Socialism won’t rescue Argentina from its Covid nightmare

In Argentina, we are in our fourth month of quarantine, with no end in sight since Covid-19 cases are rising each day. In the meantime, the government is pursuing a series of statist measures that are a direct threat to private property and liberty. If Argentina wants to have a prosperous economy, it should avoid Socialism at all costs.

But currently, it is getting closer to Socialism. Take the example of Vicentín, Argentina’s top soy bean exporter. When President Fernandez announced the expropriation of this company, there was a strong backlash. The President had to step back and apologise for this mistake, a mistake that would have put the company into a deeper amount of debt.

Even though this expropriation manoeuvre failed, it established a strong precedent for what might come. Since the government coalition has close allies of former Venezuelan President Hugo Chavez (Cristina Kirchner and La Cámpora), it is no wonder why they are attempting to impose a socialist experiment in Argentina.

Socialism always collapses. History backs this up. Every enterprise administered by the Argentine state either went broke, was involved in corruption scandals or mismanaged taxpayer funds. Consider YPF in the energy sector. The company is currently facing a billion-dollar legal case in New York, which oscillates between USD $3 billion and USD $12 billion. Also consider Aerolineas Argentinas, the state company which has near-total monopoly “of the skies” and is currently grappling with a massive amount of losses. These debts cause massive budget deficits and increase the burden on the taxpayer. The Argentine government is in no position to take on management of a private company and should not be contemplating it further.

Things do not end here. The latest scandal involves former Vice President Amado Boudou, who faced corruption charges and had a five-year prison sentence. Now he is released, on house arrest, with the excuse of Covid 19, while “Kirchnerist” attorney Carlos Zannini ordered a restoration of his salary and pension. Another corruption scandal among many.

But why is all this happening during the pandemic? It is because politicians are seeking their own benefit at the expense of society. If we take a closer look, Latin American countries have pursued clientelist policies. Especially in Argentina. The state exchanges goods, services, or money in exchange for votes. For example, 9 million people are receiving 10000 pesos (70 USD) – some in monthly instalments if they are lucky – to alleviate the economic costs of the quarantine. However, in Buenos Aires, at least 20 per cent of companies are closing permanently, and at least 300,000 people (900,000 according to private estimates) will lose their jobs.

Meanwhile, the government promises it will reactivate the economy with public and private construction, and more monetary emission. They will try to finance a collapsing economy with a bankrupt government. Good luck with that.

Despite all this in the metropolitan area of Buenos Aires (AMBA) (composed of 40 municipalities), the industrial sector is reopening gradually. However, this is not enough to mitigate the severe economic impact of the pandemic. For example, Argentina’s GDP might fall at least 12 per cent this year. Monetary emission is at its peak, and we are facing the worst economic recession in history.

Lifting quarantine measures will not help with economic recovery, either. Argentina needs external investment to allow private companies to generate work, produce, and increase revenue. The state will not be able to alleviate the economic problems, much less aid in the economic recovery.

After a 4-month quarantine, the government says that the health system is at risk of collapsing in 60 days. But let us face it, the system was already collapsing in 2019.

So, the government should stop its political demagoguery. They should know that Socialism will not save Argentina. Only a robust private sector can aid the country’s economic recovery.

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