Peculiar institutions

The government is innocent until proven guilty in all the corruption cases accumulating in the last 15 months but what may be more serious than the sum total of all these cases is the apparent indifference to creating the mechanisms to halt this multiplication. With all the irregularities so dominant in the news, who has ever heard anything from the Anti-Corruption Office or could name its head (Gabriela Zangaro for the information of the many readers with no idea)? The Milei siblings have shown slightly more interest in replenishing the Auditor-General’s Office but are suspected of trying to neutralise this watchdog by packing it with its nominations resisted in Congress. 

As for other choices, last year’s drive to inject the controversial federal judge Ariel Lijo into the Supreme Court and this year’s selection of the duo of Juan Bautista Mahiques and Santiago Viola for the Justice Ministry (the former close to the improbably opulent Argentine Football Association bosses Claudio ‘Chiqui’ Tapia and Pablo Toviggino, the latter falsely accusing the judge of consulting the presidency via false witnesses in the trial of the Kirchnerite Lázaro Báez family whom he was defending, plus a road death from his reckless driving) hardly seem moves to improve this country’s deficient institutional quality. In the words of Oscar Wilde, once might be an accident but twice looks like carelessness.

In his state-of-the-nation speech to open the ordinary sessions of Congress at the start of March, President Javier Milei said that installing morality as a state policy would be a central pillar of his administration but his philosophy in real life seems much closer to the “might makes right” now being made fashionable by his idol Donald Trump. This can be more clearly seen in other areas such as his tax policies, which magnify the gap between the winners and losers of his model far beyond the revered laws of the market. This week the government spelled out that the target beneficiaries of the “Super RIGI” tax incentive bill sent to Congress last Tuesday belong to the world of hi tech, such as Artificial Intelligence and electric cars, adding to the mining and energy sectors already favoured. In other words, those amassing fabulous fortunes even topping the US$27 billion of Peter Thiel now on these shores are to be granted tax breaks while manufacturing industry barely surviving Chinese imports and the farming sector saddled with export duties are made to carry a full tax burden in order to keep posting a fiscal surplus.

Not that extending almost a century of import substitution to prop up those now losing out is the answer, which brings up perhaps the chief problem of  a year now approaching its midpoint – the failure of the opposition to produce a credible alternative to an increasingly unpopular government. Always hard to fight progress and there are also positive aspects to the transfer of wealth inland being accelerated by the RIGIs from a pampered capital and its overpopulated industrial belt which is also a factory of poverty. The losers of this model can always be urged to wake up and adapt to changing times but easier said than done. They also deserve a voice now lacking. A return of Kirchnerism or a triumph of the left now performing strongly in some opinion polls would presumably put the clock back by blocking the imports and halting innovation but somebody needs to find a post-Milei, not a pre-Milei solution.

If Milei believes in the “might makes right” now being revived by Trump, he also seems an adherent of the “creative destruction” of Joseph  Schumpeter but he needs to understand that some creation is also necessary – nature might abhor a vacuum but these do not automatically fill themselves. This applies especially to institutions, which also interest overseas investors alongside RIGI tax incentives. It would be impossible to apply the chainsaw as massively as the Milei administration without some institutional damage while deregulation is by definition at the expense of regulatory agencies, thus leaving the door open for corruption despite the state-of-the-nation rhetoric. Quite apart from the damage perpetrated by Milei, he also inherited a flawed institutional fabric, which was indeed one of the reasons for his electoral triumph as an uncontaminated outsider.

The bestseller Why Nations Fail concludes that they do so when their institutions fail, the lack of inclusive institutions. Milei’s invocation of morality was perhaps misplaced if politics is amoral and justice blind – what Argentina needs is not a moral president but an institutional president.