Alex's Outlook

Thursday, May 15, 2003

It looked like Argentina might finally get a laissez-faire party under Carlos Menem and his New Peronist free-market allies. Unfortunately, Menem wasn't the right man to do it, and his extreme corruption obscured his message. He quit the race for the Argentine presidency, leaving socialist Peronist Nestor Kirchner as the winner by default.

Kirchner is an old-style Peronist who favors micromanaging the economy through huge public works programs and high taxes. He might consider looking at Japan, which has been pouring concrete by the truckload over the past ten years, trying to spend herself out of recession. (Her deficits have run at 7 percent of GDP annually with a cumulative total of 150 percent - which would be like Bush dealing with a $16 trillion deficit and running $750 billion in deficits this year.)

Of course, Kirchner has no clue how to pay back Argentina's many foreign creditors while spending so much in the red. Either Argentina is going to default on her loans or Kirchner's gigantic public works program - including 3 million new homes - is going to crash and burn. Another grand socialist experiment is about to take place. Again it will fail - just like the New Deal, the Great Society, the late 70's Labour welfare state in Britain, and today's Japanese Keynesianism have all failed. Don't expect the media to make much hay out of that, though.

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