The joke about Argentina’s habit of electing populist leaders says: If you go back to that country after a week, everything has changed, but if you go back after 30 years, nothing has changed.

Indeed, Sunday’s landslide victory by the Peronist ticket headed by presidential candidate Alberto Fernandez and former President Cristina Fernandez de Kirchner in Argentina’ s primary elections almost guarantees that Peronist populism will win the Oct. 27 presidential elections. If history is any lesson, that will worsen Argentina’s chances of becoming an economically viable country.

The Fernandez-Fernandez populist ticket — the candidates are not related — trounced pro-business President Mauricio Macri by 47 percent to 32 percent of the vote, a much wider margin than the polls had anticipated. Peronists, the followers of late populist leader Juan Domingo Perón, have led the country for most of the time since 1945.

Predictably, Argentina’s markets crashed the day after the Fernandez-Fernandez primary victory, and many Argentines rushed to buy U.S. dollars. They feared that a government run by these two would start to irresponsibly print money to pay for ever expanding social subsidies, worsening the country’s inflation rate.

With few exceptions, Argentina’s Peronist governments have spent way beyond the country’s means, were notably corrupt and then blamed others — whether the United States, the International Monetary Fund or whomever was the scapegoat du jour — for the inevitable economic crises they created.

Argentina’s public spending nearly doubled during the populist governments of late president Nestor Kirchner (2003-2007) and his widow, Cristina Fernandez (2007-2015), when the country enjoyed an unprecedented boom thanks to high international commodity prices.

During the Kirchners’ governments, public spending soared from 23 percent of the country’s GDP to 41.3 percent, according to the IMF. When the commodity-prices bonanza came to an end in 2012, Argentina’s economy collapsed, and Macri won the 2015 elections.

But Macri inherited a bankrupt country. Instead of immediately alerting the world to how bad things were and making drastic reforms immediately, he opted for what his advisers called a “gradualist” approach.

As Macri told me in an interview, he feared that a sudden and massive cut in social subsidies after taking office would spark opposition riots and make the country ungovernable. He made a bet that the world economy would help him draw investments, but several events — rising U.S. interest rates, a severe drought, an economic downturn in neighboring Brazil and the 2018 Turkish crisis that hurt emerging markets — foiled his expectations.

A century ago, Argentina was one of the world’s most prosperous countries, alongside the United States and Australia. When my parents emigrated to Argentina from Germany, they chose to go there because it seemed to be the country of the future. And for a while it was.

But ever since Perón’s populism captivated the minds of many Argentines, the country has gone downhill. According to a 2018 World Bank study, Argentina has had the most recessions since 1950 after the Democratic Republic of Congo, which — unlike Argentina — had two wars. Over that period, Argentina has had 14 recessions, which means that it has lived in recession for about a third of the time.

As a legacy of the Kirchner governments, Argentina now has only 9 million private-sector workers who are paying for a combined total of 15.3 million government employees and pensioners. That’s unsustainable for any country. By comparison, Chile has 9 million private-sector workers who are paying for a combined 9 million government workers and pensioners — a one-to-one ratio.

It’s no wonder that Chile, Peru, South Korea and many other countries have, with favorable business climates, grown in recent decades by courting investments. They have reduced poverty much more than has Argentina.

What will happen next? Hoping to make the best of Sunday’s results, some economists are pinning their hopes on the expectation that Alberto Fernandez will be more moderate than Cristina Fernandez.

Alberto Fernandez is, in fact, more pragmatic than his vice presidential candidate, and his good showing in Sunday’s primary may give him some extra leverage within his party. But the fact is that he was hand-picked by Cristina Fernandez as a presidential candidate. It’s she who controls the party and who will have formidable power if the Fernandez-Fernandez team wins in October.

The joke about Argentina is right. Everything has changed in the country — and nothing has.


By Andrés Oppenheimer