Former U.S. Treasury Secretary Warns of Argentina-like Decline Due to Current Policies

Former U.S. Treasury Secretary warned that the policies of the current U.S. administration could lead the country down a path similar to that of post-war Argentina, transforming it from a relatively advanced developed nation into an economically backward state.

In an interview, the former Treasury Secretary highlighted that Argentina's deviation from its trajectory was due to its leaders' pursuit of authoritarianism over democracy in a short period. This serves as a cautionary tale for the business community and all those involved in the political process.

The former Treasury Secretary drew parallels between Argentina's past and the current U.S. policies, noting that both involved protectionism and a cult of personality around the leader. These factors, along with attacks on media, universities, and law firms, have contributed to Argentina's economic decline.

The former Treasury Secretary emphasized that while the U.S. has robust institutions that Argentina lacked, the similarities in policy approaches are concerning. Historical lessons from Argentina's post-war authoritarianism and the experiences of several European countries after World War I serve as important warnings.

The current U.S. administration has argued that high tariffs provide leverage in trade negotiations, leading to agreements that expand U.S. exports. They also point to significant investment commitments from various countries and companies. However, the former Treasury Secretary expressed skepticism about these commitments, stating that it is impossible to know their true value without a baseline.

The former Treasury Secretary warned of potential investment outflows due to increased production costs and the U.S. becoming a less attractive manufacturing hub. The administration's tariffs on various manufactured goods, including steel, aluminum, semiconductors, and copper, could lead to a decrease in the quantity and quality of U.S. manufacturing.

More broadly, the former Treasury Secretary criticized the U.S. administration's protectionist and nationalist policies, which he believes are alienating other countries. Higher input prices, greater investment uncertainty, and estranged customers are not part of a sound strategy. The only clear beneficiary of these policies, according to the former Treasury Secretary, is China.