- - Tuesday, November 5, 2019

Cry, yet again, for Argentina. The South American nation — rich in farmland, durable institutions and an educated population — has, for nearly a century, been an economic basket case. With the results of its recent presidential election, that sad tale looks set to continue.

Argentina is a useful reminder to our progressive friends that history does not go in a straight line. It moves in fits and starts, and sometimes even goes backward. Consider: At the beginning of the 20th century, Argentina was wealthy, very much so. In 1913, it was the 10th richest country in the world in terms of per capita income, richer than Canada and Australia. For many years it was wealthier even than Spain, its former colonial master. Buenos Aires, the capital, is a jewel, a testament to the monumental wealth that the Latin American nation once enjoyed.

Then came decades upon decades upon decades of decline.

Trouble began early last century, around the time of the Great Depression, when Argentina foolishly began a policy of “import substation” — abandoning its agrarian economy in hopes of industrializing, and importing rather than growing its own agricultural products. This kind of heavy-handed interventionism rarely works out, and the country’s rich farmlands — the engine of its prosperity — collapsed. Then when the Depression hammered industrial production too, Argentina was left with neither a booming farmland nor the industrial boom it had hoped to foster. Lose-lose, in other words.

Things took a turn for the worse in 1943, when Juan Peron led a coup against the sitting government and made himself minister of labor. Mr. Peron injected the state’s heavy hand into Argentina’s economy, imposing price controls and nationalizing entire industries. Argentina was no free market at this point: It was state-controlled and corporatist, with various interest groups jockeying for influence and largesse. (Peron’s wife, Eva, she who urged Argentina not to cry to the swelling strings of Andrew Lloyd Webber, ended up a global celebrity, more famous than even the president.) Chronically high spending under Peron led to chronic inflation and debt defaults. That has been the tale of the subsequent decades.



Since independence from Spain, Argentina has defaulted on its debts an astonishing eight times. Even under its most recent president, the conservative reformer Mauricio Macri, Argentina was forced to take out a loan from the International Monetary Fund (IMF) to the tune of $57 billion — the largest line of credit the body has ever extended to any country. Mr. Macri, for all his good intentions, proved unable to cut the Gordian knot of interest groups and state interventionism that is strangling his country’s economy. Argentina is once again in recession and inflation is ruinously high.

And so last week saw a return of the Peronists and their heavy hand. “Argentines on Sunday entrusted leftists to steer the nation as it reels from a deep recession, electing as president Alberto Fernandez, a longtime political operative who toiled behind the scenes most of his career,” The New York Times reported. “His victory was masterminded by former President Cristina Fernandez de Kirchner, a deeply polarizing leader who opted not to try for a comeback term as president, settling instead for the No. 2 spot on the ticket.”

Ms. Fernandez de Kircher is alleged to have been fabulously corrupt during her last rule: She is currently facing trial for one of 11 (count them) graft cases brought against her. Aside from personal venality, her record in office from 2007 to 2015 was troubling, to say the least. “She was criticized for distorting economic figures and building a patchwork of unsustainable subsidies that set the stage for the state’s insolvency when commodities prices dropped during her time in office,” The New York Times noted.

Argentina, in other words, continues to suffer from a peculiar economic disease. Unfortunately, the new administration does not have the cure.

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