False Economy - Alan Beattie [17]
Peronism was largely an urban movement. Even before industrialization, Argentina still had a large urban population, as much pushed by the lack of opportunities in the countryside as pulled by the opportunities of the towns. The economic recovery at the end of the 1930s and during the war did not eliminate the villas miseria from around the big cities. Originally a symbol of the Depression and the failure of international capitalism, they now became a permanent reminder to Peron of the constituency on whom his power depended.
But it was as much the impoverishment of the countryside as the success of the cities that produced the appearance of industrialized modernity. Argentina's farmers and landowners paid for its industrialization. Their own incomes still depended on the vicissitudes of international commodity prices, while the prices of their tractors, their cars, and even their clothes were kept high by import taxes. Peron also imposed price controls on food, an even more blatant economic transfer from the countryside to the towns.
As far as Peron was concerned, this merely meant the lords of the pampas were being deservedly knocked from their privileged perches.
For him, Argentina's oligarchic aristocrats were of a piece with the foreigners trying to bring the country down. Peron's populism went by the name of justicialismo. In 1951, he declared: "The defense of justicialismo is our fight. Outside, against imperialism and reaction; inside, against political and oligarchic treachery." The traditional landowning classes were hammered by new laws fixing rents, which forced many to sell land to their tenants. Yet long after many had seen their estates broken up in the 1940s and 1950s, they were still firmly fixed in the public mind as the epitome of reactionary gilded decadence, and Peronists continued to demonize them.
The payback for retreating from the world was to face retaliatory tariffs in Argentina's export markets. This angered the farmers, who remained competitive by world standards. Agricultural trade protection across the world stayed high, and remains so to this day (one of the sources of righteous self-pity that so animated my dining companions in Davos). But it did little to upset the urban masses, who wanted Argentine products kept for Argentines, not sent out of the country.
Shortly after coming to power, Peron jacked up the export price of linseed, one of Argentina's internationally competitive agricultural products, which was bought by U.S. manufacturers to make paint. American importers complained. Peron was unrepentant. "If they want linseed, let them bring their houses to Argentina, where we'll have them painted," he said. Instead, the United States started to plant its own linseed, and Argentina lost an important export market.
Peronism endured, and indeed endures: Argentina's current president calls herself a Peronist, and so did her predecessor, who happens to be her husband. One reason is that, in a limited way and under its own distorted terms, it succeeded. The state had become strong. The government owned and ran not just natural monopolies like water and electricity but anything that looked big and strategic—steel, chemicals, car factories. The economy did industrialize. Imports of consumer goods tailed off and were replaced, if at all, by homemade equivalents—"import substitution" at work. By the 1970s, the share of manufacturing in GDP and in employment was around a third, close to the figures for the United States or Europe.
In truth, the achievement was nothing near as impressive as it appeared. Argentina may have industrialized, but it was still falling behind. During its burst of agricultural growth in the nineteenth century, the Argentine economy was catching up to leading countries like the UK. During its industrialization it dropped back, growing at around 2 percent per head per year, well below the world average. In 1950, the average Argentine income was twice that of Spain, its former colonizer. By 1975, the