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¿Cómo el peronismo convirtió a Argentina en uno de los países más pobres del mundo y por qué esto puede estar por cambiar?

How Peronism Turned Argentina Into One of the World’s Poorest Countries

The Austrian school of economics has regained a great momentum in Argentina, with referents such as the liberal economist Javier Milei, who has also entered the political arena

[Leer en español]

Argentina became the richest country in the world in 1895, long before the arrival of Peronism to power. The South American nation had the highest GDP per capita on planet Earth, at US$5,786, followed by the United States, Belgium, Australia and the United Kingdom.

Argentina has become one of the most miserable nations in the world due to the great interventions to its economy, the exacerbated protectionism, the nationalization and the socialist policies that began with the arrival of Peronism to power.

A little more than a century ago, Argentina had one of the most liberal economies in the world, which allowed Argentines to start working in the countryside and exporting raw materials to Great Britain, who was for many years its main trading partner.

President Julio Argentino Roca was perhaps the greatest architect of the country’s economic growth. During his first term of office, there was an expansion of land, labor and capital, due to immigration, which was very well exploited, with the granting of available land. At that time, sheep wool was one of the main export products and Argentine meat was gaining an enormous reputation in international markets.

Under Roca’s mandate, the so-called “Conquest of the Desert” took place, which annexed millions of hectares to the control of the country, which would later be used to strengthen and increase production and therefore, the Argentine economy; during that period, the economy of the Pampas went from cultivating 2 million hectares to more than 20 million; the production of meat and grains also increased exponentially, and little by little, Argentina, by selling its products abroad, became the richest country on the planet.

Julio Argentino Roca (Wikipedia)

The South American nation was also a successful example of migrant inclusion: Italians, Jews, Portuguese, Germans, Spaniards, and Guaranis made up the largest immigrant group; several of these arrived with capital to invest, which had a favorable impact on the country. Between the 1870s and 1920s, more than 70 % of foreign investment in the region came to Argentina.

However, World War I and the Great Depression in the United States affected the country’s economy as its main trading partners lost their ability to pay.

On May 1, 1933, the Roca-Runciman Pact was signed, which established that the United Kingdom would continue to buy Argentine meat as long as its price was lower than that of other world suppliers. As a counterpart, Argentina accepted the liberation of taxes for British products at the same time that it took the commitment of not enabling meat packing factories of national capitals; this made that when the Second World War arrived, Argentina reached a commercial surplus of 1.7 billion dollars accumulated; and then came the subject that would change forever the history of the country: Juan Domingo Perón.

The birth of Peronism

Lieutenant Colonel Perón swelled in popularity as Secretary of Labor and Social Security, making connections with the country’s socialist and communist labor unions, achieving negotiations that supposedly favored the employees; Juan Domingo’s popularity grew until he became vice-president, and then he was elected president of Argentina.

During the first Peronist period, his government was characterized by maintaining an exacerbated public expenditure, which he justified by “redistributing income to the poorest”, and began to intervene strongly in the economy.

Juan Domingo Perón with Eva Perón (Archive)

Juan Domingo Perón began to impose heavy tariffs on imports and exports, in fact, the four fundamental principles of his discourse were: “internal market”, “economic nationalism”, “preponderant role of the State”, and “central role of industry”; under these principles he proceeded to nationalize the Central Bank of Argentina in 1946, also all the railroad lines of the country were nationalized between 1946 and 1948, which previously belonged to British and French companies.

He began to build a populist discourse of a national socialist nature, inspired by the times that Mussolini’s fascism in Italy and Hitler’s German Nazism lived closely; in fact, Argentina was accused during the Perón era of receiving and doing business with the Nazis.Under these “economic principles”, the “20 Peronist truths” were also launched, which became biblical commandments for a large part of Argentines, some of the most propagated “truths” by his government were:

  • For a good Peronist, there can be nothing better than another Peronist.
  • The two arms of Peronism are social justice and social aid. With them, we give the people an embrace of justice and love.

When Perón became president in 1946, there were approximately 500,000 unionized workers; by 1951 this figure had risen to 3 million.

Thus began the great Argentine economic debacle, the domestic factors driven by Perón: uncontrolled printing of banknotes, high public spending, excessive inflation, high protectionism and excessive regulations, were damaging the nation’s business competition, pulverizing production margins, and collapsing the economic bonanza, in exchange for a “redistribution of income”; Argentines began to become poorer, but they had in front of them a man who told them that he was fighting for them.

Juan Domingo Perón (Archive)

The economic problems that arose in Argentina after being the most booming economy in the world, together with Perón’s disagreements with the Church, communication censorship of the “opposition”, and the violation of human rights, led to the coup d’état that would remove Juan Domingo from power in 1955 and take him into exile.

Unfortunately for Argentines, the military that came to replace Perón did not do much better; adhering to Peronist fever, they based their objectives on uncontrolled public spending and continued to put the country in debt and bury the national economy; all of this would serve as the impetus for Juan Domingo Perón to return from exile 18 years later to be elected president.

Perón’s messianism

Curiously, during the arrival of an aging Perón, a confrontation took place around the Ezeiza airport (Buenos Aires) between a communist guerrilla and a right-wing guerrilla, both supporting Juan Domingo; because of this ideological distortion in which opposing groups supported Peronism, it is said that “all Argentines are Peronists.”

The confrontation ended in a massacre that left a dozen dead; finally Perón would turn his back on the communist guerrillas, in spite of declaring himself a socialist; although certainly if one analyzes Peronist policies and their ideological allies, what best fits with Peronist postulates is fascism.

Soon after Perón died ill, his triumphal return did not have the glory so expected by the Argentines, and he was replaced in the presidency by his wife, María Estela Martínez de Perón, who served as vice-president of Argentina.

María Estela Martínez, ‘Isabelita Perón’ making the fascist sign (Archive)

Of all the presidents who came after him, Carlos Menem was the only one who tried to open the Argentine market and break the protectionist fence, but he did it accompanied by huge public spending and populist policies, in the most faithful Peronist style, so he was never able to balance Argentina’s public assets.

Then came the Kirchners, who also call themselves Peronists, but more radicalized to the left, and the populism did not stop, the result: today Argentina’s economy is one of the most miserable in the world and the Argentine peso is constantly devalued.

The Milei phenomenon and liberalism

What has happened in the last decades in Argentina is not an isolated fact, most South American nations have been penetrated by the socialist discourse of “redistribution of wealth”, and have seen how their countries have been impoverished causing massive migrations, as has happened in Venezuela, Cuba and Argentina itself.

However, recently, the Austrian school of economics has regained great momentum in the southern cone of America, with referents in Argentina as is the case of economist Javier Milei, who has also thrown himself into the political arena to win a seat in Congress and change the political, economic and cultural foundations of the country.

Javier Milei (Wikipedia)

Last Sunday in Argentina the primary elections called PASO were held, in which the Peronist Kirchnerist party lost in the main provinces of the country, being catalogued as a “historic” defeat by the local press.

Javier Milei was one of the most voted candidates, and if the trend of the primaries is maintained, he would win a seat in the National Congress, together with other liberal referents and politicians such as former presidential candidate Ricardo López Murphy.

After the historic results, Argentina’s country risk fell by 50 % and shares in the stock market soared, showing the confidence generated in investors by the arrival of liberal referents to Congress.

It is still too early to claim victory and liberalism is still not a majority in Argentina, but it cannot be denied that this is a hopeful beginning not only for the southern country, but also for all South American nations that desperately need a change in their economic, political and cultural bases to overcome the poverty and misery perpetuated by socialist governments in the region.

Part of the information contained in this article has been taken from Emmanuel Rincón’s book: The Ideological Reinvention of Latin America

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