Monday, June 24, 2024

OPINION AND ANALYSIS | 23-09-2023 05:00

Who will wield the chainsaw?

The marked reluctance of Peronist and Radical politicians to countenance anything that smacks of austerity has not made many Argentines better off. On the contrary, it is the main reason living standards for most have declined.

Not for the first time, the choice facing Argentina could hardly be more straightforward. It is between allowing elected politicians to do their best to manage an economy that is spinning out of control and letting the markets take charge, as they did on several occasions in the relatively recent past in which millions of middle-class people were ruined before they finished the job. While some brave souls, such as Patricia Bullrich and Carlos Melconian, say they are willing to assume responsibility for what they know will have to be done to prevent the country from being devastated by a hyperinflationary tornado which would make an already dreadful situation even worse, many others are more interested in making out that it would be grossly unfair to blame them for the bad stuff that is about to happen.

To get off the hook, those seeking to find excuses for the present government’s dismal performance rail against the International Monetary Fund; even critics of the Kirchnerite administration seem to imagine that were it not for that organisation’s sinister taste for cost-cutting, there would be nothing to stop the state from giving everybody far more money.

Unfortunately, this is nonsense. Argentina is about as broke as a country can be. The vaults of the Central Bank are stuffed with IOUs; apparently, it is already US$5 billion in the red and the next harvest, which let us hope proves better than the previous one, is months away. What is more, the only people who are prepared to lend the country any money to tide it over for a while are the harassed technocrats of the IMF, who fear that a meltdown here could lead to something even nastier in other parts of the world, and, on occasion, strategically-minded people in China, and places like Qatar who are unafraid of getting bilked. They think the political or personal benefits they could receive for making a show of generosity towards a financial pariah would matter more than the eventual loss of what, for them, would be merely small change.

As far as most Argentine politicians are concerned, austerity measures are “neoliberal” by nature and therefore wicked. This is why they have long refused to have anything to do with them. Decades ago when, shortly after being named economy minister by then-president Fernando de la Rúa, fiscal hawk Ricardo López Murphy said he wanted to slash public spending, he was promptly set upon by fellow cabinet members who forced him to resign after only a fortnight in office. Good riddance they said, but the marked reluctance of Peronist and Radical politicians to countenance anything that smacks of austerity has not made many Argentines better off. On the contrary, it is the main reason living standards for most have declined to such an extent that they are already far lower than in Chile or Uruguay: if the pessimists are right, they could soon fall to rock-bottom, as they did in Venezuela.

By making it all but impossible to handle the economy in an efficient manner, the feeling that only mean-minded enemies of the people thought that on occasion some belt-tightening could be necessary led not only to the steady impoverishment of the country but also helped popularise the idea that military dictatorships were a natural and therefore a legitimate alternative to civilian rule. In the months preceding the coups, people from all walks of life, including accredited intellectuals, took to complaining bitterly about the inability of the elected government to get the economy moving at a more rapid rate and insinuated that what was needed was a regime uninhibited by political considerations which would be able to cut through all the red tape, tame stroppy trade unions and start purging the public sector of the allegedly useless time-servers that made it so cumbersome.

In those days, few seemed to mind that much when, to the background sound of martial music and the rumbling of tanks, a civilian president was replaced overnight by a man wearing a uniform who promised to be stern but fair. Even supporters of the ousted government could be heard giving sighs of relief; they would no longer feel obliged to defend economic policies that were bound to have a negative impact on the welfare of many people. In certain quarters, the notion that only a military regime could stoop so low as to make an attempt to keep spending in line with the money available still persists. That is why, when Mauricio Macri was in office, Kirchnerite mobs treated him as though he were a general wearing civvies, a worthy successor of Jorge Rafael Videla.

For some who take a long view, a truly horrendous crisis could be beneficial for Argentina. They assume that one that was painful enough would finally wean the population away from Peronism or any other variant of short-term populism and, at long last, make it decide to support politicians who understand how to bring about sustainable economic growth. However, to judge by what is currently happening, this is wishful thinking. While it is true that a large number of people seem to have come to the conclusion that free-market economies are far more productive than those micromanaged by bureaucrats or political activists (as Argentina’s has been for many years), the chief representative of the creed that attracts them is Javier Milei, a man whose evident gifts as a propagandist are not supplemented by anything else. If elected president, as could well be the case, Milei would have to depend on members of the political “caste” he says he despises, determined as he is to remove from the well-paid sinecures they occupy.

Convinced as he is that the markets should reign supreme, Milei would presumably be unperturbed if the economy fell apart before or just after the forthcoming elections. No doubt he believes that, as he would, the markets would then use a chainsaw like the one he brandishes while out campaigning to cut back the public sector and bludgeon people with a sledgehammer until they saw reason, leaving him to reassemble what is left into something approaching the ultraliberal dynamo of his dreams. It is an appealing scenario, but a most unlikely one. A more probable outcome would be a period of chaos that would be exploited by many of the individuals whose folly brought the country to its present state. Instead of killing “populism” stone dead, a new bout of hyperinflation would give it a chance to recover from its recent setbacks and come roaring back.

James Neilson

James Neilson

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


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