Argentina

[brett]

Hoping that in a few months our local supermarket will be blowing out cases of very well priced Argentine Malbec!

[copyright1997reloaded]

Wikipedia, the indisputable source.

I wonder what happens in economies that "eat the rich"?

Argentina has a "Universal Child Allowance" (universal income anyone?). Argentina has a 35% max tax rate (on income above approximately $9500 USD). Argentina social security tax is about 17%, scheduled to increase to about 19.5% in 2022. Argentina has a medical tax of 6%.

Argentina has a wealth tax on worldwide asset holdings of individuals. This tax applies to individuals with assets over (approximately) $5000 USD, and the rate is 0.5% of the amount over AR$305,000 (approximately $5000 USD) increasing to 1.25% of amounts over AR$500,000. Assets held in Argentina institutions are exempt.

Argentina also has a value-added tax, and a financial transaction tax.

I'm certainly not an expert on Argentina, but do espouse the viewpoint that one of the major advantages the USA has had has been a relatively stable political system, where the losers lose gracefully and prepare for the next peaceful election. Another major factor has been the general sanctity of contract law and to have (in general) agreements that can be counted on being upheld in a court of law.

[Senator]

Quote:

Originally Posted by copyright1997reloaded Wikipedia, the indisputable source. I wonder what happens in economies that "eat the rich"?

Wasn't there a Goose story at one time about this? Or a Little Red Hen story? Or a Grasshopper story?

[MarieIG]

Quote:

Originally Posted by Senator Wasn't there a Goose story at one time about this? Or a Little Red Hen story? Or a Grasshopper story?

Speaking with relatives who lived "behind the iron curtain" (as well as some hard-working immigrants from those countries) it was beyond awful with bread lines, poor living conditions, poor medical care, loss of freedom, and everyone - with the exception of some corrupt government officials living in poverty.

The (non-family) immigrants who spoke with me were educated but came over with nothing, took menial jobs, saved money, bought property, sent their children to college, etc. One became a major land lord in NYC, owning commercial properties, and now has four children who are medical professionals. Another is a hard working, successful GC. They do not support the "eating of the rich," rather - they support the ability to work hard, become successful and enjoy the fruits of their efforts.

(Yes, I have also seen people who have immigrated, immediately went on social programs, and never paid a penny in taxes. These are not those people.)

[Senator]

Quote:

Originally Posted by MarieIG The (non-family) immigrants who spoke with me were educated but came over with nothing, took menial jobs, saved money, bought property, sent their children to college, etc. One became a major land lord in NYC, owning commercial properties, and now has four children who are medical professionals. Another is a hard working, successful GC. They do not support the "eating of the rich," rather - they support the ability to work hard, become successful and enjoy the fruits of their efforts.

That is the beauty of the idea of America. If you can dream it, you can live it. America is an idea, not a country. We do have a physical presence, but it is the idea that draws people to the physical country. There is nothing physical we have here that other countries do not also have.

In Argentina, people were promised more than the Government could deliver, and the people fell for it. Their government is elected by the people, just like they are in Mexico and Venezuela. The majority of the voters were envious of other people, and did not want to put in the work required to achieve the lifestyle they wanted.

The Government spent money they did not have, and could/cannot pay it back.

It's OK to not put in the extra work, but it becomes a problem if you want to live the lifestyle of the extra work.

[Teacher Terry]

My DIL ‘s parents have talked about how it was in Poland under communist rule. They celebrate their freedom every year with people on the street dressed in costumes and reenacting history. It was interesting to experience. Their stores were empty, standing in line all day hoping to get a loaf of bread, etc.

[MichaelB]

Quote:

Originally Posted by Senator In Argentina, people were promised more than the Government could deliver, and the people fell for it. Their government is elected by the people, just like they are in Mexico and Venezuela. The majority of the voters were envious of other people, and did not want to put in the work required to achieve the lifestyle they wanted. The Government spent money they did not have, and could/cannot pay it back. It's OK to not put in the extra work, but it becomes a problem if you want to live the lifestyle of the extra work.

Argentina and Venezuela lived long periods of time under military dictatorships, and Venezuela is under one today. Mexico had autocratic rule for many years. One devasting aspect of autocracy is it captures or dismantles public and social institutions to ensure a complete absence of competitive authority.

Those countries are full of hard working people looking to live and improve their lives, just like here in the US. One real and critical difference between countries like the US and Argentina, Venezuela, Mexico, etc, is not "envious people" (not sure where you even got that), it's the institutional strength and rigorous "soft infrastructure" of laws and judicial process that we enjoy, which enables us to invest in ourselves and others and subsequently benefit from the fruits of our efforts. One can never overestimate the importance of that or the contribution it makes to our continued well being.

[Senator]

Quote:

Originally Posted by MichaelB is not "envious people" (not sure where you even got that),

When a person is OK with taking something away from one person or group by force and/or threat of prison if necessary, to give to themselves, they are in my mind envious of those same people.

[MichaelB]

Quote:

Originally Posted by Senator When a person is OK with taking something away from one person or group by force and/or threat of prison if necessary, to give to themselves, they are in my mind envious of those same people.

The challenge Argentines face is not envy of others. To say they are simply trying to take what is not theirs from someone else, and that is why the currency just weakened, reflects a misunderstanding of the situation and the country. I think you're trying to impose a belief system onto a situation without regard to the facts, which are much more complex.

To tie this back into the thread topic, the reason (IMHO) the Argentine stock market and currency fell so much in one day is because Argentina does not yet have the strength or breadth of institutions needed to weather the thought of a "simple" change of one leader. When one person can make such a difference, the prior valuation was unrealistic, far too high and wildly overstated.

The weakness in policy making and governance is sad, but it isn't the "will of the people" or the result of lazy good for nothings trying to take what isn't theirs. The good people of Argentina work just as hard as you and me and have good solid values as well. Argentina lived under military rule for over 40 years, and during that time the rulers engaged in a dirty war, terrorizing the population, killing more than 30K mostly young men and women, and driving the best minds to exile. It's only been a bit over 30 years since the dictatorship was replaced with elected civilian rule. The people there are still learning to govern themselves and rebuild society. People born, raised and educated in a free society are millenniums. The older populace has spent most or all of their lives under a terror regime. How are they supposed to learn where there is neither tradition nor education? This is no surprise (except for the people and institutions that invested in that 100 year bond issue).

It's taken us (USA) over 200 years to figure out most of this stuff, including the part about having institutions, such as the armed forces, a central bank and a judiciary, that are highly qualified and independent, and can withstand encroachment. It's safe to say we're still learning.

Again, tied back to the thread topic, assets in emerging markets are "cheaper" for good reason. What's happened in Argentina could happen in most other emerging market countries. There are a few that might escape that fate, evolve and become high income countries, but (IMO) the majority will follow the same turbulent path as Argentina. Economic development is very challenging.