In political debate, looking to what other countries do is often used as a way of promoting a new idea or another. It is also used to explain why a certain policy or system should not be used. Case in point: Argentina. A mix of populism and good old fashioned ‘crony socialism’ (and you thought that only happened under capitalism), not to mention an unhealthy does of public sector union abuses have led Argentina to the verge of its second default in 12 years.
From my friends at the Pan Am Post:
“An official Argentinean delegation is set to travel to New York City to continue negotiations with a mediator chosen by US District Judge Thomas Griesa. The goal is to reach an agreement that will enable the Argentinean government to pay its debt to the holdout “vulture funds.” If they do not reach an agreement by Wednesday, July 30, Argentina will enter into a default for the second time in 12 years.”
“If those bonds do fall, including active assets in the banks, the financial system will see significant and long-lasting effects. This can lead to credit cuts, overdrafts that have occurred in the past for example, which will then lead to payment cuts and worsen the recessive process. I do not discount the idea of a bank run ensuing from the panic a default will cause…”
So how did Argentina get into this mess? Simple. They did it to themselves. Overtaxed, overspent over regulated and allowed unions to overstep their bounds at the expense of business, the people and commonsense. They mismanaged and focused on issues not actually related to their economy, for example the government has put a lot of effort into convincing Great Brittan to hand over the Falkland Islands, known locally as the ‘Islas Malvinas.’
The residents of the islands were given a chance to vote on whether to stay under the British Crown or become part of Argentina, guess what they chose by over 90% in a free election? To stay with the Brits. Why would they not? For all of its problems England has provided a very stable economy and political system, things that President Cristina Fernández de Kirchner and her predecessors have been woefully unable to do.
It many ways, the struggles of this Latin American country remind me of Puerto Rico. Always falling for the populist message, always giving into the unions, ignoring real problems caused by the government and its policies and focusing blame on anything and everyone, that has nothing to do with reality, in order to divert blame. Argentina, Cuba and Venezuela are perfect examples of how NOT to run a country.