7 Ways Argentina Defies the Conventional Economic Wisdom

Argentina's Economic Growth and Recovery: The Economy in a Time of Default  (book cover) © Routledge 2011

Reflections on Argentina’s Economic Growth and Recovery, by Michael Cohen

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history. Cohen’s rendering of 21st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina. But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom. Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 1990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics. Let me describe seven different ways in which Argentina’s experience in the 21st century should make us revisit some of the accepted aspects of economic wisdom.

To continue reading Will Milberg’s review of Argentina’s Economic Growth and Recovery by Michael Cohen, click here.

7 Ways Argentina Defies the Conventional Economic Wisdom

Argentina's Economic Growth and Recovery: The Economy in a Time of Default  (book cover) © Routledge 2011

Reflections on Argentina’s Economic Growth and Recovery, by Michael Cohen

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history. Cohen’s rendering of 21st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina. But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom. Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 19990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics. Let me describe seven different ways in which Argentina’s experience in the 21st century should make us revisit some of the accepted aspects of economic wisdom.

Conventional wisdom #1. Conventional wisdom is that default on foreign debt will have disastrous consequences for economic growth, economic suicide. The country that defaults, the thinking goes, immediately shuts itself out of international capital markets for an unpredictably long period of time, brings on a long-term collapse of the exchange rate, requires a long-term recession as the country is forced to “live within its means.”

Argentina defaulted in early 2002 and then:

*one year later was borrowing considerable from the World Bank and Inter-American Development Bank.

*between 2002 and 2006 inward FDI rose at a rate of 26% per year (much from Brazil)

*by . . .

Read more: 7 Ways Argentina Defies the Conventional Economic Wisdom

The New York Times in the Americas

President-elect Cristina Kirchner celebrates election night with her husband and predecessor, Néstor © Presidency of the Nation of Argentina | presidencia.gov

It’s mystifying to read The New York Times’ coverage of my other polity, Argentina, where the editorial positions seem to be the exact opposite to those of their coverage in the US. On the one hand, in American politics, the attacks on Obama and the Democrats as “totalitarian,” for having attempted and achieved a modest reform of the healthcare system are presented as borderline madness by the Times. But on the other, the progressive, democratic, and successful reformist governments of Nestor Kirchner—from 2003 to 2007—and Cristina Fernandez—since 2007—are accused of “authoritarianism.”

Moreover, the sources quoted when making such accusation are often mediocre conservative political commentators and journalists that would hardly be taken seriously in the US—at least, I think, in The New York Times. In no way less problematic, but perhaps more understandable, due to their sharing social circles with members of financial global institutions, the journalists’ assertions often come straight from “risk consultants” in financial firms. It is never made clear, however, that these are political adversaries of the democratically elected administration and significantly less appreciative of the working of democratic politics, to say the least, than the Argentine government.

While this strange phenomenon at first may seem difficult to understand without resorting to conspiracy theory, a closer examination of Argentine and American politics explains the apparent reporting anomaly. In Argentina the working of democratic politics involved during the period serious conflicts about major issues—such as repealing amnesty laws giving impunity to the 1976-83 human right violations, appointing the most prestigious and independent Supreme Court in the country’s history, astonishingly reducing the national foreign debt in tough negotiations with international financial groups and the IMF, building a strong and democratic Union of South American Nations, and passing transformational laws de-monopolizing media markets, universalizing marriage (gay marriage,) extending social security benefits to millions of uncovered senior citizens, streamlining the path toward citizenship for hundred of thousands of Latin American immigrants, and creating a universal subsidy for children. In contrast, in the United States, we have come . . .

Read more: The New York Times in the Americas