I know a lot about Argentina, having lived there for four years in the late 1970s. I've been following the economy closely ever since, and have traveled there extensively. This article does not exaggerate in the least how much Argentina has suffered from Big Government.
I believe strongly that the US electorate does not want to follow in Argentina's footsteps, even though our current ruling class apparently does. This is going to be the central issue in the upcoming November elections. If we say "NO" to American Peronism, as I think we will, our future will brighten considerably.
When White House Chief of Staff Rahm Emanuel last year advised "never waste a good crisis," he likely was thinking ahead to President Obama's economic stimulus program and health care plan. After swelling the federal deficit by passing the stimulus at a cost of nearly $1 trillion, Democrats in Congress signed off on Obamacare, with a price tag, according to Rep. Paul Ryan, R-Wis., of $2.3 trillion in its first decade alone. With federal spending exploding at such a rate, it's no wonder that Moody's Investor Service recently warned that it would downgrade the U.S. government's credit rating if it concludes "the government was unable and/or unwilling to quickly reverse the deterioration it has incurred."HT: Glenn Reynolds
What the United States government will do in the future may be in question, but we need not look far to find past examples of countries unwilling to get their finances in order. Consider Argentina. In 1914, it was one of the wealthiest countries in the world, and its living standard exceeded that of Western Europe until the late 1950s. Then President Juan Peron squandered his nation's prosperity by introducing a host of redistributionist economic and regulatory policies, nationalizing utilities and foreign investments, and pumping up the national debt. What followed was three decades of political instability, growing dependency, and economic stagnation.
There was a brief period of privatization and booming foreign investment in what the American Enterprise Institute's Mark Falcoff called Argentina's "go go" 1990s. But that was negated by the return of political leaders espousing Peronist principles who created a downward economic spiral by breaking contracts with foreign utility companies that had invested heavily in Argentina. Today, the country has lost its international credit standing and an estimated 10 percent of the population has moved abroad to escape the stifling taxes, regulation and inefficiency. To make matters worse, President Cristina Kirchner recently attracted attention for firing the president of the country's central bank. His sin was refusing to go along with her inflationary spending policies (Argentina's inflation is 17 percent) and challenging her demand that he hand over $6.6 billion in bank reserves.
Besides sending federal spending skyrocketing, Obama has, like so many of the politicians who ruined Argentina, dramatically increased government regulation of business, nationalized major sectors of the economy, and imposed a lengthy list of tax increases. America today is no more exempt from economic reality than Argentina was in years past. Make no mistake, these actions will eventually drain the life from this nation's economic vitality, just as they did in Argentina.