[Marxism] Argentine recovery defies neoliberal convention
lnp3 at panix.com
Sun Dec 26 08:25:40 MST 2004
NY Times, December 26, 2004
Argentina's Economic Rally Defies Forecasts
By LARRY ROHTER
BUENOS AIRES, Dec. 23 - When the Argentine economy collapsed in December
2001, doomsday predictions abounded. Unless it adopted orthodox economic
policies and quickly cut a deal with its foreign creditors, hyperinflation
would surely follow, the peso would become worthless, investment and
foreign reserves would vanish and any prospect of growth would be strangled.
But three years after Argentina declared a record debt default of more than
$100 billion, the largest in history, the apocalypse has not arrived.
Instead, the economy has grown by 8 percent for two consecutive years,
exports have zoomed, the currency is stable, investors are gradually
returning and unemployment has eased from record highs - all without a debt
settlement or the standard measures required by the International Monetary
Fund for its approval.
Argentina's recovery has been undeniable, and it has been achieved at least
in part by ignoring and even defying economic and political orthodoxy.
Rather than moving to immediately satisfy bondholders, private banks and
the I.M.F., as other developing countries have done in less severe crises,
the Peronist-led government chose to stimulate internal consumption first
and told creditors to get in line with everyone else.
"This is a remarkable historical event, one that challenges 25 years of
failed policies," said Mark Weisbrot, an economist at the Center for
Economic and Policy Research, a liberal research group in Washington.
"While other countries are just limping along, Argentina is experiencing
very healthy growth with no sign that it is unsustainable, and they've done
it without having to make any concessions to get foreign capital inflows."
The consequences of that decision can be seen in government statistics and
in stores, where consumers once again were spending robustly before
Christmas. More than two million jobs have been created since the depths of
the crisis early in 2002, and according to official figures,
inflation-adjusted income has also bounced back, returning almost to the
level of the late 1990's. That is when the crisis emerged, as Argentina
sought to tighten its belt according to I.M.F. prescriptions, only to
collapse into the worst depression in its history, which also set off a
Some of the new jobs are from a low-paying government make-work program,
but nearly half are in the private sector. As a result, unemployment has
declined from more than 20 percent to about 13 percent, and the number of
Argentines living below the poverty line has fallen by nearly 10 points
from the record high of 53.4 percent early in 2002.
"Things are by no means back to normal, but we've got the feeling we're
back on the right track," said Mario Alberto Ortiz, a refrigeration
repairman. "For the first time since things fell apart, I can actually
afford to spend a little money."
Traditional free-market economists remain skeptical of the government's
approach. While acknowledging there has been a recovery, they attribute it
mainly to external factors rather than the policies of President Néstor
Kirchner, who has been in office since May 2003. Increasingly, they also
maintain that the comeback is beginning to lose steam.
Marxism list: www.marxmail.org
More information about the Marxism