What is MacroWeb?

THE CONTROVERSIAL PERONIST PERIOD

My relatives joke that there was so much wealth in the country when Peron became president that people tripped over blocks of gold while walking through the Treasury building. Nowadays, Peron is a controversial figure in Argentine history. Some believe he was a saint, and some believe he was a villain. Maybe it was Peron who brought economic chaos to the country, but maybe it was a failing economy that was responsible for bringing a tyrant to power. It is a vicious circle: the worse the economy gets, the worse the government behaves. But, ultimately, we cannot say which began the cycle. Modern economic theories indicate that a growing economy drives a country towards the creation of democratic institutions. Could that mean that a weak economy, in contrast, drives a country towards authoritarian governments and political instability?

What we do know is that during Peron and Evita’s era both the size of the federal government and the national debt increased massively. Following the example of the earlier nationalization of the oil industry, Peron seized or “bought” private companies, specifically in the public service sector (most notably utility and transportation companies), and unionized them. A new system for distribution of wealth was instituted, in which a small aristocracy was allowed to accumulate wealth if—and only if—they contributed to the Eva Peron Foundation or were friends with government officials. The unions controlled wages, the federal justice system was shut down (literally, Peron fired all federal judges), government-controlled companies became overly bureaucratic and inefficient, churches were burned down, and most private business owners and investors were forced to play by the government’s short-sighted rules. Given these circumstances, there was no room for economic growth. Per capita GDP decreased by 10 percent between 1962 and 1963 alone.

The decades of the 1970s and 80s were possibly the darkest period of Argentine history. A succession of military dictatorships and useless democratic governments resulted in a steep decline in per capita income. Between 1981 and 1982, per capita GDP decreased by 17 percent. It was a period shaped by hyperinflation, wasteful governments, political prosecution and assassinations, and an irrational war-the Malvinas (or Falkland Islands) War with Great Britain. As interest rates skyrocketed, the government froze or seized savings accounts: companies and banks declared bankruptcy one after another.

previous page (2) next page (4)