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The "among the richest countries on Earth" statement is frequently trotted out, but I think it's kind of misleading. Argentina was rich largely because it had l

The "among the richest countries on Earth" statement is frequently trotted out, but I think it's kind of misleading. Argentina was rich largely because it had lots of raw materials and agricultural products that, at the time, could be exported at high prices. That's great while it lasts, but it doesn't necessarily lead to a long-term sustainably rich country.

diegoholiveira 2y ago
Why it is misleading? I didn’t get your point here.
- NooneAtAll3 2y ago
  feet of clay
- returningfory2 2y ago
  IMO when people say "one of the richest countries on Earth" the mental model is the United States or the European Union countries whose wealth is kind of self-sustaining at this point. Like it would take many massive proactive mess ups for the US not to be so wealthy. This does not describe Argentina in the early 1900s because the country's wealth was mostly from raw resource exports which are always unstable. It's like Venezuela being (relatively) wealthy from oil is the early 2000s. In this case transitioning from "one of the richest countries on Earth" to poor doesn't require you to mess up proactively - if the price of oil swings the wrong way, you're suddenly poor, as for Venezuela, without doing anything wrong yourself.
  - skissane 2y ago
    > This does not describe Argentina in the early 1900s because the country's wealth was mostly from raw resource exports which are always unstable. At the start of the 20th century, Argentina and Australia were in rather similar situations: southern hemisphere countries with mostly European settler ancestry, and an economy dominated by exports of agriculture and mining. And yet, across that century, Australia's economy just went up and up, while Argentina's stagnated (especially post-1950). Yes, Australia was also faced with instabilities from resource export prices, but it managed to weather them. Why? The fundamental difference between Argentina and Australia is Australia had much better economic management. And a big factor behind that, is it also had much better political stability. Which could be (at least partly) due to differences in political systems (parliamentary for Australia, presidential for Argentina) and political cultures (British-derived vs Latin American)
    - rgmerk 2y ago
      While it’s undoubtedly an oversimplification this short podcast covers some of the key differences: https://www.abc.net.au/listen/programs/abc-news-daily/iyl-argentina-inflation/102718728 https://www.abc.net.au/listen/programs/abc-news-daily/iyl-ar...
      - skissane 2y ago
        Companion article covering the same ground in text format: https://www.abc.net.au/news/2023-08-13/how-did-argentina-end-up-with-100-per-cent-inflation-/102707204 https://www.abc.net.au/news/2023-08-13/how-did-argentina-end... I agree it is an oversimplification - yes, in 1951, Artie Fadden was making sensible (even if unpopular) economic decisions in Australia, while Perón was making foolish (albeit popular) economic decisions in Argentina. But the same pattern has been repeated many times since. If Argentina had learned its lesson from Perón‘s mistakes and chosen not to repeat them, it would be in far better economic shape today - arguably much closer to where Australia is. Instead, it has chosen to repeat them again and again and again
pedalpete 2y ago
You're right it doesn't necessarily lead to long-term sustainability, but it is a strong economic lever if used correctly. Argentina was considered equally rich to Canada before WWII [1], and though Canada benefitted greatly from it's proximity to the US, Australia, has also managed their resources well, even though it is geographically challenged. This is compared to Argentina's mismanagement of finances and resources, which is what is being measured. https://www.vaia.com/en-us/textbooks/economics/macroeconomics-5th/macroeconomics-the-big-picture/q2-argentina-used-to-be-as-rich-as-canada-now-its-much-poore/#:~:text=Argentina%20and%20Canada%20were%20equally,rate%20was%20slowed%20over%20time https://www.vaia.com/en-us/textbooks/economics/macroeconomic....
rgmerk 2y ago
Yeah, so was Australia. But Australia is now roughly as rich as, say, Germany, whereas Argentina is...not. Most of that is down to bad policy from Peron onward.

diegoholiveira 2y ago

Why it is misleading? I didn’t get your point here.

NooneAtAll3 2y ago
feet of clay
returningfory2 2y ago
IMO when people say "one of the richest countries on Earth" the mental model is the United States or the European Union countries whose wealth is kind of self-sustaining at this point. Like it would take many massive proactive mess ups for the US not to be so wealthy. This does not describe Argentina in the early 1900s because the country's wealth was mostly from raw resource exports which are always unstable. It's like Venezuela being (relatively) wealthy from oil is the early 2000s. In this case transitioning from "one of the richest countries on Earth" to poor doesn't require you to mess up proactively - if the price of oil swings the wrong way, you're suddenly poor, as for Venezuela, without doing anything wrong yourself.
- skissane 2y ago
  > This does not describe Argentina in the early 1900s because the country's wealth was mostly from raw resource exports which are always unstable. At the start of the 20th century, Argentina and Australia were in rather similar situations: southern hemisphere countries with mostly European settler ancestry, and an economy dominated by exports of agriculture and mining. And yet, across that century, Australia's economy just went up and up, while Argentina's stagnated (especially post-1950). Yes, Australia was also faced with instabilities from resource export prices, but it managed to weather them. Why? The fundamental difference between Argentina and Australia is Australia had much better economic management. And a big factor behind that, is it also had much better political stability. Which could be (at least partly) due to differences in political systems (parliamentary for Australia, presidential for Argentina) and political cultures (British-derived vs Latin American)
  - rgmerk 2y ago
    While it’s undoubtedly an oversimplification this short podcast covers some of the key differences: https://www.abc.net.au/listen/programs/abc-news-daily/iyl-argentina-inflation/102718728 https://www.abc.net.au/listen/programs/abc-news-daily/iyl-ar...
    - skissane 2y ago
      Companion article covering the same ground in text format: https://www.abc.net.au/news/2023-08-13/how-did-argentina-end-up-with-100-per-cent-inflation-/102707204 https://www.abc.net.au/news/2023-08-13/how-did-argentina-end... I agree it is an oversimplification - yes, in 1951, Artie Fadden was making sensible (even if unpopular) economic decisions in Australia, while Perón was making foolish (albeit popular) economic decisions in Argentina. But the same pattern has been repeated many times since. If Argentina had learned its lesson from Perón‘s mistakes and chosen not to repeat them, it would be in far better economic shape today - arguably much closer to where Australia is. Instead, it has chosen to repeat them again and again and again

pedalpete 2y ago

You're right it doesn't necessarily lead to long-term sustainability, but it is a strong economic lever if used correctly. Argentina was considered equally rich to Canada before WWII [1], and though Canada benefitted greatly from it's proximity to the US, Australia, has also managed their resources well, even though it is geographically challenged. This is compared to Argentina's mismanagement of finances and resources, which is what is being measured. https://www.vaia.com/en-us/textbooks/economics/macroeconomics-5th/macroeconomics-the-big-picture/q2-argentina-used-to-be-as-rich-as-canada-now-its-much-poore/#:~:text=Argentina%20and%20Canada%20were%20equally,rate%20was%20slowed%20over%20time https://www.vaia.com/en-us/textbooks/economics/macroeconomic....

rgmerk 2y ago

Yeah, so was Australia. But Australia is now roughly as rich as, say, Germany, whereas Argentina is...not. Most of that is down to bad policy from Peron onward.