Friday, September 02, 2011

Can the USA Learn From Argentina?

Admittedly, since the beginning of the 20th century when it was one of the wealthiest nations on earth Argentina has not exactly been exemplar of sound fiscal and government policies. But over the last decade, Argentina - which is light years ahead of the USA on delivering full legal equality to its LGBT citizens and pushing religion out of the civil laws - seemingly has learned from its past disasters and is moving toward prosperity by employing exactly the opposite policies now championed by the GOP demagogues and the Tea Party/Christianist mental cases. Could the USA learn from a country long considered a basket case? It would seem so - not that America ever seems to want to admit that other nations might have ideas and policies that it might be wise to emulate. An op-ed in the New York Times looks at the last decade in Argentina (Argentine President Kirchner is pictured above) and how the USA seems headed 180 degrees in the opposite direction. Here are some excerpts:

ARGENTINA may seem like one of the last countries on earth to offer lessons for dealing with economic malaise. Once the eighth-largest economy in the world, it steadily slid through the 20th century, thanks to decades of repressive dictatorships and inconsistent market experiments.

That, at least, is the Argentina people know. Since then, it has performed an economic U-turn — an achievement largely unnoticed outside Latin America, but one that President Obama and Congress should look to for inspiration.

Argentina is not without problems, but its recent economic record speaks for itself: the economy has grown by over 6 percent a year for seven of the last eight years, unemployment has been cut to under 8 percent today from over 20 percent in 2002, and the poverty level has fallen by almost half over the last decade.

Argentina has regained its prosperity partly out of dumb luck: a commodity price boom has vastly benefitted this soy, corn and wheat producer. But it has also prospered thanks to smart economic measures. The government intervened to keep the value of its currency low, which boosts local industry by making Argentina’s exports cheaper abroad while keeping foreign imports expensive. It then taxed those imports and exports, using the money to pay for a New Deal-like public works binge, increasing government spending to 25 percent of G.D.P. today from 14 percent in 2003.

It has also strengthened its social safety net: the Universal Child Allowance, started in 2009 with support from both the ruling party and the opposition, gives 1.9 million low-income families a monthly stipend of about $42 per child, which helps increase consumption.

The results have also paid off politically: President Cristina Fernández de Kirchner recently won about 50 percent of the vote in an open primary against nine other presidential candidates.

Why have Argentines embraced bigger government? In part because the preceding era showed how poorly austerity measures — the sort now being pushed by conservatives in the United States — promote growth.

Of course, Argentina is far from perfect: . . . . But Argentina still offers valuable lessons. For one thing, extreme cost-cutting during a stagnant economic period will only inhibit growth. And government spending to promote local industry, pro-job infrastructure programs and unemployment benefits does not turn a country into a kind of Soviet parody. It puts money in the pockets of average citizens, who then spend it and spur the economy.

Argentina is hardly a perfect parallel for the United States. But the stark difference between its austere policies and low growth of the late 1990s and the pro-government, high-growth 2000s offers a test case for how to get an economy moving again. Washington would do well to pay attention.


Will the USA learn anything from Argentina? I doubt it. Just like the USA's military thought it could "win" in Afghanistan even though no power has done so in 2,000 years, I suspect the USA will continue failed policies that will only make the economy worse.

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