Versión Español
EspañolThe belief that higher public spending would inevitably lead to poverty reduction has led many leaders across Latin America to raid government coffers and resort to a populist, welfare-state discourse to remain in power — and Argentina is no exception.
The steep increase in public spending here has not only failed to substantially reduce the numbers of the poor. On the contrary, poverty levels have risen over the last three years, according to a report released by the Social Observatory of the Catholic University of Argentina.
This situation belies the manipulated figures released by state statistics institute INDEC, which hide real inflation, and thus report an illusory substantial decrease in poverty during the past decade of Kirchnerist rule.
This increase in public spending, first promoted by the late President Néstor Kirchner, and followed by his wife, President Cristina Kirchner, has intensified since 2005. It’s been directed to the energy sector, to the payment of public-sector workers, and offering access to pensions and public services to an additional four million people.
As a result, public spending grew by more than 651 per cent between the years 2005 and 2013. As is shown by the graph, the exorbitant increase in spending is not consistent with a corresponding marked reduction in poverty levels.
According to figures from the UCA, poverty levels dropped from 33 per cent in 2005 to 26 percent in 2013. That means that, with spending of more than AR$870 billion (US$70 billion at today’s parallel rate) only a little over 3 million people were able to leave poverty within barely nine years.
INDEC’s numbers have been manipulated since 2007 to give results that are very far from the truth. According to The Economist, INDEC cherry-picked prices during the same period to try and indicate that inflation was half that estimated by independent economists. The impact of this doctoring of the figures is plain to see in the discrepancy between government and independent estimates of poverty, which is calculated in part by looking at purchasing power.
According to INDEC, 12 million people escaped poverty between 2005 and 2013, four times more indicated by the UCA results. It should be noted that INDEC is the same organization that claimed in 2012 that a person could buy enough food to eat with AR$6 (US$0.50) per day.
Further studies have revealed the reality of the situation in recent years. In 2011, UCA indicated that 23 percent of the population were living under the poverty line. Two years later, the same figure rose to 26 percent. During the same period, public spending increased by $400 billion (US$36 billion). This huge rise in spending not only kept poverty levels static, the situation actually became worse: another million people found themselves trapped in poverty.
These figures reveal that public spending hikes don’t automatically translate into poverty reduction. The route to a better quality of life goes far beyond politically motivated social subsidies. But we will never get an accurate measure of the truth if institutions are compromised. If official statistics are corrupted by state intervention, the government’s failure to address the root causes of poverty will continue to be justified.
