Some weeks ago Mauricio Macri arrived at the White House to meet with Donald Trump for the first time since he was elected president of the United States. North Korea, lemon embargos, and some jokes about their past relationship were the main topics of the apparent amiable meeting. However, Trump was not the first US president to receive Macri with open arm. Last year, President Barack Obama also built the foundations of a close relationship with the current President of Argentina. Both meetings exhibited a measured and prepared leader, distinct from the previous ones.
However, this is not simple about being presidential. It’s deeper. Argentina’s entire political culture is changing, and the grassroots movement of this change rest in a new type of model, one that appears more neutral and smarter. A model able to combine measures like public expenditure reduction, disability of currency controls, or low taxes for international trade with strong packages of social benefits and aspirations for reaching zero poverty indexes. Within mixture, the party found the perfect balance to leverage classical market advantages without missing the essential values of State redistribution. A Latin American president (believe it or not) is proving that sometimes expanding the market doesn’t necessarily mean rolling back the State.
This style allowed him not only to recover diplomatic ties with the United States but also win the presidential race in 2015. By then, Marcos Peña, Macri’s current Chief of Staff and former campaign director realized that the fracture between the State and the market is determined by ideological constraints and took advantage of that.
In Argentina, an invasive State in economic terms is always linked to leftist ideologies. A left that does not sit well with a big part of society, considering the recent populist style of the ex-President Cristina Kirchner. A president that, by the way, left the country with almost thirty per cent of structural poverty.
However, the absence of the State in economic terms is not a good sign for people either. Especially if we look back on the social vacuum these policies left in the 90´s. During this decade neoliberal public officials promoted self-interest market measures, which ended supporting minorities and triggering inequality to unbelievable levels. Thus, despite the ability of the State to go beyond its limits, its absence is not the solution either, especially for the populations in need.
Now, if we consider the political landscape, we must take note that the country has suffered through its short history, six military de facto interruptions to democracy. So as the ghost of authoritarianism could easily reappear; an heavy handed State is not an option, not even for people with conservative leanings.
Finally, the total absence of the State, in political terms, only represents the flag for reactionary movements with radical and infeasible ideas. These anti-system activists, who blame government officials for almost everything, don’t even reach the threshold to become competitive in the electoral arena. So considering going in that direction is not only dangerous but also senseless.
Thereby, as both extremes look toxic, in economic and political terms, a great move by Peña was to draw the president image away from the corners, pushing him to the middle. A healthy middle. With this strategy, Macri attracted lower classes tired of populist deceits, middle sectors tired of vertical measures, and rich tired of economic barriers. The slogan campaign “Cambiemos”, meaning “let’s change”, seems to sound more like a “let´s be different.” It looks Macri understood the past but seems to have learned from it.
The other face of the region with cases like Venezuela, Bolivia or Ecuador seems to go in the opposite direction; still believing in reducing economic problems through suffocating state actions, ending in high inflation rates, coming from excessive public expenditures, or trade deficit and currency depreciation. However, despite structural indexes that are not helping them, (nor even social or economic statistics show any type of growth) they are sure of their pseudo-democratic model of making public policy.
So we are inevitably tempted to ask ourselves: If radical measures are failing, is today’s Argentine economic model a way out to the Latin American crisis? The answer is yes. We have proof of this success if we take some benchmarking across the ocean.
Northwestern European countries, for example, offer a model with many similarities. First, opening doors to private sector becoming competitive in international markets, and at the same time deploying efficient State intervention policies. Policies that end inefficient public goods which easily accomplish their non-exclusively and non-competitively condition.
For example, the famous Swedish model is a good case to show how a combined strategy can find the balance between the successes of the private sector and attend at the same time to social needs. We can prove this with brilliant stats, like one percent inflation or less than seven percent unemployment.
This is not a message that Latin America political style must be exactly like Sweden or Norway, its social heterogeneity, resources, and culture, would hardly allow that, but sometimes this comparative strategy can help to improve policies and, most of all, influence decision-makers.
For this type of structural change, citizens need to understand that without their collaboration this is almost impossible. We cannot expect an improvement in the public good without making contributions and that’s a basic principle of the State redistribution performance. Though the public should be segmented and those who are not able to pay must be helped with benefits and discounts, the mentality of “let´s pay the least while we can” must be changed.
Productivity in the private sector can generate incomes and positive externalities like job offers, or accumulation of reserves facilitating currency emission, (this same applies for loans reception) but efficiency in the public sector is impossible without the contribution of the people.
However, the strong disbelief of Argentines about how public officials manage money is justified if we revise the quality of services in the region; although, the country is starting to tackle these mismanagements by remaking the entire political system. The punishment for corruption, nepotism and other political contaminants, are becoming strong axioms in Mauricio Macri’s style, and this could be a cornerstone to gain people’s confidence again. Maybe its neutrality is the solution for many years of power abuse.