Argentina: Statism Triumphant

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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.

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.

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

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.

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

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.

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.

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

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.

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

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.

24, 2001

Malic [send him mail]
is a libertarian, and a foreign affairs columnist for
His column, Balkan
, appears on Thursdays.


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