February 28, 2014
Roger Cohen, what a disappointment. He is not Tom Friedman or David Brooks, and shouldn’t be insulting an entire nation based a clump of tired old clichés and a lack of information. Argentina is “the child among nations that never grew up” he writes, and “not a whole lot has changed” since he was there 25 years ago. OK, let’s see what we can do to clean up this mess with a shovel and broom made of data.
For Cohen, Argentina since the government defaulted on its debt has been an economic failure. Tens of millions of Argentines might beg to differ.
For the vast majority of people in Argentina, as in most countries, being able to find a job is very important. According to the database of SEDLAC (which works in partnership with the World Bank), employment as a percentage of the labor force hit peak levels in 2012, and has remained close to there since. This is shown in Figure 1.
FIGURE 1
Argentina: Employment Rate, Percent of Total Population
Source: SEDLAC (2014).
We can also look at unemployment data from the IMF (Figure 2). Of course the current level of 7.3 percent is far below the levels reached during the depression of 1998-2002, which was caused by the failed neoliberal experiment that the Kirchners did away with – it peaked at 22.5 percent in 2002. But it is also far below the level of the boom years of that experiment (1991-1997) when it averaged more than 13 percent.
FIGURE 2
Argentina: Unemployment Rate
Source: IMF WEO (Oct 2013).
How about poverty? Here is data from SEDLAC (Figure 3), which does not use the official Argentine government’s inflation rate but rather a higher estimate for the years after 2007. It shows a 76.3 percent drop in the poverty rate from 2002-2013, and an 85.7 percent drop in extreme poverty.
FIGURE 3
Argentina: Poverty and Extreme Poverty
Source: SEDLAC (2014).
Most of the drop in poverty was from the very high economic growth (back to that in a minute) and consequent employment. But the government also implemented one of the biggest anti-poverty programs in Latin America, a conditional cash transfer program.
Finally, there is economic growth. In a terribly flawed article today, the Wall Street Journal reported on a soon-to-be published study showing that Argentina’s real (inflation-adjusted) GDP is 12 percent less than the official figures indicate. (As the article noted, the government, in co-operation with the IMF, implemented a new measure of inflation in January, which should resolve this data problem that has existed since 2007). If we assume that the 12 percent figure is correct, then using IMF data Argentina from 2002-2013 still has real GDP growth rate of 81 percent, or 5.6 percent annually. That is the third highest of 32 countries in the region (after Peru and Panama). And incidentally, very little of this growth was driven by a “commodities boom,” or any exports for that matter.
Despite current economic problems, the country that Cohen ridicules has done extremely well by the most important economic and social indicators, since it defaulted on most of its foreign debt and sent the IMF packing at the end of 2002. This is true by any international comparison or in comparison with its past. Many foreign corporations and the business press, as well as right-wing ideologues, are upset with Argentina’s policies for various reasons. They don’t really like any of the left governments that now govern most of the South America, and Washington would like to get rid of all of them and return to the world of 20 years ago when the U.S. was in the drivers’ seat. But there’s really no reason for Roger Cohen to be jumping on this bandwagon.
