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In Alan Beattie’s new book False Economy: A Surprising Economic History of the World, the world trade editor of the Financial Times examines why some countries get rich and others get poor. He makes a fascinating comparison between the United States and Argentina. A century ago, each country seemed equally poised for greatness. Each new world country had plentiful natural resources and seemingly boundless potential. Italian, Jewish and other immigrants flocked to both New York and Buenos Aires alike to seek their fortunes.
A century on, one has been acclaimed the greatest nation in the history of the world and one is a basket case. So what went wrong with Argentina, a country that, though it has some of the proudest people on earth, is a byword for bad governance and is experiencing emigration on a massive scale by people going back to countries they once fled?
Simply put, it can be put down to poor governance. While the United States by and large embraced capitalism and the rule of law, adopting appropriate regulations for the securities industry and against monopolies to promote capitalism, Argentina took a different route. It championed national producers, prevented external competition and became rife with corruption rather than the rule of law.
The results of these divergent approaches to governance are clear. Whereas Argentina fell behind its neighbors Chile and Brazil, the United States became a ‘hyperpower’ admired around the world.
The reason I tell this story is that it is by no means clear that history cannot be reversed, and the US fall down the path that Argentina went down. Our rapidly spiraling national debt and nationalization of industries such as finance, automaking and insurance show that the US’s position as a world power is by no means secure.
Living in Singapore drives this point home. On a recent visit to New York, I was reminded of America’s deteriorating infrastructure and general sense of decline. When I had lived there previously, that was part of its charm. Living in a country that is shinier and is without problems such as homelessness and crime, the problems America has are put in a much sharper focus.
It would be wrongheaded to blame Obama for the current state of affairs. Much was inherited. And yet, this is where he finds himself. In the view from Asia, America could become another Argentina. A country full of people that think they are the best in the world that are in fact an overly indebted laughing stock.
