How the Long Shadow of Peronism Can Foil Argentina’s Recovery
EspañolBy Yamila Feccia
Over a year has passed since Mauricio Macri took office, and hope for radical change in Argentine policy management is being overshadowed by the rising concern over economic recovery and the tug-of-war from interest groups.
The skepticism of Argentines is fueled by economic forecasters and preliminary estimates that predict a takeoff for 2017. However, Argentina is a special country, where to carry out only an economic analysis wouldn’t be enough.
Argentina has another problem, one that is perhaps more complex the macroeconomic imbalances that it has dragged on for several decades: its underlying values. Cultural factors can also limit opportunities and close doors, and today the country is still affected by ulcerated roots that subject it to constant instability.
It is true that Mauricio Macri’s party, Cambiemos, has normalized Argentine policy, turning a page on the years of unscrupulous looting of the public sector and making room for reasonable discourse on public affairs that any normal country enjoys.
However, Argentine history shows that good intentions aren’t enough when it comes to putting a country on the path to prosperity. Those same lessons help us understand why Argentines are particularly vulnerable to populism. These cultural traits are well-known by demagogues, who spread the poison of corruption and appeal to deeply ingrained values to win votes and stay in power.
The seeds of these values that crave populism were sown more than a century ago but reactivated 30 years later.
In 1945, general Juan Domingo Perón, the former populist president of Argentina, rose the sleeping hopes of many Argentines and inspired distorted values and concepts which ended up taking root. He revived many flaws, while new ones sprang up.
Argentines’ mental maps began to unravel and acquired a misconception of the role of the state. We began to cultivate the culture of statism, interventionism, protectionism, distributionism and many other ‘isms’. For example, the belief that the state is responsible for providing and solving everything, even for bridging the inequality gap through redistribution, as if wealth were a given and not a result.
An example of how values can undermine growth can be seen in the book “The Atrocious Charm of Being Argentine”. Its author Marcos Aguinis explains the famous concept of viveza criolla, and defines it as an Argentine custom which has an antisocial effect, spreads resentment and poisons mutual respect.
It has tragic long-term moral and economic consequences. In addition, he defines two main participants: the cunning and the fool. The first one is the one who pulls off the con trick, while the second one is the victim. According to Aguinis, the so-called viveza criolla grows under authoritarianism and sneaks in through the claws of power.
The cunning finds corruption exciting, he is an expert of fraud and tries to get the most out of it. In addition, he feeds on the fool’s impotence, though his intention is not to destroy him but to simply use him to his advantage.
This kind of behavior is more present than one can imagine. It is hidden in part of the country’s greatest inheritance: the inheritance of Kirchnerism. It is hidden in the 7 percent deficit-to-GDP ratio; in irresponsible money printing; in the almost US$700 million more in taxes that we are charged in comparison to the last decade; in the 1,2 million unemployed; in the 64 percent public sector employment growth, which is plagued by political patronage and corruption; in the inefficient infrastructure of public schools; in the energy deficit; in the 700% cumulative inflation of the last 10 years; in the 30 percent of poor people and 6 percent of indigents; in the US$ 207 billion debt; in the 60 different types of social programs with more than 18 million beneficiaries; in the manipulation of official statistics, etc.
But how does this distorted version of cleverness permeate every corner of the society? The cunning stands for nationalism and waves the flag of protectionism by selling the fool overpriced and lower-quality goods.
Cunning is the union leader who enjoys exorbitant benefits and uses his followers demagogically to remain in power; while the fool, persuaded by his words, happily joins the union.
The cunning spends his life sucking on the state’s udder because that’s easier than working; while the fool pays taxes with great dignity to keep the wheels turning.
Cunning are the politicians who have long vanished from the public space so that shrewder groups established the culture of strikes and pickets, making the fool’s daily commute a tortuous journey.
The cunning fights for a more inclusive country by expanding social programs funded by seigniorage, while the fool thinks he’s being included.
The cunning squanders taxpayers’ money in the name of redistribution, while the fool believes free lunches exist.
In other words, cunning is the one whose speech is sickly deceitful, and fool is the one who swallows it.
It seems clear though that this rebellious rule-breaking attitude cripples any kind of long term-project, condemning us to the short-term, to improvisation, to chaos. That’s to say, we are condemned to fail.
As Joan Robinson states, every economic system needs rules, an ideology and a conscience in the individual so that he follows those rules. When people keep breaking them, society finds itself trapped in chaos that hinders its growth. So we may have the rules, we may have an ideology, but without a conscience, we are doomed to stagnation and underdevelopment.
For the economy to take off, we need to grow up and emancipate from the state, changing the rules and leaving behind the culture that prevents us from evolving, along with its disruptive anti-values, such as political patronage and welfare dependency that gnaw at our individual efforts, creativity, talent, legitimacy, sense of responsibility and working culture.
Argentina, a teenage country, needs to follow the steps of more prosperous nations, empowering its institutions, respecting property rights, upholding contracts, equal opportunities, separation of powers, and acknowledging the limitations of the executive branch.
Not only should we focus on growth, but also on restoring the health of a crumbling state and its inherent role: to provide justice and safety.
Yamila Feccia is an Argentine economist from Rosario who specializes in the analysis and development of economic variables. She is a researcher with the Center for Social and Economic Research at Fundación Libertad in Argentina.