Saturday, November 21, 2009

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 amidst a drought.

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.

References: A tear for Argentina's pension funds; Inflation in Argentina; The United States of Argentina. Linked by: Dan Riehl. Thanks!


Kevin said...

Awesome !!!

Anonymous said...

Excellent research and commentary. Your photos added quite a bit. Sadly, I doubt that any American statists will ever read this. The truth hurts...

mrkwong said...

I think it's probably overstatement to claim Argentina was the second- or third-most-powerful economy, certainly it did not have the industrial base of post-Bismarck Germany.

Still, it was well up the list.

Claris said...

It's a shame that we in this country can't see how history does indeed repeat itself. Why can't we learn from the collapse of similar economies in other countries? Why? Because Americans (or many people in America) think we're "different" and "untouchable." Unfortunately, the only way we will find out that's not so is to experience it for ourselves. By the time we find out, we will be in the same position. Very sad for America!

BOBBY said...


Unknown said...

Today's Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery.

Stupidity has nothing to do with the state of our nation right now. This isn't a misguided accident...this is a controlled, intelligent, and malicious plague we're suffering from, and we need to vote ourselves out of this hole before the only way out left is a revolution.

Anonymous said...

If your vote could change things it would be illegal !

Anonymous said...

Are you forgetting 8 years of blundering the last idiot left with us?
Instead of the middle class has shrunk more than even the Reagan years.
The first TARP and bailout for banks was an unaccountable blank check and corporate welfare galore, shifting the tax burden to my great great grand children. Etc. Etc.

Anonymous said...

I have a problem with those who scream "Bush dd it" So spoon fed. What happened to Argentina could happen here. Obama is following his far left education and the orders of the Democratic elete. This is no accident. There are those which make millions for each cent our doller looses. They bid against the american currency and then manipulate the economy.

Anonymous said...

Pretty interesting place you've got here. Thank you for it. I like such topics and everything that is connected to them. I would like to read a bit more on that blog soon.

Best wishes
Jeph Normic

innocent_bystander said...

Is it any wonder the Bush Administration left a 1.3 trillion dollar debt after paying out for two wars and reducing taxes at the same time. And now it is all Obama's fault can you imagine the panodemonium if GM, Chrysler and the banks were allowed to fail and the subsequent loss of jobs that would have followed? What was done was the only alternative. you have been living way beyond your means for far too long Wake up America you can't keep buying imports and sending your money and manufacturing plants overseas and still live the good life, the chickens have come home to roost.

tom swift said...

Good-looking boat. Garibaldi class battle cruiser, I'd guess. Probably the General Pueyrredón, launched in 1898.

One of her sisters, the Cristobal Colón, was bought by Spain; she was caught and destroyed at the Battle of Santiago by a battleship, the US Navy's magnificent Oregon.

Another two sisters, the Nisshin and the Kasuga, served with the Imperial Japanese Navy and survived the Battle of Tsushima.

Yes, those were the days.

Anonymous said...

So, innocent-bystander would have us think that just because the previous presidency was a statist, overspending boondoggle, that we should not notice or mind that the current presidency is 10 times worse, pouring gasoline on the fire to put it out? (Please re-read the original article above to determine the inevitable result)

chris Edwards said...

Yes blaming Bush is dumb, he was stopped by the dems from fixing the MAc and MAy sillyness, sure he was a poor conservative but so much better than now. Also yes to this being the plan, look at the UK, I ran away last year, to Canada, socialism is just a way of enslaving us, nothing more.

Unknown said...

Another interesting history is that of Chile. It elected socialist President Salvador Allende in 1970. The usual problems of socialism then occurred, but after 3 years a military coup took radical action. Salvador Allende committed suicide and the socialists that did not flee or find some way to hide were rounded up and killed. Free Market reforms were implemented and Chile is in much better shape today. Chile should be an object lesson to American socialists pushing CommieCare. This is what can happen to a free people if you try and push them where they don't want to go.

Anonymous said...

Oh give me a friggin' break.

The greatest redistribution of wealth UPWARDS in America's history has already happened during the Bush years through 2008...... and thanks to offshoring of jobs and industry we practically no longer have a middle class (unlike CHINA, who now DOES). Look around you!!!

And now you want to say any kind of effort on behalf of the government to help actual real people is condemning us to 3rd world ruin?

HELLO!??? We are already on the fast-track to ruin!!! IF the government is actually able to surmount the incredible powers of big business money and special interest who rule Wash D.C. and actually DO something for the common people-- such as non-for-profit healthcare, I will be amazed.

If only Americans had the courage of the French, we would throw down our silly corporate-issued TeaBags and send all these aristocrats who trashed our country to the guillotine like they deserve.

You can run the cable media and outsource my job, but not my voice.


thor said...

At 12:24 AM , Anonymous said...
"Oh give me a friggin' break....
If only Americans had the courage of the French we would throw down our silly corporate-issued TeaBags and send all these aristocrats who trashed our country to the guillotine like they deserve.

Please tell me that there's someone out there that thinks this is funny?

"the courage of the French"...

The country that surrendered to the mob in an orgy of violence that could only be ended by one of history's most brutal dictators?

The country that surrendered to the nazis after only 6 weeks, and then helped them round up jews to slaughter?

The country that surrendered 50,000troops at Dien Bien Phu?


Great revisionist history! Too funny!

Unknown said...

The French soldiers were brave under Napoleon, and during every conflict thereafter--even WWII, French military losses were 217,600 in these 6 weeks.
Troops manning the Maginot fortifications surrendered several weeks after the armistice of June 22.
You would be correct in saying the leadership was consistently worse than most but in good company nonetheless.

Anonymous said...

This is a completely incorrect analysis of the history of Argentina. Suggesting that the economic collapse and problems in Argentina came about as a result of Yrigoyen's policies is just plain myopic. I would look at the neo-liberal shock program Carlos Menem put in as a key factor.

To gloss over the history like you have done is completely idiotic.

Eric NotMyTribe said...

"Put simply" is the recurring motif in your talking points. How true.

When you linked a purported US Social Security insolvency, you showed your conservative leaning.

Murf the Surf said...

Murf the Surf
George Bush is my hero. Finally someone who had the guts to say to the ARABS, Enough is enough. Unfortunetly his stupid advisors who induced him to fly onto that carrier betrayed him. And the real causers of our current economic dilema Barney Frank and Chris Dodd go scott free. Thanks to the betrayal by those dierecting the media

axon said...

This is Chicken Little alarm-ism at it's best. The US is not Argentina and never will be; we're stronger than that. Socialism? Please. Obama's no more a Socialist than any us here. A bit naive, yes. He'll probably be gone after this term so you can all take your tinfoil hats off and breathe.

Anonymous said...

Well, if all that money has been concentrated in the "elite", it should be easy to retrieve. Let's have a transfer of wealth tax, for anyone worth over 10 million. They liquidate, we get it. Let's cap income at say, 5 million a year and tax 90% of it above that like back in the good old days under Truman, Eisenhower, Kennedy. (It was then 70% till Reagan).
We can use that money to bring those Chinese sweatshops back to the U.S. where they were until WWII. And let's get rid of those Toyota, Honda, Nissa, Nissan, Mercedes and BMW factories too. We could just put the 100,000 Americans that work there and the 500,000 at their suppliers on welfare.

Tom in NH said...

Over 80% of the US national debt was run up under JUST the last 3 Republican presidents!

It was a deliberate strategy, adopted under Reagan, to cause a budget crisis so Republicans could present privatizing Social Security and Medicare as the only option!
With the near destruction of the US economy and financial system 2 years ago, they are well on their way to accomplshing their goal is putting all that money into the hands of US bankers and Wall St.!@

MC said...

Ha,ha, ha.
Should be a joke, isn´t it body?
Do you know how much rich people were in Argentine in 1910? How much poor inmigrant european workers were actually free and rich and how much of original people were murdered by 1910?
You should learn that big GDP in a country is no equal satisfied people man.
I´m afraid you are under the bad influe of "liberalism" that is supported by protestant christian moral ideology. If it´s so your mind and your soul are losed old man.
Advice: you should learn a little bit more about other nations before open your mouth (or move your fingers in this case)

Anonymous said...

"At 12:24 AM , Anonymous said...
Oh give me a friggin' break.

The greatest redistribution of wealth UPWARDS in America's history has already happened during the Bush years through 2008...... and thanks to offshoring of jobs and industry we practically no longer have a middle class (unlike CHINA, who now DOES). Look around you!!!"

My guess is you're in late 20's, early 30's, max. Those of older folks who lived the history prior to what you speak of, can recall business and heavy industry being driven out of this country in the 1960's and 70's. What drove them to seek production sites overseas? Well, labor unions, environmental extremists, onerous federal regulation (often at the behest of labor unions and environmental extremists who desired control of businesses) an increasingly stupid and incapable work force courtesy of teachers unions, oh, and don't forget the "tax-happy" Democrats who controlled the Ways and Means Committee of the House of Representatives for more than 40 years.

As much as you Leftists want to blame all the ills of humanity on G.W. Bush, Republicans, and conservatives, most of the problems can be laid squarely at the feet of Utopian Socialists who decided that they could alter human nature if they just had enough control.

Never succeeded.

Never will.

Anonymous said...

Good story but I question your use of a picture of a capsized ship as a good choice to represent "accessible port".

Anonymous said...

"During its most vigorous period, from 1880 to 1905, this expansion resulted in a 7.5-fold growth in GDP, averaging about 8% annually. One important measure of development, GDP per capita, rose from 35% of the United States average to about 80% during that period.[3] Growth then slowed considerably, though throughout the period from 1890 to 1939, the country's per capita income was similar to that of France, Germany and Canada[4] (although income in Argentina remained considerably less evenly distributed)"

Anonymous said...

Just one question: So, who is the piper?

Unknown said...

All of you that say this is Obama's fault, or this is Bush's fault.. WAKE UP! The president has very little power to enact the laws that change the way America is becoming a socialist state. Your Congressional representative and Senator have all of the power and they are all the same. More power to the government and less free will is the way that they are all voting. With every small vote that they cast, and every new level of bureaucracy, you lose your own ability to chose what is right and wrong. Bush is no different from Obama and neither of them is really any different from any of the "conservative" candidates running for the Republican primary, except for Ron Paul, who won't be elected because he doesn't vote down the party line so they ignore him.
The only solution is to vote for a new Senator and Congressman each time. Take away their power to do anything except what the Constitution allows them to. It's really up to YOU!

The Monster from Polaris said...

What does picture 11 have to do with Argentina? Whatever language the posters are, at least it isn't Spanish. It looks like Icelandic.

Anonymous said...

Tom are you sure that is not an Esmerelda class cruiser?

Anonymous said...

Your post, while interesting and quite well-illustrated, suffers from one serious flaw. The basic premise, that Argentina was one of the most prosperous nations in the world in 1900, is incorrect. In terms of GDP per capita in 1900, the United States ranked third, Argentina was #12, with GDP per capita of about 2/3rds the US. While Argentina has fallen far since then, it's interesting to consider the countries near the top of that list that are still, depite suffering directly from two world wars, still powerful economies: Belgium, the Netherlands, Switzerland, Germany, Austria, Canada, Sweden, and the United Kingdom - ALL of which have some form of socialized health care, all of whom tax their top earners more than the US.

Anonymous said...

Interesting, I did not know all this. I know my daughter is being taught that all the ills of Central and South America were caused solely and completely by colonialism and the US. So history is being rewritten daily whenever socialism fails. Does she go to school at Columbia, Berkeley? No, University of Wyoming! Heaven help us.

Anonymous said...

Wow, some real moonbat commenters here with, "The statist I didn't like did this thing that ruined us which [somehow] excuses the statist I do like from doing the same thing!"

Think, people.... Think. You're still in the forest...

MPH said...

Tom in NH...

Needs to learn basic math. But more importantly, he needs to learn how the federal government works.

First, the math. 80% of the debt was run up by the last 3 Republican Presidents? Check out and you'll find that during the Obama administration the debt was run up by $6T. During the W. Bush Administration (2 terms) it was run up $6T. Clinton, $1.4T, H.W. Bush 1.4 T, Reagan (2 terms) $1.8. The current debt is $17T. 80% of 17T is $13.6T. So during the Bush 1 & 2, and Reagan administrations, a total of 5 terms, the debt was increased by about $9.3T, which is actually 55%. Of course these are all raw numbers, unadjusted for inflation. So over 5 terms, 20 years, the last 3 Republican Presidents have spent funds borrowed by Congress to the tune of 55% of our current total debt. Of course, in 1 term, Obama has spent 35% of our debt's borrowed money. One thing to keep in mind, that by using raw dollars, more recent Presidents will always look worse than past Presidents. For instance, Carter's $288B, after adjustment for inflation to 2014, works out to about $1T. But since the debt is paid back without adjustment for inflation, inflation is good for the government and bad for our creditors (because the debt gets paid back with dollars that are worth less than the dollars that were lent).

But the important thing, how our government works, has already been mentioned by someone else, although I doubt Tom recognized it as important. The President does not appropriate funds. Congress does. If Congress doesn't appropriate funds, the President can't spend them. If Congress does appropriate funds, the President MUST spend them. This was decided by the Supreme court during the Nixon administration, when he would try to get around the lack of a line item veto by just not "writing the check". The court stated that the appropriations and spending power resides with the Congress, and the President can only spend what Congress appropriates, and must spend it on what Congress wanted it spent on.

So if you want to blame someone in the Federal government for spending more than they took in, you have to blame Congress. Unless you want to continue to display your lack of understanding of how the federal government works. I don't blame Tom of this lack of understanding. He's probably the victim of government schools.

Anonymous said...

If congress controls the purse strings then tell me how Obama is able to spend so much money on his pet projects. A billion here, a billion there, and after a while it adds up. Your idea of a tripartite government is going the way of the dodo bird. We now have an Imperial presidency, a lapdog Judicial system, and a blank-check-writing Legislature. You need to wake up.