By Henry Srebrnik, [Saint John, N.B.] Telegraph-Journal
Argentina is in a mess. But nothing new there – it has been that way for many decades. It’s almost a test case of a country with great promise ruined by a terrible political culture. And no single presidential election can change that.
On Nov. 19, radical outsider Javier Milei, candidate of the La Libertad Avanza (Liberty Advances) coalition, won the country’s presidential election with almost 56 per cent of the vote. It had pitted him against Sergio Massa, the candidate for the Peronist Union por la Patria (Union for the Homeland) coalition, who got 44 per cent.
The Peronistas are populists who are hard to categorize as either left or right-wing, but they have been the bane of Argentine politics since Juan Peron first governed the country beginning in 1946. The Peronist political movement has dominated politics for 16 of the past 20 years and has nine of the last 12 free and fair presidential elections before this.
And it has cost Argentina dearly. As late as the 1920s it ranked among the top five wealthiest countries in the world. Now it ranks 66th, below Mexico and just above Russia and China.
Argentinians are faced with runaway inflation and a looming recession. According to the data released by the country’s statistics agency on Nov. 13, year-on-year inflation hit 142.7 per cent in October, up from 79 per cent in August 2022, when Massa became the Minister of the Economy in the Peronist government.
Considering that neither the centre-right Mauricio Macri government, which ruled from 2015 to 2019, nor the current government of President Alberto Fernandez, a Peronist who has not sought re-election, succeeded in stabilizing Argentina’s economy, this proved fertile ground for Milei to rise.
Milei, the self-described “anarcho-capitalist,” pledged to “dynamite” the central bank and “dollarize” the economy, by replacing the Argentine peso with the U.S. dollar. “We are going to dollarize. We are going to close the central bank. We are going to end the cancer of inflation,” Milei declared, attracting voters frustrated over decades of poor living standards.
On the campaign trail, Milei brandished a chainsaw to symbolize his desire to slash subsidies and drastically reduce state expenditure on social programs. He also repeatedly claimed “taxes are theft” and called the “social justice” programs they finance an “aberration.”
Argentina has an almost insurmountable $44 billion debt with the International Monetary Fund. In August, though, Milei did meet with members of the IMF to assure them that he would continue paying Argentina’s international dues if he won.
His bellicose political style has had observers compare him to Donald Trump -- he has worn “Make Argentina Great Again” hats -- and to Jair Bolsonaro, Brazil’s former president.
Milei maintained that Argentines are “hostages” to generationally destructive economic policy and that politicians -- or, as he calls them, the “parasitic, useless political caste” -- have destroyed one of the richest countries in the world “with nefarious ideas to line their pockets.” Peronism offered a state that supports its followers based on perks and clientelism.
The state, Milei asserted, “was invented by the devil, God’s system is the free market.” He promised to raffle off his presidential paycheck if he won. “To me, that is dirty money,” he explained. “From my philosophical point of view, the state is a criminal organization that is funded through taxes taken from people by force. We are giving back the money that the political caste has stolen.”
No surprise, then, to learn Milei is a fan of right-wing and libertarian economists of the so-called Austrian School, including Ludwig von Mises, Henry Hazlitt, Friedrich Hayek, and Murray Rothbard.
A lawyer and longtime politician, with one failed presidential campaign already under his belt, Massa had argued that Milei's proposed economic policies are reckless and would only make matters worse for Argentina’s poor, now 40 per cent of the population.
He emphasized Milei’s volatile character and even called for psychiatric evaluations of would-be presidents. President Fernandez called Milei “a threat to democracy” last March.
Milei was widely considered the frontrunner before last month’s first round, although he unexpectedly finished second with 29.9 per cent of the votes to Massa’s 36.6 per cent. Patricia Bullrich, a conservative former security minister, came third with 23.8 per cent and endorsed Milei following her loss, calling Massa “someone who has been part of the worst government in Argentina’s history.”
“The biggest challenge for the next government is to develop an initial stabilization plan and then push through a series of structural reforms to profoundly change the economic system,” remarked Agustin Etchebarne, director of the Libertad y Progreso Foundation in Buenos Aires. Etchebarne is part of a group of economists who condone radical structural changes to the economy to lift Argentina out of its current crisis. Others are more skeptical.
In an open letter released Nov. 8, more than 100 high-profile economists, including Thomas Piketty from France and Jayati Ghosh from India, had warned that Milei’s proposals are “full of risks that could potentially be very harmful to the Argentine economy and the Argentine people.” Their intervention didn’t work.
Still, Milei faces a daunting task: It will involve economic adjustments, budget cuts, and reducing state expenses, and that will come at a high cost.
No comments:
Post a Comment