Over the past several months the economy and government of Argentina have come under increasing stress. In 2015, their annual inflation rate was 14%. The annualized inflation rate is now 60%. The costs of many consumer goods have been subsidized by the government for years. 22 million out of the 46 million population are now dependent on some sort of government assistance.
But inflation is now causing the government to modify, scale-back, and/or delete popular subsidies the people now view as a “right.” The employment rate is less than 45%. Many people don’t want to work. Those who do work don’t want to pay taxes to support the people who don’t work.
Some advocate increased borrowing from the IMF, increasing exports and attracting more foreign investors. But, the IMF views any loans as stop-gap measures meant to stave off chaos; increasing exports is fine, but the collapsing currency makes that unattractive; foreign investors are wary and increasingly unwilling to invest in Argentina.
Since Argentina’s economy is so much smaller than that of the US, it has less “fat” in the economy that can be skimmed by the government and re-distributed; the US is nowhere near a breaking point. But, heed the lesson of the goose that laid the golden egg. You can bleed a goose until it’s dead. Then runaway inflation, economic/political chaos, collapse of the financial system take their toll.
I know, I know…but the law of gravity doesn’t apply in the USA! Neither do the laws of supply and demand! Neither do the laws of …
Here’s a nugget. Only man-made laws can be violated. Natural laws – or, rather observations about the truth of human nature, and the truths that flow from understanding human nature – cannot be violated in the long term without significant consequence. The belief in a “citizen's right” to a work-free “universal basic income” may be sustainable for a while – perhaps even a long a while – but it cannot go on indefinitely. A system built on such beliefs WILL eventually collapse.