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Positive Feedback and Vicious Circles
Argentina
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Preview Background Leftist parties,1916-1930
Military dictatorship, Quasi-democratic, quasi-military governments, Military dictatorship, Modern democratic Argentina, 1983-present Economic crisis, Non-inclusive economy and government Economic growth and political inclusion, 2003-
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Background Before 1914, Argentina experience around fifty years of expanding (per capita) production. But during this time, the economy remained largely agricultural—based on wheat, other grains and beef—and an elite controlled the government.
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Leftist parties, Conservative forces dominated Argentine politics until 1916, when the Radical Civic Union (UCR), led by Hipólito Yrigoyen, won the presidency through the first national elections with universal male suffrage. Yrigoyen, however, only obtained 45% of the votes, which did not allow him a majority in Parliament, where the conservatives had the power to block proposals by the UCR. Of the president’s 80 draft laws, only 26 were approved by the conservative majority in Parliament. A moderate agricultural reform proposal was rejected by Parliament, as was an income tax on interest, and the proposal to create a central bank.
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Leftist parties, As in Europe, the US and other countries, socialism, communism and workers’ rights were becoming more popular, but also with resistance from conservatives. The Argentine Regional Workers’ Federation had called for a general strike in 1919; during the strike workers clashed with police and military. 700 people were killed and 4,000 people were injured.
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Leftist parties, In 1921, Yrigoyen’s administration was able to enact the Labor Code; which established the right to strike, to use collective contracts and to enforce minimum wages. In 1922, Marcelo Torcuato de Alvear replaced Mr. Yrigoyen as the UCR representative in national elections. Mr. de Alvear defeated Norberto Piñero of the Concentración Nacional (conservative) party with 458,457 votes against 200,080 votes.
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Leftist parties, In 1928, Yrigoyen was re-elected as president and tried to implement more to increase workers’ rights. But the economy foundered due to the Great Depression, and on 6 September 1930, a military coup led by general José Félix Uriburu overthrew Yrigoyen’s government. Support for the coup was bolstered by the sagging Argentine economy, as well as promises to stop the ongoing violence proposed by radical anarchists, which had alienated moderates in government and society.
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Argentina’s stagnation
In 1929, Argentina had the world’s seventh highest per capita domestic income and production of marketable goods and services, comparable with the economies of Canada and Belgium. But due to decades of corrupt, inept and violent policies by either military or civilian governments, the Argentinian economy has foundered. Now, Argentina’s per capita GDP ranks about 50th in the world, worse than Chile’s rank.
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Growth in domestic income and production of marketable goods and services, 1909-2000
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Military dictatorship, 1930-1946
The economy and stability of Argentina society deteriorated during the 1930s, partly due to the lost of exports during the Depression but also due domestic policies. The military government ended free and fair elections and persecuted and executed political opposition members (mainly from the UCR) and permitted widespread corruption. The military government adopted a pro-fascist, anti-communist ideology.
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Military dictatorship, 1930-1946
On 4 June 1943, a group of military officers led by Pedro Pablo Ramírez, Arturo Rawson, Edelmiro Farrell and Juan Domingo Perón overthrew the military dictator Ramón Castillo. After these officers shared power for a few years, Juan Perón was elected president in 1946 in elections that were generally viewed as free and fair.
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Quasi-democratic, quasi-military governments, 1946-1976
By 1946, Juan Perón had developed into a populist and claimed to favor workers’ rights. During his rule, the number of unionized workers and government programs increased. However, Mr. Perón was no liberal: he censored the press by closing down 110 publications between 1943 and 1946, and opposition members were imprisoned and sometimes tortured.
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Quasi-democratic, quasi-military governments, 1946-1976
And the President dominated the Supreme Court in Argentina. After his election, Mr. Perón pressured the Chamber of Deputies to impeach 3 of the remaining Supreme Court judges who had just struck down Peron’s new legislation. The Senate approved this impeachment, and they were removed from office. And unlike Franklin Roosevelt’s failed attempt to increase the number of politically friendly judges on the US Supreme Court a decade earlier, Mr. Peron could then appoint new judges to support his policies. Today, this tradition of having politically friendly judges remains, and the President is allowed to pick new Supreme Court justices when he is elected.
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Quasi-democratic, quasi-military governments, 1946-1976
A decade earlier in the US, Franklin Roosevelt wanted to increase the number of Supreme Court Justices from 9 to 15 to obtain a majority to support his economic policies. Even though many favored Mr. Roosevelt’s radical policies to bolster the economy, a majority disapproved of Mr. Roosevelt’s political plans to change the judiciary. The House and the Senate, both controlled by Mr. Roosevelt’s party, were also unwilling to adopt this proposal because they argued that it would abandon the “constitutional principle” of an independent Supreme Court.
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Quasi-democratic, quasi-military governments, 1946-1976
But why the difference between the US and Argentina? Perhaps a stronger belief in shared power and democracy in the US, while a stronger belief in strong executive (sometimes military) leaders in Argentina. History can shape political attitudes, and political attitudes can shape history.
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Quasi-democratic, quasi-military governments, 1946-1976
After being re-elected to the office of president by popular vote, Mr. Perón soon lost favor with the ruling elites and was deposed in the Revolución Libertadora of 1955. He fled to Spain, and after a series of governments beset with political infighting including one seven-year military government, Mr. Perón returned to Argentina after 20 years and was freely elected president in 1973, but died in July 1974.
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Quasi-democratic, quasi-military governments, 1946-1976
But even during times of civilian rule, the political parties including the Partido Justicialista created by Mr. Perón were generally corrupt and nepotistic. Likewise economic policies passed by the legislative branch and approved by the president generally did not promote competition or protect property rights.
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Military dictatorship, 1976-1983
After increased domestic violence (including kidnappings and bombings) in the mid 1970s, and counter-violence by the military and police, the military, led by Lieutenant General Jorge Rafael Videla, again took power on 24 March 1976. From , the military government initiated widespread violence against purported leftists that killed an estimated 16,000 people (among civilians, police and military). See
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Modern democratic Argentina, 1983-present
A civilian government was reinstated in 1983 as voters elected Raúl Alfonsín from the UCR. However, the Argentina economy remained weak during the 1980s.
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Modern democratic Argentina, 1983-present
To try to bolster economy growth after he was elected in 1989, Carlos Menem of the Justicialist party tied the value of the peso to the US dollar in 1991 at a one-to-one rate, in a policy called a currency board. This policy was supposed to bolster confidence in the value of the peso by backing all pesos in circulation and in banks with US$.
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Modern democratic Argentina, 1983-present
The policy seemed to work well for a few years, but perhaps too well. Because of the high value of the peso, Argentinian exports declined and imports increased. Because of the stable value of the peso, foreign loans (usually in US$) increased. Thus, with falling net exports and rising foreign debt, the economy started to weaken and to become less stable. By the late 1990s, Argentina had falling production and income, rising unemployment and ballooning international debt obligations.
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Economic crisis, 2001-2002 The situation became a crisis in 2001.
On December 1, 2001, the government froze all bank accounts initially for 90 days to prevent people from taking their money out of the country, which would have put more downward pressure on the peso. When the government allowed withdrawals after 90 days, people could withdraw only 250 pesos. Dollars could not be withdrawn unless they were first converted to pesos. These policies were called el corralito, because they were supposed to corral money in the domestic economy.
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Economic crisis, Then in January 2002, the central bank devalued the peso, and soon the peso was worth less than 1/3 of a dollar. However, for those who already had dollars, the conversion rate remained one-to-one. This forced conversion of dollar accounts ignored the property rights of the account holders, and the government had effectively expropriated their resources.
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Economic crisis,
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Economic crisis,
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Economic crisis, Because of onerous debt and because of a decrease in spending money and credit due to high interest rates, political protests soon erupted. See from 4:40-34:30.
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Non-inclusive economy and government
With the exception of , Argentina has been arguably more stable than Sierra Leone and even Colombia, both economically and politically. Nonetheless, economic inequality, political corruption and violence have made voters consistently vote in favor of politicians with extreme and retributive policies during the 20th century. And an economy based on patronage and nepotism also encourages the executive branch to concentrate power, and vice versa.
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Economic growth, 2003- Fortunately, the economy and the government have been relatively stable and inclusive since 2003, although they are never perfect. Economic production and income per person have increased in most years since 2003. Relatively fair and stable presidential and legislative elections have been held since 2003.
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Economic growth, 2003-
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Economic growth, 2003-
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