Argentina: Statism Triumphant
by Nebojsa Malic
December 29, 2001

Last week’s events in Argentina were overshadowed by details of Osama bin Laden’s alleged videotape confession. Yet what happened in Buenos Aires is a far greater danger to the future of America than what happened in Tora Bora.

On the surface, it does not appear so. Angry mobs had rioted throughout the country for two days, causing 24 deaths and extensive destruction of property, forcing President Fernando de la Rua to resign on Thursday. Apparently, they were angry at De la Rua’s economic policies, alleged to have impoverished the country.

In reality, what we saw this week was a full-blown statist revolution, led by the fascist-flavored Peronist party but executed by the ignorant, welfare-dependent mob – a Dolist revolt, if you will. De la Rua’s "crime" was his commitment to private property, free market and economic liberty, and his attempt to dismantle the destructive system of state capitalism that is the real culprit for Argentina’s demise.

The Washington Post report claims Argentina was "one of the seven richest nations in the world" a century ago, but fell to ruin because of "decades of dictatorship and poor administration." In practice that meant Argentine leaders borrowed heavily from overseas in order to fund the country’s bloated social services budget, while protecting domestic industries from competition through tariffs and trade barriers. As a result, Argentina’s foreign debt ballooned to $132 billion (!), while its economy remained stunted, with most people dependent on the state for subsidized sustenance.

When De la Rua attempted to relax state control of the economy, abolish tariffs and trade barriers and begin paying down the debt, Argentina’s feeble economy went into shock. Coddled for too long by mercantilist protections, it could not compete with foreign enterprises. As industries failed, unemployment, poverty and homelessness shot up. Faced with reductions in state-subsidized wages and the dole, the mob rose up in anger – putting the blame on capitalism, foreigners and the free market. They did not understand, of course, that state-subsidized cronyism and capitalism have very little in common; that tariffs, not the market, kept them poor and their economy stunted; and that Argentines were disadvantaged in dealings with foreigners precisely because they have been controlled and restrained by the all-powerful State.

Lack of economic liberty, not its alleged "surplus," was the real cause of Argentina’s economic downfall. One does not have to read Mises to figure out that someone will have to pay back the $132 billion in funds wasted on corporate and mob welfare someday; and while Argentina’s ruling elite privatized the benefits of debt, it has entirely socialized its costs. Now Argentina’s homeowners, debtors or all sorts and small businessmen will be made to pay through the nose for having been pilfered all these years.

Indeed, those who fared well in an open market – shopkeepers and small businesses – were worst-hit by the rioting mobs. Dozens of stores and establishments were sacked. Those that survived did so only because their owners defended their property with sticks, spears, and even guns. The government police, of course, was nowhere to be seen. Thus the only Argentines who were competent enough to manage and prosper in a free market were set upon and ruined by the masses of those who were not.

Now that the Peronists are in power, Argentina can look forward to more state control of the economy (and the accompanying restrictions of civil liberties, all "for the people" of course), more poverty, more recession, and a devastating, rampaging inflation. Worse yet, if the country defaults on its foreign debt, there will be no more slop to fill the public trough. What will the mob do then?

Faced with the prospect of liberty that threatened their economically irrational, servile existence, Argentine mobs reacted the only way they knew – with violence, just like the government they have worshipped for so long. Argentina thus became the living example of a society so diseased with statism that it refuses to be cured.

Will the creeping Statism in the United States turn this country into another Argentina some day?

The forces of Statism triumphed in Argentina this week, dealing a heavy blow to liberty. That victory, however, will be short-lived if the rest of the world took notice of what transpired, and realized that Statism is not a solution to poverty, but its cause – not a cure, but the debilitating affliction itself. Though statists everywhere will no doubt cite Argentina as proof that freedom does not work, the truth is that it does, and must work. Otherwise, the lights will go out all over the world, and we will all be reduced to the violent, mindless, self-destructive mob that has just plunged itself – and Argentina – into the darkness of servitude.