This is where decades of big-government tax-and-spend policies lead.
This is where decades of big-government tax-and-spend policies lead.
I f you think inflation is bad in the United States, try living in Argentina.
Argentina’s annual inflation rate now exceeds 70 percent — a 30-year high. Its monthly inflation (just under 8 percent) is comparable to the U.S.’s annual inflation, with prices rising so much that the country’s central bank recently hiked interest rates to 69.5 percent.
The only real economic certainty for Argentines is that piles upon piles of “billetes” (cash) are required to buy even basic household items. The same cut of meat may cost twice as much today — and three times as much tomorrow — as it did yesterday. A two-hour domestic flight now costs the same as a month of college tuition. One pair of sneakers costs the same as the minimum monthly social-security payment, while a new iPhone may cost half a year’s rent. Four years ago, soccer figurines of players such as Lionel Messi (my favorite) cost 15 Argentine pesos. Today, they cost 150 pesos — a 900 percent increase.
In short, Argentina is starting to resemble Venezuela — and no country wants to resemble Venezuela.
How did things get this bad? The answer is actually quite simple: a big government that loves printing money. For decades, government intervention in Argentina’s economy has ballooned to such an extent that the state basically dictates the overwhelming majority of private-sector activity either directly or indirectly. The public sector’s meddling is notorious, crowding out the entrepreneurship, innovation, and job creation that keeps markets free and healthy. While Argentina’s population exceeds 45 million people, only about six million Argentines are employed in the private sector, while 55 percent of the country’s registered workers are employed by the government.
And public spending is gargantuan. Over the last year, Argentina’s debt has grown by an average of nearly $3 billion — one-half of 1 percent of the country’s total GDP — per month. The country’s economy — driven by U.S. dollars now, given the diminishing value of the peso — is burning through billions of dollars of foreign reserves on a weekly basis.
Meanwhile, Argentina still owes the International Monetary Fund $40 billion as a condition of the IMF bailout it received in 2018, and the government recently took out another $44 billion loan from the IMF to meet its debt obligation, heightening the risk of a future default.
My country’s story is one of excess and fiscal irresponsibility. It is a story of entrepreneurs disincentivized and replaced by government bureaucrats who recklessly and foolishly spend taxpayer funds — only to raise taxes on private companies when those funds dry up. It has been this way for decades, and there’s no end in sight.
Americans experiencing an inflationary economy of their own should be extremely concerned. Argentina may be in a worse position than the United States, but it is surely a cautionary tale to be heeded by U.S. policy-makers intent on growing government endlessly and stifling individual liberty.
Go down that road far enough, and before you know it, the market economy dries up — and you’re left holding a worthless Lionel Messi figurine.