IS THE USA FOLLOWING THE LEAD OF ARGENTINA? John Hanson Published 01/29/2010 - 5:00 a.m. CST
108 years ago, the British Empire was the world’s most powerful economy.The United States was Argentina’s closest challenger for second place among industrialized nations.
Today, Argentina, which was one of the richest countries in the world in 1902, is now among the poorest. It is in a desperate struggle to pay its economy killing debt.
Argentina had an abundance of rich farmland, miles of navigable rivers, and ports facilitating international trade. It was more industrialized than many European countries.
Until 1916 the existence of railroads, automobiles, and telephones proliferated.
In 1916 a political party, “The Radicals”, persuaded the electorate to elect its presidential candidate, Hipolito Irigoyen. They made their appeal to the middle class with the promise of “fundamental change”. Among the changes effected by the Irigoyen administration were mandatory health and pension insurance and government support for low-income housing construction to stimulate the economy. In effect, the government usurped economic control of a huge segment of the country’s businesses and began assessing new payroll taxes to finance its efforts.
The rapacious appetite of these entitlement programs soon exceeded the taxes levied to support them. Two factors worked against the sustainability of these programs: 1) their expansion bought votes. 2) Tax increases lost votes. Much like the United States’ Social Security and Medicare programs, they rapidly became under-funded and exploded the national debt of the country.
The election of Juan Peron heralded the death of the Argentine economy. Peron’s populist rhetoric initially attacked the rich but soon expanded to include most of the propertied middle classes, who became an enemy to be defeated and humiliated. Fostering the growth of labor unions and initiating massive programs of social spending exploded the size of government bureaucracies. Peron’s populist rhetoric and disdain of economic realities continued even after his ouster from leadership. High taxes and fiscal mismanagement took their inevitable toll as Argentina’s federal government continued to spend beyond its means.
Hyperinflation skyrocketed in 1989. It was the final stage of a process characterized by industrial protectionism, redistribution of income, and growing government intervention in the economy. The government had smashed the economy by printing money to pay off its public debts. Inflation hit 3,000%! Food riots and looting resulted in Chaos. By 1994 Argentina’s pension entitlement (the equivalent of our social security) had collapsed. An increase in the payroll tax to 26% wasn’t enough to fund it. This in spite of new revenues generated by a value-added tax (VAT), new income taxes, a personal tax on wealth and extra revenues based upon the sale of public enterprises. These moves crushed the private sector, further weakening the economy.
A government-controlled program to save seniors’ pensions was attempted, but by 2001 those funds had also been raided by the government and “replaced” by defaulted government bonds. By 2002, government economic mismanagement had created a crisis as severe as America’s Great depression.
Argentina got a head start down the path to economic ruin but the United States is fast catching up. Our presidents and Congresses have all been steering our ship of state. We cannot blame it on any one president or Congress. Our current failing State of the Union did not occur over night although our current president and Congress seem to be accelerating us as never before toward the shoals of economic ruin. They are in a real hurry to control about 17% of the economy under the guise of reforming health care. Damn transparency, bi-partisanship, our bankrupt treasury, the will of the people, and even the Constitution…full speed ahead.
History teaches that our government bankrupts every program it operates.
Our government established Social Security in 1935. After 75 years they still haven’t got it right and it is broken.
Fannie Mae was established in 1938. After 72 years it still doesn’t work and it is broken.
The War on Poverty has transferred $1 trillion of our money every one of the last 46 years to “the poor” and they only demand more.
Medicare and Medicaid started in 1965. After 45 years it still doesn’t work and it is broken.
Freddie Mac started in 1970. 40 years. Doesn’t work. Broke.
The Department of Energy was started in 1977 to lessen our dependence on foreign oil. It has swelled to 16,000 employees with an annual budget of $24 billion and it is a colossal failure. After 40 years we import more oil than ever before.
Our government has failed with every government service it has shoved down our throats while overspending our tax dollars. Now they have the audacity to want us to believe they can be trusted with a government mandated health care system. It is time for us to tell our government to shove their current health care system reform where the “sun doesn’t shine”! Demand accountability of your president and congress and use your vote next fall to help avoid enslaving future generations to poverty and misery.
This is CABL.com posting #294007. Tiny Link: cabl.co/mboEd
