American Man Learns Wrong Lesson
Trump Wants a Latin American Economy, Built on Patronage and Connection
Part 2 of my Argentina Post, on the economic costs of Trumpism and the doomed idea of tariffs.
I started writing this in my cabin outside a small town in Patagonia. That is the southernmost part of Argentina, and I have been going there for 35 years now.
Argentina is deeply attractive—the quality of life in a warm, educated society, with a culture rich in everything from food to the beloved tango. (Not mention soccer!) A strong populist tradition has driven many admirable advances, from functional hospitals to free university—even for foreigners. Vacation time, retirement pay, worker safety, minimum wages, and organized labor are all part of the national culture, however limited by economic realities.
Limited because this country produces very little.
If you ask ChatGPT to name ten Argentine brands of global importance, it can only come up with four. There are big agricultural exports—I’ll return to soy in a moment—but industry is weak. Tariffs protect the incompetent and crappy. Argentine brands don’t have to compete with international rivals, so they don’t. The quality of domestic products is low—I bought a bucket that broke apart the first time I used it, and then an axe that, on first strike, split itself into pieces, instead of splitting the log I was aiming at. Both were “Industria Argentina.”
You can order from Amazon, Shein, or Temu in Argentina—but only 12 times a year, total, and strictly enforced. Tariffs, import fees, fees on the fees, and special taxes routinely double or even triple the cost of items, which can take months to clear customs.
Tariffs are one reason the Argentine economy constantly underperforms. Another is the “strong money” idea. This is the popular delusion that you are better off when your currency sounds stronger than other currencies. A big, expensive peso makes Argentines feel rich, and it is said that elections in Argentina are won by a “weak dollar” policy.
But this has always suffocated Argentina. When I first came here in 1990, the peso was pegged to the dollar at 1:1, making the country insufferably expensive for a foreigner, but also stagnant in Buenos Aires and nearly somnolent in the countryside. Unemployment in the 1990s was routinely higher than today. The country’s agricultural products were too expensive for international markets, and its industrial products were as outdated and obsolete as the Ford Falcons still seen everywhere in the streets. Argentina never stopped the policies that the Asian Tigers or America left behind long ago.
A currency devaluation in 2002 reversed the situation. Amid a collapsing economy and mass unemployment and discontent, the agricultural sector soared on new sales abroad. The downsides were bitter for several years, but the economy began to recover with a new advantage: well educated people working at good prices. The film industry took off—Buenos Aires was cheap, and full of skilled artists. The educated population attracted publishing, translation and call center work. Tourism exploded, flowing into every corner of the country and becoming a serious driver of economic growth for the next twenty years. Just five years after the devaluation, the Economist referred to a “new Golden Age” in Argentina. Real estate took off, partly as a hedge against terrible inflation. Much of Buenos Aires was rebuilt or spruced up. The avenues that were empty in 1990 are thronging today.
Guess who took exactly the wrong idea from this result?
Donny, that’s who.
Next: Part 3, Trump Sends Cash, Not Commandoes