When I write about Argentina, I normally have bad things to say.
- The world’s worst-performing economy over the past 100 years.
- A nation victimized by a version of modern monetary theory.
- An example of how big government erodes societal capital.
- A case study of bad policy causing a decline in living standards.
Today, for only the second time, I’m going to say something positive about Argentina. At least in a back-handed way.
I’m currently in Buenos Aires for a conference. And because Argentinian monetary policy is even worse than U.S. monetary policy, the dollar is very strong and I’m able to enjoy great steak dinners for about $15.
Unfortunately, my gain is Argentina’s loss.
In a column for the Wall Street Journal, Dave Seminara discusses that nation’s long-run decline.
Argentina was one of the world’s seven richest countries at the turn of the last century thanks to its agricultural abundance. “People used to say someone is as rich as an Argentine.” …But bad governance has taken a heavy toll. More than a third of Argentines live in poverty and tens of thousands of small businesses closed during the pandemic. …nearly every young person…is plotting an escape to Europe or North America. …Argentina ranks 126th in the World Bank’s ease of doing business index and 96th on Transparency International’s corruption perception index, behind developing countries like Ethiopia, Tanzania and Kosovo. A bloated public sector weighs down Latin America’s third-largest economy. Roughly half the country either works for the government or depends on it for social welfare benefits. …The left’s mistakes in Argentina…profligate social spending, high taxes, and too many restrictions on commerce—are eerily similar to the priorities of the American left.
The most important passage in the above excerpts is that “Roughly half the country either works for the government or depends on it for social welfare benefits.”
How can you save a country when such a high percentage of the population has a direct incentive to vote for more government?
But it’s possible the outlook is even worse if you compared private sector workers to government bureaucrats.
Writing for National Review, Antonella Marty is very dismayed by Argentina’s trajectory.
Argentina’s annual inflation rate now exceeds 70 percent — a 30-year high. Its monthly inflation (just under 8 percent) is comparable to the U.S.’s annual inflation… Argentina is starting to resemble Venezuela — and no country wants to resemble Venezuela. How did things get this bad? The answer is actually quite simple: a big government that loves printing money. For decades, government intervention in Argentina’s economy has ballooned to such an extent that the state basically dictates the overwhelming majority of private-sector activity either directly or indirectly. The public sector’s meddling is notorious, crowding out the entrepreneurship, innovation, and job creation that keeps markets free and healthy. While Argentina’s population exceeds 45 million people, only about six million Argentines are employed in the private sector, while 55 percent of the country’s registered workers are employed by the government.
I don’t know which factoid is more depressing. Is it that “only about six million Argentines are employed in the private sector” or is it that “55 percent of the country’s registered workers are employed by the government”?
For what it’s worth, I assume “registered workers” does not include people in the underground economy. And because taxes and red tape are such a nightmare in Argentina, a lot of economic activity has been forced into the shadows.
But that does not change the fact that the country has a far-too-heavy burden of government. Politicians have turned a rich country into a basket case. And the situation seems to get worse every year, even when supposedly right-leaning governments occasionally get elected.
P.S. There’s an interesting debate whether Woodrow Wilson or Franklin Roosevelt was the worst president in U.S. history. In Argentina, there’s no ambiguity.
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Image credit: eliasbuty | Pixabay License.
