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Argentina elects its own Donald Trump

Published on 29 Comments on Argentina elects its own Donald Trump

The Washington Post describes Argentina's recent past:

For only the second time in its history, Argentina has seen 10 years without economic growth. During that decade, poverty rates shot up from 28 percent to more than 40 percent. Now, for the first time ever, even formal workers in Argentina’s economy are below the poverty line. Inflation is nearing 150 percent. The peso has plummeted, prices change nearly weekly, and Argentines are forced to carry around large wads of cash just to buy groceries.

Inflation actually hit 322% in September, but who's counting, really?

If you think this spells bad news for the party in power, you'd be right. Today, lunatic insurgent candidate Javier Milei—a self-described libertarian anarcho-capitalist—won Argentina's presidential election. Here's what he plans to do:

Wielding chain saws on the campaign trail, the wild-haired Milei vowed to slash public spending in a country heavily dependent on government subsidies. He pledged to dollarize the economy, shut down the central bank and cut the number of government ministries from 18 to eight.... He has branded Pope Francis, an Argentine, an “evil” leftist. Climate change, he says, is a “socialist lie.” He would hold a referendum to undo the three-year-old law that legalized abortion.

Most of the election discourse has revolved around Milei's plan to adopt the US dollar as Argentina's national currency, but Argentina has flirted with dollarization before. In 1989, after inflation hit 5,000%, the peso was pegged to the dollar, which worked well for a while. The peg slipped a decade later and plans were made for full dollarization. But then Argentina fell into a deep depression and plans were shelved. Even the dollar peg was abandoned.

It's easy to see why Argentinians might want to outsource monetary policy to the US, but it's a loser idea. It's always going to fail eventually when the economies of the two countries get too far out of sync. In any case, Argentina has defaulted on its foreign debt three times in the past couple of decades and understandably has a hard time attracting dollars these days. This means its domestic stock of dollars is low—which might not make dollarization literally impossible but would sure make it painful and tricky.

There's also the fact that Peronists still control Congress, which presumably means that Milei won't be able to simply bulldoze his ideas into law. Big talk doesn't necessarily translate into big action. In that sense, he might be even more Trumplike than people think.

29 thoughts on “Argentina elects its own Donald Trump”

  2. Steve_OH

    For several years, Costa Rica's currency was linked to the US dollar via a "crawling peg" (https://en.wikipedia.org/wiki/Crawling_peg) that gradually devalued the colón against the dollar at a fixed rate over time. It seemed to me that that would encourage people to sell colónes and buy dollars, further weakening the colón, but it seemed to work.

    Something like that might work for Argentina.

    1. middleoftheroaddem

      Previously, Argentina used a dollar peg and, for a time, that settled down domestic inflation.

      A dollar peg, as a temporary step, has some track record/has been used by several countries as an interium step. I am not aware of a large country (versus say Vatican City) successfully using a foreign currency peg.

  4. cld

    Baffling that he hasn't gone with Bitcoin.

    The whole modern history of Argentina seems a desperate search for one wingnut utopia or another, and they always fail.

  6. dilbert dogbert

    Brazil went thru a period of hyper inflation back in the day. I read that banks gave deposit account rates matching daily inflation. The well off didn't suffer much but the poor had to spend their pay quickly.
    I had a history prof who as a young man was in Germany in hyper inflation times. He told a story of taking a suitcase to get his pay.

  7. MF

    Zimbabwe dollarized to kill hyperinflation. They were in far worse shape than Argentina, but somehow they got the dollars.

    It worked, too. Then they de-dollarized and inflation is back over 100% annually.

    1. Adam Strange

      Inflation is a wager on the future value of a country's real output. If you don't expect the country to be productive or solvent in the future, you are going to demand a lot of cash from them right now.

      1. fd

        No, inflation in Argentina isn't high because of expectations about their future real output, it's high because the government finances high government spending by printing more pesos.

  10. ProgressOne

    Amazing how important good governance is for the economic success and quality of life in a country. Look at countries like Switzerland, Germany, Norway, Japan, South Korea, the UK, the US, Canada, and France. At the other end you have countries like Venezuela, Cuba, Iran, Nigeria, Guatemala, Zimbabwe, North Korea, Nicaragua, Haiti, and Cambodia.

    Argentina is actually ranked near the middle of the pack. So you get a sense of how bad governments are in the lower half of ranked nations. Bad governance is a leading problem in the world. Bad governance brings poverty and misery. No wonder there are so many migrants wanting to escape the countries that are run so poorly.

    BTW, the good governance indexes typically don’t take into account how democratic a country is or how well human rights are respected. For example, China ranks slightly above the middle of the pack for good governance – but China certainly lacks democracy and respect for human rights. Makes you wonder how a country can be ranked fairly high for “good governance” when they are doing their best to construct a totalitarian, surveillance state. Fortunately, freedom and democracy in a country correlates strongly with whether a country has good governance.

    1. lawnorder

      You don't say who's responsible for the rankings or what their criteria are. If countries are ranked simply by economic performance, then China ranks "slightly above the middle of the pack". If there are other criteria, I would be interested to know what they are.

      1. ProgressOne

        There are quite of few of them. They seem to mostly give similar results. Below are two examples.

        The Chandler Good Government Index (CGGI) -- focuses on six dimensions of government capabilities. They are: Leadership and Foresight, Strong Institutions, Financial Stewardship, Attractive Marketplace, Global Influence and Reputation, and Helping People Rise.

        Worldwide Governance Indicators (WGI), by the World Bank, captures six key dimensions of governance: Voice & Accountability, Political Stability and Lack of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Below is link to a summay of the WGI someone created.

        https://gain-new.crc.nd.edu/ranking/readiness/governance

  15. Justin

    Oh well. It’s another timely reminder to the open border advocates. These migrants are not necessarily ever going to be good liberals. Don’t be surprised when they turn out for Republicans if you give them the right to vote. The global south loves their oppressors and have little patience for the liberal sensibilities of the American left.

  16. Adam Strange

    I was in Argentina for business back in 1978 when the Argentinian government was "disappearing" its enemies, whom they called Communists but who were mostly liberal students.
    When I was walking around Buenos Aires, I was reminded of films of Berlin in the 1930's. The grayness. The grim oppressiveness. The Nazi architecture. The inflation.
    The country had the feel of this Iron Sky video: https://www.youtube.com/watch?v=HWEPqDfNiXk
    The Argentinian government worked entirely like the Mafia, where what mattered was who you knew and what bribes you paid. If you knew the right people, you could do ANYTHING you wanted. Steal. Murder. The police were underpaid and were completely corrupt (they hijacked cars for fun and profit in their spare time), and the people running businesses had no idea what they were doing. Dealing with business people was like being in a high school play. And the military was busy with maintaining a state of terror by torturing and murdering liberals.

    So today, inflation is back, and so are the fascists. It is more evidence for the idea that every population is 40% liberal, 40% Authoritarian, and 20% who are influenced to go one way or the other, based on how safe they feel. Evidently, the 20% don't feel safe and they need an Authoritarian in power again, to bring back order.

    Why Argentina is stuck doing Hitler repeats is an interesting question. I think it has to do with the fact that the country of Argentina lends itself to cattle farming instead of small, local farms, and therefore has adopted a social model of "one fabulously rich cattle farm owner, and many, many dispossessed cattle herders."

    Income inequality leads directly to political inequality, and the welfare of the 20% in the middle is the trip wire that opens the door for the Authoritarians.

    1. dilbert dogbert

      Reminds me of a story by my brother in law, a one of the many VP's of Bank of America, who made a trip down to Argentina to look into investments. He was dining with a group of businessmen in Asuncion and asked; what after Stroessner?
      All conversations stopped and they look under the table for "bugs". I expect that not much has changed over the years.

    2. Special Newb

      His opponent was a Peronist, who have 1. Caused the current problems 2. Have no solutions 3. A policy platform of continuing to do 1.

      A considerable number of liberal students were going for Milei.

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