In Argentina's case, they call it "Peronism" - a populist, welfare-state, socialist approach that started 70 years ago and today, in a radicalized version, remains the main inspiration of the present socialist government.
What makes Argentina such wonderful example?
Mainly the fact that Argentina had everything to be one of the richest countries in the world.
A relatively homogenous and industrious population coming from a wide European basis, amazing natural resources, wide spaces allowing for cheap, large-scale agricultural production, etc..
In fact, between the beginning of the XX century and the start of peronism, around 1945, it really was one of the richest, most developed, and fastest growing countries in the world!
In short:
- By 1900 Argentina was the 8th richest country in the world (on a per-capita basis).
- By 1929 Argentina was the 4th richest country in the world (on a per-capita basis).
- By the end of WWII (1945) Argentina was arguably the richest large county in the world (!!!) in a per-capita basis (or the second, behind the USA, depending on the exact metrics used).
That was the moment Peronism hit the country. Argentina's downfall started, and was quite fast (we can measure it in a single lifetime, about 70 years).
The fact that Argentina's recent history is so interesting and could teach so much (if people were ready to learn from the mistakes of the others) means there is a vast literature about this subject, from books (a good example: "Argentina: An Economic Chronicle. How One of the Richest Countries in the World Lost Its Wealth") to a vast number of online articles.
A Google search with the 3 words "Argentina" "economic" "downfall" finds about half a million entries (!!!), and good articles about the subject can easily be counted in thousands!
Some examples:
- Argentina's collapse - A decline without parallel
(But, really, there are literally thousands of articles about it - although, obviously, some are better than others.)
Anyway, the funniest part of the story is the full blown economic destruction of the country in the last 15 years, at the capable hands of the Kirshner couple (first Nestor, then Cristina).
Cristina, in particular, seems bent on terminal destruction of the country, at a level close to Chavez/Maduro in Venezuela, Ceausescu in Romania, or Mugabe in Zimbabwe.
Anyway, in Argentina things keep evolving in line with what could be expected.
State spending grows to fulfil the populist promises that (still) win elections; economy gets worse and worse; tax collection get more and more insufficient to cover state spending; state "regulation” (including administrative price fixing, export limitations, extreme currency controls, etc.) increases, to try to prevent reality from happening; the only "solution" is printing more and more fiat money, ending in hyperinflation, ruin, and chaos...
Following regularly the news of these countries is very interesting. At present there are several cases of extreme socialist approaches in Latin America, but I particularly like to follow the evolution of Venezuela and Argentina.
What is happening there is a good lesson to prepare us all for the future of our own countries, and of our civilization in general.
Following regularly the news of these countries is very interesting. At present there are several cases of extreme socialist approaches in Latin America, but I particularly like to follow the evolution of Venezuela and Argentina.
What is happening there is a good lesson to prepare us all for the future of our own countries, and of our civilization in general.
In this spirit, here are a couple of recent articles about the new, improved, Price Controls 2.0 in Argentina:
"By the end of WWII (1945) Argentina was arguably the richest large county in the world (!!!)" - Most remarkable, really!!
ReplyDeleteIndeed.
DeleteI based that comment on this: "Argentina was arguably the second-richest nation on the planet, and possibly the first, when one realizes that it had no war debt like the United States" (from the article "How to Destroy a Rich Country", linked in the post).
Clearly, it is not simply based on GDP per capita, and it includes at least the debt of the countries.
By then (the end of WWII) Argentina was not at the absolute top, but was near the top in GDP per capita. Also, it had spent almost nothing in WWII (quite the opposite, it benefited a lot from it, especially in terms of agricultural exports), and had basically cleaned up the previous international debt.
(And, obviously, most of the large countries in the world had been severely affected by fighting and spending in the war...)
If I recall correctly in the 60s per capita GDP of Argentina was about the some than in Canada!
ReplyDeleteAnd there's a lot of people thinking that political systems are somehow neutral for the wealth / poverty of a nation.