As the people of the rich nations are facing hard economic situations and austerity measures in their own countries while watching the banks and financial institutions get bail outs, many have taken to the streets to protest the growing inequalities in wealth within their own societies. Although these are the very countries that proclaim to be the most democratic, it seems quite obvious that some voices are heard over others. While the vast majority will be forced to swallow the poison pill, the tiny elite who control most of the world's wealth are accumulating riches at levels never before seen.
These measures, we are told by our "democratic" governments, are necessary to create a better economic situation for all. The "trickle down" economic theory has spread across much of the world. But is it really the way to a more equitable and stable economic future?
The answer to this question may be found in the most interesting of places. The IMF's International Monetary and Financial Committee's September 24, 2011 report contains a section on Argentina. In it it states:
:In the past decade, Argentina’s economy has undergone an unprecedented structural
transformation. Since the 2001/02 crisis, Argentina has recorded eight consecutive years of
growth, a sequence that has not been witnessed since the 1963-1974 period. Between 2003
and 2010, average annual economic growth was almost 8 percent, but the outstanding aspect
of this unprecedented growth period is that it was achieved together with a noticeable
reduction in poverty, unemployment, and inequality. From the point of view of the
Argentinean experience, growth must be broadly shared in order to build a more mature and
sustainable economic and social structure."
"Argentina follows a solid path that sustains high rates of growth as a result of the policy
framework followed by the country since 2003. It is based on a sound macroeconomic
policy framework supported by continuous twin surpluses, external and fiscal, a disindebtedness
process with no precedents, responsible fiscal and monetary policies, a floating
exchange rate regime, and the accumulation of foreign reserves. In this regard, the historical
pattern of stop and go that has characterized the Argentinean economy since the post-war
period was avoided. Key components of the model are job creation, fairness and social
inclusion and income distribution. In the past eight years, the average income per capita
grew by 60 percent in real terms and public expenditure per capita increased tenfold during
the same period. 3.5 million jobs were created, with unemployment decreasing from 18 to 7.3
percent, while the average real wage climbed 37 percent. Improvements in the minimum
wage, as recently occurred, benefit both the functional and the personal income distribution.
We share the view that equality is an important ingredient in promoting and sustaining
1 Social and political stability supported economic stability, and social participation
was preferred to social repression. Argentina has also been particularly successful in
guarding the most vulnerable sectors of its population, as well as its producers from the
recent episodes of volatility in international commodity prices."
"We believe it is necessary to
continue to rethink the role played by credit rating agencies through concrete policies aimed
at reducing dependence and enhancing supervision."
Is seems that the fact that Argentina decided to reject the usual prescriptions by these international lending institutions led them out of the crisis they were facing and on to a solid future. This is a point that should be realized by the countries dealing with enormous debt and also by the countries who may in the future consider listening to the ideas of the IMF.
Perhaps ways other than what the elite bankers of the world would like countries to follow are more rewarding. Perhaps countries are going to have much different relations with these institutions in the future.