Where is this new agony taking Argentina?
Por Hernán Madera
A long hard look at the country makes everybody doubt whether Argentina will ever have a solid economic project or it will just keep re-entering cycles of easy money followed by catastrophe.

For ten years now, the country has been stagnant. In this context, the electorate zigzags within the limits of bipartisanship, at least for now. How long will the zigzag last without going over that limit? This is the big question. It is also unknown whether a disruptive end of that pendulum will bring the country back to some type of growth or will end up sinking it as it happened to Venezuela.

At least half of the Peronist electorate is loyal to Cristina Kirchner, and the Vice President's political plan can be summarized in three words: Maximo for President. So far, no survey shows that scenario as even likely, which is why the subproject is Maximo for Governor. The 2023 Peronist presidential formula will again be etched by her and it will have, as its main purpose, to ensure the votes for her son to reach the governorship. She more than anyone knows how difficult it will be in two years for the Peronist Party to continue in power.

The Peronist candidate will be settled between four contenders who await the blessing of the Vice President: Axel Kicillof, Sergio Uñac, Alberto Fernández, and Sergio Massa. But only the two Sergios have a real chance of winning an awfully competitive runoff in two years.

On the other side of the boxing ring, leading the non-Peronist coalition, we find again another mayor of the city of Buenos Aires as the most probable candidate. This is the third time in twenty-one years that the non-Peronist coalition goes this way. No originality on behalf of the middle classes: to be deluded by the leader of the richest district in the country.

That is the summary on the electoral and political fields. What about the economy?

One event could shake the country and force it to abandon the road to triple-digit inflation, bringing back some expectation to the Peronist side: a partial dollarization of the economy. The Vice President is willing to play this last card even if it means losing some support from nationalist circles. The other option for the Peronist Party is radicalization to the left. That is not our most likely scenario since it only guarantees defeat, therefore we will assign it a 30% chance. 

One event could shake the country and force it to abandon the road to triple-digit inflation, bringing back some expectation to the Peronist side: a partial dollarization of the economy.

Eventually, various theories will be verbalized to imply that the Peronist Party has real chances of staying in power beyond the current administration, but the real difficulty lies in demonstrating how is the country going to access the necessary resources to really grow -and not just bounce- in the next two years.

Where is this new agony taking Argentina?

Argentina is a country without access to credit, chronic budget deficits, capital flight, and no plan on what kind of economic role it could have in the planet other than exporting between $40.000 and $50.000 million worth of commodities per year. Neither Vaca Muerta nor the exploitation of lithium reserves or the silver mine in Chubut will significantly change this reality.

The huge energy deficits that persisted in the former Kirchner administrations, but, most importantly, the end of the budget and export surpluses due to the geometric increase in spending, forced Argentina to bury its last reachable economic project ten years ago.

Polls could trigger economic changes

Why did the Kirchners go this way? Half of the explanation is attributable to deep dynamics that exceed the will of any administration. Despite any myth, Argentina never experienced strong emigration flows and its population became used to decades of low productivity. No economic catastrophe was long enough to generate emigration and thus remove pressure from the internal competition for the shrinking wealth. The intensity of the 1989 and 2002 collapses was overcompensated by subsequent red hot periods of easy money. But we may be reaching the end of these processes. Even compared to the lost decade of the eighties this stagnation is especially long, and, crucially, this new agony includes the pandemic. 

Why did the Kirchners go this way? Half of the explanation is attributable to deep dynamics that exceed the will of any administration.

At the level of political responsibility, Nestor Kirchner tried to generate his own business community in order to complement his political construction. The country lost a lot in that extravagant and unsuccessful experiment, mainly but not only in the energy sector.

Even when Cristina Kirchner abandoned this path, her need to retain the Peronist Party supremacy after the death of her husband made her let real wages grow 50% (measured in hard currency) in 2010 and 2011. Entirely unsustainable without a similar increase in productivity. But elections are always her ultimate goal. She won reelection with 54% of the vote and, within five days of that victory, she had to impose capital controls that included prohibitions to buy foreign currency. She refused to devalue but continued to pursue the possibility of a third term. The defeat in the 2013 midterms elections cancelled that option. But the country's opportunity to keep growing was also gone.

During her administration, the Supreme Court threatened to legislate from the bench and enact that every raise in pensions had to match inflation. Also, the non-Peronist opposition irresponsibly raised pensions with a Law that she had to veto and, already in Mauricio Macri´s presidency, an unpayable compensation for senior adults called Historical Repair was approved. These three examples lead us to suspect that the conservative coalition, which is supposedly more sensitive in public spending matters, actually has a wasteful dynamic similar to the Peronist one. Public spending excesses are part of a bipartisan culture.

That is why even when the Kirchners are to be blamed for the disappearance of the budget and export surpluses that would have defeated inflation and also build a stable currency, it is very likely that if the non-Peronists would have been in that same position they would have implemented similar measures to the ones that ruined the so called "twin surpluses".

This zero-sum game has a solution. Like the Mexican PRI or the Brazilian political establishment did in the 90s, Peronism is the one who can break this inertia of overflowing public spending and absence of a serious economic plan. And even when it has achieved these goals in at least three provinces (San Luis, San Juan, and La Pampa) the anxious search for unlimited reelections prevents the spending cycle that madly exceeds income -and ends in debt crisis or inflation crisis- to stop.

In the Peronist field there is also a striking question: will a new society molded by a stable yet austere economy still vote for them? The Mexican and Brazilian examples provide a tough answer: No. That might be the deep cause why the Peronist Party does not go this way.

Meanwhile, the non-Peronist coalition feels comfortable in its catharsis and victimization without ever specifying a detailed plan for development or at least a plan aimed at some kind of stability. The conservative opposition does not have the powerful weapon that the government does: unions. But, even so, their past administrations always ended up in disgusting lectures from the richest few (the ones who suck the State dry the most) to the rest of the country. And its middle-class electorate continues to avoid demanding its leaders the design of a serious project of modernization of the country (perhaps fearing that it might imply an extra effort in productivity and sacrifice beyond the one is willing to make).

Will Argentina finally learn the economic lesson? At the bottom of their hearts, and after so many crises, Argentines would like this last lesson to be as triumphant as the one dealing with territorial unity and national organization in the midst of the XIX century, or similar to the democratic one experienced almost 40 years ago.

Probably more than any other Latin American society, the Argentine is increasingly aware that falling to the bottom of the well does not ensure a subsequent wisdom, that the passage from disaster to redemption is not automatic, and, crucially, that since 1983, it cannot blame anyone for the paths chosen in elections with high turnouts. Maybe, this is the most agonizing of all for the forty-five million Argentines: having to live with the consequences of their own decisions. 

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