Thursday, August 09, 2012

America's Future

A good article on Argentina today in the WSJ.  They are a model of where I think America is going.  Lots of regulations and rights to stagnate the economy, lots of Keynesian demand management (ie, more government spending) by policy elites. You have private companies, but these are staffed at the top by government cronies.  If Stiglitz, Krugman or DeLong were put in charge, I'm sure this would be the result, regardless of their intentions.

Argentina didn't explode or stop working, it just slowly became less wealthy, and less free, so whereas 100 years ago they were similar to the US, now they are clearly backward.

7 comments:

Anonymous said...

Nice post Eric.

Mercury said...

Maybe, but in the years to come, the US won’t be living through the same decades that Argentina did during its long decline. With Japan, Europe and the rest of Western Civ. more or less in various stages of the same situation I think things will get ugly much sooner...and hopefully bottom out (a market clearing event if you will) much sooner to. So, here’s to a sudden collapse! :)

cig said...

Given that for every American who thinks the private sector is run by government cronies, there's approximately one other who thinks the public sector is run by Goldman Sachs alumni on behalf of the Great Corporate conspiracy; I conclude that you guys have got the balance about right. After all, the optimal state of a democracy is when discontent is distributed in a fair and Pareto-efficient way.

Taylor Conant said...

From the Q2 2012 conference call for DreamWorks Animation (DWA):

Argentina at the moment has decided not to pay for their films and not to pay for lots of other things, they've essentially -- are (inaudible) their foreign currencies and they are paying anywhere from about 9 months to 18 months late. As such we evaluate each film on whether or not to send it down there and then we figure out pretty much when we are going to get the cash and we don’t book it until we receive it.

So it is sort of like a non-accrual loan from the banking business. Venezuela, it is relatively new for Argentina. Venezuela has been doing this for a number of years now and also has an allocation system that comes out. In Venezuela's case, I think we get paid a couple of years after the film is released.

Kabir Gandhi Khan said...

The biggest thinking error in your post is forgetting how big is the military of the country involved. Argentina's military power is a joke. Till the US Military is even half of what it is today about 40% of the rest of the world on spending, no predictable worst case scenario is possible for the US.

Do not forget one of the top three reason the dollar matters how much ever the American economy screws up. The real power of the USA.

I think nearly all Economists miss this about the real world.

diƤtplan said...

very good post

J said...

As someone with some experience in the matter, Argentina's regression has another cause: dishonesty. La Coima (kickback) is something natural, all the governments enriched the people in charge ( there are exceptions - some because sheer incompetence, some because ... well, \i dont know, never met one)