“You can’t stay young forever,” says writer John Helyar, “but nobody ever said anything about immature.” Argentina seems to bent on proving his point; the most cosmopolitan and in some ways most European of Latin American countries is getting older, but its commitment to underdevelopment and economic failure appears undiminished with time.
Having just elected its populist Peronist president Cristina Fernandez despite some of the most widespread evidence of government economic malfeasance ever presented to a western electorate, Argentina is now preparing for yet another debilitating economic crisis and meltdown of the kind that have kept the country trapped in a cycle of underdevelopment for most of the last 100 years.
As the peso declines (losing 1/4 of its value against the shaky and weak kneed dollar since her first election in 2007 in the face of a commodity boom which under normal conditions should have seen the peso rise), the Argentine government set off a national economic mess by rejiggering rules on currency exchange to make it harder for Argentines to switch pesos for dollars.
Fair enough in some ways: decades of predatory and irresponsible government have driven many Argentines to tax evasion schemes that would make a Greek feel naive. Rules to require Argentines to give their tax ID numbers as a way to crack down on the black market might, combined with good governance, be a step in the right direction. But there is little sign that the current government intends to launch a wave of good-government reforms. On the contrary.
Typically in Argentina as each failed “miracle” economic solution begins to unwind, governments resort to increasingly desperate and irrational methods to hide the erosion of their program as long as possible. Most Argentines, cynical about their governments to a degree that even birthers and truthers would have a hard time fathoming, do not think the Fernandez government is an exception to the rule.
One hopes they are wrong, but it looks increasingly as if Argentina is now embarked on the next phase of its recurring bipolar economic disorder. The manic phase has peaked and the long and painful fall has now begun. The next step of the cycle is marked by increasingly desperate and wild struggles of a government to cope with increasingly intractable and pressing problems. During this cycle, seasoned Argentines often begin moving their money out of the country and anticipating one of the recurring bouts of inflation that periodically reduce the nation’s money to worthlessness.
Literally, to worthlessness: I was once visiting the cathedral in Buenos Aires and one peso notes (then worth approximately one seventh of a US cent) were blowing across the plaza in the wind. Homeless beggars camped on the cathedral steps didn’t even bother to snatch the notes out of the air as they blew past; the money eddied and skittered across the pavement like autumn leaves. Perhaps someone somewhere raked and burned them.
The cycles are of unpredictable length; governments develop new ways of staving off disaster, but investors find new ways to short circuit new government measures. External developments also effect the timing; the current commodity boom has probably extended the life of the current cycle by three years or more. A global commodity bust would take Argentina down very quickly; continued high commodity prices could prop things up a bit longer.
But the cycle will continue for decades to come, relegating new generations of Argentines to poverty and frustration, unless and until Argentines genuinely decide that they have had enough. So far, they haven’t.
For foreigners, there is a silver lining. At some points in the cycle, this exotic, beautiful and in every way charming country becomes one of the world’s great travel bargains. Keep your eyes on the peso — and on the ‘parallel’ rate rather than the official one if the country goes back to the capital controls that have so often failed it in similar circumstances in the past. There will come a time when visits to the unforgettable city of Buenos Aires; the unsurpassable beauty of the Iguazu Falls; a drive through unforgettable scenery and Spanish colonial architecture from Salta to Jujoy; a visit to the penguins, sea elephants and whales against the windswept South Atlantic cliffs where Darwin puzzled over the riddles of life; cowboy barbecues on the pampas; Welsh tea parties in Patagonia; the stark majesty of Mount Fitzroy and the dramatic landscape around the Perito Moreno glacier will all be within the reach of world travelers on modest budgets.
When that time comes, strike and strike quickly. Otherwise you will have to wait anywhere from five years to a decade as the cycle turns once again.
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