Perónism Lite

Friday, August 12th, 2011

The more John Derbyshire looks at our history of national debt, the less it seems like Keynesianism at work, and the more it seems like Perónism Lite:

The guiding spirit of fiscal management in the advanced world this past half century has in fact been Juan Perón, who ruled Argentina from 1946 to 1955 (and again, but inconsequentially, 1973–4). From Paul Johnson’s Modern Times:

As President, Perón gave a classic demonstration, in the name of socialism and nationalism, of how to wreck an economy. He nationalised the Central Bank, railways, communications, gas, electricity, fishing, air-transport, steel and insurance. He set up a state marketing agency for exports. He created Big Government and a welfare state in one bound: spending on public services, as a percentage of GNP, rose from 19.5 to 29.5 per cent in five years.

He had no system of priorities. He told the people they would get everything at once. In theory they did. The workers were given thirteen months’ pay for a year’s work; holidays with pay; social benefits at a Scandinavian level. He would track down a highly successful firm which spent lavishly on its workers and force all firms to copy its practices, regardless of their resources.

At the same time he carried out a frontal assault on the agricultural sector, Argentina’s main source of internal capital. By 1951 he had exhausted the reserves and decapitalized the country, wrecked the balance of payments and built wage-inflation into the system. Next year drought struck the land and brought the crisis into the open.

Seeing his support vanish, Perón turned from economic demagoguery to political tyranny. He destroyed the Supreme Court. He took over the radio station and La Prensa, the greatest newspaper in Latin America. He debauched the universities and fiddled with the constitution. Above all, he created public “enemies”: Britain, America, all foreigners, the Jockey Club, which his gangs burned down in 1953, destroying its library and art collection. Next year he turned on Catholicism, and in 1955 his labour mobs destroyed Argentina’s two finest churches, San Francisco and Santo Domingo, and many others.

That was the last straw. The army turned him out. He fled on a Paraguayan gunboat. But his successors could never get back to the minimum government which had allowed Argentina to become wealthy. Too many vested interests had been created: a huge, parasitical state, over-powerful unions, a vast army of public employees. It is one of the dismal lessons of the twentieth century that, once a state is allowed to expand, it is almost impossible to contract it.

Now of course the U.S.A. is not Argentina. The balances of power — civilian-military, agricultural-industrial, domestic-international, legal-political — are all different, and were before Juan Perón showed up. His brutish methods would not do for us. They permitted him to accomplish in a few years what has taken us decades.

We have, though, followed the same trajectory as Perón’s Argentina, albeit more slowly and gently. He got from “the minimum government which had allowed Argentina to become wealthy” to “a huge, parasitical state” with “a vast army of public employees” in just five years; it has taken us five decades. The end result for our respective peoples will be the same.

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