The polity that is Argentina

The current Peronist government has created or increased at least 27 taxes, often by decree. At least seven new exchange rates have been invented under this administration. In the run-up to the election, Mr Massa abolished income taxes for 99% of registered workers, increased wages for public employees and handed out a bonus in pesos worth $100 (converted at the official exchange rate) for pensioners.

Populism has contaminated trade, too. Successive Peronist administrations have cut the country off from international commerce in order to protect workers and keep domestic prices down. Trade as a percentage of gdp is just 33%, among the world’s lowest (it is 84% in Mexico and 64% in Chile). Such governments have also bashed the country’s main export sector, agriculture, as an oligarchy, and sought to hobble it by imposing export restrictions on farm produce. Exports of soya, the country’s main product, are taxed at 33%.

All of this means that most Argentines prefer to do things off the books. Banks, which in the past have effectively confiscated savings under government orders, are avoided. Domestic credit to the private sector is only 11% of gdp, compared with 83% in Chile.

Here is more from The Economist, an excellent survey.