[Good Government, Bad Government] Argentina’s President Perón, Who Tried to Give the People Anything They Wanted

Until the early 20th century, Argentina was one of the most prosperous countries in the world. By the 1920s, it had already built such formidable economic power that it became the third city in the world, after London and Paris, to install a subway system. As many Europeans competed to immigrate to this desirable place to live, the population also grew rapidly.

This was possible because the Argentine government guaranteed economic freedom. The country was able to export agricultural products and meat to global markets, and that created Argentina’s wealth.

The situation changed dramatically, however, with the Great Depression after 1929. As advanced countries adopted protectionism, Argentina lost its export markets and its economy fell into crisis. Argentina, too, began shifting toward protectionism. Various regulations emerged, including a guaranteed minimum price system for agricultural products.

Politically, fascism expanded its influence under the impact of Mussolini. In that atmosphere, Perón emerged. Having entered politics through the 1930 military coup, Perón was elected president in 1946 with 54% of the vote, backed by workers. Workers supported him because he pursued radically pro-labor policies. The government promised wage increases to workers and distributed numerous welfare benefits. His wife, Eva Perón, captured the hearts of the people through performative, emotionally driven politics. This kind of giveaway-style policy came to be known as Peronism.

But Peronism was a fatal trap for Argentina’s future. For the government to bestow benefits on the people, it must either collect taxes and redistribute them or print money. Perón chose both methods. By imposing high taxes on the wealthy, he created a structure of class conflict, and to solve the problem of fiscal shortfalls, he turned to fiscal deficits financed through monetary expansion. As production declined while wages and the money supply increased, prices naturally began to rise. High inflation, a chronic problem of the Argentine economy, began to take hold. It also became a cause of foreign exchange crises.

Perón’s rule came to an end with the 1959 coup, but the seeds he planted—inflation, class antagonism, and anti-Americanism—took root and grew even larger. The essence of Peronism was the promise that the government would provide the people with everything they wanted. This kind of populism brought about Argentina’s tragedy.

Original title: [좋은 정부, 나쁜 정부] 국민이 원하면 뭐든 주려했던 아르헨티나의 페론 대통령

Author: Center for Free Enterprise (CFE)

Date: 2008-12-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=18&idx=10721