Last week, as I was visiting my dad in Argentina, I had time to ponder and reflect about Argentina in the global community. As a backdrop, we saw the Summit of the Americas in Cartagena, Colombia. It was a week of strong emotions, both in my personal life, but also on the international stage.
Eduardo Mallea (1903–1982) an Argentinean thought leader, writer and diplomat published an essay in 1937 entitled “History of an Argentine Passion.” In that essay, he asks the rhetorical question: How will future generations of Argentineans look like? Mallea posits an eloquent answer to this reflection: Future generations of Argentineans, he says, will be physically strong, technically competent, and rich. But Mallea also anticipates a central paradox: These future generations of Argentineans will not themselves be Argentinean because their parents will have already lost their sense of nationalistic belonging.
Mallea captures the Argentinean drama well before it unfolded after the Second World War. Up until the early 1940s, Argentina was one of the ten richest countries in the world. This, of course, is now a distant memory. The notion of Argentina as a wealthy country isn’t a thing of the past because its material wealth is depleted. Instead, I believe that Argentina has become poor because its human capital is tired, self-centered, and incapable of dreaming big dreams. Argentina has mastered the lessons learned after a barrage of crises: it is better to speculate than to produce, to manage in the short term rather than in the long term, and to “go with the flow” than acknowledge than the “emperor has no clothes.”
Argentina (and other select Latin American countries including Venezuela) may miss a golden opportunity of a decade of high commodity prices, the emergence of new trading partner, and low interest rates. While countries like Peru, Colombia, Uruguay, and Brazil will likely join Chile in their quest to develop, Argentina has become an unreliable partner, self-absorbed in populist measures, and ultimately defying the odds and succeeding at under-developing itself! While Argentina’s enemies du jour seems to be Great Britain (due to the Malvinas Islands) or Spain (because of their expropriation of YPF), it is clear to most observers, myself included, that Argentina’s leadership is its own worst enemy.
Argentina can certainly find rankings where they lead globally. I believe that Argentina has the most entrepreneurs per capita of all Latin American countries. What explains this leadership role? My theory is simple: The constant changes in Argentina’s socio-economic winds have turned many citizens into entrepreneurs. Citizens are forced to develop extraordinary survival skills to balance developing world incomes with developed world consumption aspirations.
Since the law of large numbers applies even to Argentina, the country is home to a noticeable cadre of world-class entrepreneurs, and this extraordinary human capital asset feeds the drama. Succeeding as an entrepreneur in Argentina is close to impossible. Entrepreneurs do not need subsidies or government incentives, but do demand fair rules that establish a meritocracy to enable the best to succeed. Because entrepreneurship in Argentina is so difficult, Argentinean entrepreneurs are following in the footsteps of their forbearers: Argentinean engineers, scientists, economists, and physicians who in previous decades emigrated and found recognition and success around the world. Today’s Argentinian entrepreneurs represent the latest wave of emigrants.
This week, Argentina expropriated the majority holding of YPF, Argentina’s largest oil and gas company, from Spanish energy giant Repsol. Today, Argentina and Argentineans will have to explain this change of heart to the world community. And, unless the Argentinean government miraculously becomes better at managing enterprises, it will have to eventually explain how a profitable oil and gas company became a money losing concern as did Aerolineas Argentinas (Argentina’s national airline carrier).
I believe that enlightened governments should regulate and oversee the private sector in a rule of law framework that is constantly fine-tuned to optimize the creation of economic value sought by every corporation with the creation of social value. Many Argentineans in my generation are watching with dismay this “preview of coming attractions.” We have seen this movie before and, as with any B movie, we already know how it will end. In the meantime, Argentina’s best and brightest entrepreneurs will journey to, and be welcomed in, new lands including Silicon Valley, Chile, Peru, and Colombia.
Please don’t cry for me Argentina. We’ll cry for you instead.
Until my next post – Carlos B.