Report Nº: 103124/08/2023
The PASO (primary election) results show that people want deep and innovative transformations. It is an unprecedented political context that constitutes an opportunity to get out of decadence. The risk is that, due to ignorance of how the federal regime operates, “more of the same” may end up prevailing.
The government has been repressing inflation with a battery of instruments. Among others, was the exchange rate appreciation, which led to negative reserves in the Central Bank. Faced with an unsustainable situation, a few hours after the PASO, the government decided to devalue the official dollar in pursuit of the modest goal of mildly mitigating the inconsistencies. The immediate impact was to exacerbate inflation. It is worth mentioning that there is still a lot of repressed inflation to be disclosed.
In this framework of high uncertainty and uneasiness, the PASO was carried out. Within Juntos por el Cambio (Together for Change), there was a confrontation between deep and fast transformation proposals (Patricia Bullrich) and slower and more consensual changes (Horacio R. Larreta and the UCR). The main pro-government candidate (Sergio Massa) was also more attached to the traditional lines of Argentine politics. At the extreme, Javier Milei positioned himself with radicalized postulates of total rupture with traditional politics.
What message did the people give through the popular vote? According to the official results, 23.7 million people voted in the PASO with the following results:
These data show that those who explicitly propose to leave traditional policies (Milei and Bullrich) accumulated half of the votes. So many people rejecting traditional policies is an unprecedented fact in Argentine politics, even when both are presented in different formats. It is a great opportunity to comprehensively rethink the organization of the State with disruptive and innovative approaches.
The fact that the opportunity exists does not guarantee that it will be seized. One of the risks is to ignore the limits imposed by the federal regime. The best example is the unproductive debate around vouchers in education. The libertarians raise them as a tool to overcome the anachronistic state management of schools. But they overlook the fact that the national State does not manage schools. Article 5 of the National Constitution explicitly states that each province reserves for itself the administration of basic education. What the national State can do is induce people to pressure their governors to improve educational management, but it lacks the instruments to intervene directly in the management of the schools in order to improve the quality of education.
It is also unproductive to close national ministries that interfere in provincial responsibilities (Education, Health, Social Development, Habitat), to create a large Ministry of Human Capital. The current ministries becoming a new ministry is a cosmetic change. The disruptive change consists of dismantling the bureaucracies and national programs that overlap with the provincial bureaucracies. The Nation has to stop interfering in provincial functions –which are housing, urbanism, health, education, and poverty eradication– and start measuring provincial results. Measuring and disseminating results is the best tool the Nation can give to the people so that they can pressure their provincial and municipal governments to improve social services. By eliminating overlaps, the goal of reducing national public spending by 5% of GDP can be achieved in the short term.
Faced with the need for profound transformations in the organization of the State, for decades immobility prevailed under the argument that these reforms are “politically incorrect”. Through the vote, the people showed that they are so fed up with a dysfunctional public sector with chronic financial and management deficits that they are now willing to support disruptive changes. This is an unprecedented opportunity. Political audacity and technical professionalism are now needed to seize it.
