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Worldview: The perils of austerity in Argentina

Posted by On October 29, 2018


Worldview: The perils of austerity in Argentina

Once again, Argentina finds itself in the midst of an economic crisis, and in order to counteract it, the incumbent right-center government has decided to follow the same path of its predecessors: austerity measures. These measures, which include increasing export taxes on grains, decreasing the number of government ministries and a slew of other budget cuts, are being enacted in tandem with a $56 billion loan package from the International Monetary Fund. The intent behind these measures is to halt the rapid decline of the value of Argentina’s currency, the peso, which has lost around 50 percent of its value against the dollar this year alone, and slow down the alarming rate of inflation.

Austerity is never a popular policy. However, in Argentina, the frequency of its enactment has incensed the population. The sentiment is easy to comprehend: why should Argentinians be forced to endure budget cuts and belt-tightening three times in two decades? Indeed, austerity is intended to be an emergency policy designed to ameliorate extraordinary crises.

The failure of IMF-induced austerity measures at the turn of the century has turned many in the country into skeptics about the latest loan package. A survey of over 1,000 Argentinians in May revealed that 75 percent of respondents felt that IMF assistance was problematic. Therefore, the cooperation between President Mauricio Macri’s government and the IMF has led to wide-scale protests in Buenos Aires. The feeling is that Macri’s government has become unresponsive to the wishes of the people.

Romina del Pla, a teacher from Buenos Aires, illustrated this sentiment, saying that “for the government the priority is to defend bankers and multinational companies, not people like us,” according to an Al Jazeera article.

This is the type of environment where populism tends to thrive, and with an election looming in 2019, Argentinians will get a chance to demonstrate their discontent with Macri’s government. With the rise of the right-wing populist Jair Bolsonaro in neighboring Brazil, one would be remiss not to fear a similar phenomenon in Argentina.

This is not to say that Macri’s government is pursuing the correct policy, however. After all, if similar measures have been enacted in the past without success, intuition dictates that perhaps austerity is not the solution to Argentina’s long-standing economic crisis. The predominance of neoliberal ideology has quelled suggestions of alternative methods of economic crisis management. Hernan Reyna from the University of Buenos Aires and Andrés Ferrari Haines from the Federal University of Rio Grande do Norte articulated this point thusly: “Domestic neoliberalism and the IMF have joined hands to sell the ‘There’s No Alternative’ theory … Any alternative course, such as progressive taxation, fiscal incentives to boost production and employment or control of international capital flows, have been promptly dismissed.”

This is a shame because the austerity measures scheduled to be enacted by Macri’s government could have serious repercussions on society in more ways than one. Of the eight ministries eliminated in the recent wave of legislation, the dismantling of the Ministry of Science, Technology and Productive Innovation (which is being incorporated into the Ministry of Education) is considered to be one of the most egregious wrongdoings by Macri’s government.

This demotion, combined with plans to cut research budgets in 2019 and the fact that the government is behind on its financial commitments to research institutes this year, has created a fear that the entire field is on the verge of a catastrophe. Alberto Kornblihtt, the head of the Institute of Physiology, Molecular Biology, and Neurosciences of the National Scientific and Technical Research Council, noted ominously that “the science and technology system of Argentina is collapsing.”

Moreover, there is concern that austerity measures will disproportionately affect Argentine women. According to a report conducted by Argentina’s Center for Political Economy, the near 30 percent increase in poverty during the first half of 2018 had a disproportionate effect on women â€" 60 percent of impoverished households with minors are single-mother homes. The plans to cut welfare spending will therefore be sure to have a direct effect on these households.

Macri’s regime surely feels that it has no other choice but to enact these austerity measures, yet the short-term and long-term ramifications of such policies ought to be considered. Immediate increases in poverty and general suffering may force disenfranchised groups, such as single mothers or scientists, to political extremes. Macri insisted in a televised speech that “This is not just another crisis. It has to be the last.” But the inability of the incumbent regime to pursue any policy beside austerity may come back to haunt Argentina come election time in 2019.

Source: Google News Argentina | Netizen 24 Argentina


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