Life in Argentina

Argentina’s economic reality can be summed up as follows: the numbers may be better but life is definitely worse.

Argentina is rarely in the news except when it receives a fresh stash of cash from the IMF, to which the Latin American country is the largest debtor in the world. So, how has life for the average Argentinian changed under Javier Milei who became president of the nation on 10 December 2023?

The economic reality

Argentina has struggled with inflation and poverty due to decades of overspending and government mismanagement. Even though annualized inflation currently stands at 23%, it peaked at 300% only a year ago. Due to the recent removal of capital controls (a.k.a. “cepo”), inflation is expected to rise once more.

Out of its 47 million inhabitants, a whopping 37% live in poverty (down from its peak of 53%). Extreme poverty affects more than four million Argentinians. Poverty stood at 42% when Milei took office, though it has not fallen below one quarter in the last four decades!

In the meantime, industrial activity has slowed down significantly, with output down more than 20% overall. The economy has not grown in years, and 185,000 formal jobs were lost. The employment rate is 45% with half of all workers informally employed, for whom pay is low, unsteady, and without contributions to social security. For people with steady jobs, wages have stagnated, though there are signs they are catching up slowly.

While inflation and poverty go in the right direction, these statistics belie the everyday situation for Argentinians:

Each month [my salary] used to run out on the 20th; now it runs out on the 12th. Aida Segot, teacher

The government’s measure for inflation and with it poverty is outdated, as it does not include the items that have increased the most. Gas bills have grown by 1,000%. Rents have gone up by more than 650% in a single year because of the abolition of rent controls, leading people to cut down on meals, rely on credit cards and loans to pay for food, drink mate (an Argentine tea) as a meal replacement, or rummage through garbage for something to eat. More than a third of all children are affected by food insecurity. Soup kitchens are unfortunately more and more common for citizens nowadays:

Last year, we used to make 13 large pots three times a week. Now we cook 23 large pots, and it’s still not enough. Laura Gotte, volunteer at a soup kitchen

Deregulation has also caused prices to skyrocket, such as gas (715%), electricity (375%, from personal observations), and health insurance premiums (150%). Consumer prices have risen 160%: Argentina is becoming increasingly unaffordable for Argentinians.

Pensioners have especially been hit hard by austerity measures, as they have to make do with the equivalent of $300 per month. In most cities, that is barely sufficient to pay for a one-room apartment, let alone essentials such as food and medicine. Milei has so far failed to express any sympathy for the pensioners even though they suffer greatly because of his policies:

Once I’ve paid the rent and the bills, I’ve got nothing left. Felicita Ruboni, pensioner

The official minimum monthly wage (AR$296,832) is currently below the national poverty line of AR$334,536. No wonder pensioners and workers across the nation face destitution!

They are not alone. The middle class, crucial to economic growth and social mobility, is vanishing:

We no longer choose the brands we used to, but “downgrade” to buy brands of relatively poorer quality that are cheaper. Gustavo Ng, writer

The middle-class’s spending is crucial for stimulating local economies, yet it disappears as people’s disposable income shrinks:

In the last three months, I stopped going to the gym, going out, anything that is leisure. Agustina Bovi, cook

Recently, the government decided to allow prices to be listed in dollars as well as pesos, which already existed for savings and real estate for years. The policy is designed to shield businesses from the devaluation of the Argentine peso, reduce exchange rate risk for businesses that import goods, and provide stable price points to consumers who have often seen prices go up in a single day. It may also encourage foreign investments the government seeks, especially with 30-year corporate tax breaks and various other generous benefits. It remains to be seen whether such activities can actually improve the lives of Argentinians with stable, well-paying jobs through sustained investments in local communities or whether it leads to enclave economies that crowd out local businesses and exacerbate inequalities through unfair competition and exploitation of limited natural resources while carrying away all the profits. Foreign investment is not a short- or even medium-term solution, though, and it does not appear to benefit the middle or working classes as much, especially without government supervision, which is not in the libertarian’s dictionary.

Alleviating structural poverty requires investment in small and medium-sized businesses, yet the government appears intent on more austerity measures and deregulation. The fact that 72% of Argentinians are worse off since Milei became president, who is primarily favoured by the rich and who is a frequent flyer to the United States, has led some to question whether Javier Milei is merely Wall Street’s man who intends to sell off the country’s resources while cozying up to the tech bros for photo ops.

The president does not believe in market failures despite the overwhelming evidence against. Perhaps they might not occur in an idealized free market, but such a market (without government oversight) leads to monopolies and the exploitation of labourers, consumers, and resources. Self-regulation in the economy is a myth.

Many Argentinians commend Milei for explaining the need for his “shock therapy” for the economy, particularly inflation, and consequently they understand the need for a reduction in public spending, but they also note the irony:

The problem is that Milei told [people] that the political sector and the richest were the ones who were going to pay. That is not happening. Lorena Giorgio, economist

Or as one Argentine asks poignantly:

What good is macroeconomic stability if people can’t afford food or rent? Maravillas Fernández, consultant

As expected, the deregulation has so far only caused prices to rise, benefiting the rich rather than the middle class. The oft-cited decrease in inflation-adjusted rents is based on an analysis of Zonaprop, which only offers new leases for property in affluent areas of Buenos Aires and a few large cities. It is not indicative of Argentine society at large, which has seen existing leases increase substantially every quarter since the removal of rental controls. The macroeconomic situation therefore appears slightly better in official statistics, but Argentinians struggle more every day.

What people at the top often forget is that there are real people with real stories and real problems behind the statistics. The numbers may look better, but that does not mean life is better for the majority because of the way average with extreme skew work: a few rich who benefit massively make it look as if lots of people’s lives were improved a little, even though the reality is quite different. Leaders across the world would truly serve their citizens if they lived in many parts of their own nations for their entire tenures, so they do not merely see the idealized view from their secure compounds in the capital where life tends to be very different from most places anyway.

Politics

Milei’s rhetoric has always been inflammatory; he often dehumanizes entire groups of people, denouncing opponents as parasites, rats, cockroaches, and so on. That translates into his social policies: he intends to roll back LGBTIQ+ rights in his “war on woke”, he personally opposes abortion and is therefore making it harder access to abortion even though it is legal, and he refuses to recognize gender violence. The sad fact is that every thirty-three hours a woman is murdered in Argentina. The president simply ignores the mass demonstrations in favour of diversity and various protections—as well as those against his economic reforms, continuing to dismantle the rights that people have fought for over many decades by issuing various decrees rather than opting for due process by going through the National Congress, which is actually responsible for legislation.

Each president has the ability to issue special decrees (Decreto de necesidad y urgencia (DNU)) or “executive orders”, which come into force immediately, upon which the National Congress must determine whether these remains in force due to necessity and/or urgency, though in practice that is rarely done. Until 2006, there was no legislative oversight of DNUs at all! Javier Milei has repealed or modified over 300 laws through DNUs in a little over a year in office.

He even discontinued cooperation with the Abuelas de la Plaza de Mayo (Grandmothers of the May Square), a group of elderly women whose children were kidnapped, tortured, raped, and killed by the Argentine dictatorship between 1976 and 1983. Some of these teenagers and young adults were forced to give birth in prison, so that their children could be adopted by military families. All these people want is to find out what happened to their grandchildren, to find a semblance of peace of mind before both they and the memories of the atrocities committed on their families are gone. The government owes them that much, but it does not care at all.

Several members of Milei’s La Libertad Avanza party, including the vice-president Victoria Villarruel, even paid a visit to convicted criminals from that era, to which Milei replied: “I should talk to her.” His implicit agreement with their actions speaks dark volumes. For a president who questions how many people were actually killed under the military junta, that is insensitive though entirely expected, and a clear sign that education, including the arts and humanities, are much needed. Javier Milei urgently needs a history lesson or at least a few moments to watch the 1986 Héctor Olivera film La noche de los lápices (“The Night of the Pencils”), which shows the atrocities committed against a group of teenagers who protested for every child’s right to an education. The cruelty of Milei’s government therefore is the point, not merely a side effect of his so-called chainsaw measures.

Unsurprisingly, systemic corruption has remained high under Javier Milei’s government so far, who has personally been involved in a cryptocurrency scandal, in which he backtracked public comments several times. He has also used more than half a million dollars in public funds to pay for private trips abroad. Still, public support for the government is fifty-fifty, though pessimism prevails.

Excessive government spending had to come down and inflation with it. That is to the government’s credit. Argentinians understood that it would get worse before it could get better. They now wonder when it will get better, or if, especially since the country has entered a recession. So far, the government has shown no credible plan out of the misery for millions: austerity stabilizes numbers by destabilizing lives.

Education

Primary and secondary education lag behind countries in Latin America when it comes to skills conferred upon students: less than half reach the end of primary school with satisfactory skills in language and mathematics. By the age of 15, that figure drops to an alarming 30%. Argentina is placed 66th out of 81 countries in the PISA ranking. In science, less than half reach the minimum level required.

These figures are from before Milei took office, but they are unlikely to improve as he dissolved the Ministry of Education on his first day in office. It is now a secretariat under the control of the Orwellian-sounding Ministry of Human Capital, which also controls culture, social development, employment, and social security. It is headed by an eminently unqualified former television producer.

A bit under a quarter of the population holds a bachelor’s or master’s degree, and 81% of graduates are employed, compared to 74% of people without a university degree. All education is provided for free by the government, though private schools are available to the few who can afford to send their children there. The government invests 4–5% of its GDP in education, which is in line with global averages. Employment prospects for adolescents are dire, though:

The girls are doing OnlyFans, and the boys are trading crypto. Rodrigo Zarazaga, political scientist

Science and technology

The scientific community has not been safe from the government’s squeeze: 9% of the national council for science and technology has been laid off along with a third of their funding gone:

We haven’t received a single peso to replace a broken glass beaker in the lab. Sandra Díaz, professor of biodiversity and plant ecology

The country spends only 0.6% of its GDP on research, four times less than it ought to remain competitive. This is well below the global average of 2.7% or the OECD’s of 2.1%. Though an imperfect benchmark, we can look at prestigious awards in science to see the same pattern. No Argentine mathematician has yet won a Fields Medal. When we exclude the Nobel Prizes for peace and literature, which do not measure scientific achievement, Argentinians have nabbed only 2 out of 749 awards, or 0.3%. The last one was already more than forty years ago. That is well below what might be expected for a nation that covers 0.6% of the global population and has a similar share of global GDP. But it is more in line with its smaller national expenditure on R&D.

The problem for Argentina is that education is a medium-term plan for poverty alleviation. There is already a brain drain in science that will ultimately hurt the economy and the long-term prospects of the nation to compete globally. For tech workers, remote gig work provides a temporary yet iffy escape from today’s economy. The government therefore has no credible short-, medium-, or long-term plan to create an economy backed by solid scientific research and technology. That is worrisome.

Fortunately, the South American country is not devoid of people who understand the value of education and expect more:

Leaving Plato’s cave is not about reaching a true reality but rather leaving the cave to divest yourself of that everyday life you take for granted in order to enter a larger cave. A cave that, at first, presents itself with all its differences compared to the previous one and offers you new answers, but that slowly you come to understand is another setup. That is why I believe emancipatory pedagogy in the world of education should have more to do with inspiring students to permanently leave caves. Leaving caves is a permanent exercise, a permanent revolution. Darío Sztajnszrajber, philosopher

A well-educated population is crucial for a solid economy and a healthy democracy. But perhaps therein lies the rub…