By: Eman Fatima & others
The win of Javier Milei has broken the shackles of ideologies that stem from Peronism, the cornerstone of Argentina’s political history. Combining capitalism and socialism in a very Argentinian way, Peronism finds its roots in the populist vision of Juan Perón, a pivotal figure in the nation’s politics. During his tenure as Secretary of labor (1943-1945), he became famous for his support of labor unions and workers’ rights. He eventually was elected President in 1946, his presidency witnessed sweeping nationalizations, an expansion of social welfare programs, and a remarkable surge in the worker’s share of the national income.
Central to this ideology is its appeal to the working class and heavy government intervention in the economy. While his policies garnered widespread popularity, through hiring exceptional amounts of employees for the government, beneath this popularity loomed a darker aspect—Perón’s regime inclined towards authoritarian tactics, corroding institutions, and challenging the country’s economic stability. This dual nature of Peronism shaped Argentina’s trajectory and left it a victim of inflated expectations, deferred obligations, and the conviction that they were “too big to fail”.
Following Juan Perón’s rise to power, populist-style income, wealth redistribution policies, and further erosion of the system of checks and balances proved detrimental to Argentina’s institutional development and its path of long-run growth, thereby condemning Argentina to decades of stagnant productivity and poor economic growth.
The country’s economic deterioration reflects how the Argentinian governments – one after the other- kept spending significantly more than what the budget could sustain. Thus, it was described in all financial circles as a chronic alcoholic; once it starts deficit spending, it keeps on going until it reaches the economic equivalent of falling drunk. This already started with Peron’s government, when workers were coerced into formal labor as Peronist Unions had social welfare policies in place for people under their employment, leading to the current situation of today, where 20 million out of 36 million Argentinians receive some sort of transfer or payment from the state. This led to the downfall of Argentina from being among the world’s 10th wealthiest states per capita to defaulting on its debt nine times.
Is Milei a real revolution?
Amidst all this chaos Javier Milei – an eccentric economist who rose to fame for both his uncanny resemblance to Wolverine as well as his blatant rejection of Peronism- is ready to “end Argentina’s decay”.
Milei has gained popularity thanks to his groundbreaking reforms that could potentially transform the future of the country, which has been in a state of constant crisis for an entire generation. The crisis has worsened this year, with the inflation rate reaching the mark of 150%, a weakening currency, and a growing poverty rate, the youth has increasingly shown support for Milei and his Liberty Advances coalition. His social media campaign has been greatly facilitated by his colorful personality and quotes. He has appeared in numerous campaign events, holding a chainsaw as a symbol of the fiscal adjustments he plans to implement, or carrying a giant $100 bill with his face on it to promote his proposal of dollarizing the economy.
With similar anti-establishment rhetoric as Donald Trump, Milei plans to build a limited government, – eliminate 10 out of 18 key ministries-, liberalize the economy, and eliminate trade restrictions. To do so, his shock therapy includes the abolishment of the Central Bank of Argentina and the replacement of the Argentinian peso with the US dollar, just like Ecuador and El Salvador did. Expectations are on the rise and the need for a change has driven the traditional moderate Argentinian society to the arms of a populist that is willing to make tectonic changes in the Argentinian economy. While the rest of the world is struggling with sluggish growth and ever-increasing inflation rates, the Argentinians are ready for a wild ride. They and their neighbors will need to keep their seatbelts on as the spillover effects will bring the continent to the spotlight.
The article is co-authored by Muhammad Saad Waheed Abbasi and Zainab Murtaza Ali.