The rise and extinction of the middle class in Argentina

RIO DE JANEIRO, BRAZIL – In 1934, Carlos Gardel premiered ‘Cuesta abajo’, a tango full of pessimism in which he spoke of “the shame of having been” and “the pain of no longer being”.

Eighty-eight years later, that lament finds greater meaning: according to the World Bank, 51% of Argentines were part of the middle class before the pandemic. One year later, and due to the economic collapse, that average is 44%, making 1.7 million people poor.

The deterioration is long-standing in a country that has gone through successive crises and whose economy has been stagnant for a decade. Throughout the 20th century, Argentina built up the idea of an essentially middle-class country.

This idea has always had its hard edges, as Ezequiel Adamovsky has shown in his book ‘Historia de la clase media argentina. Apogee and decadence of an illusion, 1919-2003’.

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The first allusions to the middle class predated Gardel’s tango. They were propagated by the conservative political and economic elite to differentiate a social sector -public workers, merchants, students, and professionals- from the growing proletariat nourished by emigration, mainly Spanish and Italian, who had arrived with anarchist and socialist ideas.

Adamovsky points out that middle-class identity was intertwined with the Nation’s narrative according to which “the European” made its way in the face of mestizo and Creole “barbarism” and, above all, the poor.

RISE AND FALL

The middle class grew exponentially from the 1940s onwards and was, to a large extent, anti-Peronist, despite benefiting from his economic policies. Its moment of greatest expansion took place in the 1960s.

Mafalda, Quino’s comic strip, staged part of their aspirations: purchasing a house, a car, however modest, and cultural consumption. “The decline of that illusion,” says Adamovsky, begins in 1975, after the brutal devaluation of the third Peronist government.

The last military dictatorship (1976-83) and subsequent economic collapses steadily degraded the strength of that sector, which seemed to differentiate Argentina from its neighbors due to its characteristics. The middle class’s fall was a way of “Latin Americanizing”. It constituted what sociologists Alberto Minujín and Gabriel Kessler defined as ‘The New Poverty’.

In the 1990s, the so-called neoliberal era, seven million Argentines were expelled from their previous social belonging group. Unlike the “structural poor”, they had had a past with more resources and other horizons.

The 2001 crash aggravated the situation. Between 2004 and 2011, the country regained its economic growth path, and the middle class expanded again. The purchase of a car, private education and health, the best possible cell phone, and, above all, trips abroad were its signs of identity.
Fear of losing again

The certainty of “being” middle class in times of economic improvement reactivated the belief of a central point between rich and poor, even if one only earned a little more money than the latter.

The last decade set a new cycle of erosion that became significantly worse in 2018. Today, almost 44% of Argentines are poor and earn less than US$350 per month. Many come from the middle class, and many others fear continuing down the same path.

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has found that an Argentinean has to earn between 1.8 and 10 times the poverty line to be considered middle class.

According to a recent survey by the Observatory of Applied Social Psychology of the University of Buenos Aires, a large part of the citizens do not recognize themselves in that situation despite the stumbling and sinking.

At present, 40% of Argentines are part of the informal economy. Sixty-two percent of the people who regained employment did so in the so-called “black market”. The monetary authorities are aware of the impact this has on reducing the fiscal deficit, one of the demands of the International Monetary Fund (IMF) within the framework of the complex negotiations with the government.

The fall in tax revenues affects the pension system, which represents 40% of public spending, but also state policies that are fed by tax collection at different levels, including the health and education systems.

The draft Budget 2022, which has not yet been debated in Parliament, contains an adjustment of 6.2% in the Nation’s investment in the educational chapter. This is the lowest investment for the area since 2015.

Despite the pandemic and the state efforts to face covid-19, the expenses contemplated for health are also lower in this current year.