Monday, May 20, 2024

OPINION AND ANALYSIS | 05-09-2020 09:39

Down with development

Alberto and the people surrounding him are determined to solve the country’s socioeconomic problems by levelling down, taking as much as they can from the more productive parts of society and giving it to the millions who rely on handouts.

Alberto Fernández thinks Argentina is in a bad shape not just because of Mauricio Macri and the rampaging coronavirus but also because, as he told us a week ago, porteños are terribly selfish people who do not care what happens to their compatriots. Along with many others, he evidently takes it for granted that big cities, especially Buenos Aires, are parasitic organisms which get rich by exploiting the surrounding areas, without giving anything much in return. In his view and that of most of his fellow-Peronists, this must be the only reason the inhabitants of the Federal Capital are far better off than most of those who live in places like La Matanza, so for the entire country to prosper Buenos Aires would have to be brought down a couple of pegs and made to disgorge its ill-gotten wealth.

Complaints like this can be heard in many other parts of the world where many are convinced that cities such as London, New York, Paris and the rest of them rolling in money because they have plenty of devious individuals who are skilled in the art of squeezing farmers, manufacturers and others who live in the boondocks but produce the things consumers want? For those of us who prefer rural life to the raucous hustle that is typical of urban centres, such opinions have their charm, but the truth is otherwise. These days, cities are the main engines of economic growth even in countries which, like Argentina, depend largely on agriculture or on mining activities of one kind or another for the money they need to balance the books. Talented and ambitious people are drawn to cities because it is there where the action is and, on the whole, they enjoy one another’s company. Once their combined efforts reach a critical mass, both they and the societies they live in are liable to prosper mightily as, indeed, has Singapore which has no hinterland to speak of.

Economists have long agreed that in the modern world brainpower and the capacity to make good use of it are far more important than natural resources. The consensus is that a country’s standard of living will increasingly reflect the educational level of the general population and the opportunities available to whatever high-flyers there may be. In fact, this has been true for a great many years. Had it not been, countries such as Japan and Switzerland would still be poverty-stricken while almost all people in Argentina, the Congo and others lands which are well-endowed by nature would live far better.

In recent years, enterprises whose assets are, one might say, intangible, because they are stored in people’s heads rather than in silos, warehouses or deep underground have proved to be hugely profitable. A few days ago, it was reported that Apple’s market value had soared past the US$2-trillion mark, which made its revenue greater than the annual output of Italy, Brazil, Spain or Russia, among many other countries, including, needless to say, Argentina, whose yearly gross domestic product amounts to less than a quarter of the stock-market valuation of the world’s top technological giant.

Did Apple get so extraordinarily big by monopolising the world’s supply of silicon? Of course not; it owes its success to the intelligence and ingenuity of the men and women involved and to an economic, political, cultural and legal environment in which they could make the most of their gifts. It is possible that, had things been slightly different, companies like Apple and Alphabet (Google), or the enormously profitable media outfits such as Facebook, which became feasible thanks to the computer revolution, would have first seen the light in Japan, Germany or the United Kingdom, but it so happened that at the time Southern California had the edge on other centres of innovation. 

All this should mean that economists, politicians and others who are interested in getting their country to generate more wealth so more people can achieve their personal objectives ought to be asking themselves exactly what it was that allowed a handful of companies based in and around San Francisco to accumulate so much wealth in such a short period of time. They could then try and work out what Argentina would have to do to acquire the wherewithal to enable her to get a decent cut of the business or of others which could be spawned in the not too distant future?

Removing the many barriers to innovation which here make life impossible for would-be entrepreneurs would certainly help, but it would only be a start, as would a determined effort to ensure that the talented men and women who still live in the country do not feel obliged to move to parts of the world in order to make the most of their abilities. Though on occasion official spokespeople allude to the need to do something about this and shed tears over the disastrous state of a once relatively effective educational system, they clearly have other priorities in mind.

As well as having it in for Buenos Aires City, Alberto seems determined to stifle the country’s small but quite vigorous high tech sector. He apparently thinks it is a troublesome nuisance owned by the media conglomerate Grupo Clarín which should be cut down to size, hence last week’s decree making electronic communications a “public service” and putting them under government control, an initiative which, as he should have foreseen, potential investors immediately saw as an attempt by a crazily reactionary government to save Argentina from the horrors of economic development.

For what they presumably believe are sound political and moral reasons, Alberto and the people surrounding him are determined to solve the country’s socioeconomic problems by levelling down, by taking as much as they can from the more productive parts of society and giving it to the millions who rely on handouts. They want the nation to embrace what currently unfashionable sociologists called “the culture of poverty.” As far as they, and their favourite guru, Pope Jorge Bergoglio, are concerned, the government should concentrate on making life a bit easier for the huge, and growing, number of Argentines who are unable to cope with the allegedly unfair demands of a capitalist economy but who, bless them, regularly vote for their Peronist benefactors and therefore deserve to be given a pittance, which, thanks to almost a century of sliding downhill, is all the country is now able to afford. What will they do when the money finally runs out, as it soon could? Neither they, nor anyone else, know the answer to that particular question.

James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).


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