This essay is quite different than your previous ones. You usually have a relatively straightforward thesis concerning geographical determinism. This essay is much more comprehensive with social-economic and governance factors, but it’s also necessarily less lightbulb-over-head insightful.
It doesn’t seem like Argentina did anything particularly “wrong” it’s just that they did and continue to do everything wrong.
But it’s all motivated (I think that subtext is in your piece) from the baseline inequality that plagues South America in general, combined with the populist and revolutionary type movements that are in constant tension with the old monied landholding elite. Anybody who’s read South American literature knows this.
Beyond the culture and history, I would also posit that South America occupies a special, maybe privileged position in space and time. The geographical distance from the rest of the world is striking.
It was spared the destruction and renewal of the word wars. It didn’t have the first mover advantage of places like the U.S. or the UK but also didn’t have the knowledge and clean slate position of the Asian tigers.
South America (especially Argentina and Chile) has its own systems based on history and geographical isolation that kinds of meanders and limps along. Democracy, socialism, populism, conflict, peace, the 19th, 20th, 21st centuries…it all seems to average out to a middle income - mid level stasis.
People there do tend to be happier than in the rest of the world. So that’s something?
You're right that this is less light-bulby, but I think it's because the complexity of causality obfuscates it. If we're to summarize the insight, I think it's that
1. Unmanaged agricultural ownership leads to inequality and causes social conflict in a way that's probably more intense than mining or industry.
2. Agricultural wealth (like other commodities) causes a tremendous amount of heartache due to the swings in income and currency mgmt. This is an underdiscussed aspect of the resource curse, and it's only obvious in this article because Argentina suffers from these things yet doesn't qualify for the traditional resource curse.
If you think about how South America differs from Asia, it's that the entire LatAm continent was managed for natural resources by cultures that suffered from the resource curse: Spain and Portugal became centralized "dictatorships" (absolute monarchies) because of that resource curse. And then it didn't suffer from a power redistribution from world wars.
Asia had both thousands of years of functioning societies that weren't exposed to the resource curse, and then the post-WW2 redistribution.
Which is interesting in its own right, because what would have happened to the world without WW2 redistribution?
Hi Ryan. I assure you that socialism has never governed in Argentina; our institutions function poorly, but they are liberal. The problem is that we never had leaders who could, like our neighbors, agree on common foundations for development. Everything is fought over in rhetorical battles that, I assure you, are not ideological, but rather about sectoral interests (the countryside vs. the city, industrial bourgeoisie against landowners, public sector against private sector, unions associated with companies and independent unions). We don't have the slightest agreement on how to coexist. All political parties called on the military whenever something didn't suit them.
Throughout the entire 20th century, we experienced processes of democracy, military coups, and even "patriotic fraud." It was only when we had to search for bodies in mass graves that we agreed to live in a democracy, and that was very difficult at first. As a consequence, our institutions are severely deteriorated, and in my opinion, no leaders are emerging who are capable of reorganizing this.
Fascinating article. As an Australian with an interest in economic history, I’ve always been fascinated by the Argentina-Australia economic trajectory from the 19th to the 20th century. Interesting to read a different comparative perspective.
While excellent overall, one variable I thought you overlooked was the international economic context when Argentina and the Asian Tigers initiated their import substitution/export promotion policies. My understanding is that Argentina started earlier in the 1930s when almost everyone was restricting trade and the Asian Tigers in the 1950-60s during international trade liberalisation. The former likely required more local demand generation and it would have been difficult to rely on a more export oriented approach.
Conversely, it’s unlikely the export oriented approach would have worked without the context of global trade liberalisation. Indeed, it will be interesting to see how the Asian tiger countries adapt over the next decade or so as the international context evolves to be less accommodating of persistent surplus countries.
Very interesting Tomas. Do you plan to write a similar series about France ?
There are many similarities between what Argentina experienced and what France is currently experiencing: an omnipresent, interventionist state, an outdated policy “software” that can’t keep up with today’s realities, a powerful yet increasingly obsolete unionism that freezes reforms, chronically high public spending and structural deficits, one of the heaviest tax burdens in the developed world, rigid labor rules and steep payroll costs that entrench insiders and keep youth unemployment high, dense bureaucracy that throttles permits, housing, and industrial investment, deindustrialization with persistent trade deficits, a street-veto politics that punishes incremental reform, and an aging welfare state whose promises outpace its funding.
Ah, the land of such beautiful music can't do so many things wrong, come on!
On the origins of this inequality which seems to be the original sin of the continent, and especially in light of the comparison with the Asian tigers, something that stands out is that rich Iberian families have essentially remained the same families since the reconquista.
In contrast, Asian tigers benefitted from brutal elite ventilation after WWII: defeat and MacArthur's Zaibatsu-busting in Japan, Japanese and then American domination for SK/Taiwan, cultural revolution, you name it. The heirs of centuries old castes were screwed and had to... (gasp) work ?!?!?! Compete with the hard-working proles, you mean ?!?!? with fair rules ??!?!? exactly. Well, more or less.
Yeah, when to be rich in countries with a more continuous timeline just means having some ancestor a few centuries back that won big by taking risk - charging a muslim fort in Andalucia, or taking the dangerous trip to the new world a couple centuries later. The contempt for work in the aristocratic caste there may come from there too - plenty of opportunities to win gold by doing something dangerous, rather than getting acquainted with commerce, like the british lords eventually did.
I'm sure somebody who spent his life studying this may find a bunch of errors in the above, but I do think lack of elite renewal, a tendency for those in the good spot to just stay there is something I've noted in my long experience with the iberian culture. With some notable exception, in some particular areas, which I hope will eventually prevail over old money.
Interesting theses. I just asked ChatGPT what it thinks about your Spanish thesis, which I had never thought about, and it seems like there's a bit of it, but not too much. It did trigger something super interesting though.
Spain lost its LatAm properties because of its proximity to Europe: It got steamrolled by France in the Napoleonic Wars, and the nationalistic fight for independence was an inspiration for its LatAm empire to do the same. Similarly, this proximity to Europe pushed Spain to do lots of redistribution (eg desamortizacion de Mendizabal). Also, Spain's loss of empire meant it had to reform itself, it couldn't survive just on resources (and their curse). This might explain why Spain is a much more equal country today than LatAm
I'd be really interested to se your take on why Australia (I'm an Aussie) has succeeded when compared to Argentina especially considering that:
1. we were very similar economies in terms of relative size at the turn of the 20th century,
2. we probably still have very similar economic types when you compare resource extraction to manufacturing (though my guess is that we have much more natural resources than Argentina) 3. we also have strong unions.
4. I think we also have large scale farming that is highly concentrated into a few hands
5. We also spent a long time, until the 80's, with strong tariffs aimed at protecting import substituting companies rather than export growing companies.
How did we manage to avoid argentinia's fate - and will that continue. I know the answer may be strong governmental institutions, but we all know that they can get degraded very quickly.
I agree that this comparison would be very illuminating. The similarities are uncanny, and that will highlight the differences. One thing though, Australia's land concentration didn't start as intense as it is today!
Ah yes please do! I was going to correct a ChatGPT translation, but this would be better!
To get in touch, if you're a sub you can reply to any newsletter email and I'll get it! Sometimes they go to spam so if I don't reply, write a comment and I might see that
How much did the Asian Tigers set the perfect government path at the start and then reap the benefit? And how much did they try "thoughtful" policies, but then correct policies, improving, eliminating and adding new policies as empirical data came in? And how much did Argentina not self-correct? Is it possible that a big difference between good out comes and lousy outcomes is the amount of examination and correction encouraged and implemented. Isn't that a big difference between "communism" in the USSR and "communism" in China? Some commentators (not you) suggest that societies thrive when government "gets out of the way". I think those folks haven't read their Adam Smith and haven't studied, say, the USA or the Asian Tigers.
I don't know the answer. But I agree that "No government" is only said by people who see too much government. If you really don't want government, go to Somalia.
You're hinting at the quality of institutions and culture, which I think is very important.
So - populism ruined Argentina, but built the Peronist party. 80 years after the first Peron government, the grandchildren of the working class who first got their rights under Peron, have made Peronism part of their identity, the party that is "for them" and against the rich, reinforced by periodic handouts and a large patronage machine, makes very hard to conduct normal democratic , governance-based or competence-based competition in Argentina.
Not really. Comunism is mostly an ideology imposed by force, Peronism is a genuine part of the identity of many Argentinians. The dictatorships after Peron was deposed probably helped to built Peron's legend.
Amazing. To me an under explorered takeaway is: culture trumps all. Knowing that land distribution and inequality was the root cause, politicians did everything they could to ameliorate its consequences, willing to take risks that were incredibly dangerous – but not fix the underlying issue. Probably not because they’re stupid, but because of salience of culture and historical path dependencies. That is how important political power rooted in cultural dynamics is – and explains far more than natural resource endowments, micro policies, etc.
Excellent article, Tomas. I'd like to add some data: the 12 automotive companies merged into five during the military dictatorship, they carried out massive layoffs, and the national government nationalized their debts and allowed for imports. With the fall of the regime, in democracy, imports were restricted and many of those companies were split into the current brands.
Regarding the competition with the international textile industry, I think the world should do something about the labor conditions in certain countries like India or Bangladesh, because the low wages in that sector not only affect Argentina's economy, but also Europe's and human dignity.
Finally, I believe it would be fair to say that the debts taken on mostly by military governments, unlike in Brazil and Chile, were not used to strengthen our economic structure, but rather to refinance a state that nationalized private debts from social actors especially identified with the economic elites associated with the military. Among these were the dynasties that your article rightly points out as responsible for an excessive concentration of land, which has conditioned agriculture and our productive and export profile.
I eagerly await your perspective on the Milei government.
I didn’t know about these companies. I’d love to know more!
I’m glad the world can’t do anything about places like India or Bangladesh undercutting prices, because in politics many times the cure is worse than the disease. One of the most humane things to do is for Europeans to lose their textile jobs so that millions of south Asians can be lifted from abject poverty.
I didn’t know about the dictatorships’ mgmt of debt either. Interesting.
I did a quick review and can confirm. Fiat and Peugeot merged into Sevel S.A., which was run by the economic group belonging to the father of a former president of our country. Volkswagen acquired Chrysler’s industrial plant and later merged with Ford to form Autolatina S.A. They split up again in the 1990s.
What you mention about the textile industry is a bit extreme — I think there’s a possibility for humanism to develop new and modern economic ideas. It’s not easy, but I believe there are people working seriously on that, even if it’s not very visible today.
Regarding the management of the dictatorship’s debt, there’s a lot of literature on the subject in our country. It’s definitely something you should write about, Tomás! I read “Deuda externa y poder económico en Argentina” many years ago — I have it in print, but I found this version online: https://publicacioneseconomia.flacso.org.ar/images/pdf/237.pdf
Very interesting. One take-away - I didn't know any Argentinian companies, although I knew Mercado Libre (not as a customer, so it doesn't matter), I just didn't know it's Argentinian.
I think, overall, there is a sadness here, as so much potential has been squandered by bad policies…
Your writing weaves heartfelt inquiry with precise data analysis. It was fascinating to explore the edge of whether Argentina might return to wealth and greatness.
Absolutely brilliant!! I could not help pick the point that the culture of a people has such an effect on how they direct their economies , whether educated or not ; in my view how poor a country reflects of the impact of its culture on its economy. I would like to hear your view on this. It would be interesting to look at this broadly choosing countries with diverse cultures.
This article is totally beyond brilliant and insightful. Would love to speak with you about this and ideas I have for another Caribbean / Latin American / South American country I will not mention in this article - that could greatly use your decades long knowledge and experience. Michael Smolens - NYC - mlsmolens@gmail.com - 1 - 917 - 742 - 0158 (if you call, leave a message) starting 11th and for sure last company now all over the world called INSATIABLE INTELLECTUAL CURIOSITY LLC (nothing at all online yet) - but I have had 10 successful startups in 8 global developing countries over the past 50 years with over 20,000 employees
As soon as I read the article, I felt uneasy, because you’re someone I deeply admire for your way of thinking — your perspective is always profound and interesting to me. However, I know Argentina is a difficult case to explain (given its constant economic fluctuations), and the risk of a partial or biased interpretation is very high.
The first part of the article actually surprised me in a good way. The analysis about the lack of an industrial policy aimed at creating sectoral winners, the absence of vertical linkages in high-productivity sectors such as agriculture, and the impact of pro-cyclical policies (like export taxes on agricultural goods) all struck me as very accurate.
However, from that point onward, I noticed a drift toward something less scientific and more subjective, which I found surprising coming from someone with such strong critical thinking. On one hand, corruption appears as an unexplained factor (why is there corruption in Argentina and not in other countries?), and it’s not connected to the economic impact (why would corruption explain the inefficiency of industrial policies? There are countries with corruption that still manage development and effective industrial strategies).
On the other hand, there’s the explanation of “Peronism.” This doesn’t surprise me too much, since I understand that right now in the United States there’s a kind of fascination with Milei and his anti-Peronist rhetoric, which leads many analysts to comment on things they don’t really understand. But above all, it saddened me because I saw a lack of consistency in the arguments. In the article, you discuss Peronism and inflation, yet the graphs you include show that the first two Perón governments (the third lasted less than two years) actually had very low inflation, which skyrocketed during the following military dictatorship. The same happens when you talk about fiscal deficit and link it to “the Kirchners,” while the next graph shows that period as the one with the largest fiscal surplus in sixty years in Argentina.
All of this could be anecdotal if it weren’t for the fact that, for someone who was born and has lived in Argentina, it’s painful to see that a person they intellectually respect cites, as part of their analysis, a report by Martínez de Hoz — the Minister of Economy under the most brutal dictatorship in all of Latin America. Not only because he was a proven and convicted genocidal criminal, complicit in the murder, torture, and disappearance of over 30,000 people, but because he was also the economic architect of Argentina’s collapse during that period. I’m not sure how familiar you are with Martínez de Hoz’s economic policies, but I think if there’s one single point of consensus among all Argentine economic historians, it’s that this was the most disastrous period in the country’s economic history. It would be strange to think someone could be so right in the diagnosis and so wrong in the prescription.
Lastly, I can only hope that your view of Argentina’s economy comes from partial or incomplete readings — ones that don’t yet incorporate perspectives that could make the picture more complex than “Argentina was once a powerhouse, then Perón and corruption destroyed it.” And above all, that it’s not because your only source was ChatGPT.
Um governo projeta inflação para os próximos normalmente, não para ele próprio, não seria algo "popular" ou populista. Acredito que há paixão política no seu comentário.
This essay is quite different than your previous ones. You usually have a relatively straightforward thesis concerning geographical determinism. This essay is much more comprehensive with social-economic and governance factors, but it’s also necessarily less lightbulb-over-head insightful.
It doesn’t seem like Argentina did anything particularly “wrong” it’s just that they did and continue to do everything wrong.
But it’s all motivated (I think that subtext is in your piece) from the baseline inequality that plagues South America in general, combined with the populist and revolutionary type movements that are in constant tension with the old monied landholding elite. Anybody who’s read South American literature knows this.
Beyond the culture and history, I would also posit that South America occupies a special, maybe privileged position in space and time. The geographical distance from the rest of the world is striking.
It was spared the destruction and renewal of the word wars. It didn’t have the first mover advantage of places like the U.S. or the UK but also didn’t have the knowledge and clean slate position of the Asian tigers.
South America (especially Argentina and Chile) has its own systems based on history and geographical isolation that kinds of meanders and limps along. Democracy, socialism, populism, conflict, peace, the 19th, 20th, 21st centuries…it all seems to average out to a middle income - mid level stasis.
People there do tend to be happier than in the rest of the world. So that’s something?
Super interesting feedback, thank you.
You're right that this is less light-bulby, but I think it's because the complexity of causality obfuscates it. If we're to summarize the insight, I think it's that
1. Unmanaged agricultural ownership leads to inequality and causes social conflict in a way that's probably more intense than mining or industry.
2. Agricultural wealth (like other commodities) causes a tremendous amount of heartache due to the swings in income and currency mgmt. This is an underdiscussed aspect of the resource curse, and it's only obvious in this article because Argentina suffers from these things yet doesn't qualify for the traditional resource curse.
If you think about how South America differs from Asia, it's that the entire LatAm continent was managed for natural resources by cultures that suffered from the resource curse: Spain and Portugal became centralized "dictatorships" (absolute monarchies) because of that resource curse. And then it didn't suffer from a power redistribution from world wars.
Asia had both thousands of years of functioning societies that weren't exposed to the resource curse, and then the post-WW2 redistribution.
Which is interesting in its own right, because what would have happened to the world without WW2 redistribution?
Hi Ryan. I assure you that socialism has never governed in Argentina; our institutions function poorly, but they are liberal. The problem is that we never had leaders who could, like our neighbors, agree on common foundations for development. Everything is fought over in rhetorical battles that, I assure you, are not ideological, but rather about sectoral interests (the countryside vs. the city, industrial bourgeoisie against landowners, public sector against private sector, unions associated with companies and independent unions). We don't have the slightest agreement on how to coexist. All political parties called on the military whenever something didn't suit them.
Throughout the entire 20th century, we experienced processes of democracy, military coups, and even "patriotic fraud." It was only when we had to search for bodies in mass graves that we agreed to live in a democracy, and that was very difficult at first. As a consequence, our institutions are severely deteriorated, and in my opinion, no leaders are emerging who are capable of reorganizing this.
Fascinating article. As an Australian with an interest in economic history, I’ve always been fascinated by the Argentina-Australia economic trajectory from the 19th to the 20th century. Interesting to read a different comparative perspective.
While excellent overall, one variable I thought you overlooked was the international economic context when Argentina and the Asian Tigers initiated their import substitution/export promotion policies. My understanding is that Argentina started earlier in the 1930s when almost everyone was restricting trade and the Asian Tigers in the 1950-60s during international trade liberalisation. The former likely required more local demand generation and it would have been difficult to rely on a more export oriented approach.
Conversely, it’s unlikely the export oriented approach would have worked without the context of global trade liberalisation. Indeed, it will be interesting to see how the Asian tiger countries adapt over the next decade or so as the international context evolves to be less accommodating of persistent surplus countries.
Very interesting Tomas. Do you plan to write a similar series about France ?
There are many similarities between what Argentina experienced and what France is currently experiencing: an omnipresent, interventionist state, an outdated policy “software” that can’t keep up with today’s realities, a powerful yet increasingly obsolete unionism that freezes reforms, chronically high public spending and structural deficits, one of the heaviest tax burdens in the developed world, rigid labor rules and steep payroll costs that entrench insiders and keep youth unemployment high, dense bureaucracy that throttles permits, housing, and industrial investment, deindustrialization with persistent trade deficits, a street-veto politics that punishes incremental reform, and an aging welfare state whose promises outpace its funding.
I thought I had replied.
France’s economic history is 1000-2000 years old though; and it has a gazillion covariants. So much harder to do I reckon.
I do agree with your symptoms on the country, but I don’t know the diagnosis.
Brilliant piece. I’m from Argentina myself and could not have explained this nearly as well. Super comprehensive and detailed
Me alegro!
Ah, the land of such beautiful music can't do so many things wrong, come on!
On the origins of this inequality which seems to be the original sin of the continent, and especially in light of the comparison with the Asian tigers, something that stands out is that rich Iberian families have essentially remained the same families since the reconquista.
In contrast, Asian tigers benefitted from brutal elite ventilation after WWII: defeat and MacArthur's Zaibatsu-busting in Japan, Japanese and then American domination for SK/Taiwan, cultural revolution, you name it. The heirs of centuries old castes were screwed and had to... (gasp) work ?!?!?! Compete with the hard-working proles, you mean ?!?!? with fair rules ??!?!? exactly. Well, more or less.
Yeah, when to be rich in countries with a more continuous timeline just means having some ancestor a few centuries back that won big by taking risk - charging a muslim fort in Andalucia, or taking the dangerous trip to the new world a couple centuries later. The contempt for work in the aristocratic caste there may come from there too - plenty of opportunities to win gold by doing something dangerous, rather than getting acquainted with commerce, like the british lords eventually did.
I'm sure somebody who spent his life studying this may find a bunch of errors in the above, but I do think lack of elite renewal, a tendency for those in the good spot to just stay there is something I've noted in my long experience with the iberian culture. With some notable exception, in some particular areas, which I hope will eventually prevail over old money.
I think Peter Turchin thinks along these lines?
Interesting theses. I just asked ChatGPT what it thinks about your Spanish thesis, which I had never thought about, and it seems like there's a bit of it, but not too much. It did trigger something super interesting though.
Spain lost its LatAm properties because of its proximity to Europe: It got steamrolled by France in the Napoleonic Wars, and the nationalistic fight for independence was an inspiration for its LatAm empire to do the same. Similarly, this proximity to Europe pushed Spain to do lots of redistribution (eg desamortizacion de Mendizabal). Also, Spain's loss of empire meant it had to reform itself, it couldn't survive just on resources (and their curse). This might explain why Spain is a much more equal country today than LatAm
Yes, what you describe is much more accurate for modern- day Spanish Latin America than modern-day Spain.
great analysis.
I'd be really interested to se your take on why Australia (I'm an Aussie) has succeeded when compared to Argentina especially considering that:
1. we were very similar economies in terms of relative size at the turn of the 20th century,
2. we probably still have very similar economic types when you compare resource extraction to manufacturing (though my guess is that we have much more natural resources than Argentina) 3. we also have strong unions.
4. I think we also have large scale farming that is highly concentrated into a few hands
5. We also spent a long time, until the 80's, with strong tariffs aimed at protecting import substituting companies rather than export growing companies.
How did we manage to avoid argentinia's fate - and will that continue. I know the answer may be strong governmental institutions, but we all know that they can get degraded very quickly.
I agree that this comparison would be very illuminating. The similarities are uncanny, and that will highlight the differences. One thing though, Australia's land concentration didn't start as intense as it is today!
Hey Tomas I can translate the article to Spanish for free if you want. My girlfriend is a professional translator and we're both from Argentina.
Ah yes please do! I was going to correct a ChatGPT translation, but this would be better!
To get in touch, if you're a sub you can reply to any newsletter email and I'll get it! Sometimes they go to spam so if I don't reply, write a comment and I might see that
vi el titulo y lo leí todo. Saludos desde Good Airs
How much did the Asian Tigers set the perfect government path at the start and then reap the benefit? And how much did they try "thoughtful" policies, but then correct policies, improving, eliminating and adding new policies as empirical data came in? And how much did Argentina not self-correct? Is it possible that a big difference between good out comes and lousy outcomes is the amount of examination and correction encouraged and implemented. Isn't that a big difference between "communism" in the USSR and "communism" in China? Some commentators (not you) suggest that societies thrive when government "gets out of the way". I think those folks haven't read their Adam Smith and haven't studied, say, the USA or the Asian Tigers.
I don't know the answer. But I agree that "No government" is only said by people who see too much government. If you really don't want government, go to Somalia.
You're hinting at the quality of institutions and culture, which I think is very important.
So - populism ruined Argentina, but built the Peronist party. 80 years after the first Peron government, the grandchildren of the working class who first got their rights under Peron, have made Peronism part of their identity, the party that is "for them" and against the rich, reinforced by periodic handouts and a large patronage machine, makes very hard to conduct normal democratic , governance-based or competence-based competition in Argentina.
Reminds me of communism.
With the big caveat that Argentina has not been only Peronism. For decades it was more a dictatorship, and has had liberal phases
Not really. Comunism is mostly an ideology imposed by force, Peronism is a genuine part of the identity of many Argentinians. The dictatorships after Peron was deposed probably helped to built Peron's legend.
Amazing. To me an under explorered takeaway is: culture trumps all. Knowing that land distribution and inequality was the root cause, politicians did everything they could to ameliorate its consequences, willing to take risks that were incredibly dangerous – but not fix the underlying issue. Probably not because they’re stupid, but because of salience of culture and historical path dependencies. That is how important political power rooted in cultural dynamics is – and explains far more than natural resource endowments, micro policies, etc.
Geography is the chessboard. You need to know how to play it.
Excellent article, Tomas. I'd like to add some data: the 12 automotive companies merged into five during the military dictatorship, they carried out massive layoffs, and the national government nationalized their debts and allowed for imports. With the fall of the regime, in democracy, imports were restricted and many of those companies were split into the current brands.
Regarding the competition with the international textile industry, I think the world should do something about the labor conditions in certain countries like India or Bangladesh, because the low wages in that sector not only affect Argentina's economy, but also Europe's and human dignity.
Finally, I believe it would be fair to say that the debts taken on mostly by military governments, unlike in Brazil and Chile, were not used to strengthen our economic structure, but rather to refinance a state that nationalized private debts from social actors especially identified with the economic elites associated with the military. Among these were the dynasties that your article rightly points out as responsible for an excessive concentration of land, which has conditioned agriculture and our productive and export profile.
I eagerly await your perspective on the Milei government.
I didn’t know about these companies. I’d love to know more!
I’m glad the world can’t do anything about places like India or Bangladesh undercutting prices, because in politics many times the cure is worse than the disease. One of the most humane things to do is for Europeans to lose their textile jobs so that millions of south Asians can be lifted from abject poverty.
I didn’t know about the dictatorships’ mgmt of debt either. Interesting.
I did a quick review and can confirm. Fiat and Peugeot merged into Sevel S.A., which was run by the economic group belonging to the father of a former president of our country. Volkswagen acquired Chrysler’s industrial plant and later merged with Ford to form Autolatina S.A. They split up again in the 1990s.
What you mention about the textile industry is a bit extreme — I think there’s a possibility for humanism to develop new and modern economic ideas. It’s not easy, but I believe there are people working seriously on that, even if it’s not very visible today.
Regarding the management of the dictatorship’s debt, there’s a lot of literature on the subject in our country. It’s definitely something you should write about, Tomás! I read “Deuda externa y poder económico en Argentina” many years ago — I have it in print, but I found this version online: https://publicacioneseconomia.flacso.org.ar/images/pdf/237.pdf
Very interesting. One take-away - I didn't know any Argentinian companies, although I knew Mercado Libre (not as a customer, so it doesn't matter), I just didn't know it's Argentinian.
I think, overall, there is a sadness here, as so much potential has been squandered by bad policies…
Your writing weaves heartfelt inquiry with precise data analysis. It was fascinating to explore the edge of whether Argentina might return to wealth and greatness.
Thank you, I'm glad to hear!
Absolutely brilliant!! I could not help pick the point that the culture of a people has such an effect on how they direct their economies , whether educated or not ; in my view how poor a country reflects of the impact of its culture on its economy. I would like to hear your view on this. It would be interesting to look at this broadly choosing countries with diverse cultures.
I agree. There are strong geographic factors (the agricultural wealth) but they were not enough I think to make Argentina poor
This article is totally beyond brilliant and insightful. Would love to speak with you about this and ideas I have for another Caribbean / Latin American / South American country I will not mention in this article - that could greatly use your decades long knowledge and experience. Michael Smolens - NYC - mlsmolens@gmail.com - 1 - 917 - 742 - 0158 (if you call, leave a message) starting 11th and for sure last company now all over the world called INSATIABLE INTELLECTUAL CURIOSITY LLC (nothing at all online yet) - but I have had 10 successful startups in 8 global developing countries over the past 50 years with over 20,000 employees
Thanks Michael!
You shouldn't put your personal info on the Internet, bots can scrape it!
Please do share your ideas, you can respond to this newsletter and I'll get the email
As soon as I read the article, I felt uneasy, because you’re someone I deeply admire for your way of thinking — your perspective is always profound and interesting to me. However, I know Argentina is a difficult case to explain (given its constant economic fluctuations), and the risk of a partial or biased interpretation is very high.
The first part of the article actually surprised me in a good way. The analysis about the lack of an industrial policy aimed at creating sectoral winners, the absence of vertical linkages in high-productivity sectors such as agriculture, and the impact of pro-cyclical policies (like export taxes on agricultural goods) all struck me as very accurate.
However, from that point onward, I noticed a drift toward something less scientific and more subjective, which I found surprising coming from someone with such strong critical thinking. On one hand, corruption appears as an unexplained factor (why is there corruption in Argentina and not in other countries?), and it’s not connected to the economic impact (why would corruption explain the inefficiency of industrial policies? There are countries with corruption that still manage development and effective industrial strategies).
On the other hand, there’s the explanation of “Peronism.” This doesn’t surprise me too much, since I understand that right now in the United States there’s a kind of fascination with Milei and his anti-Peronist rhetoric, which leads many analysts to comment on things they don’t really understand. But above all, it saddened me because I saw a lack of consistency in the arguments. In the article, you discuss Peronism and inflation, yet the graphs you include show that the first two Perón governments (the third lasted less than two years) actually had very low inflation, which skyrocketed during the following military dictatorship. The same happens when you talk about fiscal deficit and link it to “the Kirchners,” while the next graph shows that period as the one with the largest fiscal surplus in sixty years in Argentina.
All of this could be anecdotal if it weren’t for the fact that, for someone who was born and has lived in Argentina, it’s painful to see that a person they intellectually respect cites, as part of their analysis, a report by Martínez de Hoz — the Minister of Economy under the most brutal dictatorship in all of Latin America. Not only because he was a proven and convicted genocidal criminal, complicit in the murder, torture, and disappearance of over 30,000 people, but because he was also the economic architect of Argentina’s collapse during that period. I’m not sure how familiar you are with Martínez de Hoz’s economic policies, but I think if there’s one single point of consensus among all Argentine economic historians, it’s that this was the most disastrous period in the country’s economic history. It would be strange to think someone could be so right in the diagnosis and so wrong in the prescription.
Lastly, I can only hope that your view of Argentina’s economy comes from partial or incomplete readings — ones that don’t yet incorporate perspectives that could make the picture more complex than “Argentina was once a powerhouse, then Perón and corruption destroyed it.” And above all, that it’s not because your only source was ChatGPT.
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Um governo projeta inflação para os próximos normalmente, não para ele próprio, não seria algo "popular" ou populista. Acredito que há paixão política no seu comentário.