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September 6, 2016

Don't Cry for 'Free' Argentina--It's Finally Doing Something Right

 

Thousands of union workers marched in Buenos Aires, the capital of Argentina, last week protesting President Mauricio Macri’s cuts to government jobs and various subsidy programs. So you know Marci is dong something right.
 
Actually, a lot of things right.
 
The Associated Press reports, “Thousands of state employees have been fired since Macri came to power in December vowing to cut bloated spending.”
 
Macri ousted Peronist predecessor Cristina Kirchner in the last election, whose leftist policies were destroying the economy.
 
One of its biggest problems is that Argentina defaulted on $95 billion in debt in 2001. Both former President Nestor Kirchner and his successor wife, Cristina, refused to repay the debt or negotiate terms, which effectively shut off most foreign investment. Macri negotiated an agreement with several hedge-fund debtors in February, which will allow foreign investment to return.
 
In addition, Kirchner ramped up utility subsidies as a way to buy votes, but it was costly. As the Wall Street Journal reported in April, “Now Mr. Macri plans to slash billions of dollars in budget-busting subsidies that economists say aren’t just bankrupting the government but also fueling the very inflation he [Macri] is trying to tame. Inflation could surpass 35%, and the economy is expected to contract this year.”
 
And that’s the problem Macri is facing. Inflation is high and it will take a little time—and some economic pain—to fix the economy the Kirchners and their leftist predecessors broke.
 
With the left and unions and those addicted to subsidies attacking Macri, he might not have much time to get the economy turned around.
 
The U.S. has its own Kirchner-esque government, and it may have another one come January. President Obama has gladly put millions more Americans on various forms of government subsidies, done all he could for the unions (whether legal or not) and nearly doubled the federal debt.
 
When, and if, a new president tries to get the U.S. back on a sustainable financial track, there will likely be massive union and leftist protests—just as in Argentina.
 
So we wish Macri the best; his country needs it. And if he is successful there, maybe Argentina will loan Macri to the U.S. for a few years?  Our country needs it, too.


 

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