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Huge crowd cheers Argentine leader's 10-year rule

Published on NewsOK Modified: May 26, 2013 at 8:26 am •  Published: May 26, 2013

"This is the government I always dreamed of and fought for in the 1970s," said Paloma Perez Galdos, a 58-year-old bank worker. "It's time that we have a justice system for everyone, not just for the rich."

"Social inclusion" under the Kirchners has involved providing billions of dollars in cash welfare payments families with children and people working in the informal economy. The government has raised pensions and minimum wages, and directed vast amounts of government revenue to keep the economy moving.

"Unemployment has gone from 25 percent to 7 percent ten years later ... in an economy that grew as fast as China," said Ramiro Castineira, an economic analyst with the Econometrica firm.

Castineira and Gargarella disagree on many aspects of the Kirchners' legacy, but they both say intervening in the government statistics service in 2007 was a critical mistake. Ever since, official annual inflation has refused to budge over 10 percent, even as Argentine shoppers watch prices double and triple each year. Many other statistics based on consumer prices have become widely disregarded.

"All the numbers on unemployment, poverty, inflation and inequality are falsified," Gargarella said.

"Misrepresenting the numbers was a strong blow to market confidence; that raised the country risk and made it impossible for Argentina to take on foreign debt. That's why the government turned to expanding the money supply," Castineira agreed.

Since 2008, the government has sought to capture more of the windfall profits from soy exports. But that alone couldn't finance the spending, so it printed more money and changed currency and tax rules forcing businesses to keep profits inside Argentina. That dissuaded investors, spurred capital flight and pushed annual inflation to as much 30 percent right now, private analysts say.

Economic instability now threatens to undo much of what the Kirchners accomplished.

"Today it's clear that Argentina, under the leadership of the Kirchners, has not known how to take advantage of the opportunity that this first decade of the 21st century has represented for Latin America, which is the strongest growth in two centuries of history," political analyst Rosendo Fraga said. "Instead of taking the path of Brazil, Mexico, Colombia, Peru, Chile and Uruguay, it's taking that of Venezuela."


Associated Press Writer Damian Pachter contributed to this story.