The Corner

Perónism Lite

Count me in with Mark Steyn and Andy McCarthy: no increase in the debt limit, no way, under any kind of deal. Let’s end the phoniness. (Which is epitomized by the very expression “debt limit.” If Congress can, and does, raise the limit any time expenditures look like breaking through it, in what sense is it a “limit”? The only real limit on how much you can borrow is how much other people are willing to lend you.) The crisis must come, and the longer it’s delayed, the worse it will be.

The more I look at the history of our national debt and federal spending, the more it seems to me that the dominant economic outcomes of the post-WW2 era owe little to Keynes, Hayek, Friedman, or any of the other big names economists toss around. These were mere philosophers, in the same relation to our political decisions as the Christian theologians of the Middle Ages were to the actual behavior of European princes.

The guiding spirit of fiscal management in the advanced world this past half century has in fact been Juan Perón, who ruled Argentina from 1946 to 1955 (and again, but inconsequentially, 1973–4). From Paul Johnson’s Modern Times:

As President, Perón gave a classic demonstration, in the name of socialism and nationalism, of how to wreck an economy. He nationalised the Central Bank, railways, communications, gas, electricity, fishing, air-transport, steel and insurance. He set up a state marketing agency for exports. He created Big Government and a welfare state in one bound: spending on public services, as a percentage of GNP, rose from 19.5 to 29.5 per cent in five years. He had no system of priorities. He told the people they would get everything at once. In theory they did. The workers were given thirteen months’ pay for a year’s work; holidays with pay; social benefits at a Scandinavian level. He would track down a highly successful firm which spent lavishly on its workers and force all firms to copy its practices, regardless of their resources. At the same time he carried out a frontal assault on the agricultural sector, Argentina’s main source of internal capital. By 1951 he had exhausted the reserves and decapitalized the country, wrecked the balance of payments and built wage-inflation into the system. Next year drought struck the land and brought the crisis into the open. Seeing his support vanish, Perón turned from economic demagoguery to political tyranny. He destroyed the Supreme Court. He took over the radio station and La Prensa, the greatest newspaper in Latin America. He debauched the universities and fiddled with the constitution. Above all, he created public “enemies”: Britain, America, all foreigners, the Jockey Club, which his gangs burned down in 1953, destroying its library and art collection. Next year he turned on Catholicism, and in 1955 his labour mobs destroyed Argentina’s two finest churches, San Francisco and Santo Domingo, and many others.

That was the last straw. The army turned him out. He fled on a Paraguayan gunboat. But his successors could never get back to the minimum government which had allowed Argentina to become wealthy. Too many vested interests had been created: a huge, parasitical state, over-powerful unions, a vast army of public employees. It is one of the dismal lessons of the twentieth century that, once a state is allowed to expand, it is almost impossible to contract it.

Now of course the U.S.A. is not Argentina. The balances of power — civilian-military, agricultural-industrial, domestic-international, legal-political — are all different, and were before Juan Perón showed up. His brutish methods would not do for us. They permitted him to accomplish in a few years what has taken us decades.

We have, though, followed the same trajectory as Perón’s Argentina, albeit more slowly and gently. He got from “the minimum government which had allowed Argentina to become wealthy” to “a huge, parasitical state” with “a vast army of public employees” in just five years; it has taken us five decades. The end result for our respective peoples will be the same.

After I’ve done one of my Radio Derb gloom’n’doom spots about the coming catastrophe I always get emails from listeners asking what I imagine things will be like after the Big Splatter. Well, it’s not hard to figure. Economic collapse is not a new thing in the world. Argentina offers several models: it has been through entire cycles of collapse and recovery since Perón sailed away on that gunboat.

So far as the effects on everyday life are concerned, the crisis of 1999–2002 is probably most relevant. Wikipedia has a decent article here. People coped as best they could:

Several thousand newly homeless and jobless Argentines found work as cartoneros, or cardboard collectors. The 2003 estimation of 30,000 to 40,000 people scavenged the streets for cardboard to eke out a living by selling it to recycling plants. This method accounts for only one of many ways of coping in a country that at the time suffered from an unemployment rate soaring at nearly 25 percent.

People helped each other, too:

A survey by an Argentina newspaper in the capital found that around 1/3 of the population had participated in general assemblies. The assemblies used to take place in street corners and public spaces, and generally gathered to discuss ways of helping each other in the face of eviction, or organizing around issues like health care, collective food buying, or conducting free food distribution programs. Some assemblies started to create new structures of health care and schooling, to replace the old ones that were not working.

There are other cases of nations hitting a fiscal-economic event horizon, notably post-U.S.S.R. Russia. Post-Mao China was a milder case. When Maoism was being dismantled in China during the 1980s and “iron rice bowls” were being smashed all over, people coped somehow. Well-connected or entrepreneurially-gifted types made out like gangbusters. (If you were well-connected and entrepreneurially-gifted — hoo-ee!) Others — I am speaking of people known to me personally — sank into poverty, falling back on family and friends for support. You do what you have to do. You survive. Unless you live in the Horn of Africa, your chance of dying from starvation in a modern nation is vanishingly small.

Of course, none of these cases maps well to the present-day U.S.A. The Argentine economy is not the keystone of international finance; Russia is an order of magnitude more corrupt than us; China is a totalitarian dictatorship. Undoubtedly the inevitable crisis, when it comes to us, will have peculiarly American features formed by our own history, geography, and demography.

We’ll survive somehow, though. And when the pieces in the kaleidoscope have settled into their new configuration, I do believe we shall be a freer, more politically healthy nation, with perforce a return to old American traditions of self-support and mutual aid. The age of Perónism Lite — the notion that everybody can have everything — will be over.

(Well, that’s my belief and hope. The most depressing thing about the Perón story is that he remains widely popular in Argentina. His Justicialist Party actually boasts of its Perónist lineage. The current President of Argentina is a party member …)

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