The Argentine Way of Business

That's the title of Mary Anastasia O'Grady's column in today's WSJ. After reading it, I realized I didn't need to come to Argentina to find out what's happening here. Most Argentines seem clueless about the what the YPF seizure is really about, even though most of the folks we know agree that what Madame President Kirchner has done is really not right.

Here's the YPF story in a nutshell: after privatizing YPF in the late 1990s, the government imposed a price ceiling on the oil that YPF sold that ended up being way below the world price; that price ceiling greatly reduced YPF's incentive to find and produce more oil; finally, the government decided that since YPF was not finding and producing enough oil, it deserved to be once again nationalized. One suspects, thought there's no proof, that lots of money changed hands behind the scenes, and not in ways that disadvantaged Ms. K.

Most Argentines never hear this side of the story, however, and end up believing the government's spin—that YPF was a greedy multinational that only wanted to milk Argentina's resources for all they were worth, with no thought for the well-being of the country.

After a series of conversations with friends these past few days, in which I relate to them what has been happening in the U.S. under Obama, I have been struck by their almost universal response: Obama is doing the same things as the Kirchner administration! Rig the rules of the game, give handouts to favored industries, financial backers, and unions, blame the rich and the big corporations for the failures, pit the rich against the poor, make every attempt to tax the rich and redistribute the wealth, avoid all mention of the disastrous financial results (e.g., trillion dollar deficits in the case of the U.S., and capital flight and double-digit inflation in the case of Argentina), and meanwhile live like a King (or Queen in the case of Cristina).

We can't afford much more of this, and neither can Argentina.