2019-08-24 The Economist Latin America

24 The Americas The EconomistAugust 24th 2019

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Bello The limits of technocracy

I

f you can’tbeat them, join them. That

seems to be Mauricio Macri’s response

to his crushing defeat in presidential

primary elections on August 11th. He won

32% of the vote against the 48% secured

by the Peronist slate of Alberto Fernán-

dez and Cristina Fernández (no relation),

a populist former president. At first Mr

Macri blamed the outcome on the voters

for “believing that returning to the past is

an alternative”, a scolding for which he

later apologised. Then the blame shifted

to his finance minister, Nicolás Dujovne,

who had been slashing the budget as

demanded by the $57bn agreement the

government negotiated with the imflast

year. Mr Dujovne resigned on August 17th

after Mr Macri scrapped vaton staple

foods, increased hand-outs and tempo-

rarily froze petrol prices in a desperate

effort to placate Argentines. These are

the kind of measures typically associated

with his Peronist opponents, and they

are contrary to the imfagreement.

Mr Macri is not quite beaten yet. The

presidential election is not until October

27th. But in Argentina’s peculiar system,

the primaries are a dress rehearsal. Few

think he can overturn a 16-point deficit in

nine weeks. The fact that the peso

crashed after the primary result will add

to inflation of 50% a year and makes his

task even harder.

This drubbing came as a shock, but it

probably should not have done. Mr Ma-

cri’s search for a second term always

looked quixotic after the economy ran

into trouble last year. Argentines are

worse off than they were four years ago.

The economy is forecast to have shrunk

by around 4% over this period; prices

have increased by more than 250%; the

peso has gone from 15 to the dollar to

almost 60, while real wages have fallen

by 10% in the past 15 months.

Many had high hopes for Mr Macri, a

former businessman turned successful

mayor of Buenos Aires. After years of

economic debauchery under Ms Fernán-

dez, he promised that Argentina would

rejoin the world as a normal country. He

appointed a team of brilliant technocrats.

So what went wrong?

One hypothesis is that he erred in

trying to stabilise the economy gradually.

That decision was political: the hope was

that growth would cushion the blow of

cuts and big rises in the cost of electricity

and transport as Ms Fernández’s huge

subsidies were withdrawn. It meant that

the government had to finance a still-large

deficit, mainly through debt. In 2018 in-

vestors became alarmed about Argentina,

forcing the government into the arms of

the imfand the economy into recession.

That alarm was partly because of the

rise in interest rates in the United States. A

severe drought also cut Argentina’s farm

exports, driving up its current account-

deficit. But the main blow was self-inflict-

ed: the government’s decision in Decem-

ber 2017 to loosen its own inflation targets,

which undermined the credibility of the

central bank. According to Federico

Sturzenegger, the bank’s then-president,

who opposed the decision, it did so

because (other) officials worried about

the bank’s relatively tight monetary

policy; some did not want inflation to fall

so swiftly because of the fiscal cost. Tax

revenues would rise less in nominal

terms but much spending (such as on

pensions) would keep rising fast, be-

cause it was indexed to past inflation.

As this highlights, the government

had too many economic cooks following

different recipes. They wanted, various-

ly, to slash inflation, increase economic

growth and tighten the budget. Some

wanted a weaker peso (for growth) and

others a stronger one (to fight inflation).

They should have accepted that the price

of fiscal gradualism was tighter money.

Populist politicians are often skilled

at explaining away economic reverses

and persuading voters that they feel their

pain. Technocrats find that harder. Mr

Macri’s re-election campaign was based

on fear, that the return of Ms Fernández

would turn Argentina into Venezuela.

She deftly defused that. By opting to run

for vice-president behind Mr Fernández,

a more moderate Peronist, she turned the

election into a referendum on Mr Macri’s

economic record.

Mr Macri’s advisers trusted in social

media and marketing, and failed to see

the strength of sentiment on the Argen-

tine street. “What happened was that the

government ended up with no politics

and couldn’t explain anything,” Mr Fer-

nández told Clarín, a newspaper. Every-

thing suggests Argentina will end up

with him. Many fear the worst. But Ar-

gentina’s current circumstances leave

little room for populist excess. And Mr

Fernández is not his namesake.

What went wrong for Argentina’s president

medals, which together will make up a map

of the city, begins.

Other cheaters give their bib to a speed-

ier “bib mule” before the race, hoping to at-

tain a time in their name that qualifies for

the prestigious Boston marathon. In 2017

organisers disqualified a man for wearing a

bib registered to a woman called María.

Others still enlist multiple runners for the

race who treat the bib like a relay baton. Or-

ganisers track them down by reviewing in-

terval times to see if a runner’s speed is un-

realistically quick or varies suspiciously.

Many Mexicans think that paying the

650 peso ($33) entrance fee gives them a

right to run the race however they like, says

Mr Carvallo. In 2007 Roberto Madrazo, a

former presidential candidate, was dis-

qualified from the Berlin marathon after

cutting a third of the course. Mr Madrazo

insisted he had never intended to run the

whole race. Social media can warp behav-

iour. Those who broadcast their prepara-

tion for the race grow desperate to post a

triumphant selfie after it. But boasts on

Facebook and Instagram are risky, Mr Car-

vallo says. Clutching a medal without a

bead of sweat can lead to disqualification.

Serious runners and jealous friends enthu-

siastically dob in suspects to organisers.

All this tomfoolery dents the reputation

of the marathon, which is among the fast-

est-growing in the world. It also affects the

contest. Die-hard runners expect clear

streets only to find them full of plodding

course-cutters, says Derek Murphy of Mar-

athon Investigation, a blog that dashes

after the bad sports of marathons around

the world. This year, an ad campaign is pro-

moting honesty. For the first time, cheaters

will be banned for life. That might be

enough to keep los chocolatesat bay. 7