December 5, 2013
Once again... it’s the economy
Last weekend’s primaries and the 2009 midterm elections have as a common denominator being low points in Kirchnerite political fortunes but many factors in the two adverse results differ, not least the economic context. If the 2009 defeat is often seen as a sequel to an unsuccessful confrontation with the farming sector, its importance has been perhaps overrated — more decisive was that 2009 was by common consent (except for INDEC statistics bureau) a year of negative growth amid the bleakest of global outlooks in a crisis-stricken world. By way of contrast, this year’s voting has followed a quarter of sturdy growth — here INDEC merely exaggerates, not contradicts, what everybody else is saying. So why an even worse result for the government in an economically superior year?
At least three explanations spring to mind. Firstly, to complete the paradox, some of the most adverse results came from the more economically dynamic parts of the country, not the stragglers — the most fertile farmlands, the mining provinces and Neuquén with all its vast shale potential. Here the government seems to have been punished for its virtues and vices alike — a victim of the “problems of success” and rising middle-class expectations after a decade of growth somewhat like neighbouring Brazil with the June riots but also feeding a sense of frustration in the most productive sectors over erratic ground rules, a rising tax burden, the currency and import curbs, etc. Secondly, while the recent growth is universally recognized, there is skepticism as to its sustainability — it is widely seen as standing on the three legs of the auto industry (86 percent of whose production is exported to a faltering Brazilian market), a recent bumper harvest and pre-electoral public spending. Thirdly, after three years of expanding money supply at or near an annual pace of 40 percent, growth and the consumer market have long been outstripped by an inflation which erodes such concrete benefits as the recently announced pension increase or the income tax exemption of the midyear bonus.
No after-the match inquest of the August 11 primary defeat will be valid without including its economic causes. Sooner or later (i.e. after 2015) Kirchnerism will have to come to grips with such problems as inflation and the exchange rate policies crippling various economic sectors. Even a willingness to talk about these problems could do wonders in bringing back some of the lost voters come the real midterm elections in October so why not sooner rather than later?