Is Argentina The Model For Where Obama Is Leading America?

I'm not an economic historian, but the following abbreviated history of Argentina rings true to me. Is this the pattern that Obama is following? Is this where America is headed? It doesn't look good. These are interesting and I fear, dangerous times.
Peter

Don't Cry For Me, America (source)

In the early 20th century, Argentina was one of the richest countries in the world. While Great Britain's maritime power and its far-flung empire had propelled it to a dominant position among the world's industrialized nations, only the United States challenged Argentina for the position of the world's second-most powerful economy.

It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.

In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of "fundamental change" with an appeal to the middle class.

Among Irigoyen's changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy. Put simply, the state assumed economic control of a vast swath of the country's operations and began assessing new payroll taxes to fund its efforts.

With an increasing flow of funds into these entitlement programs, the government's payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers' contributions. Put simply, it quickly became under-funded, much like the United States' Social Security and Medicare programs.

The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation's rich.

This targeted group "swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated."

Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.

High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and "contempt for economic realities" lived on. Argentina's federal government continued to spend far beyond its means.

Hyperinflation exploded in 1989, the final stage of a process characterized by "industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy..."

The Argentinian government's practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic. Food riots were rampant; stores were looted; the country descended into chaos.

And by 1994, Argentina's public pensions -- the equivalent of Social Security -- had imploded. The payroll tax had increased from 5% to 26%, but it wasn't enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy.

A government-controlled "privatization" effort to rescue seniors' pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina's defaulted government bonds.

By 2002, "...government fiscal irresponsibility... induced a national economic crisis as severe as America's Great Depression."

* * *
In 1902 Argentina was one of the world's richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.

We've seen this movie before. The Democrats' populist plans can't possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.

Today's Democrats are guilty of more than stupidity; they are enslaving future generations to poverty and misery. And they will be long gone when it all implodes. They will be as cold and dead as Juan Perón when the piper must ultimately be paid.


References: A tear for Argentina's pension funds; Inflation in Argentina; The United States of Argentina. Linked by: Dan Riehl. Thanks!

A Very Serious Business

As I have been saying as long as I've been posting on this blog, the issue of man-caused (or anthropogenic) global warming and climate change is far, far more than a mere academic issue. It is now being used as a rationale for an enormous revamping of the American economy. The following is well-written and one of many essays appearing all over the Internet questioning the wisdom of the Obama Administration's proposals. Let us hope this kind of questioning is not, as they say, "a day late, and a dollar short".
Peter


The Green Energy Fantasy
By Keith Lockitch FrontPageMagazine.com 2/26/2009 (source)
Will a green energy industry be an engine of economic growth? Many want us to think so, including our new president. Apparently a booming green economy with millions of new jobs is just around the corner. All we need is the right mix of government “incentives.”

These include a huge (de facto) tax on carbon emissions imposed through a cap-and-trade regulatory scheme, as well as huge government subsidies for “renewable,” carbon-free sources. The hope is that these government sticks and carrots will turn today’s pitiful “green energy” industry, which produces an insignificant fraction of American energy, into a source of abundant, affordable energy that can replace today’s fossil-fuel-dominated industry.

This view is a fantasy -- one that could devastate America’s economy. The reality is that “green energy” is at best a sophisticated make-work program.

There is a reason why less than two percent of the world’s energy currently comes from “renewable” sources such as wind and solar--the very sources that are supposedly going to power the new green economy: despite billions of dollars in government subsidies, funding decades of research, they have not proven themselves to be practical sources of energy. Indeed, without government mandates forcing their adoption in most Western countries, their high cost would make them even less prevalent.

Consider that it takes about 1,000 wind turbines, occupying tens of thousands of acres, to produce as much electricity as just one medium-sized, coal-fired power plant. And that’s if the wind is blowing: the intermittency of wind wreaks havoc on electricity grids, which need a stable flow of power, thus requiring expensive, redundant backup capacity or an unbuilt, unproven “smart grid.”

Or consider the “promise” of solar. Two projects in development will cover 12.5 square miles of central California with solar cells in the hope of generating about 800 megawatts of power (as much as one large coal-fired plant). But that power output will only be achieved when the sun is shining brightly -- around noon on sunny days; the actual output will be less than a third that amount. And the electricity will cost more than market price, even with the life-support of federal subsidies that keeps the solar industry going. The major factor driving the project is not the promise of abundant power but California’s state quota requiring 20 percent “renewable” electricity by 2010.

More than 81 percent of world energy comes from fossil fuels, and half of America’s electricity is generated by burning coal. Carbon sources are literally keeping us alive. There is no evidence that they have -- or will soon have -- a viable replacement in transportation fuel, and there is only one in electricity generation, nuclear, which “green energy” advocates also oppose.

We all saw the ripple effects last summer when gas prices shot above $4 per gallon, and higher transportation costs drove up prices of everything from plane fares to vegetables. If green policies cause a permanent, and likely far greater, hike in the cost of all forms of energy, what shockwaves would that send through our already badly damaged economy?
We don’t want to find out.

Regardless of one’s views on global warming -- and there is ample scientific evidence to reject the claim that man-made carbon emissions are causing catastrophe -- the fact is that kneecapping the fossil fuel industry while diverting tax dollars into expensive, impractical forms of energy will not be an economic boon, but an economic disaster.

We in developed countries take industrial-scale energy for granted and often fail to appreciate its crucial value to our lives -- including its indispensable role in enabling us to deal with drought, storms, temperature extremes, and other climate challenges we are told to fear by global-warming alarmists.

If we want to restore economic growth and reduce our vulnerability to the elements, what we need is not “green energy” forced upon us by government coercion but real energy delivered on a free market.

Keith Lockitch is a Ph.D. in physics and a writer for the Ayn Rand Institute in Irvine, CA.

How To Restore Health To The American Economy: Produce More Oil and Gas

How can we restore the health of the American economy? A good place to begin would be producing more oil and gas here in the United States. This would create jobs, keep our dollars here in America rather than sending them to foreign countries, and generate much-needed revenue for Federal, State and local governments. It can be done.
Peter


Why We Need to Add to Production

(source)
In an energy interdependent world, we need common sense energy policies that provide access to conventional energy supplies, encourage energy efficiency, and promote continued development of new energy technologies. Common sense dictates that increasing our ability to produce energy from American resources – including crude oil and natural gas -- must be part of the mix. If energy companies are prevented from exploring for and producing oil and natural gas here at home in the United States, they face stiff competition overseas from national oil companies for untapped resources.

We currently import more than 60 percent of the crude oil and petroleum products we use. U.S. oil and natural gas companies don’t set crude oil prices -- the world market does. While we should not expect to be able to generate all the energy we need from within our own borders, each unit of energy we produce here at home is one we do not have to import. In particular, as long as demand for clean burning natural gas continues to increase, we will need access to new supplies of natural gas. We are fortunate to have considerable natural gas resources in the United States and elsewhere in North America. Federal lands are estimated to hold an estimated 656 trillion cubic feet of recoverable natural gas, enough to heat 60 million homes for 160 years (60 million homes in the United States are heated by natural gas).

If we stopped drilling new wells, U.S. production would fall rapidly and likely cease altogether within 20-25 years. As old wells reach the point where they are no longer economic to produce, they have to be replaced by new ones. This makes it important that we continue to explore for oil and gas, adding new production sources to those that are already on their inevitable decline. Without new wells adding to U.S. supplies, our volume of imports will have to continue to increase to make up the shortfall.

A report prepared in July 2000 by the Energy Information Administration titled Accelerated Depletion: Assessing Its Impacts on Domestic Oil and Natural Gas Prices and Production remains very relevant today. This report explains why we have to work harder just to stay even when it comes to oil and gas production:
The Energy Information Administration (EIA) report was designed to examine the trend of accelerated depletion and its impacts. Accelerated depletion means that resources found today tend to have much steeper (rapid) decline curves than those found 20 years ago. After a detailed analysis of various alternative scenarios, EIA underscored the importance and interplay of two factors: technology and access to resources on government lands. The EIA report indicates that, for at least the next two decades, the potential negative effects from the accelerated depletion of existing reserves could be offset by an increase in the rate at which new technologies are introduced in the oil and gas industry and by a relaxation of restrictions on drilling on federal [government] lands.


Federal restrictions -- including the decades-old Outer Continental Shelf leasing moratoria lifted Oct. 1, 2008 - have kept significant volumes of our oil and natural gas resources off-limits. These are vital resources that Americans rely upon for our economy and our way of life. Even where leases are granted, restrictions on how those leases are developed essentially preclude development of the resources. We can no longer afford to place off-limits access to vast federal oil and natural gas resources.

Although “energy independence” may not be possible, “energy interdependence” is a reality, and producing more oil and natural gas resources within our borders will be the key to enabling us to maintain a healthy economy in an interdependent world.