A fairly common myth is the one that states that a fundamental error in the Argentine governments was in the growing tendency towards the country’s autonomy with respect to the world and, above all, in its levels of confrontation with the great hegemonic powers.
In the understanding of economic policies, myths also take the form of opposing options or terms, apparently irreducible, in decision-making or policies; such as that which would exist between indebtedness or internal savings, between inflation or convertibility, between nationalization or absolute freedom of the markets. Or the one that seeks to confront welfare policies versus flexibility and competitiveness, or an even more recent one, which points out the apparent need to choose between accepting globalization or carrying out national policies.
It is true that Argentina had an acceptable rate of economic growth at the beginning of the 20th century, although the idea that it was one of the richest countries is unseemly. One might wonder if its growth was due to extremely intelligent leadership, but it was not. It would have been if instead of playing with England, the United States had accepted. The Argentine supremacy systematically opposed an alliance with the United States, because it represented a threat to business with the United Kingdom. We lost the historic opportunity to embrace industrialization, creativity and entrepreneurship, because for the lazy landowners, it was easier to fence the gifted fields and let the cows graze. They did not register that a change was coming in the world, the agricultural-livestock business was declining and the industry was growing. The US did not miss it.
It was easier to have a rural economy with few families, with a subpopulation, linked to England, good customers for meat, skins, wool and grains. It was enough to benefit from the natural riches of the humid pampas and themassive agricultural exports from which foreign currency was obtained to import manufactured goods and request financing. Borrowing for supremacy, it was a sport. World markets required agricultural products, especially Great Britain. We had “cheap labor” due to the immigration of populations from countries in crisis in Europe. At the beginning of the last century, half of the population of the City of Buenos Aires was foreigners. The police were Turkish, the service personnel were Spanish, in construction there were Italians and, in the fields, Russians, Ukrainians, Italians, Syrians, etc., raised the harvest. Clearly in business and architectural design, there was room for the English and the French. Thanks to these factors, it was possible to obtain the foreign exchange that made it possible, especially, the enrichment of a landed elite. A small part of society was rich.
Social legislation began in the 1940s. No important social law had been enacted until the arrival of Peronism (creation of labor courts, bonuses, paid vacations, severance pay, etc.). That is the public spending that Creole neoliberalism has to reject to this day.
IN ARGENTINA THERE WAS NO INFLATION BECAUSE CONVERTIBILITY REGULATED
The gold standard began in 1819, when Parliament passed the Resumption Act. This was the first move towards the gold standard. Under the gold standard system, countries set the value of their currencies in terms of gold, so any deficit in the balance of payments had to be made up by transferring gold. Although in the 1990s, our Convertibility ($1 = US$1) we borrowed or sold “grandmother’s jewels” for more than US$100,000 million. The responsibility of a Central Bank was to safeguard the parity between its currency and gold. To meet the objective, the Central Banks had to preserve the stock of gold reserves. External balance was not the objective of the current account, but the idea was that the Central Bank neither gained nor lost gold, to avoid fluctuations in the balance of payments.
in alone 20 years they arrived in Argentina 3 millions of immigrants Europeans, without counting 1 million from other origins. Total, 4,123,800 inhabitants in 1895against 8,162,000 inhabitants in 1915. (Source: “The growth of the Argentine population”, Ramiro A. Flores Cruz). Another fallacy is that, when talking about 1890-1930 as a base and; GDP per capita is compared with reference to continental Europe, it is omitted that the period includes a war world (1914-1919) which obviously severely affected the performance of European countries, compared to other countries at peace.
In summary: In Argentina, the inflation rate was low from 1890 to the 1940s because the world gold standard worked.-and, until 1919, consumption did not put pressure on demand, because it was restricted to a select minority. Low salaries prevailed, for employees or operators without labor rights, industrial production was low and dollars came from primary exports. The opening of the economy was unconditional, which is why it looks like the golden stage. But the technical macroeconomic relationships that neoquantitativist macroeconomists usually mention lack any international and local context.
PERIOD 1900 – 1916
Consumption represented 60% of GDPof which approximately “88% was due to the Consumption of a few”. He 13.5% of GDP was made up of Public spending by a few – a supernumerary supremacy with very high salaries. There were no subsidies, social plans, universities, schools, hospitals, doctors, teachers, nurses, police; in proportion to the population. 24.52% of GDP was explained by Investment, since GDP was low, as it did not contain internal consumption. Exports represented 21% of GDP, they seemed high because internal activity was precarious. Imports represented 19% of GDP, a good luxury proportion since there was almost no industry. Exports exceeded imports by 11% approximately. In the world, half of what was the First World War 1914 – 1919 was going through..
If the context is not expressed, it is the same as when the poor performance of the US in 2020 is mentioned, without mentioning COVID-19. In 1916, the UCR became a government for the first time, defeating the conservatives. The UCR was born as an opposition of the Conservatives, not as an alliance (Together for Change). From this moment the UCR would achieve three consecutive presidencies.
UCR: 1919 – 1929
President Hipólito Yrigoyen would issue foreign debt at high rates and complete the collection of export duties. 1914-1919. Periodizing, 1919-1929 the GDP grew at an average of 6%, with the popular Government. There was no economic reason to explain a coup d’état.
However, the opening of the economy -exposed to exogenous shocks- has suffered since the 1929 crisis. Foreign trade slows down (protectionism restricts Argentine exports. In addition to the “sudden stop” (Calvo), the flow of capital decreased considerably). Argentina is neutral during the war, and that contributed to exports to countries in conflict being in demand. Argentina exported agricultural products, meat, wool, leather, cereals, linen, etc.
Yrigoyen’s return in 1928 was not well regarded by the traditional elites., who began to prepare a coup d’état in which civilians and military participated. It was always the same. This occurred in September 1930 marking the return to power of the old conservative supremacy.
1930 – COUP D’ÉTAT
The violent conservatives take power through a civic-military coup d’état, overthrowing President Hipólito Yrigoyen and what is known as “the infamous decade” begins, by those who held power through fraudulent elections. “To not give more than one example, in Argentina 1930 1% of the owners monopolized 70% of the surface. Compared to that small agrarian supremacy that controlled the core of those countries…” in reference to Latin America (“The century of populism: history, theory, criticism”, Pierre Rosanvallon, 1st. ed. Autonomous City of Buenos Aires: Manantial 2021)
The excessive dependence on imported industrial products and foreign capital goods (60%), given the low industrial development, invited without alternatives the next stage that would come of “Import Substitution”.
The agro-export model was exhausted and entered into crisis, the devaluation of the peso modified all the indicators in pesos, but Argentina was also on the verge of falling into default, like every time the same anachronistic model that the two options propose to us today is exhausted. of the opposition.
Director of Esperanza Foundation. https://fundacionesperanza.com.ar/ UBA Postgraduate Professor and Master’s Degrees at private universities. Master in International Economic Policy, Doctor in Political Science, author of 6 books
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
