Observatorio argentino 53: the real shocker in the primary election was apathy

Argentina held its primary election yesterday. The result was unexpected. Javier Milei, an unrepentant libertarian won a plurality.¹ Markets are freaking out: the unofficial exchange rate for the dollar has crashed to 680 pesos per dollar, down from a hair over 600 per dollar yesterday.

Since their creation in 2013, Argentine primary elections have usually been little more than a big government-run preview of the general election. The reason is that most parties or party coalitions settle on a single candidate before the primary. Since any voter can vote for any candidate from any party, the primary therefore looks like little more than a dry-run of the general election.

But this time both big electoral coalitions saw real internal primaries. The primary for the big right-wing four-party coalition, with the terrible poll-tested name of “Together for Change,” was a cage fight between Patricia Bullrich (the former Minister of Security) and Horacio Larreta (the mayor of Buenos Aires). The big left-wing coalition primary, with the slightly disturbing name of “Fatherland Union,” was less competitive, since the current economy minister, Sergio Massa, had mostly cleared the field. Even so, a popular left-wing firebrand, Juan Grabois, ran a serious primary campaign against Massa.

So you might have imagined that turnout would be high, especially in the context of an economy teetering on the edge of hyperinflation.

Except that the real winner of the poll wasn’t Milei, it was apathy:

Turnout hit a record low for presidential primaries and only beat the 2021 midterm primary turnout by a few percentage points.² In the 2021 midterms, record-low primary turnout presaged record-low general election turnout; the same is likely to happen in the presidential elections this year.

Low turnout makes polls less reliable and upsets more likely.

Can Milei win in the first round of the general election? The numbers look daunting. He needs to clear 40% of the vote and beat his nearest rival by at least ten points. If the established parties follow the general pattern, then they will increase their votes by about 6%. But Milei needs to increase his votes by 56% — about 4 million people. If the 2021 pattern holds, there will be only about ten million discouraged voters. Milei needs to get 40% of them. That’s a high bar.

So I think — maybe — that markets are overreacting. Milei will have a hard time winning in the first round. And he should have a hard time winning in a runoff. Massa is a moderate and could easily pull in a bunch of votes from people who supported Bullrich in the first round. Bullrich might have a tougher time, but I suspect a moderate conservative would beat a libertarian.

Next post: why markets seem disturbed that a libertarian might win the election. Preview: it’s not that they fear Liz Truss-style irresponsible tax cuts. No, it’s dollarization. More later.

1. Milei has been surprising observers for some time now. In 2021, reporters went into Villa 31, a neighborhood that was once of one Buenos Aires’s worst slums, and was shocked speechless to find support for Milei.

2. Unlike neighboring Chile, there is no real penalty for failing to vote in Argentina. In theory, the “O” in PASO stands for “Obligatoria.” But the fine currently stands at only 8¢ in American money. The authorities will collect it any time you need to do anything official, but even in crisis-ridden Argentina 50 pesos is not a big deterrent.