Fwd: Calhoun Times Column 443 The Nation of Argentina

Subject: Fwd: Calhoun Times Column 443 The Nation of Argentina

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Date: Sat, Feb 9, 2013 at 7:00 AM
Subject: Calhoun Times Column 443 The Nation of Argentina

#443 The Nation of Argentina
While I was attending Georgia Tech, there was an Argentine student in the Textile School that had some classes with me.  In conversation with him one day I asked him about the government of Argentina.  He told me that it was a democracy.  I asked him about the length of the President’s term.  His answer was that the President was elected for life.  I was surprised and looked at him quite puzzled.  He then commented that the term usually lasted two or three years and someone would kill him. 
During my research for this column, I learned that only a few former presidents of Argentina were assassinated but a large majority were removed by military coup.  In 1994, the Constitution of Argentina was amended to provide for a four year term as President with one additional term possible.  The current President is a lady – President Cristina Fernandez de Kirchner.  Her husband was President Nestor Kirchner.  He preceded Cristina as president and supported her run for the presidency.  He had been diagnosed with cancer and died during her first term in office.  She is serving her second term which will expire in December of 2015.
In 1910 the economy of Great Britain was the largest in the world with second place being a race between the United States and Argentina.  International trade in Argentina was prominent with excellent ports and rivers that were easy to navigate.  They were exporting beef and wheat in large quantities.  They had railroads to get their products to the ports.
In 1916 while the economy was still very good the country elected Hipolito Irigoyen as President.  His was a new political party called “The Radical Party.”  His campaign promise was that he was going to “Fundamentally Change” the nation of Argentina.  He began to move the country away from free enterprise into socialism.
One of his first actions was to provide health care to everyone in the nation.  He also provided pensions to every person who reached the age of retirement.  In order to stimulate the economy, he provided financing and subsidized the cost to build better housing for the low income citizens.  He started a payroll tax to pay for these additional benefits.  President Irigoyen served for six years between 1916 and 1922.  He was elected again in 1928 and served two additional years.  By 1930 the economy was already on a severe downturn with the amount being paid out not being covered by the amount of taxes coming in due to the continuing increase of the entitlements being supplied by the government.
In the next 16 years there were ten presidents elected or appointed in the nation of Argentina and the economy continued to get worse.  In 1946 at the end of WWII Juan Peron was elected president.  His theme in his campaign was to “Tax The Rich” and make the wealthy pay their fair share.  When taxing the very rich did not supply enough funds, the income level for being a part of the rich was lowered until it covered a good portion of the middle class.  The new income tax rate was over 500% of the original rate started by President Irigoyen.  President Peron increased the size of government substantially even though the government was operating with a substantial deficit.  Argentina has been unable to make payments on its national debt and the interest rate on their debts now exceeds 12 %.  The United States pays an interest rate on its debt in the range of 2 %.  If this rate were raised to 12 % our country would collapse in 4 or 5 years.   
President Peron’s policies made it difficult to make a profit by farming and the younger members of the operators of the family farms began to move to the city and go to work in the expanding government agencies.  Many of the family farms closed and the beef and wheat production was greatly reduced.  A country that had earlier been exporting farm products to the rest of the world could not supply food for their own country.  Meatless days became a common occurrence in Argentina.  Peron promoted and supported the labor unions that became a base of support for his presidency.
Peron instituted a Value Added Tax (National Sales Tax) on all products sold.  He taxed the value of each citizen’s assets.  He taxed the value of the sale of investment assets whether it was a profitable sale or not. 
After he was removed from office the government economy continued to decline.  The current president and her husband considered themselves Peronists and believed that his policies were proper.  In 2001, the government seized the public retirement funds and put them into the national treasury to help pay the government’s debts.  They left an IOU from the government for the value of the funds.  In 2002, Argentina experienced an economic period equal to the Great Depression in the USA.
In recent years, Argentina printed billions of dollars worth of their currency and used it to pay the debts of the government.  This caused an international lose of confidence in their currency and in one year they had over 3000 percent inflation.  The price of every product was changing on a daily basis.
President Irigoyen promised in 1916 that he would fundamentally change Argentina.  In a hundred years it went from the world’s second or third most successful economy to one of the worst in the world.  It sure is good to be in America and know that nothing like this could happen here.  Our government would never follow any of the policies that were used in Argentina.  Would they?   


Anonymous said...

By 1930 the economy was already on a severe downturn

Hey, you know who else's economies weren't so hot in 1930? Every other country on earth. Worldwide Depression tends to do that.

Wikipedia says they were doing quite well until the stagflation of the '70s. Prior to that, "from 1932 to 1974, Argentina's economy grew almost fivefold (or 3.8% in annual terms)," and "it led to the development of the largest proportional middle class (40% of the population by the 1960s) in Latin America as well as the region's highest-paid, most unionized working class."

So the reasons Argentina's economy collapsed were the same as the US's malaise: deficit spending during a period of weak trade and price shocks.

Oh, and that "Great Depression" in 2002? That was after a decade of deregulation, privatization, and monkeying with money policy. Perhaps the author should have written this a decade ago to warn us about the impending mortgage crisis.

gruaud said...

Right off the bat, there is no way Argentina's economy was 2nd-3rd best in the world in 1910.

GDP 1913
UK 840,612
US 517,383
China 242,431
Germany 237,332
Argentina 29,522

So one can only conclude you researched not to lay out facts, but instead with an eye to pushing an agenda. In this case, that corporations should dictate what is best for corporations, rather than a centralized government doing what is conceivably the best for the nation as a whole.

Try to understand that if a centralized government is corrupted for the benefit of those in power, that doesn't mean that all centralized governments are bad. And maybe it's possible that a nation that privatizes everything is successful. But I've yet to see any evidence of that.

Grade: D+

Anonymous said...

What a great story to illustrate the pitfalls of Socialism! If only it were true. It is a sad fact that the right wing can only prop up their ideology with lies and partial truths that come from "research" via right wing sources such as The Heritage Foundation and Conservapedia. Merely living in the real world for the past 30 years provides ample evidence that their economic ideas have failed us miserably.

Sun Goog said...

Argentina 20 ETF [ARGT] delivers as per the performance of the FTSE Argentina 20 Index. The underlying benchmark tracks the twenty most traded and large cap equity from various sectors of the Argentine economy and is a fair indicator of its fiscal health. The pure play Argentine fund ARGT covers the Materials and the Consumer Staple Industry quiet aggressively and vest a close to 60% of its assets in them.

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