[EDITORIALS]Don't cry for ArgentinaThe chaos in Argentina seems headed for a bad ending. The harsh contractionary fiscal policy undertaken to ride out a crippling national debt crisis there has triggered serial labor strikes and massive social unrest. The situation deteriorated further when the crisis pushed the country's president out of office, leaving Argentina in a state of anarchy.
The uprising by the Argentine people is not without justification. A severe recession has pushed unemployment above 18 percent, and the International Monetary Fund's refusal to provide emergency relief could not have come at a worse time. The government has slashed wages and pension payments, and capped deposit withdrawals. It has also announced a large-scale cutback on government spending next year. These sorts of conditions are, naturally, extremely difficult for the people to bear.
The international community's response to the Argentine crisis has been anything but sympathetic. Argentina's troubles have not been unexpected, for the economies of the world have been distancing themselves from the South American country for some time. Even if Argentina is pushed into a moratorium on its obligations now, international credit exposure has already been contained significantly.
Argentina's progression to its current crisis can provide some lessons. Argentina has pegged its exchange rate since the early 1990s to contain inflation that had shot up to 5,000 percent annually, and its ability to compete in the international market has declined drastically.
But its problems began, any way you look at it, with fiscal deficits and national debt. Experts point to the populism, also dubbed Peronism, undertaken since the 1970s as the root of the problem. Whenever faced with economic trouble, the government chose to assist whatever seemed in need rather than letting those unable to compete fail and strengthening those who succeed. The policy required enormous sums of money, the analysis goes, and the resulting national debt is the source of Argentina's 20- year-old problems.
The country has stood on the brink of national bankruptcy four times. Attempts were made each time to reform the economy, but it did not take long, whenever a presidential election came along, for the program and the national call to share in the pain for a better future to give into popular concern.
The business of running a national economy must be closely watched even during tough times. Restructuring the economy may be painful and unpopular, but the people must be asked over and over to take part in the painful process. The failure to do what is needed will mean a more painful ending. These are some of the lessons that can be gained from the Argentine crisis.
Korea has an economy that is fundamentally different from Argentina's. We are in a better position in terms of stability, ability to compete and creditworthiness in the eyes of the international financial community. But there are elements in Korea's economy that should not simply be brushed aside, particularly when we look at Argentina's tailspin and think of it only as something that is happening halfway around the world. Our national debt continues to increase, and took a great leap after we waded through a crisis and restructured the economy.
The Argentine crisis is not just somebody else's business. It is never too early to look for a cyst in our economy and excise what might develop into a fatal cancer.
with the Korea JoongAng Daily
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