Please Cry For Me, Argentina
I wonder whether you will notice any similarities in the progression of
Argentina’s downfall. . . .
As George Santayana said, “Those who refuse to learn from history are
condemned to repeat it.”
Why are we repeating it?
![](images/argentina-01.jpg)
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.
![](images/argentina-02.jpg)
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.
![](images/argentina-03.jpg)
In 1916, a new president was elected. Hipólito 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.
![](images/argentina-04.jpg)
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.
![](images/argentina-05.jpg)
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.
![](images/argentina-06.jpg)
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.
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..."
![](images/argentina-08.jpg)
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.
![](images/argentina-09.jpg)
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.
![](images/argentina-10.jpg)
A government-controlled "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.
![](images/argentina-11.jpg)
By 2002, "...government fiscal irresponsibility...induced a national
economic crisis as severe as America 's Great Depression."
![](images/argentina-12.jpg)
We've seen this movie before. The Democrats' populist plans can't
possibly work, because government bankrupts everything it touches.
History teaches us that ObamaCare and unfunded entitlement programs will
be utter, complete disasters.
Today's Democrats are guilty of more than stupidity; 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.