The subtext to the improbable election of Javier Milei revolves around a question that has haunted Argentina for generations. Why is this country such a mess? For as long as anyone can recall, Argentina has been synonymous with South American disfunction, to the point where the name of the country is often used as an epithet to criticize first world countries. There was even a Broadway play based on the life of a famous Argentine lunatic named Eva Perón.
The first place to start is the ruling elite. If you do an image search of “Argentine leaders” you get a collection of images that would answers the same question if you replaced Argentina with Italy or Spain. Like most South American countries, the ruling elite looks like the colonial elite that founded these countries. In some of these countries, they have been ruled by a small set of families since the 16th century when their ancestors arrived from Spain.
In other words, you do not see the Venezuela problem. In some of the more dysfunctional countries in the region, you have indigenous leaders rising up to claim some power, which always ends in disaster. They tend to be Marxists, but the illiterate sort that just understand the theft and violence parts. Venezuela is a rich country in terms of natural resources and location, but the smart fraction was chased off long ago by indigenous lunatics, so it is a basket case.
On the surface, Argentina does not have this problem. The most notorious ruler of the place was the Latin fascist Juan Perón. Anyone who has been around international organizations like the IMF or World Bank knows the sort. Perón was a populist and demagogue, but he was also highly educated and sophisticated. His politics were a populist suit her wore to garner support, but he was a man of the European elite that has run the country since forever.
The point is the ruling class of Argentina is not a lot different from the ruling elites you see in better functioning countries. Perón is typical of the ruling class in that his family tree has Spanish, French and English ancestry. Go through the long list of Argentine rulers and all of them trace their roots to the old country. You never see any references to Africans or Amerindian ancestry. The rulers always look like the sort of people who spend their career at places like the UN or now the EU.
In other words, Argentina is a country rich in natural resources, has a prime location on global trade routes and has an educated and sophisticated ruling class. On paper, it should be one of the more prosperous countries in the New World. Instead, it has been defined by government incompetence, corruption, and some of the most outlandishly terrible economic policies on the planet. Argentina has become synonymous with every failed economic policy to come out of the academy.
One clue as to why Argentina is a mess is the people. The average IQ of the population is 87 according to the most recent data. People will quibble about this score, but it is best to think of these numbers comparatively. Japan clocks in at 106, so that means the Japanese are more than a full standard deviation smarter than Argentines. Even if the measures themselves are not precise, which is surely the case, the margin of error will be similar for every country.
To give this gap some clarity, imagine a population full of people who could test into law school or business school. Assume they have not actually attended college or graduate school, but their test scores indicate they could do it. Now take a population of high school dropouts whose test scores indicate they are going to struggle getting their GED while in prison. That sounds a bit extreme, but the typical prisoner in the United States is going to have an IQ similar to the typical Argentine.
Now, take that collection of smart people and make them the talented two percent of the population and the collection of dumb guys is the population. For starters, the average IQ of the population will not change much. The average IQ of the population jumps about one point with this new smart fraction. Make it the talented ten percent and the average IQ jumps three points. In other words, in our experiment, that smart fraction is not going to change things very much.
The way to think of every human organization is to imagine a man carrying a sack full of ro9cks up an incline. The steeper the incline, the slower his pace. The more rocks in the sack, the slower the pace. The smaller the man, the slower the pace. The man is the smart fraction, while the sack in society. The incline will be the natural resources available to that society. The greater the resources, the softer the incline, while fewer resources gets a steeper incline.
Japan is a big man with a small sack, but facing a relatively steep incline due to Japan being an island nation. Even so, Japan is a rich and modern place due to the large smart fraction and the relatively small dumb fraction. On the other hand, Somalia is a tiny man dragging a boulder up a cliff wall. The smart fraction, such as it was, now lives in Minnesota leaving the rest to make what they can from very little. No amount of clever political theory is fixing Somalia.
This explains why Argentina remains an ungovernable mess. Of course, the good times in the country have often been under non-democratic rule. When you combine democracy with a low-IQ voting base, the result is populist demagogues who promise to use their power to overcome nature. The pattern in Argentina is authoritarianism, followed by democracy, followed by populism, which leads to collapse and the return of the authoritarian to restore order.
Javier Milei is toward the collapse portion of the cycle. This enigmatic weirdo, whose first act after winning election was to convert to Judaism and make a pilgrimage to the Hassidic community of New York, is in the populist tradition. He has decorated his populism with libertarian slogans, but what the voters heard was that he will take from the elites and give to the people. Given the IQ of the population, most could probably not be able to tell a libertarian from a rhinoceros.
Given his backers, there is a good chance that Milei will succeed in pushing through his changes, as they have been done before. He will put the economy on the dollar, and this will stabilize prices for a spell. Then the shortage of dollars will lead to borrowing from his backers in dollars. Those bonds will then be passed off onto American pension funds and other institutional investors. This will continue until the Argentine government can no longer make its interest payments.
What Argentina tells us is what every ball coach knows. It is not about the X’s and O’s, but the Jimmy’s and Joe’s. In the realm of sport, a great coach can only do so much with bad players. His great coaching and brilliant strategy will always run into the limits of his players. In the realm of human society, the political and economic systems will always be limited by the available human capital. it is why the Nordic countries made socialism work, while Argentina cannot make anything work.
There is another useful lesson here for people in the West. The people running Argentina have always known the math of their human capital. This is a truth that is spoken about openly in the homes and offices of the ruling class. Despite the limits it puts on their ambitions, this gap between them and the masses is what keeps them in the elite, ruling over those masses. It turns out that being a smart fish in dumb pond is a pretty good path to the good life.
This is one reason Western elites love low-IQ immigration. It is like an acid on the middle-class, diluting the layer just below them. Sure, mass migration means the subways are unusable and much of the cities are too dangerous for cafe life, but it beats having to compete with smart strivers from the middle ranks. Western elites look at Argentina and envy their rulers. No matter how stupid they are, they never have to worry about being displaced by people with genuine talent.
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