Tuesday, July 23, 2024

OPINION AND ANALYSIS | 20-01-2024 08:48

JP Spinetto: Milei’s unapologetic defence of capitalism missed a key point

What masters of the universe in Davos most wanted and needed to hear were his concrete plans to take Argentina out of its chronic malaise. They were left wanting.

As presidential speeches go, Javier Milei’s Davos debut was quite something: the Argentine libertarian took the stage to make an unapologetic defence of capitalism, the kind you don’t hear too often in mainstream politics these days. The West, Argentina’s president told the world’s most famous ski resort gathering on Wednesday, is under attack from socialism, and free-market capitalism is not only “fair and morally superior” but also the reason why humankind is enjoying “the biggest expansion in wealth and prosperity in our history.”

The model he proposes for Argentina is thus firmly rooted on key libertarian principles: “The defence of life, freedom and property,” Milei told the World Economic Forum audience in his first international trip since his December 10 inauguration.

He then described what he considers socialism’s current faces: feminism, the climate change agenda and collectivism, ideas that — he said — spread through the media, universities and even multilateral organisations coopted by “neo-Marxists.” He went as far as saying that regular policy tools in developed nations, from debt to subsidies and interest rates, are the result of the state trying to control individual lives, in a message echoing the radical campaign that took him to the Presidency.

Milei’s message stands out in a forum often devoted to politically correct topics like “Closing the gender gap in health” and “AI: The great equaliser?.” Even Donald Trump spent part of his last Davos speech touting that his government was creating “the most inclusive economy ever to exist” and bragging about how they were lifting “Americans of every race, colour, religion, and creed,” goals that Milei would probably deem a form of socialism.

At the same time, with diversity, equality and inclusion values at the forefront of the cultural battles in the United States, Milei’s speech doubtless tickled an amygdala or two in the audience. You can picture the secret smiles from those business czars who, not so deep down, couldn’t care less about promoting DEI, protecting the environment or regulating monopolistic excess but still need to follow this agenda because that’s the corporate world we live in. For them, the Argentine leader had reassuring messages: “You are heroes….If you make money, it’s because you offer a better product at a better price, contributing that way to general wellbeing….You are the true protagonists of this story and you should know that starting from today you have in Argentina an unconditional ally.”

Milei’s speech can’t be dissociated from Argentina’s recent history of economic failure. After decades of interventionism and regulations that entrenched crony capitalists and left almost half of its population in poverty, his focus on a dysfunctional state that spends too much and delivers too little is welcome.

Yet for all the provocative points that Milei made vigorously at Davos, he missed an opportunity to tell the masters of the universe what they most wanted to hear: his concrete plan to take Argentina out of the current misery produced by decades of policy malpractice. The libertarian framework can be more or less convincing for business to bet on, but it’s certainly not enough to justify pouring billions into a country that has exciting prospects and seriously needs investments but time and time again has disappointed.

The reality is that anyone who wants to invest in Argentina now won’t encounter the libertarian oasis to which Milei aspires, but a country with 211 percent inflation, no credit and multinationals leaving. Milei can’t be blamed for any of this. He’s the consequence not the cause of the country’s malaise, and he will be judged on his ability to turn things around. But he needs to start articulating in more practical ways how that U-turn will take place and what fiscal, monetary and trade policies will be in place for the next four years after these initial months of emergency.

Milei knows this all too well. Back in Buenos Aires, he spends his days not on ideological matches with the neoclassical economic theory “which opens the doors to socialism” but in very real fights and negotiations with provinces and the opposition-controlled Congress. He even had to announce tax increases, in clear contradiction to his Davos speech.

On the Lufthansa commercial flight that took him to Europe, Milei had already warned that he was attending the global elite’s favourite event to “plant the ideas of freedom in a forum contaminated by the 2030 socialist agenda that will only bring misery to the world.” Attacking socialism at a forum of billionaires and winners may be a bit redundant, but that’s Milei’s trademark message, and for the powerful audience to hear it from the man himself is not a bad idea. I can see people getting excited because it’s a rupture with the frustrating recent past.

But much more than that will be needed to convince them that Argentina can turn things around.

by Juan Pablo Spinetto, Bloomberg


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