Peronists are back in power, inflation is on the rise and economic freedom is on the decline in Argentina


The results of the 2021 edition of the Heritage Foundation’s “Index of Economic Freedom” will be announced shortly. But here’s a preview: economic freedom in Argentina, which had registered considerable improvement during the four years of the center-right Macri government, began to decline again in the year following the return to power of the Peronist Party in Casa Rosa.

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Once one of the richest nations in the world, Argentina is the second largest country in South America. It has vast agricultural and mineral resources and a highly educated population. But it also has a long history of political and economic instability due to the domination of the Peronist Party for decades.

As Heritage analysts reported, Colonel Juan Perón, an admirer of Hitler and Mussolini, seized power in a 1943 military coup in Argentina with the backing of left-wing unions. . He and his henchmen deployed the same fascist tactics and squads that his idols had to consolidate power.

Eventually, Perón built a sprawling welfare state to buy the future loyalty of voters and set up a brutally effective “Peronist” political machine, which de facto ruled Argentina for most of the next nearly eight decades.

In the process, Perón nationalized industries, created inefficient and corrupt state-owned enterprises, imposed Marxist-inspired “import substitution” policies, created a government monopoly to control all exports, jailed political opponents, and censored critics. medias.

Peronist President Alberto Fernández and Vice-President Cristina Fernández de Kirchner, Fernández’s predecessor as President, began their four-year term in December 2019. Their party controls both chambers of Congress. Cristina and her late husband, Nestor Kirchner, previously held the presidency from 2003 to 2015.

In 2020, the government reached a preliminary agreement with bondholders to resolve the most recent of its nine defaults on sovereign debt. Nonetheless, disillusionment among Argentines remains widespread due to the country’s weak economy and the still unresolved public debt crisis.

This disillusion is rooted in decades of economic mismanagement and Corruption under the Peronists. Taxing and spending too much is the motto of the Peronists. Now that Argentina is again largely excluded from global capital markets, the non-independent central bank is simply printing pesos to fill the Peronist government’s lingering deficits.

The Economist reported last fall that despite “price controls, the inflation rate exceeds 36%”. According to Reuters, high inflation continued into 2021.

According to Johns Hopkins economics professor Steve Hanke, the real inflation rate in Argentina over the past six months has reached four times higher than official rates published by the government’s national statistics office.

Unfortunately, the current Peronist government’s program, intended to undo many of the reforms carried out by the previous center-right administration, includes import and currency controls, the expropriation of companies in key sectors and new subsidies. . These policies are likely to continue to degrade economic freedom in several areas, especially with regard to declining monetary freedom.

To truly reverse this negative trend and put the country back on a sustainable path to greater economic freedom and prosperity, a future government would need to control the presidency and legislature. It is up to the Argentines to elect such a government with the mandate to carry out the painful and far-reaching structural reforms necessary to uproot the cumulative and toxic impact that peronism had on Argentina.

This piece originally appeared in The daily signal.


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