With the global economy collapsing, and predictions about its future (even from the apotheosis of hope himself, Barack Obama) turning apocalyptic, it's hard to know what to think about the world economy in general or about the Argentine, American, Asian, or European economies in particular.
Voices from leading “left-wing” economists like Paul Krugman diagnose the malady and its cure one way (more government spending, but not just 'hole-digging') while leading “right-wing” economists like Harvard's Greg Mankiw pinpoint and prescribe things another way (permanent payroll tax cuts). Argentina's Domingo Cavallo indicated in his blog Saturday that the country's poor stock market performance implies a nasty recession. Others say the Argentine stock market has become merely symbolic and is of little relevant value in determining anything of importance.
So what is one to do amid the cacophony of voices and views? Who's right? What can the developed world learn from Argentina? What can Argentina learn from the developed world? Can Argentina's experience be of any help to Obama or British Prime Minister Gordon Brown as they try to solve the world's problems?
Unfortunately, there seems to be no clearly correct answer. But some food for thought on this, and its Argentine twist, can be found in the following articles. One is a piece by British financial historian Niall Ferguson. In it, Ferguson says this: “Today, America is Argentina. Europe is Argentin
a. Former investment banks and ordinary households are Argentina.” In this (much less subtle) piece for The American Conservative, Philip Jenkins compares Argentina and the U.S. He glosses the issue this way:
The United States is a superpower with a huge economy. Argentina is a political and economic joke, a global weakling legendary for endemic economic crises. Between them and us, surely, a great gulf is fixed. Yet Argentina did not always have its present meager status, nor did its poverty result from some inherent Latin American affinity for crisis and corruption. A century ago, Argentina was one of the world’s emerging powers, seemingly destined to outpace all but the greatest imperial states. Today it is … Argentina. A national decline on that scale did not just happen: it was the result of decades of struggle and systematic endeavor, led by the nation’s elite. As the nation’s greatest writer, Jorge Luis Borges, once remarked, only generations of statesmanship could have prevented Argentina from becoming a world power.
For yet another perspective on the matter, here is a piece written for the Argentine Post a few months ago by Michael Casey, the Buenos Aires bureau chief for Dow Jones and author of a forthcoming book on Che Guevarra. All in all, these should provide a little intellectual nutrition for anyone trying to grasp the global mess and what Argentine may or may not have to do with it.
For an always interesting perspective (in Spanish) on these matters, check out La Ciencia Maldita, a local blog from a young, Harvard-trained Argentine economist.
*Kudos to Brian over at As Belgrano Byrnes for highlighting the Jenkins piece.