An Interview on the State of Argentina: Past, Present and Future

Dr. Kenneth Mitchell is an Associate Professor of Political Science at Monmouth University. Having completed a PhD in Politics at Oxford University, his extensive knowledge on Latin American Politics is evident through his instruction of PS 275 Latin American Politics and PS 398 Argentine Politics.

Outlook: Let’s begin with the crisis. The increase in crime, and most recently the violence seen in headlines about Argentina. When did this happen, and what could be to blame?

Mitchell: Well, crime in Argentina, it’s important to note, has never been at American levels of crime. There are a couple of [key] things about what’s going on right now in Argentina.

Number one – It is fairly difficult to collect accurate data on whether crime really is spiraling, because of what happened in January. See each year in Argentina police and others such as teachers negotiate a contract. Now Argentina suffers from 25 percent inflation, and contract negotiations take into account whether the inflation will get worse over the next year, if not your losing money. Now, what happened was the police negotiated hard, but the government wasn’t going to meet their demands. So the police went on strike. Imagine that, police across a country go on strike. There’s no police officers.

Outlook: Wow.

Mitchell: And Argentina has federalism, which means instead of states they have provinces. Two of the provinces are Rosario and Cordoba. When the police went on strike these two provinces, and the police sort of sit back and don’t come to work. This means immediately, there is a political problem, right? The federal government had to work out a deal with the police union very quickly. Which then led to a great deal of discussion about crime.

So, has the crime rate gone up recently? Maybe, it’s hard to tell. But the context around crime, and if the government has done a good job about it has citizens kind of ticked off; their government has let police go on strike. It led to some things that didn’t have to happen. I mean some people died in these riots. And there is the issue of inflation, and not surprisingly the people often blame the government for high inflation. [The people] are mad at the government for that. Which leads to salary problems, which leads to these strikes. 

A similar issue is the teachers striking. So if you’re in Argentina, your fourth grader, a couple days a week doesn’t have school. So if the teachers aren’t showing up to work, and the cops aren’t showing up to work, you can imagine people will get pretty angry. Then if they are asked in opinion polls whether crime is rising in the county, of course they say yes. It’s like in America when it’s asked if gun violence is going up. If the question is asked after a significant event. The numbers rise but if you look at the data, America has always had a high level of gun violence.

Outlook: Looking at earlier this month, a few people were lynched. The people seemed to be taking justice into their own hands; is this a reaction to the lack of police on the streets?

Mitchell: Well, these lynchings are not actually people being hung but what happened was this. Very common in the city they have what you call purse snatchers. One person drives the motorcycle while, the partner sits on the back and grabs the purse and then they ride off. What happened was in Cordoba someone grabbed a purse and the people who saw it happen, jumped out and kind of knocked the motorcycle down and the crowd mauled the thief and they killed him.

Its mob rule that sort of thing. And incidents like this have led to discussion about, have we lost control of ourselves. People say it’s not our fault it’s the governments fault…Wait, no it’s our fault. There is sort of a debate in Argentina on why this sort of thing is happening.

Outlook: Now about the inflation in Argentina, what does it mean for an everyday resident in one of those providences with inflation that high and fluctuating?

Mitchell: Well inflation prices are going up. You have to think of it as a math question, lets say if an annual inflation rate is 24 percent. There are 12 months in a year, the price on average for everything is going up 2 percent every month. If you paid one peso for whatever it is your buying, that same thing a month later would cost a peso and two centavos. 100 pesos, the next month would be 102 pesos.

With it growing every month, by the end of the year let’s say the sack of potatoes that cost 100 pesos is 124 pesos. It doesn’t sound like a lot but if everything keeps going up. There are a couple issues, one is that money you have in the bank sitting in there, unless you’re getting an interest rate that’s above 24 percent your money is actually shrinking. If I put 10,000 pesos in the bank and the bank is giving me 12 percent interest. Sounds great I wish we could have that here. But if the inflation rate is 24 percent your 10,000 pesos is not worth it.

Outlook: Devaluing their money.

Mitchell: Correct so, inflation hurts savers, those who put money in the bank. It encourages consumers to consume, you know buy now because it will be more expensive to borrow. In America we have the opposite problem, we have deflation.

Prices drop, lets see where the bottom is, think housing in America. Inflation is the opposite, if I’m a police officer I don’t want a contract that accounts for 24 percent inflation, 24 percent was last year. You know, I actually think it’s going to be 30 percent this year, so I need a raise of 30 percent just to keep it the same. If I want a 30 percent raise everyone will and this is called an inflationary spiral. Which can go both ways. Both inflation and deflation can be very dangerous. As for the day to day lives of Argentinians, well it makes it complicated. You have to try and guess who has the lowest prices every day. You have to figure out where to get your potatoes cheaper.

In 1989, in Buenos Aires they had hyperinflation. We are talking about 24 percent inflation imagine 900 percent inflation. Now do the math, divide that by 12, and then by 30 you get a daily inflation rate. We’re talking prices changes five percent a day. Now you need to buy as many potatoes as you can, because you expect the price will rise. What happens if everyone has that idea? Uh oh…

Outlook: Shortage of Potatoes, and other products.

Mitchell: Right.

Outlook: Okay, so it’s been 30  years since military rule in Argentina. A columnist recently wrote that, “democracy has not yet led to stability in Argentina.” Do you think that has merit?

Mitchell: I think when you think about democracy in Argentina, about 1982 the sort of transition back to a democratic government. It is a sort of glass half full, glass half empty way of looking at it. On the one hand, the glass half full is that they haven’t slipped back into military government. Other countries like Peru slipped back into military rule in the 90’s. There are cases where democracy doesn’t last very long.But, it’s lasted I guess that’s the good news. You know, in Argentina it’s expected to be a democracy the people don’t expect anything else. And that didn’t exist before 1984, the idea of a military government was never too far.

So democracy seems to be pretty stable in the sense people expect Argentina to be a democracy. However, Argentine politics is deeply divided between working class people and middle class people and they still have a fundamental problem were both sides associate, Argentina with themselves meaning that the other side is not Argentina. This leads to a particularly damaging kind of politics. When different political parties don’t accept the other sides legitimacy, it becomes a zero sum game. And that can become very unstable, because you have to win elections. If you don’t you lose everything, the other side will demonize you and do everything possible to make sure their ideas are the only ideas that matter. Both sides have changed constitutions, they’ve changed rules, they’ve ruled by decree at times. They have used every play in the book. The consequences of that; Argentinian institutions like the court system are very weak, the relationship between the legislative and executive branch is very weak, controls on corruption are very weak. When one is in power, it’s sort of “our corruption.” Its only bad corruption when you’re not in power, that sort of thing. So, the cup is half full democracy has survived a lot of crisis in Argentina. Half empty the sort of basic institutions of democracy we like to stronger simply aren’t.

Outlook: So these weaknesses, are they really to blame for things like high inflation and issues with the economy? Is the president or her party’s economic policies to blame? Argentina had one of the most flourishing economies in the world, right?

Mitchell: 7 wealthiest country in the world. It’s around 77 now. It’s important to remember that when it was wealthy it wasn’t a democracy. So, Argentina is blessed with economic advantages. It is blessed with extremely fertile land, we’re talking world class agricultural exports. Argentine beef and wheat and soy beans are consumed around the world.

So it gained a lot of wealth from agriculture, but the concentration of wealth was always in the hands of those who had all the land. See as soon as you allow people to vote.Argentina is a country that is 97 percent urban. So the wealth is in the countryside, but the humans are in the city. When you have a vote the cities beat the countryside. The inherent problem in Argentina is how you deal with that division of wealth. You have elections and those in power essentially try and take money from the countryside.

But the countryside has ways of defending itself, Argentinian growers can stop growing food for a year, they are phenomenally wealthy in the countryside they can go on vacation for a year if they need to.

But the Argentine government cannot survive for a couple of months without the money they make from exports. Government can rarely meet the demands of what the people who vote them into power want, because of the structure of the economy. They have too much wealth they can’t manufacture anything its workers are too expensive, it could never compete with China, it can’t compete with Brazil. It is a world class agricultural exporter, and in the city there are services. You know, there’s a restaurant on every corner. Everyone seems to work at a restaurant, that sort of thing.

So there will always be limitations. So is it bad economic policies to blame for economic struggles? I would think not. It’s more the reality of what Argentina can do to make money, and that’s simply agricultural products. Especially when agricultural prices drop internationally. Then you’ve got a problem. That’s what happened in 1930. When the price of agricultural products is high they make money. When it is low they don’t, the economy crashes and they have a military government.

The good thing now is that when the prices drop you don’t get military governments any more. You get a lot of instability, and problems but not a military government. Democracy has also coincided with the rise of China. What happens if China doesn’t want to buy up everyone’s soy beans, red meat, everything Argentina exports to China? What happens if they don’t buy any more? Well Argentina is back in a difficult situation. “Where’s the money going to come from, we are too wealthy to make anything. Can’t make radios or cars, our labor is too expensive.” No one would buy it.

It isn’t so much policies are bad, but the reality of the structure of their environment is tough, it’s really tough. This is the problem with most countries in South America too wealthy, and an economy that is driven by an export. Copper in Chile, beef in Argentina, the government is forced to create jobs via programs. So when they have money it’s possible when they don’t it isn’t.

Outlook: So can we expect lasting democracy in Argentina, as far as you’re concerned?

Mitchell: Yeah, it’s just weakly institutionalized. I don’t expect any military government or dictatorship.

Outlook: In five years do we see a similar Argentina? A stable country? A fluctuating economy?

Mitchell: I think there are some positive signs to be honest with you. Last summer the current president, Cristina Kirchner was thinking about attempting to lengthen her term another three years. Her party lost the midterm elections which means she cannot change the constitution. Which means she’ll be gone in 2015. Not to say whether she has done a good or bad job. For democracy, its important that she doesn’t change the constitution. That leads to the idea that she won’t leave power, ideas of dictatorship, so somebody else will take over.

Outlook: Who?

Mitchell: 85 percent chance that it’s a Peronist’s from either her party or another faction of Peronist.

Outlook: And Peronists are supported by the working class correct?

Mitchell: Right, so it’s going to look pretty similar politically. But it breaks down essentially into two possibilities. One Peronist faction, the victory front, the likely candidate will be Governor Scioli, an ally of Kirchner.

The other Peronist opposition will likely be a guy by the name of Masa, who’s a mayor. He led the alliance against Cristina in the midterm election. So it’s either Scioli or Masa will be president of Argentina.

And both agree with the economic policies of the Kirchners. The other opposition is a guy named Macri, who is the mayor of Buenos Aires. He can’t get enough votes to win.

So in five years, one of those two men will be president. In another Peronist government, the key will be inflation. If inflation is 15 percent they look really good, if 40 percent Argentina looks not so good. It would look very unstable. It’s not really about who wins. Inflation is more important. There are good signs, a recent report shows inflation dropping. Part of this has to do with Cristina not wanting to leave office with an inflation rate closer to 40 percent. Because she wants a legacy left behind of someone who created a lot of jobs and it was sustainable. If there was an economic crash in 2015 she would be blamed for it. That’s what her place in history would be.

Outlook: To bring this back to Monmouth students when it comes to fears and expectations of Argentina, for Americans; are there any issues as far as travel exports etc.?

Mitchell: Well, I’ve taken two groups of students to Argentina and both groups kind of fell in love with the country. They really had a good time. A lot of kids now are studying Argentina in grad school, which is great, it makes me really happy. I think there are reasons why Monmouth University students like Argentina when they travel there. One is that Universities teaching Spanish, I mean through study abroad programs were traditionally tied to Spain. Spain has become incredibly expensive, so it’s hard to study abroad there. It has also been in a depression since 2008. You know youth unemployment is about 50 percent, tough place. Overall unemployment’s about 30 percent, that’s really tough.

The attractiveness for Universities going to Spain has declined across the board. Okay, that opens up an opportunity for Spanish speaking countries elsewhere. Now, what kind of place is needed to bring university students from the United States?

It can’t be too violent, it has to have some development, you know, those kinds of things. It’s one thing to vacation in Cancun. It’s another to go on exchange in Mexico and live in Mexico City. You know I lived in Mexico City for a long time. It’s a very dangerous place. Almost everyone I know got kidnapped at some point, or robbed you know. Didn’t get killed, what happens is they kidnap you. Take you outside the city, they take all your clothes they, take your shoes, your wallet. Then you kind of have to walk back to the city. It’s a dangerous place.

Places like Rio, and Sao Paulo: first of all they speak Portuguese there. There is not a great demand for university students to learn Portuguese. Chile is a very safe country, but places like Peru, Venezuela and Ecuador are pretty unstable places. Not the easiest places for universities to put students, for long periods of time without fears of crime, or something happening. Argentina, and Buenos Aires in particular, its basically a European city. It’s like being in Madrid or someplace in Europe.

That’s one of the reasons why it’s attractive for American students to want to go down there. It’s developed, secure, culture, foods good all that stuff. Lots of reasons why students love going there. Also, the seasons are reversed so, when I take students over winter break, it’s summer. It’s 100 degrees, and 100 percent humidity. It’s like a giant party, it’s fun. It’s their holiday season. Argentina just really has a lot of reason for why it attracts university students.