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Javier Milei
Caption for the landscape image:

Why Argentina President is leader of year

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Argentine President-elect Javier Milei addresses supporters after winning Argentina's runoff presidential election, in Buenos Aires, Argentina November 19, 2023. 


Photo credit: Agustin Marcarian | Reuters

Voters use various rationales to support their leaders. In some democracies, particularly in Africa, sympathy is such a powerful tool for vote-mobilisation. When a leader is oppressed by an unpopular regime on behalf of the masses, his ratings usually skyrocket. And it rarely matters the leader's policies or economic standpoints.

At times sympathy blocks rational economic analysis.

In the early 1990s, Kenneth Matiba was a demi-god in Muran’ga during my childhood. He had been imprisoned by Kanu. He was released later and came out maimed. That made us love him more.

But he once made a controversial campaign pledge. He pledged Asians would be kicked out of Kenya if he won the presidency. His supporters rationalised that indeed that was a good policy of "getting rid of economic oppressors”.

But growing up and learning the impact of a similar policy in Uganda during the Idi Amin regime or Zimbabwe during Robert Mugabe’s reign in the land confiscation programme, I am no longer sure that was the right pledge. Matiba would later retract the statement in 1996.

But the point is, emotional and sympathetic appeals crowded our rational judgement and Matiba supporters endorsed a very problematic campaign pledge.

Emotional voting patterns

Sympathetic and emotional voting patterns include voting for someone on the basis of kinship or ethnicity instead of policies or economic ideology. As the Bible states in the book of Galatians, "for whatever a man sows, this he will also reap." When voters sow politics of ethnicity or sympathy, they will surely reap such. You cannot plant maize and expect to reap beans.

Voting on the basis of economic policies is hence a superior voting behaviour. This is because the choice outcome is predictable and hinged on voters’ most important endeavour: economic activities.

However, voting on the basis of economics or policies has its downside. A society can be on a downward spiral and voters are not ready to make the necessary sacrifices needed to push society forward. Voters generally never want to lose their pre-existing privileges notwithstanding that loss is necessary. Politicians, being self-interested in power and winning, rarely have the courage to tell voters the truth concerning needed collective sacrifices. Politicians always pander to the gallery.

That is why the current Argentinian President Javier Milei is a rare kind of politician globally. He gets my accolades as the leader of the year 2024.

About 100 years ago, Argentina was one of the richest countries in the world. But in mid-1900s, it adopted a nice-sounding economic philosophy of Peronism. This is an ideology based on President Juan Peron, who led Argentina in the 1940s. Peronists have won 10 out of 14 Presidential elections since this period. The ideology champions Argentina's economic independence and social justice. That sounds good. But dig deeper into the idea and one uncovers what made Argentina a very poor country as it headed into the 2000s.

International trade

The ideology made Argentina reduce international trade through high taxation. It bloated the public sector through the expansion of state-owned enterprises and high salaries for public sector employees, leaving little money for development. These policies were good in getting votes but in the long term they damaged Argentina’s economy.

Inflation sets in because high government expenditure makes people have more money (through high public sector salaries) but chasing very few goods and services. When the Argentinian government supported state-owned enterprises, chances of wastage increased due to higher incidences of corruption and mismanagement that generally permeate the public sector. This retarded the growth of the private sector, which cannot grow since the economic playing field is tilted in favour of an inefficient public sector.

Argentinian governments were, therefore, throwing good money after bad — pumping more money to prop up a failing economy to please the people. It worked but only for a little while. Inflation peaked at 250 per cent.

Milei came into power in 2023 promising the very opposite. To reduce government expenditure was a central pillar of his plan. He reduced ministries through scrapping 11 out of 18. He pledged to cut public sector salaries and to reduce taxes and government bureaucracy. And he was forthright during campaigns: it would be painful in the short term but things would get better afterwards.

And he was right - his painful remedy is working so far. Inflation, driven previously by wild printing of money and government overspending, has dropped to its lowest point in three years. The country now has a trade surplus.

But unemployment and poverty have shot up.

President Milei insists this is temporary and his approval rating remains high despite not having control of Parliament.

Dangers ahead

But there are dangers ahead. He needs to make the labour market flexible but risks confrontation with organised labour. In addition, some of his reforms might harm long-term productivity - including cuts in infrastructure, health and education.

However, similar reforms like reduction in government expenditure have made India, Indonesia and Ireland economic powerhouses.

But for his courage and having his heart on the right trajectory, he is definitely the leader to watch.

What lessons can Kenya borrow from him? Ours needs the courage to close up inefficient entities. Regional development authorities should be the first to go. Money spent in such entities is better re-channelled to education or healthcare or infrastructure.

And governments need to be truthful to their people, including disclosing necessary painful economic reforms, even if the truth hurts.

Dr Kangata is the Governor of Muranga County; Email [email protected].