Saturday, February 27, 2021

OPINION AND ANALYSIS | 03-08-2019 10:06

Is it (still) the economy, stupid?

It is no surprise that President Mauricio Macri wants to talk about anything but the economy on the campaign trail.

One of the two economists competing in this year’s presidential race, José Luis Espert, boasted a couple of weeks ago that he had a new campaign strategist: Dick Morris, famous alongside James Carville for being part of Bill Clinton’s successful US election campaigns in the 1990s. That campaign team, of course, coined the phrase “It’s the economy, stupid,” the saying that settles elections to this day.

But, in Argentina’s case, is it really the economy this time around?

Alberto Fernández, the main opposition candidate, surely believes so. His campaign is poppling along to the August 11 primary with a cornucopia of economic statements. This week he said, for instance, that Argentina needed a (new) devaluation of the peso, and that the money the Central Bank is paying in interest rates through its Leliq short-term notes (at over 60 percent this week) should instead go toward increasing pensions and funding scientific research.

It is no surprise that President Mauricio Macri wants to talk about anything but the economy on the campaign trail. By many key economic standards – for instance GDP per capita – Macri will see out his administration in December with the worst economic performance of all elected presidents since 1983 (excluding, of course, the 1999- 2003 term split between the resigning Fernando de la Rúa and caretaker-in-charge Eduardo Duhalde). Macri’s campaign therefore is selling the future rather than the present: the worst is over, we hope; the best is yet to come, sometime soon.

But that doesn’t mean the government is ignoring the impact of the economy on voting preferences. While Fernández promises an immediate 20-percent increase in pensions, starting December 10, Macri is disseminating cash among the elderly right here, right now. Via the ANSES social security administration, since April the government has given micro loans to 12.5 percent of Argentina retirees: 850,000 people that in total were given almost 40 billion pesos. These loans go out at an interest rate of 50 percent, roughly 10 percentage points under the Leliq rate. ANSES has budgeted for a total hand out of 124 billion pesos through the electoral year.

This government strategy targets the most vulnerable sectors of the public, for whom a loan – no matter how small or expensive – can help to make ends meet next month. When the campaign started, the Macri administration introduced a set of policies that fell under the “unorthodox” tag the ruling party had so much criticised in the past, on the argument that it would give those people “a bridge” toward a better future. If the polls are right and Macri has reduced Fernández’s lead to less than five percentage points, the ruling party might enter a virtuous cycle to victory in October. That prospect also explains Alberto Fernández’s effort to predict that at an inevitable financial/currency crisis is on the immediate horizon (and perhaps trigger it in the process?). Fernández, it’s clear to see, is not acting as though he is a candidate on a victory lap.

Macri’s campaign posture points to the exact opposite, but it is just a posture, nonetheless. Fernández’s talk of devaluation did not bother markets that much, mostly because the markets are optimistic that the president will triumph in October (they are even more optimistic than the ruling party’s campaign managers). But the currency continues to come under pressure, forcing heavy Central Bank intervention in the futures market this week to keep the peso under control. There are still five working days left until the country votes – and they already feel like an age in some government offices.

Back to those two economists who are running for president. They, meanwhile, are adopting very different strategies in their quest – for third place. Roberto Lavagna, who served as economy minister between 2002 and 2005, this week presented his economic plan under the slogan: “Put money in people’s pockets.” Diluted, timid, undifferentiated, Lavagna’s campaign now seems to be on life support, although polls show him gathering around 8 to 10 percent of the vote.

Espert, on the contrary, is not playing the economist but rather the irreverent outsider, even hoping to eventually become some kind of rising cult figure. This week he orchestrated a ‘hackathon’ that gathered some of his active digital followers, who spent a few hours making and spreading Espert social media memes, in order to “send a message to the political class.” His Despertar (“Wake Up”) front promises to “turn things around” and start from scratch.

Most Argentines, however, seem to believe that it is still possible to fix things before blowing them up, even this unpredictable economy

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Marcelo J. Garcia

Marcelo J. Garcia


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