danger of becoming a failed state. Millions
of its brightest citizens had migrated
abroad. Travellers on the roads between its
main cities risked being kidnapped or
killed. It is a tribute to Mr Uribe that today’s
problems look so much more manageable.
He points out that younger Colombians
haven’t known a single day of peace. He
insists the country needs to stick to his policies
without stagnation or sudden
swerves. Yet his growing number of opponents
argue that progress cannot continue
unless there is a change at the top. 7