At the Sovereign Man blog, Simon Black discusses Argentina’s sad history of central planning failures:
The more interesting part about Buenos Aires, though, is that this place is the headquarters for the central planning bad idea bus.
Argentina’s President, Cristina Fernandez, continues to tighten her stranglehold over the nation’s economy and society.
This country is so abundant with natural resources, it should be immensely wealthy. And it was. At the turn of the 20th century, Argentina was one of the richest countries in the world.
Yet rather than adopting the market-oriented approaches taken by, say, Colombia and Chile, Argentina is following the model of Venezuela.
Cristina rules by decree here; there is very little legislative power. She may as well start wearing a crown.
Just in the last few years, she’s imposed capital controls. Media controls. Price controls. Export controls.
She’s seized pension funds. She fired a central banker who didn’t bend to her ‘print more money’ directives. She even filed criminal charges against economists who publish credible inflation figures, as opposed to the lies that her government releases.
Inflation here is completely out of control. The government figures say 10%, but the street level is several times that.
[. . .]
Being here in this laboratory of central planning makes a few things abundantly clear:
1) Printing money does not create wealth. If it did, Argentina would be one of the richest places in the world again.
2) All of these policies that are ‘for the benefit of the people’ almost universally and up screwing the people they claim to help.
Printing money creates nasty inflation. If you’re wealthy, it leads to asset bubbles, which can make you even wealthier. If you’re poor, you just get crushed by rising prices. Or worse – shortages (remember the recent Venezuelan toilet paper crisis?)
3) Desperation leads to even more desperation. The worse things get, the tighter government controls become… which makes things even worse. It’s a classic negative feedback loop.
Both the United States and pan-European governments are varying degrees of this model, with only a flimsy layer of international credibility separating them from the regime of Cristina.
So Argentina is really a perfect case study in things to come.
