An incumbent Peronist trounced a fresh-faced libertarian, confounding pollsters. How this happened contains lessons for South Africa.
With great excitement, the world’s lovers of freedom watched Argentina’s general election, hoping that the outspoken libertarian, Javier Milei, would do what the polls suggested he would do and defeat the Peronist government that has led Argentina into its worst economic crisis in decades.
Against all expectations, however, the incumbent economics minister, Sergio Massa, won 36.6% of the vote to Milei’s 30%, forcing a head-to-head run-off election between the two.
There isn’t a simple explanation for this result, of course. For a start, Argentinian pollsters do not have a particularly good record, and correctly predicted neither the outcome of the previous election, nor the recent primaries that Milei won.
Milei’s policy proposals are as radical as his colourful persona, which may well scare a conservative electorate.
The most important factor, however, is likely that Massa pulled the age-old socialist trick of wooing the working-class poor with handouts.
The Peronists, a populist, nationalist, corporatist, unionist and quasi-socialist movement that has dominated Argentinian politics since the end of the Second World War, are widely viewed as the cause of the country’s economic malaise.
In government for 30 of the last 34 years, the Peronists have led the country – once one of the richest in the world – from one economic crisis to another.
Going into this year’s election, Argentina faces triple-digit inflation for the first time since a hyper-inflationary spike in 1991. Its currency has lost 44% of its value, the central bank interest rate has risen to 133%, the poverty rate sped past 40%, and the cash-strapped country is leaning on the IMF for accelerated disbursements of its 2022 loan package. It ranks 158th out of 165 countries in the Fraser Institute’s Economic Freedom of the World Reportof 2023, ahead of only Libya, Iran, Yemen, Sudan, Syria, Zimbabwe and Venezuela.
Milei stormed into this cauldron as a libertarian with wild hair and radical ideas of economic reform.
Often denounced by the media as being ‘far right’, or ‘populist’, he is not at all like other far-right populists or alt-right conservatives, such as Jair Bolsonaro of Brazil, or Viktor Orbán of Hungary, or Donald Trump of the US, or Marine le Pen of France.
He isn’t alt-right at all, which is what makes Milei’s candidacy so appealing. He rejects the ‘right-wing’ label himself, describing himself as a ‘minarchist’ (a libertarian proponent of a minimal state devoted only to the protection of life, liberty and property) and as a ‘liberal and libertarian’.
His economics – and he is a qualified economist with a very impressive résumé – are aligned with the Austrian School, with nods to Milton Friedman, Friedrich Hayek and Murray Rothbard. It is heavily in favour of free enterprise and entrepreneurialism, and views profit as the legitimate reward for performing a service to society.
Milei has the intellectual depth to debate the virtues of free markets with all comers, and frequently does so on television, to very entertaining effect.
He is an outspoken anti-socialist and anti-statist, and openly loathes the ‘thieving’ Peronist political elite. He has promised to slash the size of government and the civil service, abolish many government departments entirely, and dollarise the economy.
He considers Argentina a ‘tax hell’, and since his entry into politics in 2021 has raffled off his own salary, which he describes as ‘dirty money’.
‘The state is a criminal organisation that finances itself through taxes levied on people by force. We are returning the money that the political caste stole,’ he said.
Unlike most self-described libertarians who are far-right populists or alt-right conservatives in disguise, Milei is the real deal, and he is a firebrand.
Social safety net
Despite the economic turmoil of the last several decades, the Peronists have, besides further extending government intervention in the economy, also strengthened social programmes.
It is to this record that Massa appealed to overcome Milei, arguing that if times were tough, then social assistance and subsidies would be all the more important for ordinary Argentines.
He warned voters that their widely popular social programmes were at risk if they failed to elect him, even though Milei has explicitly said that he would not end them, but that they would be reformed over a period of 15 years to ‘take out the intermediaries’.
Startlingly, Massa responded to Milei’s promise of cutting taxes with an even wilder promise: no taxes at all.
Being in power as economics minister he promptly did as he said. According to the Wall Street Journal, he eliminated the income tax for nearly everyone, got rid of a 21% sales tax on groceries for more than 16 million people, and doled out cash ‘bonuses’ (better described as bribes) for various groups, including retirees and the unemployed. He also wooed farmers by waiving export taxes for various agricultural products.
He did not match his radical tax cuts with lower government spending, as a sane observer might expect, prompting a conservative political adviser to describe him as ‘an out of control Santa Claus’.
This electioneering stratagem can only be temporary. If Massa wins the election, he’ll either have to reinstate the taxes, or face a grave fiscal deficit that would put Argentina’s ability to service its debt at risk again.
Yet Massa’s cynical ploy did hit the target.
‘Peronism is the only space that offers the possibility that the poorest of us can have basic things at our fingertips,’ 61-year-old bricklayer Carlos Gutierrez told Reuters as he went to vote on Sunday.
As South Africa heads to the polls next year, opposition parties would do well to learn lessons from Argentina’s election.
Although none are as refreshingly libertarian as Javier Milei and his party, Advance Freedom, local opposition parties all face an incumbent, nationalist, socialist and unionist party in the ANC.
The ANC will use the threat of what an opposition victory will mean for social grants to retain the loyalty of the vast numbers of poor and unemployed South Africans. It will be a lie, since a victory by an opposition coalition will likely portend greater social relief and more jobs, but it will be a powerful lie.
Likewise, the ANC can abuse its incumbency to shower voters with presents like tax cuts, without a care in the world for the consequences or the need to tighten spending to match.
Socialism has always thrived on the mistaken belief that an economy based on the principles of free enterprise serves only the rich, at the expense of the poor. This isn’t true, since a largely free-market economy benefits the poor in its own right, and is in any case not inconsistent with social welfare programmes – as many European countries demonstrate.
However, it is very easy to deceive the poor into believing that they benefit from socialism even if it ruins the economy at large, and socialists have shown again and again that they are not above promoting this lie.
Let’s hope Argentinians see the light before Massa and Milei face off in the run-off election, and let’s hope South Africans learn from Argentina.
[Image: Ilan Berkenwald, https://commons.wikimedia.org/w/index.php?curid=138627471]
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