[snip] Argentina, a nation of 36 million, has suddenly become the new focus of Wall Street jitters following the financial meltdown in Turkey. As a result, President Fernando de la Rua is being pressured to cut the deficit by slashing expenses. At the same time, foreign creditors are encouraging Argentina to embrace reforms even more, privatizing some of the last remaining state-run institutions.
The 1991 reforms at first helped stabilize the economy, eliminating runaway inflation and generating growth spurts. They also sparked badly needed modernization, eliminating most government dinosaurs and making utilities such as telephone and electricity service more efficient. But privatization and the collapse of local businesses unable to compete in a globalized marketplace have kept unemployment above 15 percent for almost a decade. Underemployment has hovered between 40 and 50 percent.
Many here blame what they call U.S.-style "Darwinian economics." But others contend that it is Argentina, and not the reforms, that is to blame. For some economists, this nation has become a case study on how the benefits of the free market can veer off course because of corruption, weak government and a failure to overhaul labor laws and enforce tax collection on the rich. [snip]