Scott Grannis has been studying Argentina since he married an Argentinan in the '80s. He was Chief Economist from 1979-2007 at Western Asset Management, a global manager of fixed-income portfolios. He keeps up and blogs on economics, markets, and politics from his condo overlooking Calafia Beach on the Southern California coast. Now Scott is blogging from Argentina while visiting with his Argentinian wife of 37 years.
He recently presented some fabulous--if anecdotal--evidence of how government meddling destroys the economy:
Our friends tell us that a year ago the city [of Mendoza, Argentina] was doing very well, thanks to hugely expanding exports of wine. Our local Costco store (in Dana Point, CA) now has a whole section devoted just to Argentine Malbec, which is a close cousin to Cabernet Sauvignon. Most of the Malbec in Argentina is grown around Mendoza. Lately exports have fallen off sharply, and the locals, one of whom we talked to today over lunch, blame it on the Kirchner [Argentinian] administration for sharply increasing tariffs on just about all exports. Governments never learn, it seems, especially not here in Argentina.
However, his view is not built upon anecdotes, as he explains:
I've followed the economic history of the country since 1980, and I've seen them make the same mistakes countless times: devaluations to boost exports, taxes on exports to boost government revenues, capital controls to keep money from fleeing overseas, wage controls to keep inflation under control, etc. These things never work, they just exacerbate the underlying problems.
He appears to know what he is talking about, and we ought to listen.
Here in the U.S., our leaders are also meddling with the economy, imbued with an indomitable belief in their own invincibility. Their interference is ostenibly to help the economy, but instead, they are acting with the improvement of their political base and manifestation of socialsim as their goal.
If we truly wish to revive the economy, we ought to empower those that read, understand and acknowledge the only proven method for improving the economy: removal of barriers to capitalism.
(Via El Opinador Compulsivo)