Argentina, Chile, and Lessons from History

Argentina and Chile, like the US, were colonial nations, settled by the Spanish. They received independence at about the same time as the US, 1808 for Chile and 1810 for Argentina. Neither had chattel slavery, but Spain’s practices of forced labor in its colonies were notably brutal. Like the US, both are rich in natural resources and natural beauty. Both welcomed immigrants from all over the world.

In 1900, Argentina was one of the richest countries in the world. It no longer is even close. Chile is a more or less middle-income country, but not as wealthy as it could be.

Both have struggled mightily with democracy and stability.

The broad outlines are these. In Argentina, people got fat and happy and started worrying about things other than democracy and the economy. Like, what were the marks of a true Argentine? The Great Depression destroyed Argentina’s export markets, and there was a military coup and several years of contested elections. Juan Peron was elected in 1946. He and his wife, Evita, were super popular because they spent money the government didn’t have on programs that were popular with the people. The elites didn’t like them. Peron left for Spain, the next leaders stopped all of Peron’s spending and popular programs, and there were decades of political upheaval and economic decline that continue to this day.

The Catholic Church was complicit in the violence against people who protested the government. I once talked to an Argentine who told me that he stopped going to church when he found out that the bishops supported pushing protesters out of airplanes.

Chile, meanwhile, had a parliamentary democracy after its independence, but its policies heavily favored the wealthy landowners. This lead to uprisings by the people, who wanted a greater share of economic benefits. The 20th century was marked by capital flight, flirtations with communism, the US involvement in the overthrow of a democratically elected socialist president (Salvadore Allende), followed by a brutal dictatorship (Agusto Pinochet), and finally a transition to democracy. It hasn’t been easy, given the damage to the economy and national institutions.

All of which is to say: there is nothing permanent about democracy or a large economy. Democracy is hard work and requires constant vigilance and participation. An economy only works if it works for everyone (which is not the same thing as socialism, by the way). Having government and religion intertwined usually damages both.

But the key point is this: the US may have been a democracy and wealthy country for the last 244 years, but that doesn’t mean we’ll be a wealthy democracy in 2021. What do we want? What are we willing to do for it?

A white woman with green glasses and gray hairAnn C. Logue

I teach and write about finance. I’m the author of four books in Wiley’s …For Dummies series, a fintech content expert, and an avid traveler. Among other things.

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