Parallels between Argentina and Puerto Rico

The election of Javier Milei as president of Argentina has generated emotional and diverse reactions. From rejoicing to see a libertarian stop the Peronist faction of Kirchnerism, to concern about the rise to power of another form of populism with extremist overtones. What has happened in Argentina is not surprising in view of the country's trajectory over the last century and should serve as a lesson for us, particularly for Puerto Ricans.

Argentina has a large territorial extension, abundant natural resources, fertile lands, a powerful livestock sector, an enormous potential in renewable energies and high-tech services. It can be said that it has had and has it all. Incredibly, its history in the last hundred years shows the tragic story of a society full of opportunities that chose to go to waste.

Looking at the behavior of our three branches of government and the actions of all political parties, including the emerging ones, we must conclude that, as Argentina, we do not learn, according to Carlos E. Díaz Olivo. In the photo, Javier Milei. (Natacha Pisarenko)

At the beginning of the last century, Argentina was known as the granary of the world for its enormous export of agricultural products. Its capital city, because of its European architecture, was called the Paris of South America. Its standard of living was comparable to that of the United States and surpassed that of European countries, with the exception of the United Kingdom. This privileged position gradually disappeared as the country moved away from the liberal practices that generated its progress, attracted by the ideology of Italian fascism. Thus, began what has been called the 100 years of decadence, in which Argentina is said to have "evolved" from a developed country to a developing one.

Although other external and internal factors played a role, Argentina's economic decline derived mainly from disorderly public spending, protectionist practices and regulatory excesses. This pattern of irresponsibility in the management of public finances became institutionalized in the mid-1940s with Peronism.

Juan Domingo Perón increased social spending to extraordinary levels, without having the capacity to finance it. The practice of overspending increased with subsequent governments. The customary action was to issue more money and go into debt. Thus, Argentina was swallowed by inflation and public indebtedness. The level of inflation today is around 140%. This means that the money generated with difficulty by citizens evaporates and they cannot save, which is indispensable for investment. When all this is put into perspective, it is clear that last Sunday's election was like what happens to people in despair: they conclude that nothing can be worse than what they have.

The parallelism of Argentina's trajectory with that of Puerto Rico is patent. Without Argentina's wealth of resources, we made a habit of spending more than what we had. The budget deficiency was covered by imposing higher taxes and issuing debt. As we continued to spend irresponsibly, we irresponsibly continued to get into debt, until we went bankrupt.

During that reckless course, we convinced ourselves that it was necessary to continue spending to meet the needs of a population with a significant component affected by poverty and inequality. But economic constraint and inequality were not reduced, at least not as they should have been. Bigger, more interventionist, protectionist and spending government does not mean it is more effective in reducing inequality. Without increasing the capacity and freedom to create wealth, there is nothing additional to distribute and, on the contrary, with indebtedness and over-taxation, the possibilities of generating wealth and future progress are diminished.

Looking at the behavior of our three branches of government and the actions of all political parties, including the emerging ones, we must conclude that, as Argentina, we do not learn. The most frustrating thing is that, from the perspective of sound government administration, the Fiscal Oversight Board is better oriented in what should be a sensible and responsible public management, although it bothers and outrages us for its condition as an imposed and colonial agency and for its obtuse approach to debits and credits. There can be worse humiliation!

This article was published originally in Spanish by El Nuevo Dia.

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