In the second half of this electoral year policy has become more subordinated than ever to the midterms. A tension so extreme between President Javier Milei and the provincial governors that they could not even bury their differences on such an occasion of national unity as Independence Day has less to do with the issues at stake in Congress than the jockeying for electoral candidacies. Milei claims that he is defending the fiscal surplus rather than any political interest in resisting legislation releasing more funds for university spending and pensions, yet it is precisely the fiscal surplus stabilising the economy with the aid of a monetary policy giving the peso scarcity value which is giving him his electoral trump card of lower inflation – a monetary policy which is less than optimal in economic terms because the fiscal surplus carries the adverse counterpart of a balance of payments deficit topping US$5 billion in the first quarter and persistently negative Central Bank reserves.
And yet could it be that these midterms forming so much the focal point are overrated? Only half the lower house Chamber of Deputies and a third of the Senate are up for renewal and while most opinion polls are forecasting impressive libertarian gains, these will largely come at the expense of centre-right parties who were generally voting in favour of the government anyway. Instead of pinning hopes on the post-midterm Congress giving the libertarians the parliamentary clout for major structural reforms, the government should start looking at how these vital reforms can be advanced with what they have now since what they will have will not be making all that much difference.
Here they could usefully look over the border to the giant neighbour of Brazil. There the governments of both left and right have recognised that most parliamentarians are not wired to either the left or right but belong to the centrão, a hodgepodge of small parties beholden to local interests, lobbies or even for sale. While deploying a very similar anti-caste rhetoric to Milei, even Jair Bolsonaro entered into coexistence with the centrão at an early stage of his presidency. Accepting this fact of life, most Brazilian administrations (even the caretaker presidency of Michel Temer) have managed to enact major legislation, placing Brazil on an upward curve contrasting with the Argentine struggle against decline.
While the centrão can be legitimately criticised for its sordid venality and almost total lack of principle, its decisive weight (always the key to a majority when not actually the majority) has at least had the virtue of removing ideological prisms from the debate of issues and the Argentine Congress could do with more thinking out of the box. The government obsession with fiscal surplus does not permit any solution to either the universities or pensions beyond spending cuts across the board when other approaches perfectly compatible with right-of-centre thinking and also appealing to common sense could also save money – in the case of higher learning, reducing the number of universities and students (by ending unrestricted admission) while permitting fees would release funds to improve academic salaries, finance scholarships for talent from low-income families and upgrade standards in general while still being fiscally positive. Even Elon Musk now repents brandishing Milei’s chainsaw, saying that the idea should be to eliminate fraud and waste rather than cutting for its own sake. The private sector could also be encouraged to show more interest in an education which could solve their recruitment problems with curricula less geared to professional careers.
In contrast to fiscal fundamentalism, the opposition sees the problem as giving university lecturers more decent salaries and senior citizens less miserable retirement benefits but it is far from being so simple. The pension issue is increasingly looking more demographic than fiscal due to the steep decline in the birth rate (down 41 percent in the nine years since 2023), which means that Argentina could already be losing its demographic bonus by the end of the decade – i.e. the workforce will no longer outnumber those dependent on it. A higher retirement age might ease the crisis of the pension system but would also deepen the plight of youth unemployment.
The “forces of heaven” might be on the ascendancy in recent times but what politics needs is more agnostics with a pragmatic rather than dogmatic approach. Instead of polarisation squeezing out the middle ground, the latter should drop their attitudes of almost unconditional surrender and play a more assertive role as in Brazil.
Comments