Argentina's ranking in the Wall Street Journal/Heritage Foundation Index of Economic Freedom 135th out of the 179 countries ranked in the Index has declined steadily in the seven years since President Cristina Fernandez de Kirchner and her husband, former President Nestor Kirchner, took power. It is by far the lowest ranked G-20 nation, says the Heritage Foundation.
A closer look at Argentina's scores on some of the 10 indicators in the Wall Street Journal/Heritage Foundation Index of Economic Freedom reveals exactly how and why, under the rule of President Cristina Fernandez de Kirchner and her husband, former President Nestor Kirchner, Argentina has suffered a decline in prosperity and economic freedom, says Heritage.
The Kirchners' economic stewardship has been dismal; although highly indebted and facing declining commodity prices, the Kirchners have imposed unsustainable levels of government spending.
To help finance this spending spree, in the fall of 2008 the Kirchner government seized $30 billion in 401(k)-type private pension accounts belonging to individual Argentine citizens.
Although the Kirchners manipulate official government statistics to hide the true rate, private estimates show inflation in Argentina to be spiralling out of control.
In 2010 it soared to more than 20 per cent, raising fears of a return to the bad old days of 1980s-style hyper inflation; in trying to contain the rate of inflation, the Kirchner government has subsidized or price-controlled electricity, water, retail-level gas distribution, urban transport and local telephone services.
The executive branch influences Argentina's judiciary; the courts are notoriously slow, inefficient, secretive and corrupt.
Many foreign investors must resort to international arbitration; government manipulation of inflation statistics has caused foreign and domestic bondholders to lose billions in interest payments on their rightful property.
Freedom from corruption:
The entire political economy of Argentina is blighted by the Kirchners' brand of "crony capitalism" one of the most corrosive and hardest-to-eradicate forms of corruption.
Foreign investors complain about widespread government and private-sector corruption as well as pervasive demands by government officials for bribes; meanwhile money laundering, trafficking in narcotics and contraband, and tax evasion plague the financial system.
James Roberts, Cronyism and Corruption Are Killing Economic Freedom in Argentina,
Heritage Foundation, April 22, 2010.
For text: http://www.heritage.org/Research/Reports/2010/04/Cronyism-and-Corruption-Are-Killing-Economic-Freedom-in-Argentina
For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26
First published by the National Center for Policy Analysis, Dallas and Washington, USA
FMF Policy Bulletin/ 18 May 2010