Drowning by numbers

While the phrase “lies, damned lies and statistics,” attributed to the Victorian era politician Benjamin Disraeli, dates back to the 19th century, The Goon Show comedian Michael Bentine was already challenging several decades ago the general assumption that the numerical commands superior clarity over the alphabetical. In his It’s a Square World BBC show he played a newscaster whose news flashes included holding up a cardboard oblong with the number “832” written on it and saying: “Look at this figure. Terrifying, isn’t it?” – a parody barely differing from the frequent reality of news announcers tossing out supposedly alarming statistics with zero context or explanation.

Turning to Argentina today, the full range of available statistics would seem to lead us inevitably to the conclusion of “It was the best of times, it was the worst of times,” in the words of Charles Dickens – a tale of two countries rather than cities. Thus on the one hand, we are assured a second consecutive year of growth (even if the 2026 Budget forecast of five percent has been halved in the course of this year), while on the other hand there is an opposition litany of manufacturing industry and construction shrinking by three and 4.5 percent respectively so far this year (not the only data on offer in either case), the closure of over 31,000 companies and the loss of some 330,000 registered jobs between the private and public sectors since Javier Milei became President, etc., etc. Not that every sector progresses at a uniform pace in any country.

Growth is invariably considered the bottom line for an economy but even this figure has its ambiguities. Thus the 2021 growth figure of 10.4 percent marked an all-time historic record but should mostly be seen as a rebound from the minus 9.9 percent shrinkage of the previous pandemic lockdown year (amid suspicions that the latter figure had been fudged downwards in order to avoid a double-digit percentage). In other years examples can also be found of consumer-led growth fed on steroids at the cost of destructive inflation. On the other hand, there are few examples in world economic history of a more brutal downturn than the minus 14 percent contraction of Chile in 1982, the result of an accelerated elimination of deadwood by a military dictatorship which nevertheless proved to be the prelude to nearly four decades of almost continuous growth – Milei’s economic team (which includes Chile’s José Luis Daza as deputy minister) can be suspected of attempting to achieve a similar transformation by stealth, at a pace more akin to Mauricio Macri’s gradualism than the shock approach vaunted by libertarian rhetoric.

Investment data is also on a collision course. Milei’s RIGI incentive scheme for major investments has attracted almost US$200 million between projects approved and in the pipeline (literally pipeline in many cases) – a massive figure even with more than a quarter home-grown as stemming from the YPF state oil company. Yet all too much of this impressive volume is on a standby basis awaiting the results of next year’s elections – so much so that real as opposed to future investment has been lower under Milei in every year so far than during the disastrous administration of Alberto Fernández (even if the difference is largely explained by the virtual elimination of public works in order to reach a fiscal surplus as against the lavish and often scandal-ridden infrastructural spending of a Kirchnerism printing money in industrial quantities).

Indeed, the 15.1 percent of Gross Domestic Product posted in midyear is the worst investment figure since the 2001-2002 financial meltdown except for 14.2 percent in 2019 when the financial crisis and PASO primary debacle of the Macri Presidency sealed the certainty of four years of Kirchnerism. Renewing the comparison with Chile, it is some nine percentage points lower and less than half of India – percentages essential for serious, sustained growth. A market-friendly government offering investors unprecedented tax breaks is thus significantly undershooting a mediocre historical average of around 17 percent of GDP. A situation perhaps impossible to avoid while the ‘cepo’ currency and capital controls remain in place for companies.

Néstor Kirchner was able to boast twin fiscal and trade surpluses throughout his 2003-2007 presidency, thus considerably bolstering his political support in commodity boom years – the Milei administration has strenuously sustained a fiscal surplus leading to lower inflation, as they never tire of telling us, and nor are they falling at all short on the trade front, heading for a record surplus of over US$25 billion this year, and yet the electoral support for La Libertad Avanza is visibly dwindling. What is going wrong for the team that looked so good? The answer probably lies in another record – the US$285 billion “under the mattress” (although criminals interpreting Pete Clemenza’s advice of “going to the mattresses” to burgle homes looking there are sure to be disappointed), as calculated this week by the INDEC national statistics bureau. Missing links in the banking system and elsewhere are preventing this money from being channelled into bank deposits and investment.

“Lies, damned lies and statistics” notwithstanding, most economists affirm their faith in INDEC data in the face of President Milei’s critique of growth projections showing the economy on the brink of recession and this columnist is inclined to agree with them. Milei’s thesis is that an economy transformed by his model cannot be measured by the traditional yardsticks, yet it was government resistance to INDEC updating its methodology which led to Marco Lavagna’s resignation last February. It is also true that the pre-electoral “wait and see” investor boycott of the Argentine economy risks becoming a self-justifying prophesy for the worst, yet there are also elements of denialism and wishful thinking in government optimism.

In conclusion, those bemused by the alphabet soups of acronyms might find them child’s play once they move onto taking on numbers.