The United States is moving rapidly to remake itself as a "Banana Republic", along with several European countries. The economist Michael Hudson, a specialist on Wall Street, points out that this tendency can be seen in action in the State of Wisconsin. "Today, Milwaukee – Wisconsin's largest city, and once the richest in America – is ranked among the four poorest large cities in the United States."

A superficial study of the "budget repair bill" of Wisconsin, which was approved in early March of this year, and which includes the privatization of public energy generation of energy and a new system of public contracts without tender. The 37 plants that Governor Scott Walker plans to sell for liquidation produce heat and refrigeration at low cost for cities, universities, and the prisons of the state. The budget repair bill proposes to sell these goods at liquidation prices. One assumes that this policy will benefit the big contributors to the electoral campaign of the Republican Party, such as the industries of the Koch brothers. In order to cover this transfer of wealth to the wealthiest, the state will impose in perpetuity the bill for producing this energy onto the taxpayers of Wisconsin.

These are the same policies applied during the last twenty years in Panama, which have resulted in impoverishing households and eliminating productive jobs. In Chile the same thing was done from the beginning of the decade of 1980, under the Pinochet government. Menem in Argentina, Fujimori in Peru , Salinas de Gortari in Mexico, Carlos A. Pérez in Venezuela, followed this path and brought their countries to ruin. At the present time, in Latin America, many countries have corrected the errors of the past and begin to lay the foundations for greater prosperity.

The banana republics were characterized by not having national development policies and for dependence on foreign financial agents. In the case of the United States, their productive capital (including the work force, technology and finance) are "being exported". In other words, exported to China and other emerging countries with development policies. The propertied class of the United States has chosen to maintain their levels of wealth expropriating the savings of workers and reducing their incomes.

In the case of Wisconsin, the budget repair bill has among its plans the destruction of the WRS, Wisconsin’s retirement system. The WRS is one of the most stable, better financed and better administered public pension systems in the United States. Even though Wisconsin is not a heavily populated state, the WRS has accumulated 75 billion dollars in reserves. This has allowed them to pay generous pensions to retired public employees, without any need of public subsidies. The law proposed by Governor Walker is written with a language for tearing down this system: "raiding its assets to pay for further tax cuts for the rich (especially property owners), and then throwing Wall Street a meaty bone", as public employees would be shifted to private savings systems handled by money managers on commission.

In a separate proposal, Governor Walker will begin the process of privatizing the two University Campuses of the University of Wisconsin, which underwrites the doctorates of the Universities. "Ironically", notes Hudson, "the land grant universities – of which Wisconsin has long been among the best – were created by protectionist 19th-century Republicans as an alternative approach to British free-market doctrine, which dominated the prestigious and largely anglophile Ivy League universities. These universities, like their German counterparts, taught a new economic policy of state management and public enterprise that formed the basis for subsequent US and German development."

Other proposals suggest that the public forests of Wisconsin, including mineral resources and forest products will also be sold off. Hudson assures us that the initiatives of the Walker republicans is a declaration of war against workers. It is a war "against Wisconsin's Progressive Era institutions. His policy threatens to pauperise the state and deal a coup de grace to Progressive Era institutions (...) Contra John Maynard Keynes's gentle suggestion of 'euthanasia of the rentier', it is the middle class that is being euthanised". Welcome to the new banana republic.

- Marco A. Gandásegui, hijo is Professor of the University of Panama and a research associate with CELA.