Why Milei refuses to budge an inch

Javier Milei believes that if he allows public spending to rise even a millimetre above breakeven point, the edifice he is building would immediately come crashing down to the ground, taking with it Argentina’s last chance of becoming a prosperous country. As he made clear in last week’s nationwide broadcast, he is more than willing to defy politicians, ecclesiastics and progressive-minded folk who insist that human beings matter far more than numbers on a spreadsheet and accuse him of being a heartless monster who delights in making people suffer. Many openly despise the fiscal rectitude he adheres to with such tenacity and pray that in the upcoming elections he will get the punishment they think he deserves.

Will he? The conventional view is that most men and women prefer politicians who shower them with goodies before they cast their votes, which is what the Kirchnerites did with such gleeful abandon a couple of years ago, but Milei thinks that experience has taught his compatriots that only halfwits let themselves be deceived in this way and that this time they will reward him for his intransigence. There are signs that he could be right and that being generous with other people’s money no longer guarantees free-spenders the electoral success it once did. He is convinced that, unattractive though it may be when a president sternly refuses to give a helping hand to pensioners, the genuinely disabled, academics and others who surely deserve to be treated more kindly, caving in to the political pressures he is being subjected to would have unpleasant consequences not just for himself and the movement he has spawned but also for the country as a whole. Like “the Iron Lady,” late British prime minister Margaret Thatcher, whom he admires, Milei lets it be known that he is not for turning.

As far as Milei is concerned, keeping spending under tight control is the key to just about everything. His entire political philosophy is based on what to him is the indisputable fact that two plus two always equals four and that it is suicidal folly to pretend otherwise, as have generations of politicians both here and abroad, no matter what advanced thinkers have to say. No doubt he understands that, after an economy starts growing, there will be more money to hand out, but even then a considerable degree of fiscal prudence will continue to be called for. He is determined to provide it for as long as he is in office. It would seem that about half of the population has come to agree with Milei and is therefore prepared to put up with the chainsaw-enforced austerity he says he needs in order to create the conditions that will be necessary for sustained economic growth, while the other half would apparently much rather go back to the days when Peronists of one kind or another were in charge of the country and reacted to any shortage of hard cash by printing zillions of banknotes.

In an attempt to woo those who accused him of being cruel to people who find it hard to make ends meet, Milei and his keenest supporters have become used to treating those who oppose them in any way with picturesque contempt, comparing them to apes, rats, degenerates, sexual perverts and much else, but their penchant for crude insults only succeeded in putting off people who, though by and large they shared the president’s economic views, objected strongly to his aggressive vulgarity. A couple of weeks ago, Milei said he would appease them by moderating his language, a promise few expect him to keep for very long.

If the wild self-confessed “anarcho-capitalist” president succeeds in getting his message across and most Argentine politicians, whether leftist, rightist or somewhere in the centre, come to take it for granted that overspending is not only harmful but also electorally counterproductive, much of his work will have been done and he could call it a day. After all, a society in which most of the population is determined to obey the principles Milei preaches would surely be able to take full advantage of the many natural resources geological luck has given it without having to put up with his less endearing qualities. However, for this to come about, the political forces that were dominant for over three-quarters of a century and influenced the thinking even of those who detested them would have to be well and truly consigned to the what the ferocious, but highly literate, Bolshevik Leon Trotsky once called the garbage dump of history.

So far, this has not happened. Peronism and its many satellites may be divided and on the defensive, but their creed has not been utterly defeated. This is why major investors, whether Argentine or not, are still asking themselves whether Milei’s “cultural revolution” is permanently changing the country’s way of thinking or is merely another manifestation of its notorious fondness for political eccentricity after which things will return to what here passes for normal and those who risked their money here will once again get bilked.

As the high country risk index consultancy firms work out keeps reminding us, top fund managers in places like New York, London, Frankfurt and Tokyo have yet to make up their minds. If Milei’s party wins big in the October midterm elections, some could come to the conclusion that Argentina really is about to give the many sceptics out there a pleasant surprise, but even if it does, they will remember that Mauricio Macri’s coalition did remarkably well in the midterms eight years earlier only to fall flat on its face soon after, opening the way for the spendthrift triumvirate – Alberto Fernandez, Cristina Fernández de Kirchner and Sergio Massa – that came so close to turning Argentina into a “failed State.”

It is unfortunate that Milei relishes his role as a far-right pin-up boy. Among other things, it encourages people with leftist or middle-of-the-road attitudes to attack fiscal responsibility on ideological grounds and then do their utmost to force the government to adopt policies that would lead straight to an inflationary upsurge. They are unwilling to recognise that there is no reason why a socialist or centrist administration should feel itself obliged to make a mess of the economy by ignoring the Micawberish adage, “take care of the pennies and the pounds will take care of themselves.” Unless they come round to that way of thinking before a less “right-wing” government comes to office, they could end up betraying the people that say they dearly want to help.