Argentina: The superpower that never was

Saturday, May 30th, 2009

In False Economy: A Surprising Economic History of the World, Alan Beattie describes Argentina as the superpower that never was:

A short century ago the US and Argentina were rivals. Both were riding the first wave of globalisation at the turn of the 20th century. Both were young, dynamic nations with fertile farmlands and confident exporters. Both brought the beef of the New World to the tables of their European colonial forebears. Before the Great Depression of the 1930s, Argentina was among the 10 richest economies in the world. The millions of emigrant ­Italians and Irish fleeing poverty at the end of the 19th century were torn between the two: Buenos Aires or New York? The pampas or the prairie?

A hundred years later there was no choice at all. One had gone on to be among the most successful economies ever. The other was a broken husk.

There was no individual event at which Argentina’s path was set on a permanent divergence from that of the United States of America. But there was a series of mistakes and missteps that fit a general pattern. The countries were dealt quite similar hands but played them very differently. The similarities between the two in the second half of the 19th century, and in fact up to 1939, were neither fictional nor superficial. The “lords of the pampas” — young Argentines strutting the salons of Europe between the wars — pop up in accounts of the time as an equally prominent type as the swaggering Americans playing at European decadence in Berlin and Paris.

For a long while the two countries were on parallel paths. The states that later became the US declared independence in 1776 and became a new nation in 1789. The vice-royalty of Argentina, part of the Spanish empire, was overthrown in 1810 by rebels inspired by the American revolution; in 1816, Argentina became an independent republic.

Both faced an internal struggle between those that wanted a centralised nation and those that wanted power reserved for the individual states or provinces. In the US, the separate colonies had existed long before the idea of uniting them and it was not guaranteed that a republic would succeed. The negotiations that led to the writing of the constitution were tortuous and often bad-tempered, and the different denominations, traditions and constitutions of the previous colonies all too evident. Only five of the 13 founding colonies, later states, even bothered turning up to the first drafting meeting, in 1786. ­Battles had to be fought to make flesh the national motto “E pluribus unum” (“out of many, one”). That motto appears today on US coins, but at the time of independence in 1789 dozens of different currencies were circulating. A national bank and a single “national debt” — making the federal government responsible for the debts of the states — were not created without fierce opposition.

In Argentina, it took decades of struggle before a constitution was adopted in 1853 with a system of sharing tax revenue between the centre and the provinces. But continual tensions were not settled until the suppression of an armed uprising in the province of Buenos Aires in 1880, handing more power to the centre. Domingo Sarmiento, who had tried to forge Argentine national unity while president between 1868 and 1874, said he would settle for an Argentina whose inhabitants were not killing each other.

On the face of it the economies of the two countries also looked similar: agrarian nations pushing settlement westwards into a wilderness of temperate grasslands. In both nations, the frontier rancher — the gaucho and the cowboy — was elevated into a national symbol of courage and ­independence. But there were big disparities in the way this happened. America chose a path that parcelled out new land to individuals and families; Argentina delivered it into the hands of a few rich landowners.

From the founding of the colonies, America was fortunate to have imported many of the farming practices of northern Europe. The farmers of “New England” came largely from Britain, Germany and the Netherlands, bringing with them the tradition of skilled farmers on small homesteads. Argentina, by contrast, had a history of a few rich landowners on great estates left by the Spanish and the aristocratic elitism that came with it. It also had a labour shortage. Mass immigration to Argentina came later in the 19th century, but the country had to push forward its frontier with a skeleton staff.

Both countries opened up the west, the US to the Pacific and the Argentines to the Andes, but not in the same way. America favoured squatters: Argentina backed landlords. Short of cash, Buenos Aires found the best way to encourage settlers was to sell in advance large plots in areas yet to be seized from the native Americans. But once the battles were won the victors were exhausted, good farm labourers in short supply and the distances from the eastern seaboard to the frontier vast. Most of the new landowners simply encircled wide tracts of grassland with barbed-wire fences and turned them over to pasture.

Thus was privilege reinforced.

Argentina continued down that path, of privilege reinforced, and it has never recovered.

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