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. Argentina 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. Hipolito Irigoyen had formed a party called “The Radicals,” under a banner of “fundamental change,” with an appeal to the lower and middle class. (sound familiar?) Among Irgoyen’s changes, were 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 income from taxes. The un-balanced budget can be likened to America’s Social Security and Medicare. Social Security has been going on since 1933, and Medicare since 1965. Both are in the red, but a nation’s decapitation takes time with just a couple of programs, such as Argentina had for decades.
Juan Domingo Peron, was born in 1895, and was probably illegitimate. He was raised a Catholic, and in 1929 married his first wife who died of cancer. In 1938, Peron was sent to Italy to observe the fascist Mussolini’s government, which greatly appealed to him. Becoming a colonel in the army in 1943, he helped with a coup d’ etat, which overthrew a conservative government. Socialists then took over Argentina, driving another nail in its coffin. Peron married Evita in 1946, the same year he took office as president, having run on the Labor Party. He and his new wife, aimed their socialistic, populist rhetoric at the nation’s poor and middle classes.
Under Peron, the size of government bureaucracies exploded through massive programs of social spending, and encouraging the growth of labor unions. Peron instructed his economic advisors to develop a ’five year plan,’ aimed at increasing worker’s pay, achieving full employment, stimulating industrial growth, and greatly improving transportation, communication, energy, and social infrastructure. Huge government, in other words. Sound familiar? In his first two years in office, he nationalized the banks, railroads, universities, merchant marine, public utilities, and public transport. Inefficiency and waste ruled. High taxes and economic mismanagement took their inevitable toll, even after Peron had been driven from office, due to inflation, legalizing prostitution and harboring Nazi criminals. Socialism and socialistic handouts simply cannot be stopped, once begun.
Even after he left office, Argentina’s spending continued, as it had become a habit, and a politician couldn’t get elected unless he promised more and more from the public treasury. Hyper-inflation exploded in 1989, as the final stage of the previous spending, increases in government, waste, huge, inefficient military, and all the things which now imitate the current American economy. Printing money to pay off public debts, had crushed the economy. Inflation hit 3,000%, reminiscent of the Weimar Republic in 1924. Food riots were rampant, stores looted, and Argentina descended into chaos. By 1994, public pensions had imploded, and the payroll tax had quintupled. It wasn’t enough, even with the value added tax which had been added. New income taxes, taxes on wealth, and taxes on everything, crushed the private sector. Government controlled “privatization” was, I can only assume was similar the U.S. Government’s majority ownership of GM, GMAC, and AIG. At any rate, it didn’t work, and by 2002, Argentina had their own “Great Depression,” with currency becoming worthless.
We in America, are in the middle stages of what Argentina did to itself, and other failed nations did to themselves. Why is it that so many people think government creates wealth, and is responsible for prosperity? The exact opposite is the case. The more government, the less prosperity and freedom there is. I will continue with the absolutely unavoidable results of the current madness on Thursday.
P.S. I have no idea of whether Newt reads my columns or not, but yesterday, on Bill O’Rielly’s show, Newt mentioned that the ’crotch bomber’ had plans to cause damage on land as well as destroying the plane. Five days after I wrote so, and no one else has mentioned this. I’ll try another. Is Obama so anxious to get rid of Gitmo, because he plans on turning the land and base over to Castro, for some strange reason? Anyone in the media going to pick up this observation?