The Gaucho, Argentina’s hero
When I first met Ricardo the Gaucho in Argentina, all I could think about was “wow this guy has a long moustache”. Luckily, the story of gauchos is more interesting than that. I like to believe that Gauchos were the cause for Argentina’s prosperity in the early 19th century.
The story goes like this: In the 16th century, Spanish colonialists settled in Mexico, Peru, Bolivia and Colombia. Argentina was left behind due to its lack of Gold.
Argentina was nothing more than large vast plains with no interesting commodities. Little by little, many of the horses, cows and other animals brought from Europe found their way into Argentina’s vast plains. With no predators they were able to prosper and spread over Argentina.
Argentina’s cowboys, also called Gauchos, started to appear. They were able to herd wild animals and use them for farming and selling. At first, demand for meat was scarce. Transporting it to other South American countries was hard due to lack of meat preservation technology.
In the 19th century, the ancestor of our refrigerator was developed and all of a sudden, cattle became more valuable than gold. Argentina could now export its meat all over the world.
Gauchos became rich and every one lived happily ever after… Or so they thought.
One thing is certain in this world, and it’s that nothing lasts forever. Cattle markets developed all over the world. From Texas to Africa, Argentina started to feel the competition. They implemented protective regulations, applying tariffs and exchange controls that worsened its economy. The government had to start borrowing to maintain its inhabitants happiness. Debt accumulated, political instability grew and the country started going downhill.
“Some economists include Argentina into the group of countries that carry the original sin of being serial defaulters and consequently suffer from debt intolerance” (Reinhart and Rogoff, 2004).
Today Argentina’s economic history is one of the most studied due to its paradox: Great condition to prosper yet horrible economics.