Author: Megan Ryan
November 6, 2024
In an El Jagüel park, Micaela Maldano unfolds a blanket to organize personal belongings. She specifically unpacks used household items intended to be traded for food. Maldano remarks, "It's getting harder and harder to eat."
Julia, a retired chef, is compelled to travel two hours to Buenos Aires to earn extra income by singing in the street. She states, "It is the common people who are suffering."
Armando Fernandez is forced to walk hundreds of kilometers, by foot, from his residence in Santa Fe to the Argentinean capital to earn a living. Regarding the government, Fernandez states, "Politicians talk a lot but do nothing."
Introduction
While these are isolated and personal stories, they demonstrate that regular Argentinians are experiencing great adversity under the incumbent leadership of Javier Milei. Milei, the President of Argentina, has attempted to reduce inflation by implementing an austerity policy. He has cut several federal programs focused on education, childcare, transportation, and much more. This has undoubtedly affected Argentinian civilians; there were an additional 300,000 unemployed workers in the first quarter of 2024 compared to the last quarter of 2023, and many individuals cannot keep up with the increasing prices of necessities. While Milei possesses firm conviction regarding his restrictive federal spending and only wishes to further this, Argentinians have suffered greatly due to such measures.
Argentina Before Milei
Argentina has been dominated by the Peronist Party and the Radical Civic Union for the majority of its independent history. The Peronist Party, alternatively known as the Justicialist Party, is a left-leaning coalition that has typically backed federal economic involvement and welfare while still pertaining to nationalism. It was founded by Juan Peron when he began governing Argentina in 1943. The military soon exiled him from the country in 1955, and the existence and practice of his ideology were promptly prohibited. However, Peron's influence on the South American country still exists today, as the Peronist Party continues to have a large presence in the Argentinian government. In comparison, the Radical Civil Union is more right-leaning and tends to prioritize the urban middle class. It was established in 1891 and opposes the Peronist party. The Radical Civil Union typically focuses on decreasing national debt and preserving human rights. Both the Peronist Party and the Radical Civil Union were the primary factions in Argentinian politics until the twenty-first century.
Following the national debt default under President Cristina Fernandez de Kirchner, regular Argentinians became incredibly frustrated with their system of government and the political factions that had existed for so long. Citizens turned to a newer faction, the Republican Proposal Party (PRO), which was far more conservative than the incumbent Peronist policies. Mauricio Macri was elected to the presidential office in 2015. Some holdout creditors who disagreed with the revised debt plan from the Kirchner administration were deprived of interest payments for their investments from the Argentinian government. The country violated pari passu, meaning that they treated bondholders unequally and were initially required to pay 1.3 billion dollars, including interest, to the holdout creditors. However, Macri was eventually able to negotiate a settlement with the creditors and resolve the issue. Because of this, Argentina experienced improved economic success and reduced inflation in 2017. However, even Macri could not salvage the Argentinian economy, and the government was compelled to request a loan of $57 billion from the International Monetary Fund.
Following this, the Peronist Alberto Fernandez was elected into office. Argentinians wished to return to liberalism to restore their nation's welfare and saw Fernandez as their best opportunity. Fernandez faced a herculean task, as he was responsible for cleaning up the Argentinian economy while confronting the COVID-19 pandemic. As a result, inflation and poverty became rampant throughout the country. The annual inflation rate was 211.14% by late 2023, and two-fifths of the citizens were impoverished during the same period. Argentineans once again desired change, and this change came with an unorthodox and precarious candidate.
Milei's Vision for Argentina
Javier Milei is associated with the Libertarian Party, a partisan coalition created in 2018. This political faction advocated for an unregulated market separate from government intervention. The current president has quite a unique temperament and is often compared with Donald Trump and Jair Bolsonaro. He was formerly an economist on a TV program and was labeled "El Loco" for his regularly occurring tantrums. Following an initial runoff election, Milei won 56% of the vote and commenced his executive duties in late 2023. Milei disparaged the corrupt nature of elites and took advantage of the desolate Argentinean conditions throughout his campaign to assure political victory.
In his bid for the presidency, Milei notably presented an austerity plan of "shock therapy" to remedy the weak economy. With "shock therapy," Milei intended to terminate 70,000 government jobs and devalue the peso by 50%, significantly reducing federal spending. Milei delivered on these promises and has implemented many measures that drastically differ from the economic policies of Argentina's past. He froze pensions and salaries, raised import taxes, concluded public projects, and substantially decreased energy and transportation subsidies. As a result, the inflation rate was now a shell of its former self. Monthly inflation decreased from 26% in December 2023 to about 4% in June 2024. However, the vast improvements represented by these statistics do not necessarily reflect the average Argentinian’s prosperity.
While the President has successfully reduced inflation rates through his tenure thus far, this has been accomplished through contested policies. Austerity, which includes harsh cuts to federal spending, is typically enacted to reduce the monetary deficit of a nation. It is generally believed that strict federal spending measures may not be the most effective when a nation is affected by an already poisoned economy. As said in "Does Austerity Work? Or Does It Make Things Worse?" from Knowledge at Wharton, "...many economists point out that while austerity might be the right prescription when an economy has been growing too fast and overheating with inflation, it does not make sense to cut spending when an economy is already in a tailspin." Restricting too much too soon might also pose devastating consequences to a nation that imposes austerity. While the efficacy of austerity is debated amongst economists, what cannot be debated is the severe suffering it can cause in drastic situations.
How Regular Argentinians Experience Austerity
While Milei has accomplished his goal of reducing inflation, that has yet to improve the lives of Argentinian civilians. In fact, constituents of this South American country are encountering greater difficulties than they previously faced.
Austerity restricts the economy, which makes the living conditions for civilians very strenuous. This has certainly been felt in Argentina, where their implementation resulted in mass layoffs and the extermination of various social welfare programs. For instance, Julia cannot survive on her existing monthly pension, the equivalent of $190 US dollars, which has been drastically decreased. Thus, she must commute to the capital to supplement her income. The aggressive manner in which Milei has cut government spending spiraled the economy into a recession. The purchasing power of constituents has decreased by 20.7%, the costs of necessities have increased, and UNICEF even warned that if conditions in Argentina did not improve, child poverty would expand dramatically. The poverty rate has increased to about 53% (the highest rate in more than 20 years), while 3.4 million civilians are impoverished. Kirsten Sehnbruch, a Policy Fellow at the International Institute at the London School of Economics and Political Science, stated, "This new economic programme is not protecting the poor…the jump is absolutely horrendous." In addition, the unemployment rate has increased, and many Argentinians cannot keep up with the increasing prices of necessities. Micaela Maldano currently lives in an apartment with her partner, whose salary she primarily relies upon for living expenses. She remarked, “There are tons of people who are hungry,” and referred to meat as a “distant memory.” Unemployment jumped from 5.7% in the last quarter of 2023 to 7.7% in the first quarter of 2024.
Normal Argentinians are finding a stable livelihood to be an unfeasible endeavor. In June, supermarket sales decreased by 10%, and energy bills from middle-class homes increased by 155%. In a Buenos Aires square positioned near the residence of the president, Solidarity Network provides hungry Argentinians with free meals. As quoted by Pilar Cristiansen, a volunteer at this soup kitchen, "We are serving more and more people every night…There are more and more people who cannot afford to buy food." Armando Fernandez is one such citizen, as he is forced to sweep the sidewalks of Buenos Aires for any pay that business owners offer him. He states, “I survive thanks to these soup kitchens, these people who offer me a bit of food.” If Milei does not prioritize the basic needs of Argentinians soon, the horrible conditions described will only progress further. Similarly, María Claudia Albornoz, a community worker in Santa Fe, stated, "We are feeling it in the fridge, empty and unplugged. Money is really worth absolutely nothing. We have three jobs and it is not enough." If Milei does not prioritize the basic needs of Argentinians soon, the horrible conditions described will only progress further.
The Future of Milei
It can be argued that Milei's changes have not demonstrated the necessary success to warrant the resulting suffering. The president has stated, "We know that in the short term the situation will worsen. But then we will see the fruits of our efforts." However, one must ask: how much of a step back must Argentineans take to experience any prosperity? Argentina's economy contracted 1.7% in the second quarter of 2024, and the GDP also decreased 1.7%. While the agriculture and fishing industries experienced stimulation expansion, several other sectors, including construction, manufacturing, and retail, saw an inverse decline.
The regressing economy is paramount in the minds of Argentinians, and public opinion has recently been increasingly critical of Milei. Surprisingly, he has remained quite popular with voters despite the economic adversities that plague the South American country. However, approval for Milei dropped 15% in September, which is the greatest reduction in popularity that the president has experienced during his term. In a survey conducted by Consultancy Proyeccion, only 44.8% of voters demonstrated positive perspectives with the incumbent executive, while 50.7% expressed negative opinions.
Before Milei took office, over 100 economists warned, in an open letter, of the possible devastating consequences of the president's untraditional methods, claiming that Milei's initial policies were "…fraught with risks that make them potentially very harmful for the Argentine economy and the Argentine people." While Milei has not delivered on some of the more extreme policies that experts were most critical of, his general philosophy has played out as economists predicted.
Milei recently presented a 2025 budget to Congress, in which he promises "zero deficit" and deflating currency from its present form of 1,207 pesos per dollar to 960. Despite this, it remains to be seen if that will significantly improve the lives of the Argentinian people and if Milei's continued austerity will improve the devastating conditions that Micaela Maldano, Julia, and Armando Fernandez have to endure.
Glossary
Adversity: Adversity is a state of difficulty or misfortune that someone can experience.
Alberto Fernandez: He is a Peronist president elected in 2019 who grappled with Argentinean inflation and the revolutionary COVID-19 pandemic. He was initially slow to respond to the global health crisis but ultimately enacted an incredibly strict lockdown of the country, which became one of the longest-lasting COVID-19 shutdowns worldwide.
Austerity Policy: Austerity policy is the act of reducing federal spending to attempt to improve the national debt. This can be executed through increases and taxes or the slashing of government programs. Austerity Policy is evident throughout many global governments, most notably England and Greece, to varying degrees of success.
Coalition: A Coalition is a temporary alliance of states, parties, or individuals for a shared goal.
Constituents: Constituents belong to a group of citizens that are able to elect a representative.
Disparaged: This occurs when someone is described as having very minimal worth.
Deficit: A deficit is when the money spent is greater than the money earned or received.
Desolate: An individual is desolate when they are absent of joy.
Election: An election is a democratic process where the leader or President is chosen by the votes of the citizens native to that country.
Faction: A faction is a small group of individuals that exists within a larger group or organization.
Gross Domestic Product (GDP): Gross domestic product is the numerical calculation of the amount of goods produced within a certain nation over a set period. It essentially estimates the welfare and stability of the corresponding country.
Ideology: Ideology is a set of ideas and beliefs that an individual subscribes to.
Incumbent: The incumbent is the political official or party who is currently in office.
Inflation: Inflation accounts for the amount that goods or products increase over a certain period.
Impoverished: A person is determined to be impoverished when they are either extremely poor or very ill.
Inverse: Inverse is the opposite of another thing or idea.
Javier Milei: Javier Milei is a former economist who is now the President of Argentina. He is a member of the Libertarian Party and has implemented a harsh plan of reduced federal spending to ease Argentinian inflation.
Liberalism: Liberalism is a political ideology that is often associated with Democratic ideals. It centers around individual rights and liberties, specifically highlighting the personal freedoms of citizens.
Libertarian Party: The Libertarian Party was a political party created in 2018. It mostly centers around an unregulated market and an absence of federal welfare. While Milei currently represents the Libertarian Party as president, the coalition does not have much representation through Congress.
Mauricio Macri: Mauricio Macri was elected president in 2015 and brought a new conservative faction, the Republican Proposal Party, into Argentinean politics. The beginning of his term saw great success as he resolved the debt restructuring that had lingered from Kirchner’s tenure.
Nationalism: Nationalism is the practice of supporting the interests of one particular nation and neglecting the interests of other nations.
Partisan: A partisan individual or corporation is one that has a strong affinity for a political party.
Peso: The peso is the currency of several Central and South American countries, including Argentina.
Precarious: A precarious situation is uncertain and likely to collapse.
President Cristina Fernandez de Kirchner: She is a Peronist President elected to office in 2010. She was initially able to restructure the Argentinean national debt, which led to greater prosperity. However, as a result of inequities to creditors in the debt restructuring deal, Argentina fell into default during her term.
Prosperity: Prosperity is a state of immense success and affluence.
Purchasing Power: Purchasing power is the amount of goods or products money can buy.
Rampant: Something that is rampant spreads or develops quickly like a disease.
Recession: A recession occurs when a country has experienced a decrease in GDP for two quarters (six months).
Republican Proposal Party (PRO): This political faction was founded in 2003 by Mauricio Macri and became more established in the congressional elections of 2005. The Republican Proposal Party is far more conservative than its predecessors and supports free market and harsh crime policies.
Runoff Election: A runoff election occurs when a second election must be performed because the first did not receive enough votes for a presidential winner to be determined. In Argentina specifically, a candidate either requires 45% of the vote or 40% with a 10% lead over their competitor.
Subsidies: Subsidies are money provided by the government to a specific industry or corporation.
Tantrums: A tantrum is an uncontrolled instance of anger.
Temperament: Temperament is an individual's attitude or disposition.
Unemployment Rate: The unemployment rate is the calculation of the amount of individuals who are currently jobless in the workforce.
Unfeasible: Something that is unfeasible is impractical or difficult to execute.
Unorthodox: An unorthodox idea or thing is nontraditional and atypical.
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