Wednesday, June 19, 2024

OPINION AND ANALYSIS | 18-03-2022 21:00

It’s the inflation, dickhead

In a country with a long history of uncontrollable price increases – including several bouts of hyperinflation – the last three administrations have failed miserably at controlling runaway price rises.

There should be no doubts that public servants, particularly those that are designated in their posts, have a higher responsibility than other members of society in that they represent their people and their countries, particularly when it comes to the international arena. 

One would expect, for example, a foreign minister to speak a certain level of English, given its prevalence as the lingua franca of the Western World. In a speech at Expo Dubai, Santiago Cafiero — Argentina’s Foreign Minister who is considered an undercover Cabinet chief after being removed from that post — tried his best to please the international audience but was seen to be lacking in his pronunciation and vocabulary, sparking the mockery of the Twittersphere. Another picture of his tour, where he was looking to attract much-needed investments into the country showed him standing before a huge screen with a pathetically written slide behind him, full of basic mistakes including misspelt words. Of course, one would expect Cafiero and his team at the Ministry, considered domestically an efficient organisation, to take more care with basic details that could make the country look amateurish in the global arena. The mockery, which reached the traditional media outlets too, was laced with a certain malice, almost expressing a sort of “class violence” which Cafiero hinted at when in a radio interview he noted he hadn’t been educated in a bilingual institution, just before calling an important journalist, Jorge Lanata, a “dickhead.”

Cafiero comes from a traditional Peronist family with a long-history of major political appointments, grew up in the well-off northern Buenos Aires municipality of San Isidro and has university degrees from two prestigious institutions, political science at the University of Buenos Aires and a master’s in public policy from the Universidad Di Tella. His poor grasp of English doesn’t come from a lack of opportunities but probably from lack of trying, but that shouldn’t be the underlying point: he’s a political appointee, not a career diplomat. Yet, his failed attempts at speaking the world’s most important language from a geopolitical perspective is evidence of a lack of preparation at the Foreign Ministry he runs. He was indeed mocked on social media and by certain elements of the press — everyone should know Lanata is a feisty one — and he has every right to defend himself, even through mockery and chicanery. Calling a journalist a “dickhead” is probably one more example of improvisation. Despite the connotation of the term in English, which renders it a relatively light insult, its direct translation into Spanish is extremely vulgar to the point of backfiring and makes him look even less prepared to lead the Foreign Ministry.

Yet, what’s really at stake here isn’t the petty war of words between Cafiero and the media, but the same level of improvisation that has infested this administration from day one. Alberto Fernández, a handpicked placeholder given Cristina Fernández de Kirchner’s incapacity to win an election, has had his fair share of gaffes and public demonstrations of unpreparedness. The issue is that these things trickle down from language to action, becoming an initial demonstration of incompetence in the public sector that has very real effects on the lives of every Argentine.

Inflation is one of Argentina’s most pressing issues. In a country with a long history of uncontrollable price increases, including several bouts of hyperinflation, the last three administrations have failed miserably at controlling runaway price rises, leading to a sustained and painful decrease in the wellbeing of the population. Fernández de Kirchner kicked it all off again during her second term after husband Néstor and then-economy ninister Roberto Lavagna had managed to take advantage of the 2001 economic implosion and a favourable global environment to put the country on a sustained path of growth and low inflation. The 2008 subprime crisis and its global ramifications, including the 2010 European crisis, shook the foundations of an economic model that relied on dual surpluses: trade and fiscal. By the end of her second mandate the current vice-president relied on archaic and ineffective public policies to contain inflation that worsened the problem and passed on a ticking time bomb to her successor.

Mauricio Macri took office in 2015 as a consequence of a social exhaustion to more than a decade of Kirchnerism, but it was also a depleted economic model that decreased society’s quality of living. He armed himself with teams of CEOs, financiers and economists, and claimed he would tackle inflation easily. The cataclysmic debacle of his economic model showed that the self-proclaimed “best economic team in 50 years” was just as incapable of tackling the problem as Cristina’s stooges, forcing Macri to request an emergency bailout from the International Monetary Fund that ended up being the largest in the multilateral institution’s history. The US$44.5 billion Argentina received from the IMF didn’t solve the problem either, leaving the country with inflation above 50 percent and a deep recession in the prelude to the global Covid-19 pandemic.

Now, President Fernández has made a fool of himself once again by formally declaring a “war against inflation” more than two years into his term, as prices continue to climb higher. The latest figure released by the INDEC national statistics bureau came in at 4.7 percent on a monthly basis for February, the highest figure in a year, with the annualised increase reaching 52.3 percent. What’s even more troubling is that the government has supposedly been in a “war” against inflation since 2020 when Paula Español led the Commerce Secretariat and began to impose price freezes as the first wave of the coronavirus pandemic was still hammering the world. She was replaced with Roberto Feletti late last year, who promised to take the battle against inflation to the oligopolies that set prices at the expense of everyday Argentines. Unsurprisingly, he’s failed miserably as well.

In this country, we can consider ourselves experts in inflation, having tried everything in the policy toolkit to stop it, most of the time ineffectively. Economy Minister Martín Guzmán managed to impose the vision that it is a multi-causal phenomenon, yet he’s been incapable of convincing his peers within the ruling coalition, Frente de Todos, that credibility and predictability are necessary and sufficient conditions in the battle against inflation. It is not a purely monetary phenomenon, as orthodox economists closer to the opposition coalition Juntos por el Cambio claim, or a consequence of an evil elite that manipulates prices, as the Kirchnerite think-tank Instituto Patria proclaims. Yet, while reducing the deficit and regulating certain sectors of the economy should be conducive to lower inflation in theoretical terms, none of this is possible without trust.

Thus, the unpreparedness of the Fernández-Fernández administration, the arrogance of the Macri administration, and the incompetence of Cristina’s administration have all worsened the problem. What’s lacking isn’t ideology or theory but the capacity to convince the group of economic actors that whoever is in office will embrace a rational long-term approach to the issue that won’t be immediately dismantled by the winner of the next election. Only then will a policy approach make sense. Until then, we’ll be forced to listen to the Cafieros, Albertos, Cristinas, Macris, and the whole rest of them speaking nonsense, in whatever language they choose.

Agustino Fontevecchia

Agustino Fontevecchia


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