Green Room

Don’t Cry For Me, America

posted at 6:45 pm on November 21, 2009 by

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. Cross-posted at: Doug Ross @ Journal.

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Comments

Coming to a USA near you.

Hawkins1701 on November 21, 2009 at 8:07 PM

Thanks Director,
When will we ever learn
when will we ever learn?

As if this has ever worked in any point in world history.
Oh, but the current slugs running the government have no idea of this and we are the poorer for it.

But, they are the smartest guys in that history and will do things much more efficiently. They’ll Make it work. /

OkieDoc on November 21, 2009 at 8:23 PM

Hey, I have an idea!

Let’s elect Barack Hussein Obama as the President of the United States, and give him a majority in both the House and Senate of Liberal Marxist Socialist Fascist Democrats…

What could go wrong…?

Oh, wait!

Seven Percent Solution on November 21, 2009 at 8:24 PM

Since we’re so much smarter than the Argentinians we should be able to do this in a lot less than 100 years. Prepare yourselves for survival. Might be better to move from the large cities for rural areas. Montana is full but I hear N. Dakota is nice.

Kissmygrits on November 21, 2009 at 8:36 PM

Getting old is hell, except for the fact that I grew up and lived in America’s Golden Age and will probably die before things collapse entirely. At least there is a chance that I will.

Meremortal on November 21, 2009 at 9:16 PM

When I tell people about Argentina, I am usually met with a blank stare. We are an uneducated populace, as our current “leadership” reflects. Need more canned goods and ammo I guess.

riverrat10k on November 21, 2009 at 10:19 PM

Oh, and nice post, by the way.

riverrat

riverrat10k on November 21, 2009 at 10:21 PM

An excellent piece! This needs to be moved to the front page. Great title too, by the way.

The old saw about those who don’t learn from history is so true. Big government programs always fail to accomplish their intended purpose, and always inflict unintended collateral damage to the citizens and to the nation’s well being.

hillbillyjim on November 21, 2009 at 10:25 PM

I don’t believe that any of this is the result of stupidity…it is flat out CORRUPTION. Not only are we in debt because of unfunded entitlements, but we literally have billions of dollars for which we cannot account. Today’s vote in the Senate just reinforced just how many of our elected officials are “on the take”. By the way, how many times have we bought Louisiana anyway? I know there was Jefferson, the Bush administration after Katrina, Nancy Pelosi to the one Republican and today Harry Reid to Landrieu.

texabama on November 21, 2009 at 11:53 PM

Nice post.

Too bad this, and other historical events, are no longer taught in high school as a requirement to graduate.

Robert17 on November 22, 2009 at 6:06 AM

One of the most interesting posts on the blog.

JC Silverberg on November 22, 2009 at 8:24 AM

Great post! Im sending the link to any democrat that I know!

becki51758 on November 22, 2009 at 8:36 AM

This is maybe one of the 10 best Greemroom posts I’ve ever read. I’ll be forwarding the link to friends, and it should definitely get some front page love.

BadgerHawk on November 22, 2009 at 10:08 AM

We have seen this coming slowly for years in America, but under this bho, team, and the dc bunch is has gone full blast since being elected. I just wonder if enough American’s will finally wake up or put their heads in the sand and let it happen here.
L

letget on November 22, 2009 at 11:40 AM

Great little documentary.

jeanie on November 22, 2009 at 12:09 PM

This is maybe one of the 10 best Greemroom posts I’ve ever read. I’ll be forwarding the link to friends, and it should definitely get some front page love.

BadgerHawk on November 22, 2009 at 10:08 AM

+ agree!

How much faster would Argentina’s economy, culture and country become a charred ash heap of it’s former self if accelerants like the cult of global warming, political correctness and a complicit media had been involved?

batterup on November 22, 2009 at 12:51 PM

Keep in mind that, like it or not the USA is a stabilizing influence in the world.

If this happens here, what happens to the rest of the world?

Chainsaw56 on November 22, 2009 at 1:25 PM

Great post!!! History repeats itself.

yoda on November 22, 2009 at 1:35 PM

How appropriate that at the bottom of this post, I am seeing an ad for SarahPAC.
Some want to call her an Evita, but she is just the opposite.

Brian1972 on November 22, 2009 at 2:49 PM

100 years? We can do it in ten or less.

BrideOfRove on November 22, 2009 at 7:01 PM

Beautiful post, Directorblue! Too many people refuse to learn from the tragedies of history. I fear the collapse of the American system will be the IMAX version of the Argentine disaster movie.

Doctor Zero on November 22, 2009 at 7:16 PM

Beautiful post, Directorblue! Too many people refuse to learn from the tragedies of history. I fear the collapse of the American system will be the IMAX version of the Argentine disaster movie.
Doctor Zero on November 22, 2009 at 7:16 PM

I would like people to start thinking of a way to avoid this fate.

There has to be a way, there is no reason that we need to repeat this same lesson from history.

What say you, Dr. Z?

Chainsaw56 on November 22, 2009 at 8:01 PM

Thanks for the history lesson.
I knew a bit about Argentina from Peron on, but prior to that, I was clueless.

LegendHasIt on November 23, 2009 at 1:54 AM

Shhh, you are exposing the Democrat plan.

bill30097 on November 23, 2009 at 10:51 PM

Very well done! Bookmarked for forwarding and additional research. Wondering what their obligations, as a % of GDP, were at the hyperinflation stage.

GnuBreed on November 25, 2009 at 4:38 AM


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