No más: The Coming Argentinian Meltdown
In Greek mythology, the adhesive adjoining feathers to the wooden frame of Icarus's wings melted away when the young man flew too close to the sun, causing him to plummet from the sky. It seems Argentina is poised to suffer the same fate, differing from Daedalus's headstrong son in that the government's penchant for economic interventionism will undermine a high-flying recovery and scorch other South American countries along with it. [FULL ARTICLE]
Comments (6)
California redeux.
Published: May 21, 2004 11:30 AM
I found this article and the one about the Argentine financial crisis fascinating. Having survived (and I mean that) two political science classes about 20th century Latin America at my university this past year, it seems to me that the consensus among academics who study Latin America is that the state is the only solution to all of the region's pressing economic and social problems. The message in my classes was that free markets have value, but really don't work all that well without a "strong state" to regulate them. I know the many, many, many flaws of this, but I fear most of the other students don't. Articles like this are really good for trying to spread an alternative message, and I hope they can make a dent in people's thinking about what the state is really doing for Latin America today, since what is being taught to people who study politics in the university setting is that the idea that unfettered free markets work without the wise intervention of the benevolent state is just naive. Keep the articles like these coming!
Published: May 21, 2004 1:08 PM
In reference to the following comments:
"it seems to me that the consensus among academics who study Latin America is that the state is the only solution to all of the region's pressing economic and social problems"
Chile is the prime example of the exception to the rule. This nation of 15 million has halved poverty, has one of the highest UN Human Development Index scores among emerging economies. The goverment, for a couple of decades now, has been pragmatic and pro free-market and is an active player of the global economy having FTAs with around 30 different nations. Private ingenuity and enterpreneurship are encouraged by a long standing govermental policy that is not just from the present political party in power.
Published: May 21, 2004 2:07 PM
Argentinian politicians seem incapable of coming to their senses about the long term damage that their short-sighted policies are inflicting on the Argentinian economy. An prolonged and severe energy shortage in Argentina may be unavoidable. Parts of Chile at least has the potential to generate large amounts of (expensive) wind powered electricity, while other parts of Chile has high potential for (expensive) solar PV electricity. Argentina's low natural gas prices could deplete their domestic supply in the long term, leaving Argentina to the mercy of world prices (from Bolivia). At such a time, will the Argentinian army invade Bolivia over higher natural gas prices?
As a result of Argentinian gov't meddling in the power markets, Wealthy Argentinians may opt for(expensive) off-grid generated power, produced and used on-site if they want a reliable electric power supply. The deep natural gas wells that have already run dry, would hold enough low-grade geothermal energy to heat homes and even generate electric power (lots of ocean water may need to be pumped into them). Except Kirchner's people would likely even want to exert control over such power generation.
Harry Valentine
Published: May 21, 2004 2:27 PM
"Barely two years removed from an acute financial crisis that resulted in the largest sovereign debt default in history, Argentina is experiencing a revival in commercial activity. The country posted a torrid 8.7% growth rate during 2003, the second highest figure in the world after China. Booming commodity prices, a revival in domestic consumption and an upswing in manufacturing stoked by a sharply devalued peso have prompted the resurgence."
Or then again... it MIGHT just be that the near-collapse of the economy resulted in a shift of base figure. Twenty cents is either a large, or a small sum, depending upon what you compare it with. If you're starving, an 8.7% increase in your calorific intake might SOUND good... but you'd still be starving. Or, let's put it in simple terms. Within a year of Johns Hopkins university allowing the admission of female students, no fewer than FIFTY PERCENT of the female intake had found a rich husband from within the male student fraternity. Pretty shocking behaviour, no? What doesn't spring to mind is... who did the OTHER female student marry? Because, 50% of TWO, is just ONE girl. And the first intake of female students was... two girls. Use a small base fugure, and you can get impressive (and utterly misleading) statistical results. The key is, to remember that they're also pretty meaningless - and certainly not something anyone with a brain would want to extrapolate from.
Published: May 22, 2004 9:25 AM
I think some of you on this post are giving the politicians too much credit. I mean I think you're assuming that the rich/govt/elite (they're all the same people down there) have the public's best interest at heart when they make and institute public policy. This is a false assumption. The rich in Latin America actually like the way things are down there. Who could blame them? They're rich, everybody else is poor. Pretty good deal if you can get it. The reason I say this is b/c las elitistas portenas don't like competition. With freer markets and less govt intervention, the elite would constantly have to stay on their toes to keep their high position on the ladder.
For example, my aunt who lives in BsAs told me here recently that the govt there has passed a law requiring employers to something like 100 pesos on top of the prevailing minimum wage. Well what this did was raise the cost of doing business. It hurts primarily small/med-sized businesses, but doesn't hurt the big co's at all. But most of the growth that has been occuring there was in the small biz owner sector. So basically small biz's now have to raise their prices (thus making them less competitive) or not hire that extra person or two that they were planning on. Either way, more people are hurt than helped. The only people that were helped were the fat cats. Certainly not the poor/working class. And you can't convince me that the bureaucrats didn't know this would be the result.
Pelotas....
Published: May 22, 2004 1:58 PM