79-11-B3
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Common Sense from a Neighbor[edit]
Transcript[edit]Dr. Martinez de Hoz was given the responsibility of rebuilding Argentina's ruined economy when, in March 1976, the armed forces took over the government of Juan Peron's widow. The country was on the verge of anarchy and terrorists had declared virtual civil war against the population. Today, Argentina is at peace, the terrorist threat nearly eliminated. Though Martinez de Hoz, in his U.S. talks concentrates on economics, he does not shy from discussing human rights. He points out that in the process of bringing stability to a terrorized nation of 25 million, a small number were caught in the crossfire, among them a few innocents. Today, the number of people detained for suspicion of terrorist links is steadily declining. Martinez de Hoz makes the point that you can't have true political freedom without economic freedom and that Argentina had been on a 30-year roller-coaster ride of massive inflation (over 1,000 percent a year at one point); big budget deficits; negative balance of trade; a currency black market; protected industries with almost no competitive incentives to improve products or services; and nationalization of industries that failed because of their own inefficiency. By early 1976, the average Argentine's peso was worth next to nothing. The dips in the roller coaster were deeper and the intoxicating highs higher than here, but the symptoms were similar to the ones we wrestle with today. Can we learn from Argentina's experience? Consider this: Since 1976, Argentina has decontrolled interest rates on savings. The rates went up and so did the savings. Today, the average Argentine saves 27 percent of his pay--one of the highest rates in the world. Thus, new capital is provided for economic growth. Rent controls were causing a chronic housing shortage. They were scrapped and buildings went up. Exchange controls on currency were lifted and the black market in money disappeared. State-owned industries have been sold off to private enterprise and new competition has been encouraged. Trade protection measures have been cut and foreign competition is now forcing domestic industries to become more productive and customer-oriented. Though he has wrestled inflation down from 360 percent to 100 percent a year, Martinez de Hoz still has a way to go. But if you ask the average Argentine-in-the-street what he thinks about the state of his country's economy, chances are you'll find him pleased, not seething, about the way things are going. Maybe we could learn something from our neighbors at the other end of the hemisphere. This is Ronald Reagan. Thanks for listening. |
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