Socialism: In the latest chapter of Argentina’s war on economic reality, President Cristina Fernandez has banned the buying of dollars in a bid to halt capital flight. It’s a market verdict on her policies, and it won’t stop dollarization.
Putting dollar-sniffing dogs on outbound ferries from Buenos Aires to Uruguay apparently didn’t halt Argentinians’ desire to get their money out of the country. After losing a billion dollars a month to capital flight by small investors in 2011’s fourth quarter, Argentina continues to lose about half that amount as citizens send assets out of the country.
And why shouldn’t they? In the last three years, Argentina’s government has seized private pensions to pay for pork barrel social programs, raising government spending to 38% of GDP.