Argentina has long been in the hands of individuals who reach power by attributing her many woes to the stupidity or wickedness of their political rivals, but who once in office do not have the slightest idea of what could be done to improve matters. The reason is simple: when in opposition, almost all local politicians kid themselves that Argentina is far richer than unpatriotic number-crunchers here and envious foreign economists abroad make out. In power, they soon discover that she is not.
This is why up to now all governments, whether military or civilian, populist or market-friendly, have ended up by resigning themselves to leaving things much as they found them. After getting it into their heads that unless public expenditure is sharply reduced Argentina will continue to get poorer and poorer, they decide there is not much they can do about it because millions need handouts to keep them from starvation. So they do nothing. Like the owners of a dilapidated jalopy who do not have enough money to replace it with a newer and better model, they can only cross their fingers and pray that it does not break down completely when they are miles from anything resembling a repair shop with parts they can afford.
This, unfortunately for all of us, is where Argentina is today. She is running out of homegrown financial resources and, as a result of the pandemic, is even less likely that might otherwise have been the case to be treated with generosity by those countries which remain solvent. Perhaps China will prove to be an exception though, needless to say, any financial aid from that quarter would entail many geopolitical concessions.
A few weeks ago, Alberto Fernández seemed convinced that by coming to an agreement with a bunch of creditors he had done enough to keep the country moving until his stint in office was over. But, as the panicky measures his government has just taken to prevent what is left of the hard-currency reserves from draining away entirely have reminded us all Argentina’s social and economic problems are far more complicated than he had imagined while out there campaigning. And, thanks largely to his inability to prevent his boss, Cristina Fernández de Kirchner, from making mischief, hardly a day passes without them getting much worse. Alarmed by what is happening, foreign-owned firms, and those local businessmen who are able to relocate to Uruguay are fleeing the country.
Populists are good at pinning the blame for the latest stage of the ongoing economic crisis on politicians who made unsuccessful efforts to bring about much-needed structural changes. They want Argentina to stay the way she is and make sure that people learn nothing from the disasters they help bring about. Instead of recognising that Domingo Cavallo’s currency-board came a cropper because the Carlos Menem’s government and its mainly Radical successor were unable to bring state spending under control, they want people to think it was sheer folly to believe the Argentine economy could coexist for long with a currency as strong as the North American dollar. Cristina, who for years had warmly supported Cavallo’s scheme, said this was because the United States was far bigger than Argentina; tell that to the Swiss who, despite their country’s diminutive size, have not been over inconvenienced by the robustness of the franc.
Much the same happened after Mauricio Macri’s “gradualist” approach proved inadequate. It failed because his team could not take the really drastic measures which, with luck, would have persuaded the rest of the world, and the local population, that at long last Argentina was on the right track, but according to people like Alberto, Cristina and their followers, it all came apart because the then-president was a wealthy “neoliberal” who despised ordinary folk.
The truth is that Macri refrained from doing what he presumably thought would be necessary because he quite rightly feared that slashing public expenditure would hurt a huge number of people and lead to blood in the streets. Given the circumstances, he had little alternative but to hope that foreign creditors would help him push through a series of slow-motion reforms few would even notice. For a while, they did let him have lots of money, but one day they decided he was going nowhere and that was that.
In any event, it is worth remembering that the outlook facing Argentina darkened immediately when, to widespread dismay, it appeared that Alberto and Cristina would crush Macri and his running mate, Miguel Ángel Pichetto, in the presidential elections. Days earlier, when a rogue poll told the world the government had a good chance of coming out on top, prospects had suddenly brightened.
The government’s economic policy is straightforward. As the Radical leader Alfredo Cornejo likes reminding us, it is based on squeezing the “productive” part of society for money to subsidise the “parasitical.” Alberto is fully on board with this. He says he thinks it is terribly unfair that people in Buenos Aires City live “in opulence,” while their neighbours in Buenos Aires Province go hungry. He has also taken to going on about how in his view worldly success has nothing at all to do with “merit.” Just how seriously one should take such remarks is anybody’s guess, but the mere fact that he is saying such things suggests that, as the situation gets more desperate, the government he formally heads will intensify its attacks on what is still left of Argentina’s once flourishing middle class.
Such a policy may make sense for politicians whose power – and the sizeable incomes that here as elsewhere tend to accompany it – depend on the support they receive from millions of barely literate slum-dwellers, but it does not bode well for the country’s future. Even without the additional hardships brought about by the pandemic, recovery from the chronic economic crisis that began almost a century ago would have been extremely arduous. Coming just when it did, the coronavirus has made everything far more difficult, but the harm it is expected to do before it is finally tamed will be minor compared to the damage caused by a political movement led by people who, dimly aware that saving Argentina from ruin would require them to jettison all their social and ideological prejudices, have decided that they might as well do their utmost to make everything far worse.