Che Guevara t-shirts may be selling as fast as ever in campus bookstores, but Latin Leftists aren’t doing so well in the real world. Between the Brazilian crisis and the Venezuelan implosion, left-wing regimes of different shades have some economic ‘splainin’ to do. So it shouldn’t be so surprising that anti-Leftist winds have blown into recession-mired Argentina and upended the Presidential election there.
Argentina has been a mess for most of the past fifteen years and presently suffers 25% inflation. The global commodities price collapse hasn’t helped (nor has the country taxing its own critical exports). Yet an election to succeed the hard-nosed Leftist President Cristina Fernández de Kirchner was still expected to smoothly usher in Kirchner’s designated heir and successor, Daniel Scioli. That didn’t happen, and there’s now a run-off after Scioli managed to receive only 2% more of the vote than his centrist opponent, Buenos Aires Mayor Mauricio Macri.
Scioli might have won outright if former political ally Sergio Massa hadn’t left Scioli’s party and garnered 21.4% of the vote as a third-party candidate. With questions swirling about whether Massa will make an endorsement, Macri and Scioli will face off next month and most analysts suggest it’s anyone’s game.
Given the depth of Argentina’s recession, it may or may not be surprising that left-wing star economist Paul Krugman has been known to hold the country up as an example for the rest of us:
After it defaulted at the end of 2001, [Argentina] went through a brief severe downturn, but soon began a rapid recovery that continued for a long time. Surely the Argentine example suggests that default is a great idea…
After the 1998–2001 depression that saw a loss of over a quarter of GDP, Néstor Kirchner, Cristina’s late husband and political predecessor, steered the economy to an apparent 9% growth for five years. Yet as things came apart during the 2008 global recession, it became clear that Argentina had been habitually fudging its numbers and over-inflating its currency. Some economists began to doubt that the economy ever saw anything close to 9% growth (Krugman has dismissed all criticism and doubled down on his analysis).
Kirchnerists are still running on their track record in 2002 and 2003, saying that at least things aren’t as bad as they were in the Great Argentinian Depression. For many Argentinians, that’s a stale message.
Argentina is a great example of what we like to call Recurring Failed Populist Syndrome. RFPS takes hold when a corrupt oligarchy doesn’t bother to secure economic gains for the poor and middle class. Think Greece or, in a starker example, Venezuela. In such a political climate, the isolated majority grows restless and rises up to kick out the regime. The problem is that the populists often end up replacing the old system with an equally corrupt, but far less competent one. No amount of socialist lipstick can hide the failure of this new oligarchy and the saga often ends in a return of the old, and still unreformed, establishment. That sad cycle is the curse of modern Latin American history, and Argentina’s seventy year fixation with a deeply corrupt, anti-liberal Peronist movement has been one of the costliest political infatuations on record.
Unsurprisingly, Macri is accused of being a friend of big money and the banks. Populist Argentinian wisdom is that neoliberal (a favorite Latin American slur) policies led to the 1998 collapse, so Macri is trying to avoid looking too much like the status quo ante. Indeed, he has been so successful that many Argentinian pundits believed he wasn’t differing himself enough from Kirchner. Yet his careful strategy seems to have worked well thus far, and many outside observers now think he will win.
Whether Macri makes it to the Casa Rosada (in Argentina, even the White House is pink), his surprising success indicates a clear anti-Leftist trend: we aren’t hearing viva la revolución shouted from many Latin American rooftops these days. We aren’t really surprised, either: socialism generally falls out of favor when it moves from t-shirt slogan to actual policy.