Monday, June 1, 2020

OPINION AND ANALYSIS | 13-01-2018 10:33

The trouble with gradualism

For years disgruntled humourists have been saying that we pay Swedish taxes and in return get Haitian public services. That may be an exaggeration, but to many it seems realistic enough.

Like the Fabian socialists in Victorian times who assumed it would be far better to wear down their enemies little by little, much as did the Roman general Quintus Fabius Maximus in his war to the death against the Carthaginians, rather than confronting them head-on, Mauricio Macri and his supporters say they prefer what they call “gradualism” to the shock tactics recommended by “neoliberal” ideologues. No doubt many would think otherwise if the ruling coalition had a big majority in parliament, but, surrounded as they are by individuals who are more interested in their own personal fate than in the wellbeing of their compatriots, the leaders of Cambiemos (Let’s Change) feel they had little choice but to stick to a softly-softly approach.  

Unfortunately, the odds are still very much against them. In Argentina what makes good political sense tends to be economic lunacy and vice-versa. With luck, the economy will continue to chug along for a few years without anything really dreadful happening. That would allow the government to move slightly closer to its goals. However, as Macri himself has quietly warned, if things go wrong, the country could easily suffer yet another of its periodic collapses.

There is certainly plenty to worry about. To get by, the government is piling up debt that in time will have to be repaid, inflation continues to gallop ahead at a pace only Venezuela and a handful of war-torn countries in the Middle East and Africa can match, public spending is unsustainably high, the trade deficit is enormous and the tax burden remains heavier than in many far richer countries. For years disgruntled humourists have been saying that we pay Swedish taxes and in return get Haitian public services. That may be an exaggeration, but to many it seems realistic enough.

The fairly drastic reforms that would be needed for Argentina’s economy to enjoy decades of rapid growth will continue to be politically unacceptable until a clear majority understands that opposing them would only make matters far worse for just about everyone. For that to happen, the country would have to be hit by a crisis bad enough to scare people but which nonetheless would leave his government more or less intact. As Barack Obama’s onetime advisor Rahm Emanuel put it: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”

Carlos Menem and Eduardo Duhalde were able to take draconian measures because few doubted that unless they did so, much of Argentina would go down the plughole. Unluckily for Macri, he moved into the Pink House before the breakdown many had been predicting took place. By patching things up just in time, the new government made the structural changes it believes are necessary that much harder to carry out. Unless it acquires much more political power, it will spend the next few years tinkering with the sadly dilapidated “model” the previous government bequeathed it, a model that is incapable of going uphill for long and is all too prone to break down and then slide backwards.

After getting his hands on the presidential regalia, Macri decided it would be in his interest to make out that – despite everything the Kirchnerites had done to it – the economy was in a reasonable shape. The idea was that, with someone like him in charge, investors the world over would lap up the praise ladled out by political heavyweights like Barack Obama and make the most of an opportunity to put their money into what had suddenly become a promising enterprise. When the hoped-for cash failed to arrive, optimists told us that the individuals responsible for managing it were waiting to see how the midterm elections would turn out. From Macri’s point of view, the results could hardly have been better, but even so investors remain wary.

A country’s economic performance depends largely on what John Maynard Keynes called “animal spirits.” Confidence counts. But by encouraging a moderately upbeat mood, Macri and his backers are making it harder to ram through changes that may seem perfectly logical but which are bound to prove unpopular. Why should people give up what they feel they are entitled to keep or to get if, according to the government, the economy is doing quite nicely and overall prospects are good? Another difficulty has to do with the adversarial nature of democratic politics. Most politicians are in opposition and therefore spend much of their time looking for what they hope will be seen as legitimate reasons to complain about the government’s performance.

Not just the Kirchnerites, who will say or do just about anything to loosen Macri’s hold on power, but also born opportunists, like Sergio Massa, who can be relied upon to attack the government from all possible angles even if it means going against policies they themselves once recommended. Most journalists feel much the same way; with few exceptions, they enjoy what they say is “speaking truth to power” and take comfort in the notion that being against whatever happens to be the status quo is a higher form of patriotism.

The ongoing critical barrage the Macri and the rest of them are subjected to may have done them less damage than might have been expected, but it has surely made their life that bit harder. They have to be on their toes day in and day out and be very careful about what they say in private. Surrounded as they are by devices capable of picking up every word they utter or broadcast worldwide an untoward facial expression, like their counterparts in all democratic countries they know that an ill-chosen adjective could put an end to what until then had been a successful career. The only contemporary politician who seems immune to this particular danger is Donald Trump who has said so many outrageous things in his time that one more makes no difference.

Were Macri as flamboyant a character as the Donald or, for that matter, Carlos Menem, he would find it easier to press ahead as vigorously as he would like, but for him to get away with it he would have to convince the country that, given the circumstances, the gradualism he has embraced is not a serious option.

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James Neilson

James Neilson

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

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