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January 4th, 2010
03:27 PM ET

Scary lessons from Argentina

David Frum
CNN Contributor

I spent the Christmas holidays in two very similar nations, with two radically different histories.

Country 1 is my native Canada: a resource-rich nation of 33 million people that has grown from an exporter of the products of forest, mine and farm into one of the world's most advanced economies. Gross Domestic Product per capita in 2008, according to the World Bank: $42,031 U.S., just behind the United Kingdom, just ahead of Japan.

Country 2 is sunny Argentina: a resource-rich nation of 39 million people that started as an exporter of agricultural products. A century ago, Argentina was probably a richer country than Canada. Argentina's GDP per capita in 2008: $8,236 - just behind Brazil, just ahead of Montenegro.

The Argentine experience is one of tragic falling away from a once glorious promise. It's a story often told, even the subject of a musical, and I'm not proposing to retell it. Instead, in this season of intense debate over the future of American capitalism, let me just draw two morals, one for the political left, one for the political right.

For the left:

Here's a story I heard last week from a onetime foreign investor in Argentina. The thing that drove him out of the country was a 5 percent tax on his company. Five percent may not sound like much, but what mattered was not the amount of the tax. It was the way it was imposed. The tax was not enacted by Congress. It was not even ordered by the president.

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Filed under: 360° Radar • Canada
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