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OPINION AND ANALYSIS | 02-12-2023 09:56

A president without money to spend

For any government, whether populist, neoliberal, Trotskyite or flat-earthist, catering to the pressing needs of the millions of people who are on welfare would remain a huge problem.

On the many occasions when Margaret Thatcher found herself under attack by kind-hearted people who objected to her “neoliberal” policies, she responded by telling them “there is no alternative” – a catchy slogan which both her supporters and her critics summed up as ‘TINA.’ Like the British prime minister he evidently admires, Javier Milei has an equally simple answer to those who question his desire to take a chainsaw to public spending: “There is no money left.”

While the Iron Lady’s insistence that hers was the only conceivable way of dealing with the United Kingdom’s economic problems was always open to debate, the same cannot be said about the situation facing Argentina’s rulers: the country is flat broke, has little of value in the Central Bank vaults and is regarded with well-merited suspicion by foreign potentates, wealthy investors and the people who call the shots in the International Monetary Fund. Experience has taught them that Axel Kiciloff is not the only Argentine politician prone to take an unconventional view of the legal niceties that matter to businessmen. Not just elsewhere but also here at home, the consensus is that they are an untrustworthy bunch.

Though churning out ever-increasing quantities of orange-coloured banknotes has helped keep the local economy moving, it could soon bring about another hyperinflationary explosion which – according to the man who won the presidential elections by a comfortable margin – would in all probability impoverish about 90 percent of the country’s inhabitants. It may be already too late to prevent this from happening but, in public at least, serious economists keep their fingers crossed and say the disaster doomsters predict can still be averted.

It is widely agreed that those who voted for Milei want to consign the established order to what Leon Trotsky called the rubbish heap of history and replace it with something resembling what can be found in the ‘developed’ parts of the world. They would very much like Argentina to turn into what many wistfully describe as ‘a normal country.’ Given the circumstances, this seems reasonable enough, but for it to be more than just a wanhope a major cultural shift would be needed, one which would install a far more individualistic social and political order than the one that exists. For such a metamorphosis to take place, a large majority would have to be genuinely convinced that Peronism and, for that matter, the milder version of the populist creed represented by the Radical movement, have failed so dismally in practice that there can be no going back.

Is something on this line happening in the country’s collective mind? We could soon know the answer to this very important question. It will depend in large measure on the public reaction to the threats being mouthed by those defenders of the status quo who are determined to make Milei’s life impossible and vow they will fight tooth and nail against whatever cost-cutting measures he takes because they will harm the poor and, in many cases, unemployable men and women who depend on hand-outs.

Although Milei says he will not make such people suffer in the initial stages of the drastic reforms he has in mind, he must be aware that if he is serious about reining in inflation, his government will have to spend far less on social-welfare programmes than did those of his predecessors. No doubt he would like to take it easy for a while in order to give people time in which to adapt to what is coming their way, but, as he is well aware, the money needed for him to pay for what most have come to think of as theirs by right has already run out.

For any government, whether populist, neoliberal, Trotskyite or flat-earthist, catering to the pressing needs of the millions of people who are on welfare would remain a huge problem. Had Massa won the presidential election, he would now be frantically reducing public spending in an effort to keep hyperinflation at bay. For a month or so, he would’ve enjoyed the support of the labour unions and a large number of Peronist militants who could help him keep a lid on unrest, but it wouldn’t have been long before they too started demanding to be paid for their services.

Unlike Massa, Milei cannot rely on organised groups of heavies who would be happy to deal with anyone tempted to unseat him. Though he is supported, up to a point, by the almost 56 percent who voted for him, they are unlikely to include many seasoned street-fighters. So, will he be able to apply the law against trouble-makers? Quoting Juan Domingo Perón, who once proclaimed “within the law, everything; outside the law, nothing,” he says he will take a stern approach towards any protestor who oversteps the mark. 

Milei is also in favour of making sure that all the beneficiaries of welfare programmes use credit cards so they can get their money directly from banks, in this way by-passing the activists that previous administrations put in charge of them in a variant of the tax-farming arrangements that were often favoured by pre-modern governments. The idea is that, by denying the “picket” leaders access to public funds, he will deprive them of their ability to stage big and often rowdy demonstrations in Buenos Aires and other cities. Another possibility that is being floated has to do with getting town mayors to play a bigger role in handling welfare programmes because they are presumably well-acquainted with the needs of people living in their districts.

All politicians say they think poverty is terribly bad and that they would like nothing better than to see it eliminated, but despite such sentiments many have grown used to seeing it as an asset because it gives them a chance to pose as generous benefactors. This is certainly true in the “feudal” provinces of the north and, needless to say, in the ramshackle slums of Greater Buenos Aires, where Peronism has long reigned supreme. Encouraged by the election results, some think that the victims of decades of populist misrule are beginning to attribute their plight to the selfishness, corruption and incompetence of politicians who are far more interested in their own well-being than in improving the living standards of those who provide them with votes and, via taxes, with money. This may be wishful thinking on their part, but there can be little doubt that some big changes are on the way.

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James Neilson

James Neilson

Former editor of the Buenos Aires Herald (1979-1986).


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