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Comment by confusedcitizen | Hacker News Reader

This is another economist trying to beat the capitalistic drum. Apart from Peron's protectionist policies (which some call a drive toward self-sustenance), one shouldn't forget contributing factors like the 1948 exclusion of Argentina exports from the Marshall Plan by the Truman administration. Peron might have been mistaken on many counts, but so many things are ignored behind the veil of apparently protectionist policies, like worker protection and upliftment, social infrastructure growth, etc.

What a myopic article, so many things are ignored, he's trying to put blinders on us.

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"Apart from Peron's protectionist policies (which some call a drive toward self-sustenance)"

Trade protection and autarky have long been defended by words like "self-sustenance," and the like, but such policies have never turned out well: just ask India and China before they modernized and liberalized their economies.

"Peron might have been mistaken on many counts, but so many things are ignored behind the veil of apparently protectionist policies, like worker protection and upliftment, social infrastructure growth, etc."

Maybe: but by virtually every metric, Argentina is now worse off than countries like Spain and Italy, which have (relatively) liberal economic policies and relatively high rates of education.

Menem, a peronist president in the 90s, undid many things Peron did. His government was a poster child for deregulation and what's called neo-liberalism. They privatized almost everything in a ruthless manner. The crisis of 2001 was a consequence of all those policies.

I am against publicly owned corporations and services but I'm against raw short-sighted capitalism, too. Some of the privatized public corporations had operating surplus, were not monopolies and were worth billions. Those were given to foreign investors who bought them taking credits over the same assets bought. Then proceeded to raise prices, perform massive layoffs, and vacuum capital to service companies owned also by those same investors.

I am quite against socialism (left or right) but you clearly lack knowledge on Argentina. The country is far more complicated that you might think.

It is not an argument against capitalism when corrupt politicians sell companies below value to crooks. It is an argument for good governance, which countries also need.

"...just ask India and China before they modernized and liberalized their economies."

Well, modernization and liberalization of economies have increased the economic divide in India. It's not that liberal economic policies are wrong, just that their implementations are always skewed by greedy corporations. A government's responsibility is not only to cater to cash sinks but also the people they govern, which especially in India, is the poor majority. Of course the GDP goes up, there is no question about that. But at what cost?

Note that "increased the economic divide" sounds bad, but there's no way from that statement alone to know whether people are better off or worse off, on the whole. If the "economic divide" was broadened merely by making some people better off faster than others, as is usually the case in a freer market, then there's no problem. It's only when people actually get poorer in terms of what they can do and have that "increasing the economic divide" is a problem, but that's much less common than nearly everyone getting poorer, which would have the effect of narrowing the gap by at least some measures.

I agree to what you say, but by economic divide in India, I meant, the rich get richer, the poor, frankly cannot get any poorer there and are untouched, maybe even adversely affected by the economic boom.

For the sake of free-market policies and rampant industrialization, people are displaced without their consent. For example, dams alone have displaced more than 30 million people in India.

Successive governments like to publicize decreasing poverty figures, which are constantly rebutted by independent agencies.

A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees per day (USD 0.50 nominal, USD 2.0 in PPP), with most working in "informal labour sector with no job or social security, living in abject poverty." [http://www.reuters.com/article/latestCrisis/idUSDEL218894]

For the sake of free-market policies and rampant industrialization, people are displaced without their consent.

If people are losing their land without their consent, then the market isn't free. I guess we're losing the original meaning of "free market", here, which is just the latest in a list of such redefinitions to suit whatever the politicians want to do, while saying nice things. The euphemism treadmill strikes again! :)

> If the "economic divide" was broadened merely by making some people better off faster than others, as is usually the case in a freer market, then there's no problem.

This seems a little optimistic. Having a large gap between the rich and the poor does in fact cause problems (e.g. social unrest).

It's unclear to me if this is human nature, or just cultural.

Either way, it still causes problems. And one can certainly point to historical examples of it causing unrest in culturally quite different societies.

What is the evidence that things are worse off for anybody in India today as compared to 1965?

Actually, Ha-Joon Chang pointed out that the economic powerhouses (US, UK, Japan, etc.) relied on enormous protectionism when they were developing. However, now that they're powerful, they "kick away the ladder" and push developing nations to struggle under the ineffective free-market principles that they knew to avoid. http://www.newamerica.net/events/2008/why_world_isnt_flat

the ineffective free-market principles that they knew to avoid

Compare and contrast:

The US, Canada, Japan, and western Europe, Australia, New Zealand.

Maoist China vs. Hong King, socialist India, the Soviet Union, Germany under the National Socialist German Workers Party versus today, East Germany vs. West Germany, Africa, Vietnam, Cambodia, etc, etc, etc...

What surprised me about the article was that I didn't see much 'capitalist drum-beating'. His argument is that the performance of Argentina versus the US can be entirely explained by education levels. Schools are typically provided by the government, and the idea of universal education was initially regarded as a radical one, often associated with early socialists.

I'm not sure if I agree with the hypothesis, but I'd rather hear a specific counter-argument. Your condemnation seems more suited to a rebuttal of the typical 'Argentina is poor because it's socialist' idea.

In fact, he does mention Peron's protectionism being a root cause (along with depression and wars) for Argentina's financial woes today. He states that protectionism, regulation, large state enterprises (which are anti-capitalistic themes) have never been 'particularly good for growth'.

I feel he does start of with the capitalistic premise. Only later is education hypothesized as a major culprit.

The key phrase is 'But why was Argentina's public sector so problematic?'. Other countries have thrived despite similar policies, what he argues is that lack of education led to poor implementations of them in Argentina.

I wouldn't disagree that he's starting from a standard narrative, but his argument doesn't require those causes as premises to explain Argentina's lack of growth.

Perhaps education makes the difference because a literate population can more effectively hold its government to account. Consider the proliferation of rabble-rousing newspapers, associated with every political stripe, during the late nineteenth and early twentieth centures in the US.

The problem with the argument is that it doesn't explain Argentina's performance when compared to all the countries with worse education levels (which are the majority).

i agree.

there's a lot of issues in the history of argentina that are brushed by in an attempt to make this a simple economic policy debate.

for example, they were quite politically unstable. there was a coup in the 30s, 40s, 50s, 60s, and 70s. the ruling military government died in the 80s after a brief war. a prosperous economy is difficult to foster without a stable governmental structure, regardless of what that structure is.

But might the political instability also be a symptom of the educational level?

(Anyone want to plot education-in-1900 vs. coups-in-20th-century?)

could be. i'm sure there's a lot of chicken/egg questions that could be asked with respect to a lot of issues in the country.

Extremely myopic, indeed. Peron was an authoritarian and a demagogue, but he improved most social indicators of the country. Sure, GDP diminished but that was part of the cost to make Argentina an industrialized nation. Also the infrastructure of the country improved significantly.

IMHO, it's quite hard to understand a right-leaning socialist government from the point of view of a US citizen. There's no reference.

If education was truly that bad, I have a hard time seeing those improvements as social ones. They seem more like a side effect of strong authoritarian policy.

I don't buy the article's explanations thus far; though it appears to be one of a series and I look forward to reading more.

But I also am not swayed but your assertion that progress in a socialist country is too alien for we crass capitalists to gauge.

I don't think it's that difficult with proper reference to historical examples. The first socialist welfare programs in Europe were instituted by authoritarian, nationalist, militarist Prussian leadership shortly following the unification of Germany. It was part of Bismarck's strategy to undercut the republican reformist sentiment left over from 1848, and bind the common people to the state through conservative handouts.

Another interesting book looks at the welfare programs instituted in Nazi Germany as part of their corporatist 'third way' economic system (supposed to avoid reliance on free trade industrialism and inoculate against cosmopolitan bolshevist appeals): http://www.amazon.com/Hitlers-Beneficiaries-Plunder-Racial-W...

Right-leaning socialism was the original socialism in practice in Europe.

"Sure, GDP diminished but that was part of the cost to make Argentina an industrialized nation."

That sentence doesn't even make sense. The whole point of industrialization is to boost economic output. That's what it does almost by definition.

The nationalization had a major impact on outputs and in particular on agriculture exports. Go to Gapminder.org and check GDP during Peron's first presidency 1942-1955.

http://en.wikipedia.org/wiki/Peron (not great but a good start.)

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