Former editor of the Buenos Aires Herald (1979-1986).
Alberto Fernández must think he has it in the bag. Which is why he is telling business leaders, foreign diplomats and emissaries from the International Monetary Fund (IMF) that, once he has moved into the Pink House, he will handle the economy in a fairly sensible manner. So far, his efforts to this end have not met with much success, but reports of what he is up to are not going down well with the many Kirchnerites who would like him to show the world that their pet schemes are far better than anything yet tried in the United States, Europe, Japan or, for that matter, China.
One such scheme is based on the notion that printing lots of money is not inflationary. According to the talkative lawmaker Fernanda Vallejos, a “modern monetary theory” seized on by North American leftists such as Alexandria Ocasio-Cortez shows that if prices insist on going up, it is because of the oligopolistic nature of the local market and the nasty habits it encourages, not because the money supply is increasing far too fast.
To the relief of many people, neither Alberto nor the individuals who are on his shortlist of possible future economy ministers say they would try to make the economy bigger by pumping it full of colourful peso bills. While they are happy to berate Mauricio Macri for what they say is his overzealous attachment to pre-modern monetarism, they do agree that the amount of money in circulation should be kept under control.
With elections just a few weeks away, the differences between Macri’s approach to Argentina’s many economic woes and that favoured by Alberto Fernández are getting smaller by the day. Both men appreciate that sooner or later – preferably later – drastic measures will have to be taken to put things right and understand that to have any chance of working they would have to be backed by a strong political consensus. Unfortunately, right now the consensus seems to be that, after last year’s run on the peso, Macri’s government made the fatal mistake of subordinating far too much to reordering the country’s finances, when he should have given priority to stuffing more money into the pockets of the country’s long-suffering inhabitants so they could go out and buy things. Had he done so, we would now, in all probability, be in the middle of yet another hyperinflationary firestorm.
The current wisdom is still that Macri is on the way out because he mishandled the economy incredibly badly and that just about anybody else could have done a far better job. This, by and large, is what Alberto has been telling voters who – if the results of the mock elections held in August are anything to go by – have eagerly lapped it up. Their willingness to do so can be attributed to the conviction that, as Argentina really ought to be rich, mass poverty, rising unemployment, chronic inflation and all the rest of it must be the fault of whoever happens to be in office at the time. It is a pleasing illusion but, as Alberto will soon find out if, as expected, he climbs into the driving-seat, the country’s economic problems are far more serious, and run far deeper, than most people like to think.
Even if Macri had turned out to be a master politician capable of putting together a wider and more coherent coalition than the one he assembled, he would still have had to take measures that would have hit consumers hard and tarnished his image. It is easy to say that forcing people to pay something like the market price for gas and electricity was a huge mistake, but had he continued the previous policy – which was adopted by Cristina Fernández de Kirchner after she saw her approval rating fall when she made a half-hearted attempt to do some “fine-tuning” in that department – of letting much of the middle class get what it needed for virtually nothing, the costs of importing energy would have ended up going through the roof, with dire consequences for almost everyone.
Macri’s government also increased social-welfare spending and did little to trim the pathologically obese public sector, both of which gobble up resources at an alarming rate. But had he done otherwise, the Kirchnerites and their leftist allies, plus the cantankerous labour unions, would have organised street protests that would have been much larger and far more violent than the ones which have long been routine.
All this, and much more, is awaiting the arrival of Alberto. Unless he is very lucky, within a couple of months he will find himself being treated by a disgruntled citizenry like a clone of Macri, as an incompetent who, for sinister reasons, has no interest in making people’s lives any better and is therefore a liar who never believed in his own campaign promises. If he attempts to prove he is no “neoliberal,” by applying some blatantly unorthodox nostrums, his troubles will almost certainly get even worse. And if he sticks to his guns and strives to do everything by the book, he will incur the enmity not only of hard-line Kirchnerites who want the country to be run in accordance with their allegedly revolutionary play-book but also of the many politicians whose stock in trade is to blame the national government for whatever goes wrong in the places they represent, as the embattled governor of Chubut has lately been doing.
When Macri took over, it was generally assumed that, after the excesses of the Kirchnerite era, the country would have to endure some mild belt-tightening. Should Alberto win power, he will enjoy no such advantage. Many, perhaps most, of the people who voted for him expect the new government to put an end to the depressing austerity of the Macri interlude and go all out for growth by giving their incomes a vigorous boost. For a month or so, he may be able to get away with blaming all the hardship on his predecessor’s misanthropic bungling. But by then he will be facing the opposition of people who backed him while the election campaign lasted, not because they thought he would be a good president but because they wanted to stick it to Macri and his middle-class supporters and then go on to make the country a bastion of their own version of what the late Hugo Chávez called “21st-century socialism.”