The decline of Argentina. Is USA is following the same footsteps?
In the early 20th century Argentina was one of the Richest countries in the world. While Great Britain maritime power and it far flung empire had propelled it to a dominate position amongst the worlds industrialized nations. Only the United States challenged Argentina for the position of the world second-most powerful economy.
Like the USA, Argentina was blessed with abundant agriculture, vast swaths of rich farmland with navigable rivers and and accessible port system. It level of industrialization was higher than many European Countries; railroads, automobiles and telephones were commonplace.
In 1916 Argentina elected a new president, Hipolito 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 fir low-income housing construction to stimulate the Economy. Put simply, the State assumed economic control of a vast amount of the countries operations and began assessing new payroll taxes to fund it efforts.
With an increasing flow of the funds in these entitlement programs, the government payout soon became overly generous. Before long it 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 Argentina economy however, came with the election of Juan Peron. Peron had a fascist and corporatist upbringing, he and his charismatic wife Eve, aimed their populist rhetoric at the nations rich.
This targeted group swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.
Under Peron, the size of the 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 Peron had been driven from office. However, his populist rhetoric and contempt for economic realities lived on. Argentina’s federal government continued to spend far beyond it’s means.
Hyper inflation exploded in 1989, the final stage of a process characterized by industrial protectionism, redistribution and income based on increased wages , and growing state intervention in the economy.
The Argentinian government 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 looted, the country descended into chaos.
By 1994, Argentina’s public pensions, the equivalent of social security, had imploded. The payroll tax had increased from 5% to 26%, but was not enough , in addition , Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth and additions 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. However 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 the United States Great Depression.
In 1902, Argentina was one of the worlds richest countries. Little more than a hundred years later it is poverty stricken, struggling to meet it’s debt obligations.
The Democrats party of the USA populist plans for the United States cannot possibly work, because government bankrupt everything it touches. History teaches us that Obamacare and unfunded entitlement programs will be utter, complete disasters.
The Democratic party leaders of today are guilty of more than stupidity, they are enslaving future generations to poverty and misery.
