[Market Economy Guide] Government and Populism

“The reason Argentina, once an economic powerhouse, collapsed was industrial nationalization, the expulsion of foreign capital, and populist policies.”

“Don’t cry for me, Argentina”—this famous lyric, which almost everyone has heard at least once, is a line from a song sung by the female lead playing Eva Perón in the musical *Evita*. Eva Perón was an Argentine actress and the wife of President Juan Perón. She was called Argentina’s saint and enjoyed enormous popularity as first lady, but at the same time she is also seen as a source of Peronism and populism, which set Argentina on a path of economic decline.

Eva Perón and Peronism

In Argentina’s 1946 presidential election, Eva Perón became a strong supporter of her husband, Juan Perón. With her beautiful appearance, she possessed an agitating and captivating charisma. Although she was born out of wedlock and did not grow up in a normal family environment, the fact that she rose to become a beloved actress was enough to win support from workers and the poor as well. The public responded enthusiastically to her speeches. Thanks to her, Juan Perón gained great political strength and was eventually elected president.

Consistent Closed Protectionism

After becoming president, Juan Perón won popular support by pursuing policies that looked plausible on the surface, but the economy steadily entered a path of decline. Eva Perón was revered as a saint for her work on behalf of the socially vulnerable, but in practical terms the economic lives of Argentines did not improve. Although the Perón regime outwardly claimed to champion the weak, in reality it carried out a dictatorship marked by control and repression. In the end, Argentina began to decline economically, corruption became widespread, and politically it became a completely rigid state.

As recently as the early 1900s, Argentina was an economic powerhouse that other countries looked to as a model. Democracy was beginning to flourish, and economically it was more stable than the advanced countries of Europe. Argentina was such a wonderful country that immigrants flocked there from all over the world. It was a dream destination for everyone. But Argentina became a country in economic collapse. The gap with advanced European countries widened to the point that it could no longer be compared with them, and it has even fallen behind other Latin American countries that Argentina once looked down on. Why did this happen?

At the time, the Peronists pushed policies and regulations divorced from Argentina’s actual circumstances—such as the nationalization of industry, the expulsion of foreign capital, and worker-centered social policies—thereby isolating the entire country economically. Argentina’s closed protectionist policies ended up weakening its economic position in the South American market.

From the example of Argentina, once called an economic powerhouse but sunk by a government obsessed with popularity, we can draw one lesson: if a country cannot break with protectionist policies that create an endless vicious cycle and cannot escape the chains of regulation, its national economy will sink ever deeper into a mire.

Control and Regulation Ruin Economies

This is why Korea must boldly cast off outdated regulations. For the economy to continue developing, we must guard against and abolish populist policies driven by public popularity. In some industrial sectors, Korea is still flooded with unnecessary controls and regulations so out of step with the times that it is even called a “censorship state.” In the media sector, controversies never cease because of hard-to-understand reviews and regulations. It is also troubling that the game industry, which is rapidly industrializing, faces overlapping layers of regulation.

In particular, the service sector, which is highly sensitive to technological development and changes in the times, remains hamstrung in most industries by regulations made without principle. Arbitrary government regulations with unclear standards and low efficiency do nothing more than infringe on freedom and creativity and serve as tools of control that pursue only the interests of vested-interest groups. We should examine whether outdated regulations are oppressing people and obstructing economic development, and then work to change them.

Understanding the proper role and function of government in a market economy is highly meaningful. That is because a government friendly to the market economy is more effective at increasing jobs and improving our lives. Now is the time to make an effort to correct misguided regulations that paralyze the economy.

■ Food for Thought

As recently as the early 1900s, Argentina ranked among the world’s top five economic powers. Abundant resources and solid industries produced economic prosperity. But the nation’s fortunes tilted sharply downward with the arrival of the Perón government. Today, it has become a country that must worry about national default. Let us discuss what policies the Perón government implemented and what results those policies produced.

Sung-no Choi

President, Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 정부와 포퓰리즘

Author: Sung-no Choi

Date: 2019-01-14

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=15&idx=11360