By Alejandro A. Tagliavini *
Eleven years ago, in a column – “Argentina, the country we deserve” – I have tried to explain that everyone, the national government – in the hands of an exacerbated Peronist populism, the Kirchner’s – and the “opponent” head of the Government of Buenos Aires, Mauricio Macri, took measures against the private sector: increased taxes, regulations and state enterprises.
With inexplicable ingenuity, public opinion believed that Macri was “free market friendly” due to his misleading speech – every time he raises taxes he says they are very harmful … and raise them – but above all because of the “business” family history.
Now, from the corruption scandal known as “Cuadernos de Centeno”, it is becoming clear that in Argentina many “companies” really are “lobby” offices to do “business”. And the Macri family was no exception: they have never been entrepreneurs but lobbyists, they made a fortune with public works and other state favors.
Then, in another column – “Is Macri more populist than Evo?” – I showed that, beyond discourse and friends, his politics were populist: more assistentialism and more state-owned companies, greater fiscal pressure and debt. And in another article – “The capitalist road to socialism” – I pointed out how the growing statism led to this socialist country where almost 33% of the population is poor.
Because of the uncontrolled monetary issue that today exceeds 39% per annum in a context of strong contraction in demand, Argentina is sixth – and rising – in the world inflation ranking: in the last twelve months exceeded 42% annually and is on track of hyperinflation.
Ironically, in part the retraction of demand is due to the huge interest rate imposed by the government of 60% in order to absorb pesos and “lower inflation”. State spending grows relatively since, although the government says it goes down, the private sector falls more. And the debt went from 50% of GDP during the unbridled Peronism to today that exceeds 60%.
Desperate, in order to continue with its waste, the government has resorted to the financing of the multi-state IMF whose demands are the same as always: even more taxes, instead of doing the opposite and deregulating – starting with union activity – so that the economy expand, in addition to selling the infinite state properties.
If any ideology Macri has – beyond his proverbial ineptitude and that of his team – it is neofascism: controlled economy, strong pyramidal unions, etc. What is not surprising in this Argentina with a clear inclination in that sense, since before Perón when among the conservatives many already had a tendency toward the exaggerated right.
Against all forecasts the GDP will fall in 2018, in 2019 … and as long as the ruling party continues to increase the weight of the State, a trend that does not find a brake. Macri won by frightening: Argentina would become Venezuela if he did not succeed. What proved to be false: Chavism would not have tolerated an opposition electoral victory with so little difference in votes. On the other hand, the Chavez power is based on corrupt armed forces while in Argentina the Kirchner were far from the military.
Almost three years of Macri’s presidency, and Argentina is among the “mostly unfree” countries – ranked 144 on the Heritage Foundation’s Freedom Index – below Communist Vietnam, and Ethiopia.
* Member of the Advisory Board of the Center on Global Prosperity, Oakland, California