If you pay any attention to the news, you’ve no doubt be reading a lot about Argentina and the Falkland Islands debacle.
Whatever you think about the Falkland Islands debacle, I doubt any freedom-loving capitalist would have many good things to say about Argentina’s President, Cristina Fernández de Kirchner.
From capital controls to nationalization to confiscation of assets, populism is back on the move in Argentina, and it’s not the first time in their history.
But it wasn’t always that way.
In fact, back in the early 20th century, Argentina was one of the world’s richest countries on earth.
Exploration of the country’s rich agricultural lands made it a powerhouse, exceeding Australia and Canada in population, economic strength, and income per capita. Farming exports from this once ignored nation became so plentiful it was widely expected to become the United States of the southern hemisphere.
Locals earned as much as the British and the French.
Argentina’s fall from grace has created “the Argentina paradox” and has been the source of great wonder among scholars. How did a nation so successful at the turn of the 20th century come in dead last in terms of income and social growth at the turn of the 21st?
How it happened was that the 1930s brought an era of instability that brought the days of prosperity to an end. The new government adopted a strategy of reducing imports and working toward self-sufficiency.
Sounds great, except that they abandoned their farming sector in favor of sexier, industrial might, and things turned ugly.
By the time they had to put their tail between their legs and scrap that policy, inflation began to rise, production was inefficient, and government spending was unsustainable. Sound familiar?
By 1913, exactly one century ago, Argentina was the tenth wealthiest nation in the world. It’s amazing how quickly things can change when you bite the hand that feeds you.
And in this case, how long it can take to turn back around when you refuse to admit it.