Another Country

Thursday, July 30, 1998

“It happened around 1991: Everything changed.” The speaker is a young Argentinian investment banker, talking over coffee at La Biela, a restaurant across the park from the Recoleta Cemetery where Eva Perón is buried, amid the leading families of Buenos Aires. The words are almost identical to ones I heard in India two years ago: “You cannot overestimate how much everything changed with the fall of the Soviet Union in 1991.” I had been in Buenos Aires a dozen years ago. “You visited another country,” the banker says.

What changed in both India and Argentina was less a matter of conditions on the ground than of ideas in people’s heads. Abruptly, the articulate elites of these countries moved from believing in socialism to believing in free markets, from championing government ownership of business to celebrating privatization, from walling off their national economies to opening them up to foreign trade and investment, from blaming the United States for almost everything that went wrong to seeking closer cooperation with the United States and convertibility with the dollar.

“People change their minds,” Daniel Patrick Moynihan quotes philosopher Michael Polanyi as saying. We do not move smoothly and gradually along a continuum of ideas but lurch sharply from one idea to its opposite. Everything changed around December 1910, Virginia Woolf once said, with her gaggle of intellectual friends in mind; everything changed for very many more people around 1991, in countries large and small across the world.

Americans find it hard to appreciate the starkness of the change. Elite opinion shifts more slowly in the United States. If the fulcrum on the continuum has been moving to the right, the left has a stake in minimizing the change and forgetting where the fulcrum used to be: It’s funny how all those people who used to go around attacking Cold Warriors now say the Cold War was uncontroversial. We lose sight of how many aspects of their cultures countries like Argentina are trying to change at once, how great the stakes are for them, how large are the potential benefits and risks, and how profoundly the United States can affect what happens, for better or worse.

The starkest change in Argentina is economic. A dozen years ago, you had to add four digits to your peso notes to keep up with inflation: A 10-peso bill was actually worth 100,000. Now the peso is tied to the dollar by a convertibility board: Argentina’s central banker is Alan Greenspan. This change was made by President Carlos Saúl Menem—in vivid defiance of the traditions of his Perónist party—and by the finance minister he appointed in 1991, Domingo Cavallo. They have cut the bloated public sector and are privatizing state firms; they have reduced inflation from 3,000 percent in 1989 to 2 percent in 1996; they have spurred growth from zero in 1990 to 6 to 9 percent in 1991–94. In early 1995, in the “Tequila crisis” after Mexico devalued its peso, Argentina resisted pressure to devalue as well and took a recession instead; even so, Menem was reelected that May. The changes seem to be enduring. Cavallo is out of office, and Menem’s party lost it legislative majority in the October 1997 elections. But Menem has continued Cavallo’s policies, and the opposition coalition has accepted them. As East Asian currencies have collapsed and the peso’s tie with the dollar has been threatened, every Argentinian politician has supported maintaining the convertibility board.


We often lose sight of how many aspects of their cultures countries like Argentina are trying to change, how great are the stakes, and how profoundly the United States can affect what happens.


There are signs as well that Argentina is changing not just its economic policy but its political culture. As Moynihan has written, “Politics can change a culture and save it from itself.” Lawrence Harrison, citing Latin American scholars Carlos Rangel and Claudio Veliz, argues that Latin countries have been held back by “the traditional Ibero-Catholic system of values and attitudes.” These have included lack of future orientation, lack of a perceived connection between effort and reward, and lack of a sense of communal obligation beyond the family. These were exacerbated in the years of Juan Perón and his successors by what Mark Falcoff, America’s leading student of Argentina, calls “mismanagement, corruption, and political unwisdom.”

But Argentina’s free market economic policies may be changing these attitudes and patterns of behavior. In this decade, Argentina’s government has preserved the value of its currency—creating a clear connection between effort and reward. It has copied Chile’s social security reforms to give workers control over their long-term savings and pensions—nurturing a future orientation. The conquest of hyperinflation has made possible a home mortgage market—providing a mechanism to accumulate wealth through home owning and creating a long-term stake in protecting property.

How lasting are these changes? No one can know for sure. “Argentina’s politics is improving a lot,” says Falcoff. “They’re discussing the right issues, and the public is demanding a higher level of probity, which hurt Menem’s party in 1997 and may well defeat it in 1999.” But the greatest threats to Argentina’s new consensus no longer come from inside the country. Argentina’s leaders were sorely disappointed when, thanks to his fecklessness and concern for domestic politics over international trade strategy, Bill Clinton failed to win fast-track trade-negotiating power from Congress and the dream of a Western Hemisphere free trade agreement was postponed indefinitely. Argentina’s response was to build higher barriers around Mercosur, the free trade zone it created with Brazil and tiny Uruguay and Paraguay—a temporary measure to help Brazil withstand the challenge to its currency after the East Asian collapse. But temporary measures have a way of becoming permanent. The danger is that instead of one hemispheric free trade area, we may end up with protectionist blocs, leaving Argentina in something like the inefficient isolation imposed by Juan Perón—all because Clinton couldn’t be bothered to risk his political capital on renewing fast track for three and a half years, until it was too late.

The history of even so remote a nation as Argentina is evidence that no country can truly be isolated from the trends of world events and opinion. The economic upheavals caused by World War I and the years following helped pitch Argentina and other Latin countries from elite-run regimes, with limited electorates but considerable personal and economic freedom, into military-run and dictatorial regimes verging in some cases on totalitarianism: Argentina and Brazil were under authoritarian rule for most of the quarter century after 1930.

Moreover, as Moynihan says, ideas nurtured on the Left Bank in Paris reach the confiterias of Buenos Aires twenty years later. Latin America’s violent revolutionaries of the 1970s, suppressed by violent and lawless military regimes, took their inspiration from Jean-Paul Sartre and his friends at the Deux Magots and the Café Flore in the 1950s. Happily, what is happening in Latin America now may be a similarly delayed reflection of French intellectuals’ revulsion at communism in the wake of Solzhenitsyn’s Gulag Archipelago in the 1970s; it may reflect as well the democratic opening of Spain under King Juan Carlos after Franco’s death in 1975.

The prospect for Argentina—and for so many other countries today—seems as sunny as the November spring looks from La Biela, yet there are no guarantees. Even happy revolutions in ideas are not irreversible. We in the United States—both policymakers and thinkers—have the capacity to make things very much better or very much worse for people all over the world. And we tend to do so without giving it much thought one way or the other.