Last night, we watched a documentary film about the financial crisis in Argentina. It was the sort of polemic that might have been made by Michael Moore – arguing that Argentina’s financial woes of 2001-2002 were caused by rich international investors and globalised companies, rather than by the Argentines themselves.
What a wonderful medium the documentary is. Show a photo of a poor starving child; then show a photo of a rich, fat man, eating in a fancy restaurant. You have made your argument; and the spectator gets to take your point without ever having to put two and two together. That is the beauty of the documentary; it doesn’t require any thinking on the part of the viewer.
(As an aside, we’re trying our hand at the medium ourselves… we’ve have been working with the makers of the hit documentary, Wordplay…about the NY Times crossword puzzle. “We didn’t think it was possible to find a more boring subject than crosswords,” says the director Patrick Creadon “but now we’re making one about debt.”)
If you really wanted to understand what happened in Argentina…and why a financial crisis struck the country in the early 21st century…you would have to do a lot of thinking. Like the rest of life, the facts are infinitely complex and nuanced. But neither investors, nor voters, nor soldiers can stand ambiguity. They need a simple narrative that turns them into saints, heroes, and geniuses…and leads them right to the gates of Hell.
The neo-Peronist, Carlos Menem – with the help of American economists – had pegged the Argentine peso to the U.S. dollar. This had the expected effect – it stopped inflation. But once the danger of Argentine-style inflation was passed, the coast was clear for the big banks to lend money on a grand scale. Argentina’s foreign debts soared. Meanwhile, the relatively strong new peso made it difficult for Argentina’s exporters to stay in business. Because of the one-to-one exchange rate, Argentine products were expensive to the rest of the world. Industries closed. Unemployment rose.
And then, people took to the streets. They had a narrative of their own. They thought the problems were all caused by a small elite of evil bankers, corrupt politicians, and greedy international businessmen. “Out with them all,” they chanted, banging pots. “Thieves!” they shouted.
All narratives have some truth in them. This one had a measure of it. But whatever truth there is soon becomes lost in the vanity and mindlessness of it all. People come to believe only the most cartoon-like version of the narrative…and forget to think.
Markets and Money