70 Years Later, Peron’s Politics Still Reign In Argentina

Por Alejandro Chafuen: Publicado el 22/10/15 en: http://www.forbes.com/sites/alejandrochafuen/2015/10/22/argentinean-2015-presidential-election-uncertain-change-or-peronist-continuity/


Argentina is a nation that, for its potential, should be able to shine as its name: the “Silver Nation.” Yet as the elections this Sunday will prove, the country is stuck in the slime of a corrupt political culture: Peronism.

According to the most recent polls, approximately 60% of the votes of the first round of the presidential election will go to the two candidates aligned with the Justicialista Party, founded by General Juan Domingo Peron (1895-1974). Around 30% of the votes will go to Cambiemos, a coalition that would, in the United States, be considered centrist with a tilt to the left in social values and to the right in economics. Its leader, Mauricio Macri, who has been governing the city of Buenos Aires, recently paid tribute to Peron’s memory while attending the unveiling of a statue in his honor.

The story goes that a foreign journalist interviewed President Peron during the peak of his first “democratic dictatorship” (1946-1955). He asked Peron to describe the Argentine political scene. In his affable and convincing tone, the president answered: “Close to forty percent are conservatives, then we have the radicals, near thirty percent, they are a centrist party founded in 1890, we also have the socialists, also moderate, around ten percent, we also have some Christian Democrats and some Liberals …” the journalist interrupted, “Excuse me Mr. President, aren’t you forgetting the Peronists?” “Peronists? They are All Peronists!” the president quipped wittingly.

A few different versions of this story exist, but they all describe the same sad reality, which continues to reign true today, 70 years later. Some of the distinguishing aspects of the Peronist culture—a third way economic system, a cult of the leader, a rhetoric of “social justice,” and a penchant for seeking foreign enemies to blame for local ills—continue to color the Argentine political scene.

Peronism has been able to dominate Argentine politics because it is based more on interests and feelings than on a strict ideology. Depending on circumstances, the ideology can accommodate the extreme right or the extreme left. Some of its figures have also flirted with free-market views. Take the two leading candidates and two additional political figures of the “departing” Cristina Kirchner administration. Daniel Scioli, former vice president, and current governor of the Buenos Aires province, who is currently ahead in the polls, used to be the de facto ambassador of the administration (1989-1999) of Carlos Saul Menem to most gatherings with U.S. free-market conservatives. Menem was the Peronist who led numerous privatizations, from the post office to the oil company—many of them crony. At the time, his government was hailed and praised in capitalist neo-liberal circles. Scioli attended the U.S. Republican conventions and many other meetings with pro free-market policy leaders. Despite being Kirchner’s favorite candidate, though, he is not the most trusted ally.

Sergio Massa is running third in the polls with almost 20% of the vote. During his youth, he was a member of UCEDE, a pro free-market party founded by Alvaro Alsogaray, a prominent Argentine figure of the Mont Pelerin Society, the elite libertarian and classical liberal group. He later joined the Peronists and occupied relevant positions in the governments of Nestor and Cristina Kirchner. The current Argentine Vice President, Amado Boudou, was also a member of UCEDE, and got his master’s degree at CEMA, a graduate school aligned with the Chicago School of Economics. Another prominent figure in the Kirchner administration, Jorge Capitanich, now Governor of the Chaco Province, graduated from ESEADE, a business school founded by another Mont Pelerin Society member with Austrian School leanings. Capitanich even had a short tenure as an ESEADE trustee.

For lovers of free-enterprise, Argentina is a very frustrating case. Milton Friedman, who was very open to travelling abroad to give advice, never once went there. I once acted as an intermediary for Fundación Libertad, trying to attract him for a visit by offering a very substantial fee. He had gone to Chile, Mexico, and Peru almost for free. Yet he decided against it. He told me, “Argentina has a large amount of talented economists; I know many who graduated with honors from the University of Chicago. You also have the Austrians, and several Mont Pelerin Society members. If Argentineans do not do the right thing it is because they do not want to do the right thing.” Argentina is also one of the countries in the world with the highest number of free-market think tanks per capita.

By kneeling in Peronist altars, Mauricio Macri increased the pain of those who still cherish an Argentine Republic that rose to glory by embracing free-society principles and practices. Macri leads the Cambiemos (Let’s Change) coalition, which includes some traditional and less populist parties. They tend to be more respectful of institutions, and of checks and balances. If they manage to come up within ten percent of the winner of Sunday’s election, Cambiemos has a chance to win in a second round. If that is the case, then we can expect a change in country’s direction.

Few things are more important for the Argentine economy than eliminating exchange controls, and the multiple exchange rates which have fueled immense corruption and created damaging bottlenecks. By providing undervalued foreign currency to allies, the Kirchner administration had an easy tool to buy votes and enrich cronies. Agustin Etchebarne, of the think tank Libertad y Progreso, believes that under a Macri administration there would likely be a reduction or elimination of numerous subsidies to energy, transport, and other government-controlled services, “this will have two effects: higher prices will affect salaries, leading to a contraction of consumption. On the other hand, more realistic prices will benefit energy-producing provinces and generate a more transparent and credible economic climate. It will make it easier for Argentina to regain some credibility to settle with remaining creditors and reach an agreement with the Paris Club.”

With the commodities boom over and with its trading partners growing very slowly or in stagnation, Argentina will need access to credit. Salvador Di Stefano, an economics consultant formerly with the Fundacion Libertad think tank, speculates that if Scioli wins, one of his allies, economist Mario Blejer, former president of the Argentine Central Bank, would likely be appointed UK ambassador. Blejer will try to lead Argentina’s effort to borrow in London, seeking to bypass the jurisdiction of U.S. courts, which ruled that Argentina must first settle with its creditors. Di Stefano also expects a “blanqueo” (literally “whitewash”), which would forgive taxes on repatriated undeclared money, and is expected to attract $15 to $30 billion. This official avenue for money laundering can give a temporary push and compensate for other adjustments.

Going to issues beyond economics, few expect major changes. As Iranian groups have been accused of committing terrorist acts in Argentina, some, like Joseph Humire of theCenter for a Secure Free Society, have been tracking their influence. Humire does not expect much: “Iran is entrenched in Argentina’s intelligence and judicial system. They have been there for 30 years. The new Argentine government would have to clean house but that might cause more problems than what is politically expedient. Your everyday Argentine doesn’t seem to worry much about Iran, even though they’ve attacked Argentina three times. It’s a problem.”


Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.

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