Policy Recommendation for Argentina – Fixing the Situation

By: Brigitte Smith

Introducing the Problem:

Argentina has been and remains to be in economic turmoil, which invokes political and social instability. The state of the economy greatly influences the success of the democracy as it affects the attitude of the public. To understand this it is important to study the economy in the process of democratization since there is a “mutual interdependence between the economic and political stability” (Pridham 2000). This nation experiences short cycles of GDP growth only to be followed by abrupt downward swings to a negative GDP (The Economist, 2014). This is continuous throughout the period of democratization, post 1983. The market-oriented neoliberal reforms induced a lagging economy with great instability.  The policies lead to a diminishing middle class and greater unemployment (Carranza 2001) The nation’s GDP level correlates to the political outcomes, such as free polities and human rights, since greater literacy and urbanization can yield self-expression (Lipset 1994).  Ultimately, the economic state has prohibited the consolidation of democracy after the transition from the military dictatorship.

Moreover, the government was already confronting public opposition at the onset of democratization as a result of the lack of collective remembrance. Even though the elections of 1983 brought an end to the terror of “Dirty War” in which the military would remove any left-wing opposition, the elections did not heal the wounds of the civilians.  According to Robben (2002), the adversarial opposition of the remembrance of the traumatic past made it impossible for there to be a uniform movement toward national reconciliation. The economic policies of the government were influenced by the existing sense of distrust and in turn poor economic policies perpetuated public mistrust. While the policies that will be recommended are mainly aimed at advancing the economy, they also address the necessary externalities of civil culture to stimulate political democratic consolidation.

Outcome sought:

For more stable dynamics within the nation, Argentina needs to consolidate its democratic system and institutions.  Argentina has undergone numerous arduous transitions from authoritarian to democracy, in part due to lack of proper institutional consolidation.  The recurring unconsolidated democracy ‘punctured’ by returning dictatorships is know as “Argentinization”.  “Elections are held; associations are tolerated; rights may be respected; arbitrary treatment by authorities may decline–in other words,the procedural minima are met with some degree of regularity–but regular, acceptable, and predictable democratic patterns never quite crystallize”(Schmitter 1994).  Thus, in order to uphold the last restoration of democracy, to avoid another lapse to dictatorship, to avert a regime that abuses the public’s humans rights, to function as a state through maintaining order and monopolizing violence that provides beneficial security, it is vital that the democratic institutions consolidate.

In consideration of preserving citizens’ innate human rights and improving living conditions, democracy is the best option so that the people can influence the construction of policy that will better the greater good.  Historically, and throughout the process of democratization, Argentine government has failed to respond to the public’s desires. The demonstrations in the Plaza de Mayo are one means of outcry from the public. They started with mourning mothers but have transitioned into protest about the economic crisis.  Civil participation is prominent yet it is triggered by opposition to the government instead of political participation.  For example, following the riots of 2001, 50 percent of the population of citizens cast a null vote, known as the ‘anger vote’ to the economic crisis (Scherlis 2014).  If the democracy is able to consolidate, then they will be able to better comply with the public’s needs since government officials will be better accountable with a more democratic rule of law.

Policy Proposal:

Overall as the political elite sought to restore democracy, the economic policies should have been focused on further expanding the middle class rather than favoring international enterprises at the disposal of the good of the public. Already in a poor economic state before the onset of the process of democratization, the policies only worsened the economy.  From the lack of rule of law and lack in government support programs, the middle class shrunk as unemployment rose.  Thus, these events inhibited consolidation. Democracy entails accommodation and national unity, which is a product of responsiveness, in order to effectively function (Rustow 1970).   Policy makers should have implemented government sponsored programs from the onset of the democracy to offer employment, training, public services, and support for local businesses. These initiatives would have helped to restore faith in the government.

The first setback of the economy, after the reign of the military dictatorship, was the lack in correcting the flaws of conducting business from the past.  Just as the political elite neglected to properly resolve sentiments of the past and initially pardoned many military leaders of the past, they also failed to properly address the economic remnants.  The mistake came in putting off confronting the flaws of the previous regime. The government failed to address the “legacy of corruption, protectionism, price distortions, foreign indebtedness, inefficient public enterprises, trade imbalances, and fiscal instability”(Schmitter 1994). Instead some of these practices lingered over.    

Regardless of the institutionalized faults, the newly established policies in the period of democratization set forth greater setbacks.  Even as the democratization process transpired, experts expressed concern towards policies being implemented, partly since they had historically failed. The initiatives of the stabilization programs most typically favored the large foreign and domestic industrial and financial groups, while labor bore the greater portion of the short term risks (Kaufman 1985).  Socially, the side effect of such systems create further cleavages between the economic groups.  Specifically, it the misconstrued pro-globalization ‘economic adjustments’ policies of the 1990s that lead Argentina into the deepest economic slump yet. It was not so much due to the case of bad politicians, as it was the consequence of the policies in place.  The outcome of the Menem administration “revealed the profound weakness of the neoliberal model of economic policy” (Carranza 2005).  One such policy favored big business and appealed to the demand of international markets, it was known as the Privatization Programs of Menem, which also removed state institutions that insulated Argentine workers and local firms from the shocks of the global market.  As a result, the research shows that 5.2 million people fell below the poverty line and from 1998 to 2002 the economy shrank by twenty percent (Carranza 2005).  The middle class shrunk, which infringed economic progression and decreased economic freedoms.  The political methods to implement his plans were also concerning. President Menem would bypass parliament and rule through presidential decree, eroding constitutional practices (Zakaria 1997).  Not only were the policies themselves harmful to the process of democratization, the methods he used also undermined the consolidation of the institutions.

Another setback hindered the middle class when the De La Rue Administration instituted the policy of the corralitos to limit the amount of money that could be extracted from the banks. The policy was put in place to service the national debt, however it greatly punished those who were saving their money (Carranza 2005).  As opposed to Menem that neglected to interact with operations at the local level, De La Rue’s policy intervened. However they were not in the intent of the to encourage local transaction. The corralitos crippled the middle class in that it overly hindered monetary affairs of the public.

In 2001 the public erupted in large scale demonstrations. It is evident that such systems did not accommodate to Argentine society especially in the stages of democratic consolidation. In fact, Glanc correlates the increasing social unrest and crime with the high levels of poverty and inequality as a consequence of President Menem’s privatization program for the economy.  Not only did the government neglect to tend to the wounds of the public, they also neglected to meet their financial needs.

The problem does not stem directly from the neoliberal policies that opened up Argentine industries to the international market. The greater fault pertains to how the policies sacrificed the  interest of the majority in favor of supporting large companies.  The opening of the market came at the dispense of the economic protection of the majority of the people.  The period of political transition was the ideal moment to rebuild especially since economic development is conducive to democracy. The nation should have been dominated by internal modernization.  This is because the nature of the work involved for economic progression brings about predictable changes in society, culture, and politics. Personal economic advancement at the family level, would have lead to political advancement throughout society. “High levels of economic development tend to make people more tolerant and trusting, bringing more emphasis on self-expression and more participation in decisionmaking” (Inglehart & Wetzel 2009).  As the mindset of Argentinians lingered in past atrocities, a strong economic foreground would have ignited a more confident outlook to the new regime.  Furthermore, “Economic development is conducive to democracy to the extent that it, first, creates a large, educated, and articulate middle class of people who are accustomed to thinking for themselves and, second, transforms people’s values and motivations”(Inglehart & Wetzel 2009). However, Argentina lacked a middle class. While globalization could have been an effective tool to encourage large scale development, policy makers overlooked the necessary components in preserving and expanding a middle class.  The economic system of trickle-down economics was not effective for Argentine society.    

Instead of removing government support there should have been a surge in government sponsored initiative that would build infrastructure or spur production.  These government sponsored programs would have been able to accomplish two things: provide jobs and instill a sense of closure and pride.  It is a way for the government to support the people financially as well as show them that they operate for the good of the public.  In 1994 a law was passed to give economic reparations to the families of the disappeared.  For reasons of dissatisfaction with the refusal of officials to admit to the abductions, a fraction of the Mothers from the Plaza de Mayo rejected the payment (Robben 2012). Nevertheless, this act demonstrates the new government’s search for a quick fix with a one time payment instead of establishing an institutionalized system that economically and socially accommodates the mourning public.  The nation longed for a more lasting gesture.  Especially in transitioning from the Dirty War, the first priority of the government should have been to rebuild the public’s faith in the government. Furthermore the government could have used this funding from the World Bank towards such government programs in attempt to modernize the nation with infrastructural advancements that commemorated the 30,000 lives lost during Dirty War.

In regards to the opportunities for employment, the funds allocated toward such programs would have direct immediate benefits. The jobs that would have been provided could have given the public steady incomes.  Moreover, there would have also been positive effects for society as a whole. With jobs, there is diminishing motivation for those of lower economic status to commit crimes and bring about social unrest (Glanc 2014).  Even after the time of the programs, the workforce could have been more experienced and better trained for other job opportunities once the rest of civil society was up and running. This is mainly speculation, however there would have been greater potential to build a middle class by initiating projects that ensure steady employment. This positive and legal form of active civil participation would have created a sound middle class that would have fostered cultural aspect for stability (Almond & Verba 1963). Nevertheless, government initiated modernization programs are likely to be short-lived from limited external funds, however they could have function just long enough during the political transition period and cultivated greater trust in the government.

Not only would the work provide positive externalities for the progression of the nation, civil society, but it could have strategically built symbols that could have instilled national pride. First off, they could have built memorials, parks, cultural centers. Even though there was a memorial park built along the Rio de la Plata in 1998  that was already  too late(Atlas Obsura). By then the economy was already plummeting, furthering deepening the distrust from the public, plus the public already resented the government for social reasons evident from the demonstrations.  Nevertheless, they could have initiated mental health programs or sponsored small groups to cope with the traumas that transpired under the previous military dictatorship.  While independent programs may have been present during this time, it is important these services were sponsored by the new government to demonstrate the interest the government had in the well-being of the public.  While these programs would not provide immediate payoff and provide an quick return on profit to the government, it has the potential to construe positive informal norms and cultural change.

A major component of progress is having an uniform movement. These programs funded by the government would help to build faith in the intentions of the new regime, the labor force would not only build networks of civic engagement but the trust would also achieve norms of reciprocity.  If the government provided such services or commemorations and the public assumed positive sentiments toward the government, the nation would have achieved norms of reciprocity.  The networks of civic engagement being the networks of interpersonal communication and exchange and norms of reciprocity as actions of positive externalities that establish a reputation of trust and cooperation. If achieved, this should foster institutional success in the broader community.  “Social trust, norms of reciprocity, networks of civic engagement,and successful cooperation are mutually reinforcing. Effective collaborative institutions require interpersonal skills and trust, but those skills and that trust are also inculcated and reinforced by organized collaboration. Norms and networks of civic engagement contribute to economic prosperity and are in turn reinforced by that prosperity”(Putnam 180).  Civic culture is a vital aspect for the nation to make uniform advancements toward democratization, these government sponsored initiatives could have helped to establish the mutual beneficial norms of government initiating programs and the workforce could have fulfilled the plans and put trust and taxes back to the government. It would help provide jobs for the public and the public would feel that they were connected with the operations of the government.

Conclusion:

The various administrative attempts at advancing the economy failed to make substantive and effective strides toward stability. The Menem’s trickle-down economics that removed government institutional support for local firms as well as De La Rue’s intervention that cut off the public’s access to the personal funds they had saved, inhibited the growth of the working class.  Unfortunately Argentina operated more like a sham democracy.  The elites overlooked the necessary steps to build a stable domestic market and lacked responsiveness. The economic policies during the process of democratization instead should have been aimed at expanding the middle class and building bridges with civil participants.  It would have been in the best interest of the nation for the government to have instituted government programs that not only supported local firms and built infrastructure advancements in memory of the ‘Desaparecidos’. Government support could have eradicated public mistrust that still lingered over from the brutal national security tactics of the past while provoking modernization. Such initiatives would have fostered democratic consolidation.   

Due to the interactive dynamics of policy, economy and social climate, transformation must be simultaneous to create a liberal democracy. As the middle class is built, there is greater stability and opportunity for the democratic institutions to consolidate.   The neoliberal policies could have been effective, however the civil culture and political culture first needed to be aligned in a mutually beneficial system, to serve as an effective and stable link between macroeconomic and microeconomic policies. The effectiveness of the democracy relies on the interplay between the policies of the economy and the civic culture to foster political participation and trust so that the democratic institutions can consolidate.

References

“A Century of Decline.” The Economist. The Economist Newspaper, 15 Feb. 2014. Web. 20 Apr. 2016.

Almond, G. & Verba, S.  The Civic Culture: Political Attitudes and Democracy in Five Nations. Princeton: Princeton University Press. 1 (1963): 3-30.

Carranza, Mario E. “Poster Child or Victim of Imperialist Globalization? Explaining Argentina’s December 2001 Political Crisis and Economic Collapse.” Latin American Perspectives 32.6 (2005): 65-89. Web.

Glanc, Laura. “Caught between Soldiers and Police Officers: Police Violence in Contemporary Argentina.” Policing and Society 24.4 (2014): 479-96. Web.

Kaufman, Robert R. “Democratic and Authoritarian Responses to the Debt Issue: Argentina, Brazil, Mexico.” International Organization Int. Org. 39.03 (1985): 473. Web.

Lipset, S. M.  “The Social Requisites of Democracy Revisited.” American Sociological Review 59 (1994): 1-22.

“Parque De La Memoria – Memory Park.” Atlas Obscura. Web. 21 Apr. 2016.

Pridham, G.  The Dynamics of Democratization: A Comparative Approach. New York: Continuum. 16-24 (2000): 4-5.

Putnam, R. D.  Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press. 6 (1993): 163-181.

Robben, A. C. G. M. “From Dirty War to Genocide: Argentina’s Resistance to National Reconciliation.” Memory Studies 5.3 (2012): 305-15. Web.

Rustow, D.  “Transitions to Democracy: Toward a Dynamic Model.” Comparative Politics, 2 (1970): 337-363.

Scherlis, G. “Political Legitimacy, Fragmentation and the Rise of Party-formation Costs in Contemporary Latin America.” International Political Science Review 35.3 (2014): 307-23. Web.

Schmitter, P. C. “Dangers and Dilemmas of Democracy”. Journal of Democracy 5.2(1994):  57-74.

Zakaria, F. 1997. “Rise of Illiberal Democracy.” Foreign Affairs November (1997) 22-43. Web.

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