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America's Argentina risk

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13.10.2019

By Kaushik Basu

ITHACA ― There is a growing belief that the United States is heading for a recession, possibly before the 2020 presidential election. Current economic data and statistical trends indicate that many parts of the U.S. economy are apparently under strain. It is not evident to me, however, that a recession is around the corner. In fact, the real danger for America is more serious, and is best described as the "Argentina risk."

During the first few decades of the 20th century, Argentina was one of the world's fastest-growing economies. It also had talent flowing in, with more immigrants per capita than virtually any other country. As a result, Argentina was among the world's 10 richest countries, ahead of Germany and France.

That all changed in 1930, with a military coup led by Lieutenant General Jose Felix Uriburu. Over the next few years, amid rising right-wing hyper-nationalism, immigration stalled and tariff wars began. Between 1930 and 1933, the country almost doubled its average import tariff. What followed was not so much a recession as a slow-motion slowdown, the scars of which are visible even today. Argentina thus became a cautionary tale of how a wealthy country can lose its way.

The American economy remains globally dominant. But we have not, in recent times, seen the U.S. as polarized and bitter as it is today. Watching this downward spiral, my mind drifts back a quarter-century, to 1994, when I moved with my family from........

© The Korea Times