Alberto Fernández’s Economic Plan Won’t Save Argentina
Alberto Fernández, the Argentine president, is confident that his Keynesian plan will lead to economic recovery, but it will not bring the expected results
Alberto Fernández is an optimist. He acknowledges the problems he has inherited and never tires of reiterating that he intends to “take charge” of everything. The peculiarity of this political moment pushed him, unexpectedly, into the center of the scene of a country where just a year ago, he was a former official of a corrupt government which he left with a fight. But life has its twists and turns.
His former boss, who got tired of criticizing him publicly, had to go looking for him (in a successful move) more out of necessity than anything else. Today, a month after forming the new government, the president has managed to consolidate his style, and, as far as it seems, Kirchner is somewhat removed from the heat of real power. This is already a merit of what today in Argentine politics is called “pure Albertism”- a space that reflects the president and is independent of the former president.
Fernández consolidates his “Albertism” with the governors, unions, and diverse political actors. Even leaders who worked at Cambiemos (until very recently) are lining up for a meeting with the man in the Casa Rosada. This proximity, coupled with the relaxed style reminiscent of Carlos Menem or the first Néstor Kirchner, differs from Cristina’s model, which is much more restricted to her trusted people.
However, the consolidation of political power (which, given the circumstances, maybe no small thing) is not enough, given Argentina’s economic gravity. “I don’t understand much why the middle class gets angry,” says a president who is beginning to take the first steps in the direction opposite to the feeling in the streets. “They will be the ones who benefit the most,” he assures, referring to his economic program, which, in all fairness, does not even deserve to be called an “economic plan.”
Hopefully, and so far, it seems there is some hope, the government will manage to avoid a catastrophe in the short term and, with even more luck (and doing some homework about international politics), Fernández will be able to prevent total default. But, without a doubt, the “Economic Emergency Law” or the “Council Against Hunger” will not provide the solutions that Argentina needs. Given the gravity of the situation, we can even say that the contrary is true.
In his unreasonable optimism, Alberto hopes that the “middle class” will realize the economic revival that will take place after the increase in consumption by “the bottom sectors.”
But of course, there was not a single peso of investment or growth of the real economy in Argentina. In other words, the “boost” expected from “the lower sectors” is merely redistributive: more taxes on the productive sectors and monetary emission. Being as “heterodox” as possible, one can even expect that, in the best of cases, this program could be a solution for the most deprived. But the size of the pie of the Argentine economy, no matter how it is distributed, will be smaller by March.
One must not overlook the possibility that an even greater drop in demand for money (related to the inconvertibility of the Argentine peso) will give the government another major inflationary headache, at the hands of a Central Bank that has already begun to print colorful paper. The fact that Argentine society discusses the names of the heroes who will appear on the bills or whether it is better to have local animals is one less problem for a government that, for now, and like the previous one, seems to be avoiding the fundamental reforms.
If Fernández, facing the mid-term elections, and avoiding a severe crisis, manages to consolidate his political power scheme, he will inevitably have to present an economic agenda because Argentina is going nowhere with what the government is currently offering as an option.