Decline of Argentina (WWII, war, bomb, Great Britain)

[lentzr]

Since the Great Depression until the latest finacial crisis of 2001, Argentina has been in a state of overall economic decline. This has often mistified scholars since Argentina was once the seventh wealthiest country in the world with a per capita income similar to France. Some people in the late 1800's, when Argentina's boom began, believed that Argentina would surpass the US. However, is there any consensus developing from historians on how exactly this happened?

[John Walmsley]

Originally Posted by lentzr

Since the Great Depression until the latest finacial crisis of 2001, Argentina has been in a state of overall economic decline. This has often mistified scholars since Argentina was once the seventh wealthiest country in the world with a per capita income similar to France. Some people in the late 1800's, when Argentina's boom began, believed that Argentina would surpass the US. However, is there any consensus developing from historians on how exactly this happened?

This is a good question and very relevant in light of the last few years in our own country, where we have experienced severe economic disruptions. I have often wondered how Argentina with it's rich natural resources could slip so badly, while neighboring Brazil is on an economic boom cycle. In looking for answers, I found an interesting site as follows:

seekingalpha.com/.../164387-america-as-argentina-setting-up-for-economic-decline

Apparently this link didn't work, so please access the site by doing a search on the following:

America as Argentina: Setting Up For Economic Decline -- Seeking Alpha

Obviously, America isn't Argentina, but there are some parallels in the past history of both countries that deserve consideration. Perhaps some on the board have have insight into this question.

[texdav]

The economy had a crisi and inflation was runawy after. that is the real danger of any massive bobble and spending.That is what worries people about the massive governamt( taxpayer) debt now being amassed without much real results.

[markg91359]

Argentina was largely an economic, if not political, colony of Great Britain during the early part of the nineteenth century. This had been both good and bad for Argentina. The good part was that investment by the British of millions of pounds had yielded an economy that exported large quantities of beef and wheat to the rest of the world. The Argentine Pampas, or prairie, maybe more naturally suited to the grazing of cattle and raising of crops like wheat than any other place on earth. British investment had also resulted in a large railroad network that acted like a hub and spoke system which made the city of Buenos Aires into the financial as well as the political capitol of the country.

The negative side of all of this was that the Argentine economy became very heavily dependent on beef and wheat for for foreign exchange. This trend continues even today. Also, these actions helped create a wealthy oligarchy of landowners and businessmen who largely saw themselves as above the ordinary masses or peasants who toiled on farms, ranches, and in packing houses. Argentina may have been the seventh wealthiest country on earth at one time, but very little of these vast riches trickled down to the majority of the population.

In the 1930's a worldwide depression occurred. Unpopularity and instability caused the military to step in and overthrow the government in a military coup. A series of military juntas ruled the country for about ten years. A competent and charismatic military officer named Juan Peron participated in many of these juntas. Peron was farsighted enough to see that labor unions were a growing force to be reckoned with in Argentina. He was able to arrange to have himself appointed as Labor Minister in the government. Peron soon courted favor with labor unions by arbitrating a series of strikes in packing plants in favor of the workers. This became his major base of support for what followed.

Shortly, after the end of World War II, Peron was elected President of Argentina. Many of the problems of the country can be traced to him, his political party (the Peronists) which still exist, and the role the armed forces have played throughout history in Argentina. Peron did some good as President. He made the working classes feel more important and his policies did result in some badly needed income redistribution in the country. Unfortunately, the harm he did exceeded the good. Peron spent the country's foreign exchange reserves which had been accumulated for years by buying out the British interests, giving welfare to the poor in ways that were not very sensible or sustainable (The Eva Peron Foundation), placating fellow military officers, and trying to create industries in the country like steel and automobile manufacturing. Perhaps, worst of all, Peron laid the foundation for future repression in Argentina by imprisoning and torturing his opponents, having his followers beat and murder people who chose to oppose him too publicly, and shutting down newspapers that dared print the truth about his regime.

By 1956, Argentina had gone from one of the most prosperous countries in the world to an economic debacle. The treasury had run out of foreign exchange. Inflation had reached crisis levels. Unemployment was very high. Even labor was turning against Peron. Another military coup' took place and Peron fled to exile in Spain where he spent the next 18 years.

Between 1956 and 1974, things just got worse. New governments lacked legitimacy because they refused to allow Peron or his party to participate in elections. Labor unions fought the new government and refused any and all cooperation. Developments were taking place in the world economy that were resulting in cheaper and cheaper prices for Argentina's main exports, beef and wheat. The USA, Canada, and Australia competed for the foreign market with their own exports and this held prices down. The European Common Market kept much Argentine beef out of their countries by imposing price floors on beef. By 1974, it was clear that the country was in crisis and something new was needed. The government in power, allowed Juan Peron to return from exile and run in a presidential election. To no one's surprise, Peron won the election and his new wife, Isabel, became Vice President. Peron was an old man and died after spending about fourteen months in office. His wife Isabel who had no background for public office other than that of being a dancer became President. Things continued to deteriorate. Inflation reached unprecedented levels. Domestic terrorism, crime, and kidnapping became absolutely uncontrollable. Foreign companies announced their intention to leave Argentina because they did not feel their executives were safe there. Something about Argentina seems to lend itself to political extremism on the right and the left. The military watched from the sidelines until 1976 and than decided it could wait no longer. A military coup' lead by General Videla took over the country.

This coup' would be different than the ones that preceded it. Videla and many other military leaders had concluded that Argentina's problems were largely the result of left wing terrorists. They resolved to rid the country of this group once and for all and--at any cost. A sad chapter in the country's history known as the "Dirty War" began. From 1977 to 1980, fifteen thousand people were "disappeared" or murdered by the military. Many of these people were guilty of nothing, but being associated with elements the military deemed subversive.

Despite the Dirty War, some economic recovery took place. Argentina also succeeded in eliminating most terrorism. The generals were forced to end their military control of Argentina when they were badly defeated in the Falklands War of 1982. Since 1984, elected civilian governments have run the country.

In short, the Argentine economy is heavily reliant on goods and commodities that are less important in the world economy than say oil or high technology are. The political instability in the country discouraged much foreign investment. Although, that is beginning to return. Argentina is still by most measures in the world a relatively prosperous country. However, there is a great deal of poverty and a great many slums or barrios throughout its cities. The Argentine story is a sad one. Its the story of a people who had a great future within their grasp and frittered it away do to poor choices, stupidity, preferring violence over consensus, and not developing a more diversified economy.

[lentzr]

MARKG - Thanks a million for your historical background. However, I have to correct two years that you mentioned...Peron was overthrown in the Revolucion Liberator (sp?) in 1955, not 1956. Secondly, democrayc returned to Argentina in 1983 when Raul Alfonsin took office... not 1984.

Anyway, I know somethings about the political history of Argentina but not the economic. From your post, you have suggested that the lack of diversification and a reliance on certain agricultural products (that are easily affected by the world economy) are the economic mistakes of the Argentine elite. Political instability is the political problem of the elite. However, now that a certain degree of political stability in Argentina has returned (no military coup during the 2001 meltdown) and foreign investment is returning, is there more of a chance for Argentina to regain its "developed nation" status? In 40 years?

However, I have to disagree with you to some extent that none of the wealth trickled down to the masses during Argentina's golden age. Despite the fact that Argenitna always had much inequality, there was always a much large middle class than in most Latin American countries. Therefore, SOME wealth has indeed reached the masses.

On the other hand, what is the role of education in this entire picture? I understand that the literacy rate are faily good, but aren't too many university degree in psycology and sociology instead of math and sciences? Secondly, is the new government in Argentina trying to diversify? What success are they having (except for tourism), despite the recent downturn?

Finally, do all historians agree with this explanation on the decline of Argentina?

[Torquemada]

Argentina is a very rich country, but the wealth is abroad. Should the wealth return and invested, Argentina would be one of the richest countries in the world. Problem is populism.

[eatfastnoodle]

A few points:

1. Argentina is not isolated, you can find most of Argentina's gifts in most Latin American countries, and you can find most of Argentina's ills in most Latin American countries. The same thing can be said about the US, to a lesser extent. So you need to find a deeper explanation for the very similar problem infesting almost all Latin American countries.

2. As pointed out by previous posts, most of Latin Americans, though nominally enjoyed independence, nonetheless became de facto economic colonies of European powers during the 18th and 19th century. They all had the same problem: few oligarchies in control of the economy, economy heavily concentrated in the production of one or few commodity items, frequent political turmoil as a result of the conflicts between the greedy&callous elite and restive&disenfranchised masses.

3. And (I don't want to veer into cultural mysticism, though I do think it's important personally) unlike another, much much much more successful developing region, namely, East Asia, Latin America has no political, cultural and social identity that extends back millenniums. The two biggest success stories in Asia, Japan and China, were both independent, proud and powerful nations before the colonial era, and their status as laggard during the 19th century produced national obsession to catch up with the west on every front. Some of their attempts failed, like Japanese militarism, Chinese great leap forward, but through these failures, you can see two nations that weren't still aren't satisfied to be second class citizens, even rich second class citizens of the world. Japanese imperial army swept Asia pacific nation. Chairman Mao sent army into Korea to fight the most powerful nation in the world, detonated nuclear weapon. You can call these actions foolhardy endeavors of some egoistical dictators. But it's precisely these kind of actions that solidify the position of China and Japan among nations. And it's precisely these kind of actions that represent a political class that might be dictatorial, that might be crazy, that might be not very careful when it comes to human lives, but nonetheless a political class that wants more that just their own personal fat bank account and their own personal luxurious lives (nuclear bomb can't make profit and it can't make you a billionaire, but it's important to have it to make yourself totally independent). It's the same kind of attitude and obsession that used to give bloody nose to British and Americans in WWII, Americans in Korean war, detonate nuclear weapon, later refocused on economic development that produced spectacular result.
Latin America is cursed with a political class that's too rich in wealth but too poor in ambition. Therefore, their existence can only produce conflict and instability with the poor masses which further inhibits the development of their country that naturally leads to more political extremes on both side, thus creating a vicious circle. While elite of successful developing nation, though rich as well, nevertheless want and do produce something that can satisfy the desire of the masses materially or psychologically, such as Japan's imperial expansion and China's status as one of super elite nuclear club, that smooth the relations between ruling class and masses (both Japan and China, back then, were far poorer than Argentina, but they had far less social instability and violent confrontations among classes.) which further empowers the ruling class to pursue other projects that benefit those on the top AND those at the bottom, namely, economic growth.

[Pretzelogic]

The USA may be joining Argentina in a debt meltdown.

[Tantalust]

There was a detailed explanation of Argentina's financial problems on the recently aired PBS series, "The Ascent of Money". Quite frightening.

[brassbin]

markg & eatfastnoodle, all i can say is when i grow up i want to be like you

just teasing good informative posts