Mark Falcoff over at AEI argues that while Argentina has somewhat successfully escaped the headlines over the past several years, providing space instead to Bolivia, Venezuela, and Cuba, what is taking place there today cannot and should not be ignored.
The country’s economic recovery, as the author suggests, has been marred by the biggest sovereign debt default of $140 billion as well as by radical currency devaluation. Further, while macroeconomic situation has been improved drastically, the country attracts less than 3% of total foreign investment in the region.
But more than economic statistics, its the country’s leadership style that worries the author.
[The president’s] style is authoritarian and opaque: he has never held a cabinet meeting, refuses to receive ambassadors, has purged the Supreme Court, makes uninhibited use of government money, taps telephones, and characterizes all forms of dissent or disagreement as illegitimate. Of the country’s two great dailies, one is clearly an official organ of the government. Some journalists working for what remains of the independent media have received threats. Businessmen who contemplate contributing to the campaign funds of opponents find their taxes suddenly subject to an audit. Congress has ceased to play much of an active role in government, even though Kirchner’s party has a majority in both houses.
The views echo those of former Minister of Economy, Roberto Lavagna, who thinks that the government’s meddling in the economy undermines investment and the growth potential of the private sector.
Government’s overregulation of the private sector is often reasoned by the need to make sure the benefits of growth are evenly spread. The idea of providing equal access to benefits is noble indeed, but, as Bill Faries suggests in this Bloomberg article, when more poverty rather than less is the result of economic mismanagement, an option that leaders such as Kirchner and Chavez don’t hesitate to use is a simple one — controlling the data.
Chavez is prodding the central bank to use more government-subsidized food prices in its monthly surveys and include prices from small towns. Kirchner removed the official in charge of measuring inflation in January and then altered the methodology for gauging prices. Rising costs threaten the populist images Chavez and Kirchner have cultivated as their citizens struggle to pay for food and clothing. Under-reporting inflation also allows the leaders to restrain wage increases for many workers and limit payments on certain bonds.
While elections in Argentina are still somewhat far away to make predictions, the debate on the country’s course is certainly going to heat up over the summer. One thing is certain, swinging macroeconomic numbers one way or another is not going to make life of an average citizen much better. Ensuring that political and social institutions really do provide equal opportunities for all – will.
Published Date: April 09, 2007