Friday, July 19, 2024

OP-ED | 16-10-2021 00:01

One month (and two years) to go

The Frente de Todos coalition is failing to come up with any new answers now that reality is finally starting to bite.

Peronist Loyalty Day tomorrow has not always been a festive moment for the movement – the 10th anniversary came the month after the overthrow of its first government, the 30th with the Isabel Perón presidency in free fall, the 40th just before a sweeping Radical midterm victory and the 70th on the eve of a traumatic general election defeat (including recently reborn Security Minister Aníbal Fernández losing the Buenos Aires Province stronghold), among other examples – but this year might well end up among the bleakest.

If the theory of challenge and response was Arnold Toynbee’s explanation for the rise and fall of civilisations and hence governments, the Frente de Todos coalition is failing signally in coming up with any new answers now that reality is finally starting to bite. Probably a mission impossible in the best of cases to solve deep-rooted problems almost in real time but the improvised and often self-destructive rehash of repeatedly failed ideas can only confirm the negative trends instead of coaxing out of the electorate that word “Yes” on which a government of yes men now bases its electoral propaganda.

If inflation and crime are the leading problems for today’s voters (as President Alberto Fernández could instantly glean from any opinion poll without need for painstakingly taking notes in face-to-face chats with citizens), last week brought bad news on both fronts – the accelerating inflation rate of 3.5 percent posted for September by INDEC statistics bureau on Thursday and three murders in violent robberies in Greater Buenos Aires on Wednesday (over six times last year’s daily average) quite apart from the continuing carnage in Rosario.

In response to inflation, the brand-new Domestic Trade Secretary Roberto Feletti has hit the ground running with a price freeze on over 1,200 “items of first need” (not excluding champagne) until the second week of 2022. Critics point to the historic failure of price controls over four millennia but there is no need to look far afield to comprehend the futility of his initiative – this government has explored multiple curbs in less than two years, including not only over a dozen programmes to tame food prices but also frozen utility billing and transport fares, as well as a repressed exchange rate amid the multi-trillion printing of pesos. Despite which, there is every danger of this year’s inflation reaching the 53.8 percent dooming Mauricio Macri in 2019 (the highest figure this century).

Fundamentally price controls to halt inflation stumble because they are premised on the fallacy of inflation being synonymous with price increases. Anybody growing up in Britain in the latter half of the 20th century is likely to have come across those born in the late Victorian era who would lament without too much exaggeration the good old days when you could eat in a fine restaurant, get dead drunk and buy a new suit for a no longer existing shilling while the classic line of United States victims of the Great Depression starting in 1929 was: “Brother, can you spare a dime?” – comparing that with today’s price levels in those countries, the percentage increases are astronomic and yet inflation is not considered a problem there. Many prices are seasonal or cyclical – paying more for strawberries in winter or petrol in certain periods is not inflation.  A more accurate definition of that word relates primarily to the volume of the money supply in relation to a nation’s productivity and monetary reserves but also to the disarray of relative prices. Yet nor can inflation be understood as a purely monetary phenomenon because the Macri government froze the money supply, only to end up with the aforementioned 53.8 percent inflation. All this resolves nothing but the first step towards solving a problem is to understand it.

Not only are the policies deficient but also the communication. Extending the benefit of the doubt to Security Minister Fernández, he may only have been pointing out to the cartoonist Nik the inconsistency of criticising the government’s electioneering stunt of free graduation trips while himself sending his children to a state-subsidised school (where he was mistaken) but he chose the worst possible mafia message way of expressing himself and in any case why is he criminalising government critics instead of the murderous thugs of Rosario and Greater Buenos Aires? The new corn regulations to confirm grain stocks and shipment dates came across as another export curb on top of beef when fairly routine precautions against speculation.

The month to come will be trying enough and then what?     

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