The recent outcome of the 1st round in the elections in Argentina, will send Sergio Massa and Javier Milei into the 2nd runoff round. Javier Milei a Libertarian recently entering the political arena as an outsider, will compete for the presidency with Sergio Massa, the current Minister of Economics, running for the incumbent and rebranded Peronist party.
In this article, we will delve into why Milei’s disruptive approach into Argentina’s politics unintentionally rejuvenated the status quo he seeks to combat and will examine the broader dynamics of Argentine politics
Patricia Bullrich who was the third in dispute after the primary elections and was representing “Juntos por el Cambio” after contesting with Horacio Larreta was short in votes to continue the race. She was representing the party founded by former president, Mauricio Macri, which has been the voice of the opposition and is formed by a coalition of different political sectors with significant discrepancy on their ideological views, but with a clear position against the traditional Peronist party and strong defence of political institutions and respect for the rule of law.
Milei, a 52-year-old congressman, a new contestant in the political arena has struck a chord with this generation through his viral TikTok diatribes against the “political elite” and his fervent advocacy for free-market principles. His bold demeanor, eccentric remarks, and unkempt appearance have attracted millions of viewers and disrupted conventional politics. Unafraid to court controversy, he offers a departure from the status quo by advocating for the shutdown of the central bank, the dollarization of the economy, and substantial cuts to government spending.
His journey to political prominence was unconventional, having previously served as a goalkeeper for the Chacarita Juniors soccer team and even assuming the role of Mick Jagger in a Rolling Stones tribute band. Inspired by Argentina’s hyperinflation crisis in 1989, he transitioned to economics, eventually gaining traction through his appearances on television shows, where his unorthodox ideas and style found a receptive audience amid economic turmoil.
He was elected to Congress in 2021 with a pledge to dismantle the political elite, describing himself as a proponent of minimal government intervention. He made promises to slash the number of federal ministries and championed deregulation in various sectors, including proposing the relaxation of gun laws. Milei’s authenticity seems to resonate profoundly with the youth, and offers an avenue for Gen Z voters to express their rebellion against a system they feel has done little for them.
For decades, Argentine elections have revolved around the power struggle between the Peronist party and the Opposition. Despite their apparent differences, these two factions mainly vied for control of the government and the associated benefits. Throughout the years, Argentina has witnessed a consistent trend: government spending relentlessly expanding. This expansion has encompassed welfare programs, news organizations, public institutions, infrastructure projects, and various avenues for politicians to enrich themselves. Consequently, the government’s size ballooned faster than the country’s GDP, placing immense pressure on the private sector.
As government reserves dwindled, Argentina sought loans from international institutions, notably the IMF, with Alex Gladstein pointing out the adverse long-term consequences. Moreover, the government resorted to Money printing, effectively taxing citizens’ savings through rampant inflation.
To finance their ever-increasing expenses, the government introduced a barrage of never-ending regulations, taxes, and controls. Cumbersome regulations for opening businesses and a complex tax system have made it nearly impossible for small enterprises to thrive, creating fertile ground for corruption.
A case in point is the convoluted importation process in Argentina. Due to a shortage of USD reserves, a permit-based import system known as SIRA was established. With a stark disparity between “The official” and “The Blue” USD exchange rates, this system has bred a sophisticated web of kickbacks, no-look fees, and political protection. Unfortunately, it is the ordinary citizens who bear the brunt, as they are forced to overpay for goods and services due to the absence of competitive market forces.
The Universal Basic Income (UBI) system, intended to alleviate poverty, traps individuals within the system. High poverty rates, lack of access to quality education for the poor, and soaring inflation pressures force people to live hand-to-mouth and allow Politicians, Social and Religious leaders to exploit this predicament, demanding loyalty in exchange for UBI benefits.
Argentinians, however, have demonstrated remarkable resilience. The country boasts a vibrant informal economy where individuals endeavour to shield themselves from government overreach. Yet, the opposition has consistently advocated for tighter budget control and more institutional governance, often triggering public backlash when subsidies are reduced. Consequently, populist ideas have resurfaced each time austerity measures are implemented.
Both major political factions in Argentina share a pro-statism perspective, emphasising the state’s dominant role in controlling and regulating every aspect of society. Money issuance and control are deemed essential components of the nation’s values.
Javier Milei disrupted this stalemate by steering the debate towards individual freedom and respect for private property. This marked a significant departure from the populist and socialist ideologies that had dominated Argentina for nearly eight decades.
Javier Milei, a vocal advocate for economic freedom, has put forth audacious proposals that challenge the established norms. He advocates for closing the central bank, allowing freedom of choice in money, and professes support for cryptocurrencies like Bitcoin. His ideas signal a radical departure from the conventional, interventionist policies that have long dominated Argentina’s economic landscape.
As the Argentine economy faces dire circumstances, as clearly described in the latest film by Peter McCormack, people are finding innovative ways to shield themselves from its fallout. The affluent and sophisticated classes are diversifying their assets by investing in equities, real estate, and international hedges. Meanwhile, many ordinary middle-class citizens are turning to time-tested methods, such as hoarding dollars under their mattresses. Unfortunately, there is a significant portion of society that have no disposable income to save and who have no access to the banking system.
Argentina is among the leading countries on Bitcoin and Crypto adoption and that is for a reason. The rise of cryptocurrencies, especially Bitcoin, is transforming the financial landscape since they offer an accessible and decentralized means of hedging against the peso’s volatility and maintain their savings beyond the government reach. Many still fear the government and banking system appropriating their savings like it happened in 2001. Bitcoin and stablecoins like USDT (Tether) have democratized the opportunity for individuals to protect their wealth, offering a refuge from the ravages of inflation and economic uncertainty.
By proposing radical changes and openly challenging the status quo he Ironically revived it. Those who profited from the prevailing system, be they staunch supporters of state intervention or beneficiaries of its largesse, rallied behind Sergio Massa, who emerged as the candidate who would safeguard their interests.
Massa has an unparalleled drive for power and has transitioned through all political parties without any remorse to partner with those he criticised before. He was very courageous to take the Ministry of economics role in the current administration as a gateway for his candidacy. He was not shy of using the money printer at his disposal to flood the country with heaps of money that have eroded the value of the Peso driving Argentina into the worst inflation crisis in decades. But as FIAT minded people have high time preference and short time horizons, he used this in his favor and coupled this with instilling fear of the pain that the changes Milei is proposing will cause.
Argentina has now a golden opportunity in the upcoming election for those who believe there is an alternative path and a return to the Argentina of the early 1900s, characterized by economic prominence. This is the time, there is hope.
Sixty-five percent of the voters expressed a desire for change. There is a charismatic leader in the runoff challenging the incumbent system and a huge audience in the electorate looking for an option to believe that the change is possible. Yet the fear of change is palpable and achieving this change will require a collective effort from a diverse group of political leaders who must set aside their egos and seek common ground. Figures like Milei, Macri, Bullrich, and Schiaretti must step forward. Failure to do so could accelerate Argentina’s descent down the slippery slope toward a socialist, corruption-fuelled path, akin to that of Venezuela.
Argentina’s future can be bright. With greater economic freedom for the individual, clear rules and regulations, and an open market for money and the economy, Argentina has the potential to thrive once more and regain its status as a relevant global player. The winds of change have begun to blow, and with a collective effort from visionary leaders and a population eager for positive transformation, Argentina can rise to new heights. The challenges are immense, but the possibilities for a reinvigorated and prosperous Argentina are equally vast.
This is a guest post by Juan Llauró. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.