The protest by Argentina’s three union confederations, the CTA-A, CTA-T and CGT, will unite teachers, doctors, transport workers and many others, bringing the country to a standstill for a day.
The stakes for working people in Argentina are high.
Faced with a faltering economic performance, the Argentine government has turned to the “zombie economics” of austerity by proposing spending cuts that the ITUC estimates will reach 12% this year and a massive 19% in 2019.
In a misjudged attempt to reassure investors who have been spooked by rampant inflation, President Mauricio Macri is pursuing an economic strategy that has failed the world over.
The scale of the planned cuts will have a devastating effect on health care provision, pensions and the public sector as a whole, where a recruitment freeze is set to be imposed. Like in the UK, local government services will also be severely impacted across Argentina’s provinces.
Lurking behind this policy, and binding not only President Macri but his successors, is the International Monetary Fund (IMF).
The IMF has advanced the Argentine government a loan of $50bn on the condition that it eliminates the country’s structural deficit by 2020 and continues the squeeze for a further three years thereafter.
As the Financial Times reports: “the IMF has a chequered history in the country, with many still blaming the multilateral lender for its role in a devastating economic crisis in 2001-02”.
Conscious of this, the IMF has tried to improve its image and allowed minor areas of spend to be exempt from the raft of cuts, such as special status for existing payments to families with or expecting children.
Yet children will still suffer from the lack of a loophole for education or health, which will inevitably end up in the austerity grinder.
The irony is that the IMF issued a mea culpa on austerity a few years ago, when it admitted that it was a dangerous tool that could do more harm than good.
Its then Chief Economist Oliver Blanchard noted that whenever austerity was used, the countries involved undershot the IMF’s own economic forecasts. As a result, austerity was often counter-productive rather than a grim, but effective, necessity.
Sadly, Oliver Blanchard has moved on and the IMF is up to its old tricks again. But the calculations for the loan assume that the economy will expand healthily to GDP growth of over 3% by 2021.
If Blanchard’s theory is correct, however, the country will undershoot this significantly, leaving the IMF deal in crisis and future governments unable to pursue alternative means to secure Argentina’s future.
After all, the UK’s own experiment with austerity continues to fail.
Despite much crowing by ministers about the first full quarter of budget surplus in over a decade, the UK has now fallen back into deficit following stalled growth and falling tax revenues as a result of the government’s shambolic mismanagement of the economy.
The incalculable damage done to our public services and society for such a pathetic reward should be a warning to any country contemplating unleashing zombie economics on their population.
As our General Secretary, Frances O’Grady, wrote to Argentina’s unions: “We trust that in taking your stand on Monday you will capture the attention of the people and politicians alike in making the case for a better way to build a better future for your country.”
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