Many observers have pondered if the United States is following the same troubled path as Argentina. In the 1940s, Argentina’s Juan Domingo Perón used government agencies for political gain and created a popular form of fascism called Perónism. In the United States, the recent revelation of the Internal Revenue Service targeting political enemies is a bad omen. Are we on an Argentinean course?
The road to decay in my native country, Argentina, began with the implementation of one of the most powerful collectivist doctrines of the 20th century: fascism. The Labour Charter of 1927 – promulgated by Italy’s Grand Council of Fascism under Mussolini – is a guiding document of this doctrine and provides for government-based economic management. This same document recommends government provision of healthcare and unemployment insurance. Sound familiar?
Since adopting its own brand of fascism, “Justicialismo,” Argentina began to fall in world economic rankings.
- In 1930, Argentina’s gold reserves ranked 6th. After the “experts” took over the central bank, reserves fell to 9th in 1948 (with $700 million), 16th during 1950-54 (with $530 million), and 28th during 1960-1964 (with $290 million).
- The Argentine central bank, created in 1935, was at first a private corporation. Its president lasted longer (seven years) than the president of the country, and it had strict limits for government debt purchases and even had foreign bankers on its board. It became a government entity in 1946.
When Perón assumed power shortly thereafter, he hastily expanded the role of government, relaxed central banking rules and used the bank to facilitate his statist policies. In just 10 years, the peso went from 4.05 per U.S. dollar to 18 in 1955 (and later peaked at 36 that same year). After Perón’s rule, Argentina further devalued its currency to 400 pesos per U.S. dollar by 1970.
Bipartisanship in bad policy-making can be especially damaging. Just as some of President Obama’s interventionist monetary policies were preceded by similar Bush administration policies, some of Perón’s policies were similarly foreshadowed: “Already before we reached power, we started to reform, with the approval and collaboration of the previous de facto regime,” said the populist.
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