The Riddle Of Argentina Discussed

[ElQueso]

I was looking on the front page again for something interesting to read and saw this article posted there:

http://www.eurasiareview.com/21122014-riddle-argentina-analysis/

The conclusion of the author's article about Argentina's fall from being one of the richest, "developed" countries in 1900 to a country that is still "developing" in 2014 (although the study started with 1890, I'm not sure at which year they stopped - the article was written Dec. 1):

These combined results suggest that financial institutions and political institutions exhibited first-order effects on Argentina’s economic growth path since the 1890s. Their preponderance is justified on the basis that their effects are significant either directly or indirectly, and in both the short- and long-runs, and accounting for structural breaks. The direct growth effect of financial development is positive, but has a negative short-run effect and a larger, positive long-run effect. Hence Argentina’s fall is better explained by institutional change – informal political instability has a negative direct effect and negative short- and long-run impacts on growth, while formal political instability has equally significant and negative indirect growth effects (Campos et al. 2012 show that these results are also obtained for a much wider range of measures of political and financial institutions).

The article is looking at the "macro" level of pretty much everything here. Seems to me they are basically saying that policies of leaders like Cristina (although they don't say her specifically) messing around with things, being corrupt and trying to control the legislature and courts (again, they don't specify it in this direct a fashion, but these are included in their definitions of what they looked for within institutional impacts) has screwed up Argentina.

The funny thing is, I think that the conclusion is pretty obvious, but it's nice to see how much impact each of the different factors had on Argentina's "fall". The author apparently modeled a number of various factors (including political and economic - see the article for the general list of what they all they looked at) to come to the conclusion of when and what was the downfall of Argentina in the macro sense.

But it would to see a nice analysis of the "why" behind the "what". For example, why the political instability, why the institutional change, etc. What is it that drove Argentina to change the constitution, to waver back and forth between democracy and authoritarian governments, the implementation of protectionism and trade barriers, etc.?

Also, now that I think of it, the article doesn't mention taking into account (although it briefly mentions general strikes) things like the labor laws, which have had to have had a fairly good-sized impact on growth ability. Although also thinking about it again, I'm not sure when the current draconian (to businesses and the economy, anyway) labor laws and practices really went into effect. It may have been a more recent occurrence and not, therefore, have had anything to do with the beginning and middle of the "fall" and it's impact was just another drop in growth that was already pretty much plummeting.

Anyway, I find the article interesting.

 

[Matt84]

Thank you for the article.

It's only a riddle if you ignore what you are not supposed to look at.

But it would to see a nice analysis of the "why" behind the "what". For example, why the political instability, why the institutional change, etc. What is it that drove Argentina to change the constitution, to waver back and forth between democracy and authoritarian governments

The political instability comes from the consequences of that Liberal Oligarchy that built that prosperous 1900 Argentina. At the time when Argentina was supposed to be a Developed country it was also a non democratic one, but rather one ruled by consensus of land-owners. Their plan to industrialize their holdings and fatherland, and indeed create a country for mankind (or a section of them they felt more associated with) led to immigration which led to unstabilizing Radical ideas that were pretty unnecessary in a country that was already moving into a Bismarck-like Welfare state, at its own pace. Eventually the land-owning club allowed for actual free elections and in less than twenty years the armed forces staged the first coup d'etat which led directly to the perverse cycle of peronchonism and military rule.
Democracy, sometimes by force, in the form of Peronchonism led to the Constitution being changed. Ironically but truthfully the armed forces took control of the government every time to protect the constitution and avoid the Democratic rise of either a Fascist or Communist dictatorship. I believe they admitted to suspend the constitution, and I am certain they declared it was for a temporary time every coup and it was never a euphemism, as they would dissolve their juntas every time and hold free elections. They didn't belong to political parties or ever had the intention to create one and hold power at the same time.

I didn't even mention the part one is not supposed to look at, but just consider that under unrestrained democracy the winners are those who reproduce the most, and those have been doing that for the latter half of the 20th century have been people accustomed to a very hierarchical relationship between ruler and ruled.

 

[Matiasba]

I really laugh out loud with these articles that do not consider in their analysis the geopolitics.
You cant explain Argentina instability in politics, numerous coups, militars taking power and overthrowing democratic governments, without the main political and economic power, that is the USA, and its influence during the XXth century. Its like trying to understand Taiwan without China, or in this case also the US, or Ukraine without Russia. Its something big missing.

 

[EdRooney]

Read the article first Matías, it does at least mention international context:

A vast literature emerged offering various competing explanations for such extraordinary long-run relative economic decline (Taylor 2014). One reason that has received considerable attention is increased competition in international markets (especially from Australia, New Zealand, and Canada) during and after WWI and the concomitant decline in migration and foreign capital inflows. Finance has also received a great deal of attention with the Argentine decline linked to low savings rates and associated high population dependency rates (Taylor 1992). A key role has also been attributed to international financial integration as there may have been excessive dependence on one source of foreign capital (U.K.) with changes in global leadership (U.S.) contributing substantially to the Argentine decline (Taylor 1998).​

That said, this article is just a summary and does not provide the data it references, so who knows. It would seem odd to have any discussion about Argentine "decline" without mentioning the Marshall plan and how a country heavily dependant on commodity exports lost its main markets in the mid 1940s. I give the article an INCOMPLETE.

 

[Matiasba]

Read the article first Matías, it does at least mention international context:

A vast literature emerged offering various competing explanations for such extraordinary long-run relative economic decline (Taylor 2014). One reason that has received considerable attention is increased competition in international markets (especially from Australia, New Zealand, and Canada) during and after WWI and the concomitant decline in migration and foreign capital inflows. Finance has also received a great deal of attention with the Argentine decline linked to low savings rates and associated high population dependency rates (Taylor 1992). A key role has also been attributed to international financial integration as there may have been excessive dependence on one source of foreign capital (U.K.) with changes in global leadership (U.S.) contributing substantially to the Argentine decline (Taylor 1998).​

That said, this article is just a summary and does not provide the data it references, so who knows. It would seem odd to have any discussion about Argentine "decline" without mentioning the Marshall plan and how a country heavily dependant on commodity exports lost its main markets in the mid 1940s. I give the article an INCOMPLETE.

it is very difficult to find some text on the web, at least if its not some good historian, that mentions the US participation in Latin America (not) political stability. As well as almost nobody mentions the UK participation in the conformation of the nations, of the map, the same that happened with Africa and Asia, especially Africa. Its a world made up from western countries, google the Berlin Congress in 1875, the borders in Asian countries, all made by western powers. That, to determine countries, like the UK did with Uruguays independence, is the range of geopolitics.
I did not read a single text in english, ever, on the web or outside of it, that says something about it, about the power they have and they had, some self criticism, how they manage colonialism in XXIst century, how they created countries and put friends several times to govern them.

Ps: I wrote many times here of how tired am I from reading these kind of articles that talk of Argentine decadence. Cansino is the word in spanish. Inisiting with the same over and over and over. Its like somobody compares constantly the current Germany with Hitler's. Whats the point? what are you trying to say? that we are a poor country? we all know that, except from some rich lunatic that still believes we re Europe.

 

[Joe]

The 1940's should have been the glory days for Argentina. It's main competitors were all mired in war.

Many commentators believe that the reason the US shined in the 60 and 70's was because it's main competitors were devastated, viz. Western Europe. The USA rode in to fill the vacuum of manufacturers that were burnt to the ground. Argentina was in an even better position because unlike the US it didn't have to waste money on war (soldiers and weapons).

It just shows how destructive corruption and incompetent economic management is.

 

[ajoknoblauch]

The 1940's should have been the glory days for Argentina. It's main competitors were all mired in war.

Many commentators believe that the reason the US shined in the 60 and 70's was because it's main competitors were devastated, viz. Western Europe. The USA rode in to fill the vacuum of manufacturers that were burnt to the ground. Argentina was in an even better position because unlike the US it didn't have to waste money on war (soldiers and weapons).

It just shows how destructive corruption and incompetent economic management is.

Argentina appears to be the country of lost opportunities. Think, by contrast, about what tiny South Korea has accomplished since the end of WW II (despite another war on its own peninsula).

 

[Matiasba]

The 1940's should have been the glory days for Argentina. It's main competitors were all mired in war.

Many commentators believe that the reason the US shined in the 60 and 70's was because it's main competitors were devastated, viz. Western Europe. The USA rode in to fill the vacuum of manufacturers that were burnt to the ground. Argentina was in an even better position because unlike the US it didn't have to waste money on war (soldiers and weapons).

It just shows how destructive corruption and incompetent economic management is.

I beg to disagree. The 50s and 60s were the golden ages for Agentina. What happened with Peron, in the early 40s, that even the militars could not disassemble and prolonged till 1976, is that while the powers were so ruined, esp. the UK, our main bussiness partner, we had to make the stuff from our own and not depend on imported industrial stuff that we exchanged for agro products.
That impulsed a fantastic industrialization process in Argentina, translated in full employment level, almost no poverty, a phenomenal migration from interior to BsAs... everything was made here, Nac & Pop...
The world was such a mess that we had to industrialize so not to depend any more on the campo. That independence we never achieved, we still depend on the campo today, our industry is not competitive.

What really killed Argentina IMHO is the Marshall plan (again, geopolitics). We ve been deliverately left outside the world. And IMO was because of Peron´s likings of Mussolini.

 

[Pensador]

The 1940's should have been the glory days for Argentina. It's main competitors were all mired in war.

Many commentators believe that the reason the US shined in the 60 and 70's was because it's main competitors were devastated, viz. Western Europe. The USA rode in to fill the vacuum of manufacturers that were burnt to the ground. Argentina was in an even better position because unlike the US it didn't have to waste money on war (soldiers and weapons).

It just shows how destructive corruption and incompetent economic management is.

You nailed it dead on with that one Joe! Best explanation I have read with so few words yet.

 

[Joe]

You nailed it dead on with that one Joe! Best explanation I have read with so few words yet.

Thanks, I meant to say the 50 and 60's as the USA zenith, not the 60 and 70's.

The 50's were the real pinnacle of the USA.