The party is over in Argentina, and a crisis looms. But take Evita Peron’s advice from the 1978 musical bearing her name: “Don’t cry.” Both Argentina and Venezuela will now pay the piper and get what they deserve. We might also be rejoicing soon that socialist politics in Argentina could be over, if the country cannot get its beleaguered Frontier Market in pesos under control.
Will our weary world ever learn the dead-end stupidity of socialism? Argentina defaulted on its debt in 2001, to the tune of $95 billion. There was rioting and killing in the streets, and millions in the Argentine middle class spiraled into poverty. Seemingly, Argentina learned its lesson, as it emerged from the financial slaughter to briefly become a beacon of global capitalism.
But then the socialists regained power through corruption, bribes, illegal campaign contributions and by stacking the Argentine Supreme Court, which lit the fuse for the country’s fiscal decline all over again. Starting in 2003, the husband-and-wife socialist team of Nestor Kirchner and Cristina Fernandez de Kirchner came to long-term power, one after the other, fueling a slow-motion fiscal train wreck evolving into a severe crisis. Last week, Argentina devalued its peso, and the market imploded. So far in January, its peso has dropped 20 percent against the dollar, inflation jumped, and the cost of household goods leaped 20 percent in one day. Consumer prices in Argentina will increase 30 percent this year, analysts say.
So what did Argentine President Cristina Kirchner do, after her country was rocked by the biggest devaluation of its peso in 12 years? She flew to Cuba for a summit meeting — seeking some advice from her communist buddy, Raul Castro, perhaps.
For 10 years, the Kirchners have engineered a feverish rampage of government spending, spiking recent inflation rates north of 25 percent per year. They cozied up with the lunatic president of Venezuela, Hugo Chavez, and refused to support the war on terror. Their political power was built on government spending that bought them great popularity. (Sound familiar?) Now, Argentina faces another debt default, a deep recession and further currency devaluations.
The Kirchners were tutored in socialist/communist dogma by Venezuela’s Chavez, so it is not surprising to read Friday that Venezuela also had a big devaluation of the bolivar, and the story here is the same as it was for its socialist twin, Argentina. It now takes 82 percent more bolivars to buy a dollar. Yet the real eyebrow-raiser is the black market rate, which requires 1,050 percent more bolivars to buy dollars. Venezuela’s inflation rate last year was 56 percent, as the central bank printed mountains of bolivars. Venezuela and Argentina now see firsthand how socialist policies drive out capital, pour money into the black hole of public spending and drive up currency inflation, all to conceal socialism’s failures.
Anyone with half a brain who reads history would quickly conclude that socialism doesn’t work and has not succeeded for longer than a few years. That’s because, as former British Prime Minister Margaret Thatcher noted, socialists eventually run out of other people’s money. The second reason is that, until the system collapses, power-hungry politicians or despots find socialist systems the ideal climate in which to rule. Their greed for power overcomes all ethical behavior. The totalitarians can use the taxing authority and government power to buy off or eliminate critics, buy elections and reward those who voted for them with handouts, subsidies and food.
The socialist country implodes and is left with a wrecked economy, a financial mess, gargantuan debt, currency devaluation and eventual inflation caused by government borrowing and money-printing. Usually, the climax of socialist-caused crises includes rioting and looting in the streets, the imprisonment or assassination of critics, extreme shortages and steep increases in poverty.
In fact, socialism never ends well for the people. You play with the bull, and you get the horns. Socialism’s bills always come due when government tyrants run out of other people’s money. The evils of socialism are coming home to roost in Argentina and Venezuela. Let it be a lesson for America’s socialist-leaning federal government.
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