Monday, June 17, 2024

OP-ED | 18-05-2024 06:13

Single digit should not mean single issue

Single-digit inflation relieves the poor more than anybody but comes at a price – must they also be the ones to pay it?

If May 14 was the date of both of Carlos Menem’s electoral triumphs in 1989 and 1995 (honoured this year by his bust being given pride of place in the Casa Rosada), it was also a Ruby Tuesday for a President Javier Milei increasingly aspiring to emulate him – for the first time in his Presidency he arrived at single-digit monthly inflation with the 8.8 percent announced for April by the INDEC national statistics bureau. Milei was thus keeping faith with his voters because there can be no doubt that an annual inflation already reaching 200 percent was public enemy number one for the electorate back in October and November yet the monthly inflation in the former month was 8.3 percent – where is the progress, one might ask?

Government supporters would doubtless argue that April’s 8.8 percent is a far more honest figure than October’s 8.3 percent because in the interim the La Libertad Avanza government lifted a raft of controls on both private-sector prices and public services (causing monthly inflation to double to 25 percent in December). It would be entirely valid to question whether that honesty was total because not a few goal-posts were moved in order to satisfy the craving for single-digit inflation – the updating of some utility billing and fuel prices was deferred, the creeping devaluation of a monthly two percent installed an artificial anchor with the exchange rate and (in the most flagrant contradiction with the libertarian creed) prepaid health plans were forced to limit their increases to this year’s inflation despite a massive backlog from previous freezes. But instead this editorial would prefer to take April’s single-digit inflation at face value as decisive progress and start urging the government to turn its attention to other social needs and frustrations.

While this government has been perhaps uniquely successful in creating hopes of a different future despite current sacrifices, it has also shown a distressing tendency to throw out the baby with the bathwater in a number of areas. It would seem that previous Kirchnerite administrations never met a noble cause which they did not adopt and which they did not taint but the Javier Milei government is being cynical in using all that dirty bathwater to drown essential needs. Human rights would be one example – while yet to be as explicit as Mauricio Macri in calling this cause a “scam” and while Vice-President Victoria Villarruel has yet to live up to the worst fears as a military apologist, this government is running it down at every turn while basically placing it on the backburner. Crippling public works as a shortcut to a fiscal surplus would be another example more central to the government’s economic priorities – all those fraudulent highway and other contracts being exposed in trials over several years now along with the money-laundering via hotel chains etc. has helped the government to brainwash public opinion that public works are synonymous with corruption. Yet quite apart from the recent shock railway accident, infrastructure is a crying need if the government is to complete its mission of economic modernisation, precisely because of all that mislaid graft money plus decades of populist consumer-led growth – this backlog cannot continue forever.

And now the Milei Presidency is at it again with the biggest problem of them all, mass poverty (profoundly deepened in recent months amid the fiscal progress and the plunging country risk). In this month the government and the mainstream media have jumped on court investigations of the extortionate manipulation of social plans by picket organisations and a nebulous report on bogus soup kitchens to start implying that social welfare benefits are just as synonymous with corruption as public works. Yet these scams need to be placed in proportion. A court has just confirmed that over US$76,000 and more than eight million pesos have been embezzled by picket leaders but what are these sums when measured against a daily outlay of over three billion pesos for social plans? The chief finding of the report on soup kitchens is that 47 percent of them are non-existent but this calls for more rigorous fact-checking – after months of being denied funds and food, would it be a surprise that many have ceased to exist? Given the general track record of Kirchnerism, there should be little doubt of shenanigans but these more likely amounted to 4.7 than 47 percent and even 53 percent would feed millions.

Single-digit inflation relieves the poor more than anybody but comes at a price – must they also be the ones to pay it?


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