Friday, May 24, 2024


Dhaka Tribune

Argentina’s messy economics

Will Javier Milei’s chainsaw antics be able to cut through Argentina’s economic hang-ups?

Update : 03 Dec 2023, 09:51 AM

So, Argentina did elect the chainsawing maniac. How pleasant it is to see an elected politician with economic views even more extreme than my own -- for Milei is a self-described anarcho-capitalist, while I am merely a classical liberal. Same spectrum, different positions upon it. But then anyone on that spectrum observing the Argentine economy would be very tempted to move to the more extreme end of it. 

Don't forget, Argentina was, back around 1900, one of the richest countries in the world. Of course, it is much richer now than it was then -- but comparatively it's now relatively much poorer than it was. So, yes, the onward march of technology and just the general base rate of economic development have made it richer. But its politics and economic management have failed to allow it to take advantage of that -- at a very optimistic estimation of events. A more accurate one might be that the ruling class have plundered the body politic for most of the past century.

Thus, one can, indeed, logically and perfectly respectably, move to the position that the correct action now is a chainsaw to the entire ruling system. Which is what Milei is promising and here's hoping that he can do it. 

One little side issue is that I think it's hilarious that he is being described as a “populist” -- the point of democracy is that those elected do what the populace want. But populism now, today, means whatever is not desired by the ruling establishment. So, clearing out a corrupt bureaucracy and ruling class is populism. For that ruling class is, of course, the establishment making the claim of his being populist. 

We can prove this too. As Prof Khondker said in this newspaper: “One hundred leading economists wrote an appeal urging Argentinians not to elect him. This is both unusual and astounding. The list included Thomas Piketty, Jayati Ghosh, and Branco Milanovic among others.” Well, yes, I know one of the three and respect his technical work. Ghosh was one of those behind Sri Lanka's disastrous economics of the past couple of years and Piketty stopped being an economist long ago and is now an apologist for that state bureaucracy and establishment. So, being attacked by (two of the three at least) is a validation of the policies being suggested. 

One of which is illustrative. The Argentine economy is “corporatist,” which can also be described as “fascist economics.” What this means is that government and politics take part in all economic decisions. Big Government allied with Big Unions and Big Business run the place. This works about as well in Argentina as it did in Spain and Portugal when they were properly fascist economies right up into the 1970s -- when they were the poorest two European countries. 

So, in order to change this, Milei has suggested -- insisted rather, more likely -- that he's going to sell off the varied businesses that the government does run and own. One of which is the national airline, Aerolineas Argentinas. At which point the leader of the pilots' union says “if he wants to take over Aerolíneas, he will have to kill us … And when I say kill, I mean it literally: He will have to take the bodies and I will be the first.” Which is perhaps a bit of that Latin propensity for excessive rhetoric. But it's also an interesting insight.

For what Milei is proposing is that the airline be privatized to the employees. But with no further subsidy. Hey, here, have the company. Run it yourselves. Sort it out so that it makes a profit, keep that profit, go on. Is this the proposal that has a union leader demanding that it can only happen over his dead body? 

Well, quite -- there's something wrong with the base Argentine approach to business and economics, isn't there? Perhaps a chainsaw is the correct answer? Not, of course, to be applied to union leaders, but to the system. 

This also explains why the opposition from Piketty, Ghosh, and other stalwarts of the current managerial politics. What if Milei's plans actually work out? After all, it is possible -- I would say certain, but then again I would -- that they will. That killing off the leeches on the body politic will revive the economy. Wouldn't that be a disaster for those who think that politics should run economies? Who would want to be an arguer for more leeches when reality has proven that fewer is the solution? 

As a true cynic like me would put it: We can measure the righteousness of Milei's policies by those who argue against them. Given Piketty, Ghosh, and so on, we are all “chainsawistas” now -- at least we should be.

Tim Worstall is a senior fellow at the Adam Smith Institute in London.

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