Antagonism in Wonderland

Argentina's Original Public Sector Sins

By
Cristina Fernandez de Kirchner
Antagonism in Wonderland : Argentina's Original Public Sector Sins - James Stranko

Abstract

Argentina’s public sector spending has consistently outpaced tax revenues—opening up a gap that could only be filled by massive deficits, official currency manipulations, inflation underreporting and other fiscal and monetary hocus pocus. But even that hasn’t worked for current president Cristina Fernández—forcing her to smear opponents and silence critics at the expense of creating sustainable policies. This paper looks at increased export taxes on soy and the privatization of national pensions as examples of fundamental argentine fiscal policy. Through first person interviews with a politician, government worker, businessman and academic, it also aims to imbue the issues with the local politics that shape Argentina’s political realities and that typically fail to make it to the international press.

Introduction

Argentina’s social balance rests on a few polarizing debates: city vs. countryside; center vs. periphery; landowning class vs. working class, Peronist vs. everyone else. In the perpetual balancing act that government and society must perform, spending commitments that aim to smooth these conflicts outweigh the insufficient tax collection and state-enterprise profits that pay for them. Even after the country’s historic default, subsequent debt renegotiation, and subsequent export-led bonanza of growth, Argentina’s government revenue consistently fails to match its spending commitments. This dynamic has contributed to the overall instability of the Argentine republic during the twentieth century, yet it seems like an inevitable feature of Argentina’s political structure. It also causes the government to take drastic and punitive measures when times are tight.

A number of factors contribute to this harmful dynamic of Argentina’s political economy. To give structure, this paper will use two of Argentina’s most recent eruptions—the nationalization of private pensions in 2008 and the agricultural export tax debacle of the same year—as examples of the irresponsibility and political expediency that undermine sustainable government revenue and spending. It will also examine the antecedents that influence the problems and the ways in which unpredictable government behavior has provoked a broad feeling of uncertainty in the Argentine economy. Finally it will examine the role of Argentina’s polarizing politics, insidious elite control, and weak conception of national solidarity as key actors in this dynamic.

First World Public Sector Expectations and Third World Realities

Richer societies demand more public sector spending. In these societies the state has guaranteed certain services to all of its citizens due to the more stable nature of tax revenue and the relative size of the state budget. Many of these commitments, particularly in Western Europe, were born from a desire to provide a broad welfare state mechanism in the ruins of the Second World War. In the United States, one of the largest expansions of public goods was the new Deal at the wake of the great Depression. The general success of public goods over time (despite the strain on funding currently being seen on both sides of the Atlantic) is apparent in the public’s satisfaction with the good being provided and the state’s ability to unite political support for the continued provision of such goods.

Argentina, unfortunately, neither had a defining national moment to establish broad support for these goods nor the economic wellbeing over time to support their provision. The Ministerio de Salud (Ministry of Health) is one good example of the destructive politics associated with providing public goods in Argentina. Established in 1949 under Juan Perón’s direction (and with the spiritual leadership of his wife Evita), this ministry was dissolved under the subsequent military coup. The ministry was reinstalled under Arturo Frondizi’s administration (1958–1962), and then dissolved again during the 1976 military junta’s brutal “national reorganization Plan.” It was reinstated by Raúl Alfonsín in 1983 and later fused and defused several times into and out of other ministries, the most recent move occurring during the current Fernández de Kirchner administration. As in the case of the Ministry of Health, many of the social spending commitments made in the realm of public goods, pensions being a prime example, have been purely political decisions. They lack the institutional and solidarity necessary to maintain coherent programs both in their founding and in their current operation.

Contributing to this instability are the nefarious effects of populism and clientelism. This, of course, is nothing new in Argentina’s history, nor is it exclusive to Argentina in the realm of social spending (other Latin American countries provide particularly egregious examples of both). At the same time, the Argentine public sector collects a smaller proportion of national income than countries with similar social spending programs. This phenomenon has a simple explanation: Argentines that can evade taxes often do, and the state up until recently was ineffective in addressing fraud and evasion. The tendency to ignore fiscal realities or manipulate numbers to suit contemporary policies (from Perón’s time to the present) complicates the issue. Argentina’s government has only been willing to reform the economy in key sectors when such manipulation is not enough to sustain spending.

Cristina Fernández de Kirchner’s government has shown a flimsy commitment to budget control and an aversion to the tough political decisions required to match public expectations with financial reality. While fiscal austerity, particularly in the current environment, is a challenge many governments face, Argentina’s past demonstrates a clear inability to match economic reality with self-assessment. Increased export taxes on soy and the privatization of national pensions are good examples of fundamental national questions that continuously constrain fiscal policy. The next section will address some of the dilemmas both incidents posed to Argentina’s fiscal situation.

The Taxing Side: Resolución 125—Export Taxes on Soy

Following the 2001 crisis, the country’s economy had grown very rapidly, at an annual rate of more than 8 percent since 2003. Part of this was the natural recovery from the devastating economic meltdown of late 2001, but another important part was the reestablishment of a strong agricultural and resources sector. Despite criticism that this resulted largely from rising global prices for raw materials, the agricultural sector had become a serious motor for economic growth in Argentina. Alongside the rising prices came rising demand; by taking advantage of the considerable rise in demand from traditional buyers and new actors in Asia, exporters developed a strong production capacity capable of satisfying large markets.

However, attempts to tax this success led to one of the most serious threats to the Kirchner-led dominance of post-2001 Argentine politics. The months-long incident began on March 11, 2008 when Martin Lousteau, then the Minister of Economy and Production, proposed a new tax regime that raised the fixed agricultural export tax to a variable rate between 35 percent to 44 percent. In addition, this rate was meant to change alongside shifts in the price of commodities such as soybeans, wheat, etc. the tax was estimated to have the potential to generate about $2.3 billion (USD) per year for the government.1. Adding insult to injury, Fernández introduced the increased tax rates without consulting Congress. What followed was months of protests and fierce lobbying from the agricultural sector alongside a general feeling of miscalculation and unfairness on the part of the Fernández government.

Several observers noted that the Fernández government viewed the taxes as an opportunity to redistribute the wealth that was created during the agricultural bonanza years.2 the easiest target was the farming sector, and the revenue potential to fund activities to entrench Fernández’s party positions was clear. Argentine farmers were unified in their opposition, launching crippling strikes that blocked foodstuffs from arriving to the nation’s principal cities and mounting roadblocks around the most important trade routes in Argentina.

Indeed, these were not just protests reacting to marginally higher taxation. under the Fernández government, income tax is levied on top of the export taxes, meaning that nearly 44 percent of the soy revenue would have been siphoned off by the state. the farming sector claimed that the cultivation, harvesting and transportation processes take about half of their revenues; only six cents on the peso are returned in profits to farmers. this tax would drastically change the economics of opening new fields in Argentina’s vast empty plains to farming and would put constraints on the resilience of farmers against changes in world prices and the specter of a bad crop.

In a stunning turn of events Fernández’s vice president Juan Cobos cast an emotional deciding vote and the Senate voted 37 to 36 to reject the system of floating-rate taxes. When asked why he voted the way he did, Cobos said ‘’I agree with the distribution of wealth,’’ but ‘’I also know that one has to see a reasonable profit. To redistribute wealth, one has to create it.”3

Carlos Malamud, chief Argentine researcher at the Real Instituto Elcano in Spain, believes that the farm levies represent “the only recent political crisis in Argentina that is not the direct result of a serious economic situation. It is a political crisis that has led to a deterioration of the economic situation.”4

In addition, the crisis has started to dent Argentina’s reemerging image as a credible actor for international investors and financial markets. Martin Simonetta, executive director of the nonprofit civil-society promoting Atlas foundation, argued that “Argentina does not really exist abroad...and has no ‘capacity to damage’ other economies. It is merely a country that is losing a great opportunity to jump on the train of growth fueled by global commodity prices. The government’s voraciousness since 2001 has led to abusively high taxes that have paid for the tripling of public spending.”5

But those close to the government find this an overly simplistic explanation. According to Sebastián Welisiejko, who works directly with the Fernández government as an economist, taxing the agrarian sector was not solely for political reasons to upend a powerful sector. The 35 percent tax on soy exports represented an effective and cheap way of capturing lots of revenue for the Peronists. In a society where it is difficult to collect taxes, this tax is very efficient while being cognizant of international demand and prices. Welisiejko continues, “It is necessary to abut the level of spending the government had budgeted.”6 nevertheless, even if the motivation was principally economic, the move is also a power play—taxing a sector that is politically powerful and confrontational.

Representative Facundo Di Filippo, a legislator in the Buenos Aires City legislature for ARI (Afirmación para una República Igualitaria) of the Coalición Cívica sees this as a positive sign of political pluralism in Argentina’s troubled democratic process. He maintains that despite a large presence of agrodiputados (representatives that are heavily swayed by agribusinesses) in Congress, the industry was not successful in reducing the export taxes. To representative Di Filippo, the failure of the Fernández administration to push through increased retenciones (export taxes) and the failure of the agrodiputados to negotiate further reductions showed that there is not one unified rural sector.7 It proved that there are strong divergent interests—between multinational distributors, large national producers, small and medium-sized farms, and the rural working class—and a multiplicity of social actors involved in Argentinean agriculture.

Unexpectedly, Fernández paid a huge political price for pushing the policy, and the powerful agricultural sector found support in unanticipated places. This was exceptional given the political environment created under the Kirchners. Instead of cheering on the increased revenue for the state, many people who were discontent with the government for other reasons were drawn into the dispute. A strange marriage developed between left-wing protest movements and the entrenched right-wing agricultural sector of society (admittedly with some of the urban activity paid for handsomely by the wealthy rural courtiers), and the economic rationale behind the taxes quickly lost credibility. What became important was the unification behind an anti-Kirchner agenda, even if neither side had equal outcomes in mind. Although retaining the all-too-common features of character assassination and a divorce of pragmatism from collective action, the episode provoked a twist in the traditional city-country urban-agricultural antagonism that has persisted in Argentine society since the nineteenth century.

The Spending Side: The Nationalization of Private Pensions

Argentina’s first public pension system came into being relatively early on—having been created out of the 1967 merger of other independent funds. Given the different interest groups that fought for their share of state funding, the system was widely considered to encourage rent seeking and favor certain sectors. So in 1994, under the neoliberal Peronist President Carlos Menem, the state reformed the pension system and gave the public the option of: A) a public system with wage contributions and fixed benefits; B) a private system with ten managed funds (AFJPs) to choose from; or C) a straight deposit to a savings account—all at a flat rate of 11% of gross wages.

The early results were encouraging. Between the privatization and the re-nationalization, the AFJP accounts grew by an average annual 7.7 percent,8 with fees trending downwards and the portfolios (aside from government bonds) diversifying into multiple asset classes. In addition, the private system meant there was no arbitrary “pension formula,” thereby eliminating a large source of the rent seeking that plagued the erstwhile public option. According to Kristian Niemetz, a researcher at the Institute of Economic Affairs in London, the AFJP system “particularly benefited low-income earners, because in the old system, the implicit rate of return was regressive.”9

In addition, Argentines in the formal sector, particularly employers, initially viewed this move as positive because the former system had been a reliable political target for extra cash.10 old tactics included filling budget holes by fixing pensions in nominal terms during high inflationary environments. Furthermore, the private system addressed the major fundamental flaw of the previous system: government interference. Indeed skeptical Argentines, now with the ability to choose, chose not to rely on another government body, and private membership grew while the public system shrank.11

However, the transition proved imperfect. According to David Thompson, the English-Argentine director of the International House-Buenos Aires, while “it may work in fiscally stable countries, [the private system] took far too much money out of circulation for the government to stomach.”12 Plus, actors across the political spectrum began to claim that the Menem government got the deal wrong with the companies, and that the involved financial institutions made unreasonable profits on transaction charges.

It stands to reason that, in the months and years leading up to the announcement by the Fernández government to expropriate the pension system, there were rumblings of official dissatisfaction with the program. The charges against it included the lack of coverage; with a large part of the Argentine public working in the informal sector, many of the poorest Argentines were shut out of the system. Another less substantiated claim included accusations of usury and mismanagement against the financial firms—a claim belied by the funds’ performance over their lifespan.13 nonetheless, the government’s decision to announce the reform on October 21, 2008 came as a surprise to investors and pensioners who believed, perhaps naively, that the relatively positive performance of the private system put pension funds off-limits to government meddling.

Even more surprising to the private sector was the reaction in Congress. The law earned the votes of nearly 70 percent of both houses, including many prominent members of the opposition parties. The vote reflected, according to Camila Arza, a researcher at FLACSO, the “general unpopularity” of the privatized system in the political class. Some opposition politicians maintained dissent throughout. Sen. Ernesto Sanz of Mendoza, leader of the center-right UCR block in the Senate, said, “We don’t have any doubt that this is violating the right to private property. Not just for us, but for all society and the world. This is clearly confiscation.”14

The economist agreed, writing, “Many economists see the measure as a naked government grab for pensioners’ assets.”15 financial markets reflected this sentiment. In the month following the approval of the bill, the Merval Index (Argentina’s main stock exchange) fell by 27 percent, and $4 billion left the country. Even Argentines were worried by the resolution’s impact on their financial security, with 5 percent of all deposits nationwide being pulled out of banks. Also, there was serious concern that the financial muscle of the state pension scheme, which at the time of approval owned shares worth 13 percent of the Merval—would meddle in the day-to-day management of companies via board-level interference.16 other experts agree with this assessment. Claudio loser from the Inter-American Dialogue called the resolution “one of the most blatant acts of financial piracy in the country’s recent history” and warned that it “would eliminate [the individual savings model], and convert them into a pay-as-you-go system, with large funds that could be spent almost freely by the Argentine government.”17

But overall political and popular reactions were very different, invoking the longer national memory of the history of the pension system and making the cognitive distinction between rationale and procedure.18 According to representative Di Filippo, the private pension system was an “unsustainable alternative.” nevertheless, his party leader and an important national figure, Elisa Carrió, led the opposition to the pension reform as presented. Carrió felt the reform failed to incorporate amendments that restricted ANSES (the acronym of the nationalized system) from functioning as a “government pot of money:” buying sovereign bonds, funding politically-driven megaprojects and supporting crony capitalism.

Certainly, a structural reform of the current system would be a good start to making a public pension scheme equitable and sustainable, but the private system is one that most Argentines and their politicians do not want to return to. When asked to justify the stock market drop and international condemnation of the nationalization, representative Di Filippo responded, “International markets only tend to digest the political actions that benefit them even if they ignore the needs of the people. From our center-left point of view, it is in our interest to always defend popular interests.”19

In brief, there is consensus around the idea that the nationalization was the politically correct thing to do given the lack of public control of the private system and the perceived rewarding of financial engineers more than individual contributors. Nonetheless, given a politically pressured majority portfolio of domestic government debt, the profitability of the private funds was always being challenged by Argentina’s bond performance and the fact that the system coincided with Argentina’s worst economic moments. With these political stipulations, it may be possible to say that even the private funds were not far from being a publicly controlled asset.

Is it possible that the government successfully nationalized a pension system under the excuse of low performance and high fees after it created those same conditions? Indeed it is, but few people in Fernández’s own party question the political motives behind the move. Going into an election year, this discretionary power over spending could be a key actor in Fernández’s reelection campaign. Although there is widespread political support for the pension program, it is necessary to return to an earlier theme in this essay around fiscal realities versus perceptions. Among those who know the current government, there is little doubt that the nationalization will come back to haunt public finances when the administration leaves the scene.

Looking Ahead

What kind of Argentina is Cristina leaving for her successor (or herself) after the elections in 2011? Since Néstor Kirchner came into power, the government has created an economic model dependent on a bumper fiscal surplus (taking advantage of high commodity prices, high demand from Asia, and the general growth tendency of Argentina after the 2001 collapse). The situation was particularly convenient because Kirchner needed to get on better terms to renegotiate debt with the Paris club of creditors and save the necessary resources to begin making payments on the “haircut” settlement.

In the budget, however, the government has underestimated income consistently every year by manipulating the consumer price index and official inflation rates in order to later exercise discretionary power over the ‘extra’ funds for which the budget did not account. We have seen after 2008, when the fiscal surplus began to dry up and renegotiated debt payments began to come due, how the government had to come up with new ways to collect taxes and new taxes to collect while dipping into national reserves. It is becoming clear how Fernandez’s government fudges numbers in order to put more money in the coffers, boost discretionary spending, and quite possibly shrink the inflation-linked debt payments that will be due from Nestor Kirchner’s renegotiation.

According to Kirchner supporter Welisiejko, Kirchner opposition Di Filippo, and businessman Thompson, this has had important negative consequences, particularly in the level of corruption concentrated in the highest levels of government. Very few Argentines doubt that the majority of public works suffer from some corrupt diversion of funds. The Kirchners’ personal wealth gains during their presidencies (158 percent in Cristina’s first year in office alone) do not help their case.20 even with the record fiscal surpluses, the government has not made any progress on combating the strong levels of inequality throughout the country and has failed to make the necessary economic reforms to entice fiscal cooperation amongst capital holders.

With so much turmoil, so much political back-and-forth, and so little progress, one could fear that the confrontations that accompanied the soy export taxes and pension reform are not actually linked to promoting equality and combating social exclusion. The politicians and businessmen promoting the conflicts may instead be using voters (and the most marginalized ones at that) as fuel for the conflict. If this is true, the poorest individuals in a very rich society are not only excluded by the system, they are used to prop it up.

Thompson has noted in his business experience that the central government has become more efficient at collecting taxes and has modernized practices to gain more power of enforcement. For instance, they now make overflights to count livestock on land and for zoning and property tax verification. They have also become more efficient at connecting the various government agencies to share information in order to cross check on discrepancies. But, given the drastic measures the Fernández government has taken to boost government revenue, even a more efficient tax collection program may be seen as a bad thing.

Meanwhile, there is a generalized perception amongst business and entrepreneurs that there is little effective use of their money in the public sector, reflecting a deep distrust of government—at the same time government mistrusts business. Welisiejko muses about Brazil with jealousy and when pressed on this topic he said, “Brazilians are committed to their nation, and Brazilian banks are committed to reinvesting profits for national growth. In Argentina, if they make profits, they open accounts in Switzerland and Uruguay—happy to have made enough money to squirrel it away from the government’s reach.”21

Summing It Up, or Can It Sum Up?

Class antagonism, regionalist antagonism, fiscal irresponsibility, dramatic politics, and an obsession with the past: these are the characteristics of the country that fuel headlines around the world. And many of them are honest portrayals; Argentina suffers from a counterproductive and widespread antagonism that breeds mistrust and legitimizes the lack of clear choices for voters. Given steady and long-term economic woes, shrinking wages, and constant pressures for and against redistributionist politics, conflicts and antagonism are inevitable. These phenomena, however damaging, may be a natural reaction to decline.

Both Kirchner administrations have been metaphors for the conflicted state of Argentine politics. Rhetoric has replaced reason; a jealous opposition tars and feathers any substantive progress, and endogenous problems are blamed as exogenous shocks. The problem is always of someone else’s doing, but the solution is always completely Argentine. Journalists and editorialists often attack the current government for the style of governance and the hostile nature of Cristina Fernández’s rule, but they miss the point on the real negatives of her style of governing. While the Kirchner style is antagonistic, it reflects the tone and nature of Argentine politics rather than a characteristic specific to her rule. Argentina’s democracy remains a vibrant one nearly 30 years after its transition. It is stymied, however, by a Peronism that is unsure what it stands for and the lack of a credible political alternative that can take up desperately needed political, institutional, economic and social reforms. In order to battle antagonism it is necessary to satisfy politically the large number of actors that resist these types of reforms, and these interests are entrenched in every level of Argentine government.

In the case of public spending, this antagonism means that when someone benefits, someone else has to lose. It creates a natural barrier between segments of society, and a high bar for less-powerful actors. Public spending is a good manifestation of this dynamic, and the lack of balanced budgets combined with the lack of real economic progress from expanded social spending shows that its distribution is fundamentally flawed. This is why there is a clear contradiction between the progressive rhetoric Peronists use for its own political promotion and the statistical realities of what its public policies produce in society.

What Does Argentina Really Need (aside from fewer foreigners telling them what to do)?

Argentina needs, more than anything, a level of political certainty and continuity that can outlast presidents, congressional officials, and entire blocs of voters. The rules of the game ought not to be so easy to amend, even though the new rules may be productive and appropriate for the moment. These problems are often addressed in political science with a push for stronger institutions. Argentine institutions are amongst the weakest in Latin America, despite the country’s high relative levels of GDP per capita and human development. Stronger and more reliable institutions would be the first step on a very long road. But this also can be addressed by a more constructive application of Argentine’s long memory and obsession with its past. Namely, the problem could be ameliorated if Argentines gave more thought to whether specific politicians, parties and programs have fought for the long-term wellbeing of the country rather than voters’ immediate economic caprices. In the case of Peronists, perhaps they would be wise to pause and think whether his values are represented in modern politics or whether it is even appropriate to pursue his model anymore.

Perón institutionalized the class antagonism, personalism and populism that have existed since independence into twentieth century Argentine politics, and the results of this during his administration are clear. His influence was so reviled by his political opposition (the elite vis-à-vis the military) that after he was deposed his Partido Justicialista was banned from practice and discussion. Showing the lasting influence of the movement, the prohibitions radicalized a new generation of the same forces that brought Perón to power in the first instance. The Montoneros (a group of armed youth active in the military period after the Frondizi presidency, in the early years of Peron’s return to government, and Isabel Perón’s brief presidency), are the height of this antagonism, antagonizing and frequently murdering members of the right-wing political elite. It is no surprise, then, that the first people to be targeted for “disappearance” under the 1976–1983 military regime were these same young organizers and militants. It shows that each opposition not only finds no common grounds with their counterparts, but also resorts to extreme measures to dispose of them via prohibition, humiliation, or death. It stands to reason that both Presidents Kirchner and Fernández were children of the ideological clashes of this era.

The hard truth is that some issues may be intractable and systemic. Argentines remain skeptical of orthodox fiscal stability and political harmony. When asked about the comparative successes the Chilean economy has experienced over the past decade, Welisiejko put it this way, “Yes, but they’ve paid a large social cost in the process, and have promoted a rigid way to deal with relative stable problems. Argentina is not and cannot be like that. Honestly, I prefer this mess to that order.”22

Maybe that’s the problem.

Notes & References

  1. Wharton Universia, “Cristina Kirchner Confronts the goose that lays the golden eggs,” Universia Knowledge@Wharton, June 25, 2008, accessed December 10, 2010, http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=1541&language=english
  2. Eduardo Fracchia, “Soja, y distribución de ingresos,” Perfil, March 29, 2008, http://www.diarioperfil.com.ar/ edimp/0246/articulo.php?art=6436&ed=0246.
  3. Alexei Barrionuevo, “Rebuffing President, Argentina’s Senate Votes Against Farm Export Tax Increases,” The New York Times, July 18, 2008. 
  4. Universia, “Cristina Kirchner Confronts the Goose.” 
  5. Ibid.
  6. Sebastian Welisiejko, interview with author, January 30, 2011. 
  7. Facundo Di Filippo, interview with author, January 26, 2011.
  8. Kristian Niemetz, La Nacionalización De Los Fondos De Jubilación Privados En Argentina (Washington, DC: the Cato Institute, April 15, 2009), accessed January 10, 2011, http://www.elcato.org/pdf_files/ens-2009-04-15.pdf, 1. 
  9. Ibid., 3. 
  10. Di Filippo, interview.
  11. Niemetz, La Nacionalización. 
  12. David Thompson, interview with author, January 30, 2011. 
  13. Welisiejko, interview. 
  14. “Argentina Moves to Nationalise Pension Funds,” Financial Times, November 21, 2008, accessed December 1, 2010, http://www.ft.com/cms/s/0/d428857e-b77c-11dd-8e01-0000779fd18c.html.
  15. “Harvesting Pensions: A Pre-Election Boost for Cristina,” The Economist, November 27, 2008, accessed December 1, 2010, http://www.economist.com/node/12685478?story_id=12685478
  16. Ibid.
  17. Joshua Partlow and Brian Byrnes, “Argentina to Nationalize Pension Funds Senate Approves Plan Aimed at Protecting Savings from Global Crisis,” The Washington Post, November 21, 2008, accessed December 1, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2008/11/20/ Ar2008112003812.html
  18. Camila Arza, e-mail correspondence with author, January 17, 2011. 
  19. Di Filippo, interview. 
  20. Huga Alconada Mon, “Avanza la causa por la fortuna de los Kirchner,” La Nacion, November 9, 2009, accessed December 1, 2010, http://www.lanacion.com.ar/nota.asp?nota_id=1197064
  21. Welisiejko, interview. 
  22. Ibid.
James Stranko is an M.A. candidate at the Washington, DC campus of SAIS. He graduated from Columbia University with a degree in Political Science and Latin American Studies. Before coming to SAIS, Stranko worked in London and New York in management consulting and public relations before being awarded a Fulbright Binational Business Fellowship in 2009 to work with a leading social entrepreneurship NGO in Mexico City.