Recently I spent a month in Buenos Aires. I went there to study the culture and the economy of a formrely prosperous land, filled with kind well-educated people.
One key lesson was this: Given enough time, bad policies will eventually ruin any advantage.
While not as bad off as it was in 2002, when the masses took to the streets banging pots and pans in protest of their nations ruined economy, the city of Buenos Aires is still clearly depressed. As are most of its people.
More than that, all hope has been lost. Every time a new politician is elected, things are promised to get better, but they don’t. Argentina’s current woes are the result of far too many successive political regimes that made terrible decisions. It’s a clear as simple as this: Bad policies lead to bad outcomes.
As we learned in our interview with Daron Acemoglu on Why Nations Fail, what matters most for widespread prosperity is that the political and economic institutions be fair and inclusive. From the podcast:
It all depends on incentives and opportunities. If people have opportunities to become rich, to open businesses, be innovative, do things that are going to further their interests and at the same time the nation’s GDP (Gross Domestic Product) and they have incentives to do so, that’s going to lay the foundations of economic prosperity.
This post was published at PeakProsperity on Friday, July 14, 2017,.
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