home » Cuba? Try Argentina: collapse, capitalist-democracy style

Cuba? Try Argentina: collapse, capitalist-democracy style

by Paula | 19 October 2008 | permalink | comments
Tags: argentina, collapse
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Argentina on background:

• The Empty ATM — PBS documentary on the economic collapse, August 2002
• Argentine Economic Crisis at Wikipedia
• Argentina at the CIA World Fact Book
• Personal account from a survivor of the Argentine economic collapse. Posted in 2005; original author is, I believe, the person who posted it. An absolute must read! Print it out and keep it for future reference.

In 2006, Community Solutions released its video documentary The Power of Community: How Cuba Survived Peak Oil to praise and hallelujas that rivaled the snake-throwing ecstasy of remote Appalachia. Okay well that’s not really true but you get my drift. With the exception of End of Suburbia, no documentary holds more sway among peak oil folk than The Power of Community and it stands as the reference point for collapse/decline planning. In the years since its release I have never seen a single critical review or attempt to question its assumptions.

For those who haven’t seen the DVD, The Power of Community documents the methods by which Cuba relocalized its economy after the sudden and unexpected cessation of oil shipments from the collapsed Soviet Union in the early 1990s. It is, essentially, an extended infomercial for the Community Solutions organization. I have no problem with this on principle; what bothers me is that Community Solutions has presented the film as gospel truth and the whole of the relocalization movement has fallen in line to advance its propositions with nary a critical thought. In fact, it is a serious mistake to think that the Cuban response to its energy crisis can be ported to America just like that — as if one can save the Cuban experience to a thumb drive and expect it to function upon download in Coeur d’Alene or Apache Junction.

It has apparently escaped everyone’s notice that Cuba is a profoundly different place from the US. For example:

• It is geographically small
• The population is racially homogenous
• The culture is likewise homogenous
• It is an island
• Income disparity prior to its crisis was, compared to the US, pretty much nonexistent — there was not really anyone from whom to steal anything
• The economy fell from a much lower height than the US economy is falling
• The people have been psychologically conditioned to accept central economic command for generations
• The collapse was resource-based, not finance-based
• Relocalization was subject to law enforcement
• The citizenry was not armed

Taking these differences into account, it seems exceedingly unlikely to me that Americans will, by and large, happily join together to grow worms in boxes when armed robbery provides such an immediate return on investment.

Closer to the evolving American experience was that of Argentina, a capitalist democracy which suffered a devastating financial collapse in 2001. This collapse was precipitated by Argentina’s enormous national debt. According to Wikipedia, “The fixed exchange rate made imports cheap, producing a constant flight of dollars away from the country and a progressive loss of Argentina’s industrial infrastructure, which led to an increase in unemployment.” Imagine that.

As a result, Argentina’s GDP began dropping in 1999 and as things deteriorated investors continued pulling their money out of the country. In 2001 a full-bown run on Argentine banks began in earnest and the government responded by freezing everyone’s bank accounts. Riots ensued and on December 21, 2001, the president fled the country in a helicopter and left the government to fall. Just before the 2002 new year, Argentina officially defaulted on $93 billion in international loans and its currency collapsed. By October of 2002, over 57% of the population was living in poverty, while over 27% were living in extreme poverty.

Prior to the currency collapse Argentina had been like the United States, consuming imports based on foreign debt while its own national productivity declined; after the currency collapse, Argentina became more like China — its national wealth became cheap to foreign investment and foreign money poured into the country, so much so that the central bank began buying the foreign dollars and stashing them away as reserves. Eventually the central bank accumulated so much foreign capital that in December, 2005, Argentina paid off its debt to the IMF — debt that had created the illusion of prosperity for the country throughout the 1990s. (Would that America had the option of such leadership.)

In reading the various accounts of the Argentine collapse, one thing becomes abundantly clear: when a capitalist society collapses, capitalism continues on. People do not abandon buying and selling to share resources according to their ability. They get inventive, engineering new ways to conduct business whether by virtue or by vice. The anonymous account linked above describes a kidnapping scheme that became popular during the Argentine crisis: scammers would collect ransom from the kidnap victims’ families before the real kidnappers even made their demands. That’s some perverse innovation right there.

Argentina is making some progress toward recovery but for us, I don’t believe we will be able to make even as much progress as Argentina has made ever again. Therefore it is instructive to observe how ordinary people dealt with the disintegration of their national economy. Our economy is almost certainly going to devolve into something similar, and survival means being prepared to adapt.

The following are selections from the anonymous account:

Once you experience the lack of stuff you took for granted, like food, medicines, your set of priorities change all of a sudden. For example, I had two wisdom tooth removed last year. On both occasions I was prescribed with antibiotics and strong Ibuprofen for the pain. I took the antibiotics (though I did buy two boxes with the same recipe just to keep one box just in case) but I didn’t use the Ibuprofen, I added it to my pile of medicines. Why? Because medicines are not always available and I’m not sure if they will be available in the future.

Once the SHTF the black/gray market will take no time to appear all around you. In my country, gray markets were even accepted in the end. At first it was all about trading skills or craft products for food. Districts and towns would form their own barter markets, and created their own tickets, similar to money, that was used to trade. This didn’t last long. Those tickets were easy to make on your home computer, there was no control and eventually people went back to paper money.

These markets were usually placed on warehouses or empty land, and were managed by some wise guy and a few thugs or hired security. Anyone can go rent a kiosk inside these markets for about 50-100 pesos (about 20-30 dollars) a day and sell his goods and services. Peace within these markets is usually respected… lets just say that these managers don’t call the police if someone tries anything funny, like stealing, fighting or taking advantage of women. That’s not good for their business and anyone that tries to mess with their business finds out how much pain the human body can actually experiment or gets a free ticket to meet the Lord.

Someone hit me in the head please because I messed up about the gold issue. Everyone wants to buy gold! “I buy gold. Pay cash” signs are everywhere, even on TV! I can’t believe I’m that silly! I just didn’t relate it to what I read here because they deal with junk gold, like jewelry, either stolen or sold because they needed the money, not the gold coins that you guys talk about. No one pays for the true value of the stuff, so big WARNING! Sign on people that are buying gold coins. Since it is impossible to determine the true mineral percentage of gold, small shops and dealers will pay for it as regular jewelry gold. What I would do if I were you: Besides gold coins, buy a lot of small gold rings and other jewelry. They should be less expensive than gold coins, and if the SHTF bad, you’ll not be loosing money, selling premium quality gold coins for the price of junk gold. If I could travel back in time, I’d buy a small bag worth of gold rings.

After TSHTF in 2001, only the most narrow minded, brain washed, butterfly IQ level idiots believed that the police would protect them from the crime wave that followed the collapse of our economy. A lot of people that could have been considered antigun before, ran to the gun shops, seeking advice on how to defend themselves and their families. They would buy a 38 revolver, a box of ammo, and leave it in the closet, probably believing that it would magically protect them from intruders.

Oh, maybe you don’t think that firearms are really necessary or your beliefs do not allow you to buy a tool designed to kill people. So you probably ask yourself, is a gun really necessary when TSHTF? Will it truly make a difference? Having gone through a shtf scenario myself, total economical collapse in the year 2001, and still dealing with the consequences, 5 years later, I feel I can answer that question. YES, you need a gun, pepper spray, a machete, a battle axe, club with a rusty nail sticking out of it, or whatever weapon you can get hold of.

Do not make the mistake of thinking that TSHTF will be a brand new start for you, and that all your problems will just go away and you’ll have a new start in the brave new world. It doesn’t work that way. Quite the contrary, everything will get worse, small problems will turn into bigger, more serious problems. If you have drinking problems, you’ll drink more, if you can’t keep a job, you’ll spend years unemployed, if you have a disease, you’ll see that it’s harder to get attention and medications. Again everything gets WORSE.

There are any number of take-aways from this. The biggest ones for me are:

• Business trumps law when policemen are hungry. Business acumen is therefore a critical survival skill
• Having a clientele that operates in currencies other than the national currency can save your ass
• Appropriating existing but idled productive capacity under the radar of the law may well become a legitimate option
• Local-level security is a major area of opportunity
• Barter networks require planning ahead so as not to become a bottleneck

My research into the Argentine experience is just now in its infancy. I’m sure I’ll have much more to say on the matter as I learn more.

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