NYT op-ed: US should mimic Argentine economic policy

So says Ian Mount, a freelance journalist with two degrees in English who has a forthcoming book about making malbec and was able to convince the NYT editors that he was a serious person.  Mount argues that because the Argentine economy has been growing rapidly since 2002, other countries should take a serious look at its policies.  The two most recent Argentine presidents (the late Nestor Kirchner and his wife Christina) raised taxes (especially on agricultural exports) and then overspent the proceeds on a wide range of government programs.

Mount ignores three inconvenient truths.  First, the World Bank statistics do show a remarkable turnaround in recent years as Argentine GDP per capita rose from $2708 in 2002 to $7626 in 2009.  He perhaps is not aware of the fact that Argentina still has not caught up to its standard of living in 1998 when GDP per capita was $8279.  In other words, living standards in Argentina have improved over the last 10 years but they have fallen since 1996. 

Second, ever since the days of Juan and Eva Person, Argentina has had a cycle of booms driven by expanded government activity funded by debt followed by devastating busts.  The current boom is being driven by exports and government spending funded through printing money.  The chickens will come home to roost again; the only question is what will happen first -- a drop in commodity prices or inflation rates topping 50%.

Third, and most importantly, Argentine economic growth has been abysmal.  In 1900 Argentina had a standard of living close to that of the US, it has since fallen very very far behind.  The real Latin American success stories are Brazil and Chile, both of which lagged significantly behind Argentina until the mid 1970s.  Chile adopted free market economic policies at that time and caught up with Argentina by 1989 and surged ahead since 2000.  Brazil became more market-oriented as well in the 1990s (although not as much as Chile), caught up with Argentina in 2002 and was 8% ahead in GDP per capita in 2009. 

Hard to see how we can learn much about economics from a country that jails its own economists who dare tell the truth.