The fatal attraction of Peronism

Suh Kyoung-ho
The author is an editorial writer of the JoongAng Ilbo.

It felt like watching a soap opera. I have been following the news reports on Argentina’s presidential election with much disappointment.

In August’s presidential primaries, economist and congressman Javier Milei surprisingly came in first place. Sergio Massa, the incumbent minister of economy in the Peronist government, came in third. Milei, a radical libertarian politician, has promised to abolish the central bank and make the U.S. dollar Argentina’s official currency. He went so far as to legalize organ trafficking. The foreign press called him an “anarcho-capitalist.”

Milei pledged to cut government spending by up to 15 percent of the country’s GDP and shut down 10 of the 18 ministries. He campaigned with a chain saw to show his determination to fix the government’s reckless fiscal spending. A single man in his 50s, Milei has dogs named after free market advocates such as Milton (Friedman) and Robert (Lucas) and raises them as if they were his children. He has been dubbed the “Trump of Argentina” for his weird behavior and tough rhetoric.

The election outcomes were overturned last week. Massa, the economy minister, came in first with 37 percent of the votes, pushing Milei to the second place with 30 percent. The two candidates will face off again in a runoff next month. The only reasonable center-right candidate, Patricia Bullrich, was eliminated after winning just 24 percent. The Economist called it “the worst presidential election result ever,” as the governing party’s candidate took the lead despite the fact that inflation is running at 138 percent annually and the peso, the country’s currency, has plunged 95 percent in value over the past four years. The conventional wisdom of elections — that a collapsing economy is a disadvantage to the ruling party — didn’t apply in Argentina. Why?

As expected, populism was powerful in the Latin American country. The government of Massa cut income tax for 99 percent of the working population, gave pensioners bonus payments worth $100 each, and reimbursed some of the grocery tax. The Justicialist Party — the governing party more commonly known as the Peronist party — spent about 1 percent of the GDP for the campaign. It took advantage of the premium as the governing party by methodically spending money. This happened in a country that needs to repay $43 billion in debt to the International Monetary Fund.

There were outright vote-buying activities, too. Gifts like refrigerators were doled out to poor neighborhoods. The populist government’s fear mongering about the libertarian candidate who would cause the subway and other utility bills to skyrocket also played a part. Milei’s foul mouth also helped him lose votes. Argentina is a country where two-thirds of the population is Catholic, and he called Pope Francis, an Argentine, a “leftist son of a bitch.”

An anti-Peronist coalition has now been formed, but it is hard to predict the outcome. Can Argentines resist the lure of Peronism? Even if they do, could a maverick and libertarian economist really unite the country and start painful reforms?

Populism is not just a problem in Argentina. Economic inequality deepened whenever new technologies with a massive impact on the economy and society — such as the steam engine, electricity, computers, the Internet, artificial intelligence and robotics — were introduced. Populism targets countries whose governments cannot resolve the conflicts.

The Yoon Suk Yeol administration has stressed the importance of maintaining fiscal health, and yet his People Power Party (PPP) has presented some questionable pork barrel policies. The PPP proposed raising the monthly payment for the neighborhood leaders from 300,000 won ($222) a month to 400,000 won starting next year. It will cost 138.1 billion won while tax revenue decreases.

The conservative government and the PPP also decided to exempt small business owners from paying back about 800 billion won in Covid-19 emergency relief funds that were hastily handed out without even verifying their eligibility during the liberal Moon Jae-in administration. The PPP must have made the difficult decision in consideration of the hardships of small businesses. But it certainly increased the burden of the people.

The musical “Evita” depicts the life of Eva Peron, the wife of former Argentine President Juan Peron. In the musical, she sings “Don’t Cry for Me Argentina.” But the tears of her people are not likely to be wiped away by populism.