Of course, comparisons like this are disingenuous. According to rankings maintained by the World Bank and the Heritage Foundation, the U.S. is one of the most business-friendly countries in the world. We have stable, transparent regulations, and we pay a smaller percentage of our income in taxes than almost every other rich country.
Moreover, it's hard to chalk up Argentina's problems to any one ideology. Argentina is an equal-opportunity boondoggle, a deeply divided place where politicians oscillate among the extreme right, the extreme left, and the extremely weird. The causes of the crisis that nearly killed Bilinkis's company were many: a patronage system, started by Juan and Eva Perón in the 1950s, that grew into a bloated government bureaucracy; a corrupt privatization of government services that sold off some of the country's most valuable assets at fire-sale prices; and a reactionary monetary policy that exacerbated both of these problems. In 1991, the government launched a plan known as convertibility, in which it pegged the Argentine peso to the dollar and promised to exchange pesos for dollars at any time. The plan—a sort of update on the gold standard—was intended to stop the country from simply printing money and to force it to live within its means.
But it's hard for a country to live within its means when it is unable to collect revenue. Income-tax-evasion rates in Argentina are roughly 60 percent, and evasion of the value-added tax is roughly 40 percent, according to Marcelo Bergman, a professor at Mexico City's Center for Economic Research and Teaching and the author of Tax Evasion and the Rule of Law in Latin America. (Evasion rates are 10 percent to 20 percent in the U.S.) Bergman says that Argentina, like other countries in which tax evasion is widespread, suffers from a "noncompliance equilibrium." People see their neighbors cheating with impunity and conclude they should cheat, too. "In order to change this, they'd have to do some kind of shock and awe and go after everybody," Bergman says. "But that's impossible. You can't audit everybody."
The result of all this has been something rare and tragic in modern history: a rich country made poor. In 1913, Argentina was the 10th wealthiest country in the world, ahead of Norway, France, Germany, and Japan. Today, it is in 66th place, with a per-capita income of $7,600.
The strange thing is that it's easy to spend time in Argentina and miss all of this. Argentina is sparsely populated and resource rich—producing soybeans, wheat, wine, and, of course, beef—and has more arable land per person than all but five nations. Demographically, Argentina feels familiar to Americans—most Argentines descend from European immigrants who came during the late 19th and early 20th centuries—and its capital city could easily be mistaken for Paris or Madrid. Wealthy Argentines live in opulent apartment buildings or in gated communities, wear designer clothes, and drink espresso out of tiny cups.
But although Argentina talks and walks like a European country, its style of doing business is distinctly Third World. The country ranks 115th on the World Bank's Doing Business index and 138th on the Heritage Foundation's Index of Economic Freedom, thanks to a tangle of taxes, tax credits, subsidies, prohibitions, exemptions, and delays. These rules change constantly, aren't enforced uniformly, and are forever subject to bending or breaking if a bribe is paid. And almost everybody pays: Transparency International ranks Argentina 105th in terms of corruption, worse than famously corrupt countries such as Mexico, Egypt, and Liberia.
According to the Argentine government, inflation in Argentina is 10 percent. That's bad compared with the U.S. and the European Union, where the rates of inflation are 2.7 percent and 3.1 percent, respectively, but economists not affiliated with the government say the real figure is at least twice as high. (The government has responded to these reports with typical aplomb. Earlier this year, the Argentine commerce department fined a handful of consultancies $125,000 each.) "The government is lying," says Alberto Cavallo, an economics professor at MIT's Sloan School of Management. Cavallo, who is Argentine and who started an online-payments company in Buenos Aires before entering academia, pegs the rate at 25 percent. "Inflation makes it very hard for entrepreneurs to plan ahead," he says. "You don't know how much you can charge and how much you should pay your employees. It's a constant feeling of crisis."
Even so, entrepreneurs start companies in Argentina. Most of these businesses are small and born out of necessity—desperation, even—but not all of them. "Argentina has been all over the place," says Marcos Galperin, the founder of the auction website Mercado Libre, which, with a $4 billion market capitalization on the Nasdaq, is widely regarded as the country's most successful entrepreneurial company. "But all those changes have fueled entrepreneurship, because the only way to survive in Argentina is to be entrepreneurial." To live in Argentina is to get used to adapting to life's hardships, to make the best of a crisis. "We're comfortable working with risk," says Alejandro Mashad, the executive director of Endeavor Argentina, a nonprofit that promotes entrepreneurship in the country. "It's something we get used to from the day we are born."
Over the course of two weeks in Argentina, I crisscrossed the country, interviewing dozens of entrepreneurs in a variety of industries. I met winemakers in the foothills of the Andes, manufacturers in the country's agricultural heartland, and the founders of some of the country's biggest and most successful tech companies. I met jaded old-timers and fresh-faced kids too young to really remember the worst excesses. I spent a lot of time listening to complaints.
