Friday, August 03, 2012

Don't Cry For Me, America

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. 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.

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.

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 Argentinian 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-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.

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 in the midst of droughts and economic malaise.

We've seen this movie before. The Democrats' populist plans -- their inane class warfare arguments -- can't possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter and 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.

November is the last chance we may have to save this precious country.

References: A tear for Argentina's pension funds; Inflation in Argentina; The United States of Argentina.


Reliapundit said...

awesome post

Anonymous said...

also, take notice of the demographic change, 1920s Argentina was largely white, these days brown people are dominant


One of my favorite posts of all time! Please re-run it weekly until election day for the benefit of the insane clown posse.

Anonymous said...

To compare our current President witb Juan Peron is assinine and childish, to Compare our country with that of Argentina is assinine and childish, to compare the American people with Argentinian's is childish and assinine. The only problem with our country at this time is the stalemate going on in Washington, no one on either side right now wants to compromise or "make a deal", this is caused by the last 4 years of Republican and tea party thinking, which is we will do anything to remove our President and regain power. This has got the hackles of the Democrats to come around to the same kind of thinking, no compromise, no deals. This country is not as bad as you are making it out, true it is not the booming times of Clinton, and we all know who we can thank for that, and its not really Bush, but more Cheney's influance on Bush. Lets start to think positive, look at the bright side, Look at the Auto Industry, can you imagine what a fix we would be in if President Obama didn't handle that with Mr. RAttner, that alone saved hundreds of thousands of jobs. Times are not doom and gloom, look at the glass nearly full, rather than mostly empty. Lets hope President Obama gets reelected and the House and Senate come around and think about the country rather than themselves, and the underlying current of racism, Obamba hating, and take care of business.



You're joking, right? If not, while we're at it, let's all go ahead and hope that Iran doesn't have a nuclear bomb, that Islam really is a religion of peace and Harry Reid isn't just a lying weasel.