Americans should mind the lesson of Argentina, whose bright potential once again is being squandered.
Spend to create jobs, only to see businesses dry up; use political power to pressure "reforms" that increase the power of government; mobilize the poor against the "rich," only to have inflation rob the poor of their bread. That is the illusionary agenda of left wing economics on display again right now in Buenos Aires.
Alexi Barrionuevo writes in the New York Times that the government of Cristina Kirchner "has tried to quell concerns about mounting inflation by continuing to keep the economy growing in China-like rates, largely fueled by high soybean prices. The government also says the country is in the midst of a consumption boom, pointing to domestic car sales that reached record levels in 2010.."
The trouble is, when inflation rages people with money consume it on things like cars because they believe, correctly, that at least they can get something tangible by spending their currency now. It they save or invest it, they will have nothing to show (inflation is over 30 percent a year already, and rising). Consumption spending is not a vote of confidence in the economy, but just the opposite.
Over and over, for the seventy years since the Juan and Eva Peron appeared, left wing populism in Argentina has traded on people's ignorance of economics and impatience with fiscal discipline. Each time a government finally comes to power to stop inflation and unsupported spending, the voters soon throw them out--before the medicine can work. Then comes another inflationary binge. Argentina, as a result, is the classic example of reverse development, how a first world country (which Argentina was a century ago) becomes a third world country.