Argentina's Fall from Grace...
... and potential recovery
Photo: Unsplash
Greetings Prosperous Souls,
In the 1900s, Argentina was extremely prosperous, well on track to being one the world’s most successful economies. But, by the middle of the century, the nation began a backslide into poverty. What happened? Economist, Thomas Sowell, writes:
In the early twentieth century, Argentina was one of the world’s most prosperous nations—ranking above France and Germany… But, by the middle of the twentieth century, disastrous political policies had dropped Argentina out of the front ranks of nations economically.
Despite its rich soil and other natural advantages… Argentina’s political culture destroyed the… economy… Messianic political demagoguery and class warfare rhetoric and policies, epitomized by Juan Perón and his wife Evita—patroness of “the shirtless ones”—were part of an economically counterproductive pattern that began before them and continued long after their time, nullifying both the advantages provided by nature and the human capital supplied largely by foreigners, whether immigrants or international investors and entrepreneurs. As of 2015, The Economist magazines reported that Argentina’s economy had “barely grown for four years,” was running a budget deficit and had an inflation rate of about 25 percent per year (Wealth, Poverty, and Politics, 113).
It’s tragic to see such a prosperous nation collapse. But Argentina may be on its way to a massive comeback. According to the American Institute for Economic Research, the nation’s president “has been waging a bitter but largely successful campaign against inflation.” However, there have been setbacks. Reuters writes: “Argentina’s economic activity likely fell in June versus the same month a year earlier…” You can see this in the chart below:
While this setback feels discouraging, I see it as part of the recovery process. When a country is weighed down by skyrocketing inflation and rampant poverty, it takes extreme measures to turn things around.
The Road to Freedom
President Milei has called his economic strategy “Shock Therapy.” It’s a plan that demands courage and resilience from his people. Yes, times will be tough, but maintaining the old broken system is much worse.
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God bless your Prosperous Soul,
Stephen K. De Silva
About: Stephen K. De Silva is an author, speaker, and financial coach. From 1995 until 2017, he served as the CFO of Bethel Church, and a member of the senior leadership team. Stephen’s blend of experience, training, and gifting make him a pioneer in the subject of money. You can reach Stephen at hello@prosperoussoul.com