May 23, 2013
Back to the future?
Of course, Argentine Industrial Union (UIA) president José Ignacio de Mendiguren’s controversial comparison between the outlook for this year and the 1975 Rodrigazo is open to question — in fact, the situation is both better and worse. It is better because the polarized politics and increasingly aggressive rhetoric of these days cannot possibly be equated with the guerrilla strife and military coup-mongering plaguing the Isabel Perón presidency (political violence claimed 860 lives in 1975) — Mendiguren’s comparison is all the less fortunate because the Rodrigazo formed part of the prelude to the 1976 coup. But it is also worse because back in 1975, socio-economic tension took the relatively simple form of a wage-price race — today an income tax floor remaining stubbornly static during 21 months of inflation causes wage increases to fall into a tax trap, while adding to the labour costs of an ever less competitive industry so that everybody (with the exception of an increasingly insolvent state) loses in a way which was not happening in 1975, making pay conflicts more insoluble than before.
While the situation is thus both better and worse than in 1975, the comparison is also valid in some very basic aspects. In both cases a Peronist government seems on a collision course with its trade union “spine.” In 1975 the Rodrigazo (a maxi-devaluation and steep utility rate increases by the new economy minister Celestino Rodrigo which sent prices soaring) provoked a CGT general strike against the Isabel Perón government in the very same month (July) — today, quite apart from the deeply personal rift between President Cristina Fernández de Kirchner and dissident CGT leader Hugo Moyano, both the pro-government and hostile factions of both the CGT and CTA trade union groupings are united in an insistence on raising the income tax floor almost as a condition before starting collective wage bargaining. There is also common ground between then and now in the general confusion of economic policy, even if in different forms. Four decades ago economic policy lurched from one extreme to the other (from the rigid price controls of José Ber Gelbard through the monetarism of Alfredo Gómez Morales to the Rodrigazo with the aim of a more “sincere” economy) — today there seems to be no policy beyond printing money to meet politically driven fiscal needs.
Mendiguren was doubtless exaggerating when he floated a return to 1975 — it would be truer to say that we are plunging towards a new uncertainty.