A model of the collapse: Argentina 2001

Posted on August 9, 2011 by


(In light of the current financial crises, and the increasing predictions of economic decline and eventual war, I thought I’d offer a repeat of my much-linked and widely-read article reviewing the economic collapse in Argentina in 2001.)

The collapse is coming

I think what’s most likely will be a quick economic collapse, followed by a slow slide into tyranny and penury. It won’t be Armageddon, but it will change life as we know it significantly. The best example I could give would be Argentina in 2001. The collapse of this middle-income country went nearly unnoticed due to 9/11, but it is instructive for what awaits us.

The process is quite simple and predictable. The following things will happen in whatever order they happen:

  • The government will default on some of its debt and the stock market will crash
  • Prices for basic necessities will rise and the dollar will lose reserve-currency status
  • Public spending will be slashed dramatically and unemployment will rise
  • The government will tighten control of the population to prevent unrest, cut immigration dramatically, and lock down the border
  • All liquid assets that still hold value will be “transferred” to the government (and replaced with worthless government bonds), to cover budget holes
  • There will be some demonstrations and rioting in the larger cities

That’s it. That’s all that will happen. The world will not end, we won’t break out into civil war, and the government will not be overthrown by violent protests. For most people, things really will just “keep on, keeping on”, but their life will be harder and they will feel poorer.

There will be a short crisis, which might lead to temporary bank closings and food shortages (probably not more than a week or two), but things will be back up and running soon enough. The government already has contingency plans for such a crisis and they’ve stockpiled resources and weapons throughout the country; these plans will simply be put into place.

It’s what happens after the collapse that will be crucial, and most relevant to this blog’s focus. The new economic situation will rapidly alter the social landscape, in an acceleration of what is already underway.

The social impact of the economic and political changes that a collapse will bring

Just like America, Argentina was a majority-white, Christian, wealthy democracy that faced economic decline after adopting statist/leftist policies and social liberalism. For this reason, I believe it offers more accurate clues to our future than a country like Russia or Egypt. So let us take a look at what happened to Argentinians after their economy collapsed.

  • Employment increased steadily following the collapse (data from World Bank). Both men and women went to work in higher numbers, but most of the growth was in agriculture and heavy industry, which favored men.
  • Teenage pregnancy and illegitimacy decreased, due to the near-elimination of the welfare system. Fornication increased however, because of government pressure to “liberalize” (patriarchy weakens a leftist state).
  • Half of the population plunged under the poverty line, but recovered as the country’s employment ratio rose. Nevertheless, economic inequality worsens.
  • The fertility rate held steady (at 2.2 now, down from 2.4 in 2001), while the household-formation rate decreased (indicating higher cohabitation rates, and adult children moving in with their parents). This would imply that more children are being born within intact families.
  • The marriage rate increases, as does prostitution. (Divorce was only recently legalized.)
  • Consumer prices for basic goods have doubled, as the currency lost worth. This discourages household-formation, as economies of scale become more important to survival.
  • Crime rates increase at an astonishing rate. Rape, murder, and robbery become commonplace. Kidnapping for ransom money becomes a minor industry.
  • College enrollment drops dramatically, as students leave to earn money to help support their families.
  • Child poverty is much higher than before, with child labor again common. In Buenos Aires, the majority of those under 18 live in poverty, and children and the elderly starve to death regularly (12 children per day).
  • Health care becomes harder to acquire and medicine becomes prohibitively expensive. People routinely die from preventable diseases, and outbreaks regularly ravage the population — even the middle and upper classes. 17 children die per day from lack of adequate health care.
  • Automobile accident, suicide, and stress-related deaths increase rapidly and dramatically. The car deaths come from higher drunk-driving rates, the poor conditions of the cars and roads, and the fact that nobody wants to stop at a red light or a stop sign anymore (car jackings).
  • Class warfare is common in politics and on the streets. Everyone is armed to the teeth, and the shrinking middle and upper class lives behind gates and barbed wire. It becomes de rigueur for women to be brutally raped during robberies, so their husbands learn to shoot invaders on sight.
  • Black-banking and bartering become commonplace, so that monetary transactions are hidden from the greedy hands of the government. Cash transactions increase, which fuels bank and ATM-robberies.
  • Middle-class (i.e. married) women’s and children’s movements are greatly curtailed, due to safety concerns. Protected women live under increasingly strict patriarchy, as men can no longer afford to be lax and permissive. Protected women are increasingly discouraged from working outside of the home, as travel is precarious. Children stop playing outside, and teenage girls are increasingly chauffeured and chaperoned.
  • People are increasingly homebound at night, to avoid criminal attacks.
  • Domestic violence increases, and white-knighting for victims becomes a winning sexual strategy again. In other words, abusive men both give and receive beatings in higher numbers. A related problem is that drug use and alcohol use increased.
  • Religiosity/spirituality and moral relativism increased, while mass attendance declined slightly.
  • Police pay gets cut, so they become increasingly corrupt and regularly ask for bribes. As a result, vigilante violence increases.