It is said that when Juan Domingo Perón arrived to power in Argentina in 1946 one of the first things he did was to visit the central bank. Afterwards, he would claim that “there’s so much gold that one can’t walk through the hallways.”
Perón is not only the first ruler we can call populist but also the quintessential, the ultimate populist.
In fact, he’s the last Argentinean president who didn’t complain about the inheritance received. Quite on the contrary, he got a still rich country and thanks to that he could apply –for some time– redistributionist policies.
For five years or so these policies seemed to be working. Perón and his wife, the notorious Evita, had free goodies for almost everybody. The trilogy of redistribution, demagoguery, and propaganda helped create the myth of the “popular government.” Perón was “a man of the people” and his plan was working. This is how the myth of Peronism was created. And that myth has haunted Argentina for decades now.
Of course, redistribution is nothing more than destruction of wealth and the levels of it were totally unsustainable. But, like heroin addiction, for a while it feels amazing.
This is how redistribution operates politically and how it creates the populist myth.
In the 21st century, the best students of Perón were Hugo Chávez (Venezuela) and Néstor and Cristina Kirchner (Argentina). Although their nations weren’t as rich as the Argentina of the 1940s they had something else working in their favor. Namely, the commodity price boom. Thanks to this windfall, again, for some years they could do as much redistribution as they wanted to.
The consequences of these policies are always economic collapse. But when reality hits them the populists claim that it’s not the logical consequence of their actions but some sort of conspiracy. And in the minds of many people the myth of an effective redistribution is well established. Thus, at the beginning at least, they believe that these popular figures tried to do the right thing but face certain dark forces who want to make them fail. These so-called agents of chaos usually are faceless constructs presented under the labels of “the oligarchs,” “the USA,” “international capital,” “the banks” etc.
When he was running for prime minister, Alexis Tsipras didn’t hesitate in making all sorts of crazy promises. He was best friends with Pablo Iglesias – the leader of populism in Spain. He was also a great admirer of Cristina Kirchner and even declared “I wish we had become Argentina.” He was totally on board of the new populist wave inaugurated by Hugo Chávez in Venezuela and a staunch supporter of the 21st Century Socialism.
Unfortunately for him, Tsipras painfully realized that he committed the worst sin of a populist – bad timing. Greece was broke when he got into office and there was nothing to redistribute. That’s why he so quickly became the loyal puppy of the Troika.
When Tsipras announced he’s raising taxes and reducing the pensions (again) it’s not because he’s a sadist. He’s just a mediocre ruler, out of ideas, and with no money in his pockets.
But this is fantastic news! Why? Because it provides Greece with a great opportunity.
Unlike every other “successful” populist experience, Tsipras has no golden era to show. In fact, his administration has an appalling social and economic record – full of tax hikes, “austerity” measures, unemployment, and wage and pension contractions.
In this sense, Greece has tried the forbidden fruit of 21st century populism without any of the temporary benefits. It’s like having drugs without the short term pleasure.
While I was in Greece for the Free Market Road Show, Tsipras met his idol Cristina Kirchner. The meeting was probably pointless. In any case, it’s now the time for the Greek civil society to start building an anti-populist consensus that favors rationality, a smaller state, less regulations, and cuts in taxes and public spending. Think tanks, public intellectuals, bloggers, and people in new media have to help create a demand for sound policies.
If Greece is up to this challenge, Tsipras will soon join Kirchner in the ranks of unemployed populists.
Federico N. Fernández is a Senior Fellow at the Austrian Economics Center and President of the Fundación Internacional Bases.
Source: Free Market Diaries