What is a poor person? Well, poor is someone whose income does not allow them to be rich or, at least, to be part of the most common and majority group of the population in terms of income. In other words, poor is someone who receives regular income of money that is below a certain percentage in relation to the average of society.
What percentage are we talking about? 20%? 30%? 50%? Well, that, like so many things in this life, ultimately depends on an arbitrary decision adopted by the technical bureaucracy of some state administrative body.
Poor, therefore, turns out to be the one who the State, based on some conventional statistical criterion and created by himself, he decides that he is poor. I suppose the reader is already wondering why this strange introduction is about a column with content that seems political. But, as strange as it may seem, it is relevant.
And without this prologue, let’s say methodological, there would be no other way to understand how the president of Argentina, Javier Milei, was able to carry out over the last twelve months the greatest known miracle of economic science since Adam Smith created that academic discipline in 1776, the year of publication of The Wealth of Nations.
That amazing prodigy has been none other than lifting twelve million Argentines out of poverty, all of this in the context of the strict application of a budget program based on extreme austerity and characterized by massive and simultaneous cuts in both public and private spending. Since the miracle of the loaves and fishes, nothing like it had been seen.
Argentina, its economy, is collapsing
But let’s get back to the question. How could Milei achieve it? The truth is that the matter does not contain much mystery; It has simply happened that the income of the middle class, the social group of those who always have something to lose, has shrunk during the period much more than the income of the needy, which has shortened the distance that existed between them, always in relative terms; That is, the impoverishment of the Argentine middle classes, combined with the magic of official statistical indicators, is what explains the implausible portent of the twelve million.
Argentina, its economy, is collapsing. Something that usually happens with millimetric mathematical periodicity every seven years and for which, to be fair, the great winner of last Sunday, Milei, cannot be blamed, if only because such recurring collapses were already happening in the country before he was even born.
This being the case, nothing would be turning out substantially different, perhaps with some less cruel nuances in the cruelty with the income of pensioners or the mutilation of subsidies for the disabled and chronically ill, in the event that the Kirchnerists had been in charge of doing the dirty budgetary work of the adjustment.
Otherwise, those $20 billion at Trump’s compound interestthe rescue of the peso at the last minute that Scott Bessent devised, will not be able to prevent the well-known Bankrupt Groundhog Day script from being repeated for the umpteenth time in Buenos Aires. And the daily drama of today’s euphoric Milei turns out to be exactly the same as that experienced by many other Argentine presidents, and of all political colors, in the Casa Rosada.
Because the sequence of events is also always the same. First, a hyperinflationary outbreak is about stopping it in its tracks through a budget austerity plan that collapses demand and generates recession. At the same time, an artificial and overvalued exchange rate of the peso against the dollar is forced.
Argentina is condemned to having to choose between permanent hyperinflation and the definitive dismantling of most of its national industry.
This is necessary so that imports remain cheap and do not trigger the same inflation that they want to combat. But the new peso, so artificially expensive, destroys exports.
And if there are no exports, no dollars enter. And if dollars do not come in, the foreign debt cannot be paid. And then you have to request another loan in dollars to pay those previous dollars that are still owed. And then the dollar debt increases even more. And the snowball keeps growing and growing.
Until everything collapses, there is an explosion of popular anger in the streets, the current president is deposed (something that in all probability would already be about to happen within hours if Trump had not taken the step of becoming Argentina’s lender of last resort, a role that not even the IMF wants to play) and start all over again. It is the eternal history of Argentina.
The profound tragedy of that country, which neither the liberals nor the Peronists understand, is that Argentina is condemned to having to choose between permanent hyperinflation and the definitive dismantling of most of its national industry; a terrible dilemma that admits of no other alternative solution.
No one should be fooled, what happened on Sunday did not represent an overwhelming victory for Milei, but rather a failure – overwhelming and historic – for the Peronists, the other leg of the Argentine political establishment until now. As an alternative government, Peronism, The oldest populist movement in Latin America has just crashed and is now on its way to extinction.
But nothing guarantees that what comes to fill the gap left vacant by the specter of Lieutenant General Perón will be better. Although not necessarily military, some Hugo Chávez with a Buenos Aires accent may already be on the way.
*** José García Domínguez is an economist.
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