Sunday, March 8, 2009

The United States of Argentina

By Douglas Kohn

Those steeped in history can best predict the future. George Santayana said “He who does not understand history is condemned to repeat it.”

Argentina, at its peak was the fourth wealthiest country in the world. That’s right, Argentina, now just one of any number of Latin American economic basket cases. In the case of Argentina, the once mighty have fallen quite far.

Argentina was once considered a model of economic prosperity, prudence and management. Its people enjoyed an incredible standard of living. Out of 38 million people, 20 million are of Italian descent. Argentina was a place immigrants wanted to go, much like America. It was a land of promise and opportunity.

Of course, like the rest of the world, Argentina was crushed during the 1930s. It began to recover during World War II when renewed global economic activity pushed up prices for Argentine goods. Then came Juan Peron.

Peron began an economic program that nationalized much of Argentina’s industry. He also began massive public spending programs that were ill advised. He threw up trade barriers. All of this was done in the name of making Argentina economically independent and prosperous. What followed was a disaster.

Argentina began periods of stagflation and massive recessions. The country became a serial defaulter on its debt. This debt became so overwhelming that the government, after Peron left, was forced to raise taxes to a level that destroyed business activity. The country was ruined by populist policy, over spending and ruinous trade barriers.

The country is still the wealthiest in Latin America but is nowhere near developed status. Recent developments such as the default of 2001 and the inflation driving public spending continue to plague Argentina.

This is the history of Argentina. Why should the history of the United States be different? Under George Bush the deficit reached record levels. Under Barack Obama, it has now been doubled.

Every time a Republican points out that the deficit is too high they have the Bush years thrown in their face and rightfully so. But this is still counterproductive, especially from someone with my view who never approved of Bush’s wild spending. Obama is just the same as George Bush. They were both basically fiscal Marxists. There is no justification for Obama’s massive spending.

Now America is becoming a mix of Argentina and the Weimar Republic (interwar Germany). We owe all our debts to foreign powers and are about to undergo a trillion dollar tax increase. We have committed ourselves to insane public spending that will take a generation to pay off. Somehow, I doubt there will be a world war to end the economic pain quickly. Just because the Republicans overspent, does not make it the right thing to do when it is Democratic spending. It is childish now to say ‘Bush started it.’ It is quite obvious, but now that basically all of Bush’s policies are continuing and it is just Barack Obama doing it, that somehow makes it okay.

No comments: