Cry for Me, Argentina
In the early 20th century, Argentina was one of the richest countries in the
world. While Great Britain 's maritime power and its far-flung empire had
propelled it to a dominant position among the world's industrialized nations,
only the United States challenged Argentina for the position of the world's
second-most powerful economy.
It was blessed with abundant agriculture, vast swaths of rich farmland laced
with navigable rivers and an accessible port system. Its level of
industrialization was higher than many European countries: railroads,
automobiles and telephones were commonplace.
In 1916, a new president was elected. H ipólito Irigoyen had formed a party
called The Radicals under the banner of "fundamental change" with an appeal to
the middle class.
Among Irigoyen's changes: mandatory pension insurance, mandatory health
insurance, and support for low-income housing construction to stimulate the
economy. Put simply, the state assumed economic control of a vast swath of the
country's operations and began assessing new payroll taxes to fund its efforts.
With an increasing flow of funds into these entitlement programs, the
government's payouts soon became overly generous. Before long its outlays
surpassed the value of the taxpayers' contributions. Put simply, it quickly
became under-funded, much like the United States ' Social Security and
Medicare programs.
The death knell for the Argentine economy, however, came with the election of
Juan Perón. Perón had a fascist and corporatist upbringing; he and his
charismatic wife aimed their populist rhetoric at the nation's rich.
This targeted group "swiftly expanded to cover most of the propertied middle
classes, who became an enemy to be defeated and humiliated."
Under Perón, the size of government bureaucracies exploded through massive
programs of social spending and by encouraging the growth of labor unions.
High taxes and economic mismanagement took their inevitable toll even after
Perón had been driven from office. But his populist rhetoric and "contempt for
economic realities" lived on. Argentina's federal government continued to spend
far beyond its means.
(Below also a link re: inflation figures)
Hyperinflation exploded in 1989, the final stage of a process characterized by
"industrial protectionism, redistribution of income based on increased wages,
and growing state intervention in the economy..."
The Argentinean government's practice of printing money to pay off its public
debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar
Republic . Food riots were rampant; stores were looted; the country descended
into chaos.
And by 1994, Argentina 's public pensions -- the equivalent of Social Security
-- had imploded. The payroll tax had increased from 5% to 26%, but it wasn't
enough. In addition, Argentina had implemented a value-added tax (VAT), new
income taxes, a personal tax on wealth, and additional revenues based upon the
sale of public enterprises. These crushed the private sector, further damaging
the economy.
A government-controll ed "privatization" effort to rescue seniors' pensions was
attempted. But, by 2001, those funds had also been raided by the government,
the monies replaced by Argentina 's defaulted government bonds.
By 2002, "...government fiscal irresponsibility. .. induced a national economic
crisis as severe as America 's Great Depression."
* * *
In 1902 Argentina was one of the world's richest countries. Little more than a
hundred years later, it is poverty-stricken, struggling to meet its debt
obligations amidst a drought. (another link}
We've seen this scene before. The incumbent administration' s populist plans
can't possibly work, because government bankrupts everything it touches.
History teaches us that Obama Care and unfunded entitlement programs will most
likely be utter, complete disasters.
Those in power in our government are guilty of more than ignoring history; they
are enslaving future generations to poverty and misery. And they will be long
gone when it all implodes. They will be as cold and dead as Juan Perón when the
piper must ultimately be paid.
References: A tear for Argentina's pension funds; Inflation in Argentina; The
United States of Argentina.
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opposition, it has only one way to go, and that is down the path of
increasingly repressive measures, until it becomes a source of terror to all
its citizens and creates a country where everyone lives in fear." - Harry S.
Truman
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sacrifice for that freedom." - John F. Kennedy
"Facts are stubborn things; and whatever may be our wishes, our inclinations,
or the dictates of our passion, they cannot alter the state of facts and
evidence." - John Adams
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justice is no virtue." - Barry Goldwater
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