Posted April 18, 2015 6:35 PM by

Weeping for Argentina: Once powerful —now socialist cesspool of poverty…


(CUSA) – Socialism breeds corruption and poverty.


Argentina has embraced the failure of modern Leftism and the victims are the Argentinians. Samuel Gregg has the story. —Ed.


There are countries which are rich and countries which are poor. And there are poor countries which are growing rich. And then there is Argentina.


This saying, attributed to the 2010 Nobel Laureate for Literature, Peru’s Mario Vargas Llosa, is perhaps the pithiest description of what many regard as the twentieth century textbook-case of economic decay.


Fifteen years into the twenty-first century there’s no indication that Argentina will change anytime soon. That’s partly because the Argentine economy’s problems mirror political and cultural dysfunctionalities that most of the nation’s elites—and many ordinary Argentines—have little interest in addressing.


The first thing I noticed while recently lecturing in Argentina was just how much conditions had deteriorated since my last visit in 2010. The center of Buenos Aires is an impressive mixture of Art Deco, Baroque, nineteenth-century Parisian, and colonial styles alongside often surprisingly tasteful modern architecture.


Amidst those same streets, there is an increased number of beggars, people befuddled by drink and drugs, prostitutes, and homeless sleeping in doorways. Once you drive a few miles away from Buenos Aires’s center, you quickly encounter shanty towns that are no-go areas for the police.


Another disparity is between the rampant inflation and general decline in living standards on the one hand, and the interminable “equality-and-social-justice” rhetoric that rules public discourse on the other.


The brutal reality is that twelve years of the combined presidencies of the late Néstor Kirchner, his wife Cristina and their leftist-populist economic policies have helped drive Argentina even further into economic decrepitude.


In 2013, Uruguay’s then-President José Mujica labeled the Argentine government’s approach to the economy as “autarchist.” Such policies have included nationalizing large industries, increasing protectionism, import-substitution measures, on-going expansions of regulation, and the establishment of currency controls.


Depending on who you talk to in Argentina, there are at least five official and unofficial exchange rates for the Argentine peso. Unsurprisingly, no one’s anxious to use the government-mandated rates. Most people opt for what’s called the “blue market.” When I queried why the word “blue” was used, I was informed: “Well, it’s a more elegant word than ‘black.’”


Then there is the endemic corruption that pervades Argentina. If you want to understand why Pope Francis hammers away at the iniquity of corruption, consider the primary economic context with which he’s familiar.


The World Economic Forum’s 2014-2015 Global Competiveness Report ranked Argentina as 139 in the world for “ethics and corruption” and 141 for “undue influence.” Corruption is widespread in the Argentine judiciary and police and among politicians, with the Kirchner family being the most prominent accused of involvement.


These are just some of the reasons why Argentina was recently ranked 169 (out of 178) on the 2015 Index of Economic Freedom. This translates into a burdensome regulatory environment for domestic businesses. On the World Bank’s 2015 Ease of Doing Business Index, Argentina ranked 124 (out of 189) with an even worse rating (146) for ease in starting a business.


Part of the playbook when things inevitably go wrong is to blame everyone else for the problems. Kirchnerism’s list of bogeymen includes hedge funds, the IMF, America, and scheming “neoliberals.” Kirchner has also tried to divert Argentines’ attention from their economic plight by seeking to increase tensions with Britain over the Falklands.


This underscores an even deeper problem in the Argentine body politic: the reluctance to concede that Argentina’s problems are largely self-inflicted.


  • No one made the Argentine electorate vote the Kirchners into power on three occasions.
  • No one outside Argentina forced the Kirchner diarchy to embrace left-populist economics.
  • No one beyond Argentina’s borders compels Argentines to engage in corruption.


As for the clientilism that infects Argentina from top to bottom, it requires two parties: those who use public office to offer favors in return for votes, and those who accept the patronage and then vote accordingly. That means millions of ordinary Argentines are complicit in practices that have poisoned the country’s economy.


So, what should the country do? More often than not, the question is prefaced by declarations that Argentina needed strong leaders to turn itself around.


The truth is that Argentina doesn’t need any more “great men.” Instead Argentina needs fundamental reforms of its political, legal, and economic institutions. Argentina’s institutions are among the weakest in the world, being ranked by the World Economic Forum report at 137 out of 144.


Rectifying this situation is more easily said than done. Institutional transformation is hard, calls for patience, and takes a long time. In modern democracies in which voters have short memories and even shorter-term horizons, this is increasingly a big ask.


It also entails acknowledgment that poverty’s long-term diminishment owes less to wealth redistribution than it does to stable, economic growth-enhancing institutions. In a continent that’s almost as obsessed with economic equality as your average Western European, this would be tantamount to an intellectual revolution.


In Argentina’s case, such changes also mean facing up to the fact that the two political figures invested with pseudo-religious status by many Argentines—Juan and Eva Perón—not only contributed significantly to the nation’s long-term decline, but urgently need de-deification.


Even today, one sees prominent pictures and well-kept memorials to the Peróns scattered throughout Argentine cities and towns. What better way for Argentina to put distance between itself and populism than by acknowledging just how much damage the Peróns inflicted—and continues to foist—upon the country?


The scale of Kirchernism’s failure has created unique conditions for disavowing this past. The real question is whether ordinary Argentines and their leaders are willing to make the mental and cultural leap as October’s elections draw closer.


“Anyone,” I was informed during my Argentine visit, “would be better than Cristina.” Argentina’s economic difficulties are such that much more is needed than just “not Cristina.”


What’s required is wholesale rejection of entire ways of thinking and practices that are buttressed by attitudes and priorities apparently hardwired into Argentina’s retrograde economic culture.


In that regard, I’m afraid, realism about Argentina, to paraphrase a former Israeli prime minister, involves belief in miracles.


With permission of the Acton Institute

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