Unlike most of his predecessors, whose electoral triumphs were celebrated by huge slogan-chanting crowds and horn-honking motorists of the kind that can be relied on to turn out when the nation’s footballers win a World Cup, Javier Milei had to make do with a relatively low-key reaction to the stunning victory he pulled off ages ago last Sunday. This was just as well: the many who voted for him, whether they were enthusiastic supporters or, as a large number were, simply people who thought him less dangerous than his Peronist adversary, Sergio Massa, are well aware that the coming months will be terribly difficult for just about everyone and that the libertarian’s foes will do their utmost to make things even worse. For a short while, the impressive size of the majority that backed Milei in the polling booths may help deter defenders of the old order from attacking him head-on, but if there is a truce it will not last very long.
President-elect Milei, like his ally Mauricio Macri before him, thinks that what Argentina most needs is a full-blown cultural revolution, in which the statist ideas that have predominated for over a century get replaced by liberal ones. Something along this line seems to be happening in the minds of the young Argentines, including many from desperately poor families, who flocked to his banner. While few will have paid much attention to the works of the stern Austrian economists Milei enjoys alluding to, their own experience has taught them that in this part of the world the State is a racket run by self-serving politicians and their hangers-on. This may not be the case in some fortunate countries, but it certainly is here.
Thanks to the reckless behaviour of the outgoing government, which, among many other things, spent up to three percent of the gross national product on Massa’s ill-fated election campaign, in addition to flooding the country with immense quantities of freshly-printed thousand-peso notes worth about one US dollar, Milei will have no choice but to start his term in office by slashing public expenditure to the bone, and then some. Even if he did not want to do it for ideological reasons, circumstances would have obliged him to get to work with his now iconic chainsaw to rid the public sector of excrescences that serve no useful purpose. Had Massa been elected, he too would have had to behave in a similar manner because the money has run out.
Milei says that on this occasion the “political caste” will foot most of the bill. Though closing down some costly virtue-signalling government departments, as he has promised, would help, as would the eventual removal of the swarms of barely employable men and women who are cluttering up the national, provincial and municipal bureaucracies, the money thus saved would not leave enough over to allow the State to continue to give handouts to millions of poverty-stricken individuals as it has been doing up to now. They too will see their already miserly incomes shrink even further.
The unhappy truth is that Argentina has run out of ready cash and, until more comes in from farming, raw-material exports, business activities and, with luck, foreign investments, public spending will have to be kept on a cruelly tight leash. Organisations set up to make the most of government largesse are threatening direct action and some who have based their careers on staging protest marches look forward to the day they see blood in the streets.
For a great many years, populists have contrived to make people think that whatever benefits come their way are due to the personal generosity of the local political boss. In the Greater Buenos Aires slum belt, where handing out free stuff before voting day is a routine procedure, most still take this seriously, which was why the Kirchnerites kept expanding the public sector until it reached its current dimensions; like Massa, they have always taken it for granted that popularity can be bought.
Cristina Fernández de Kirchner and her devotees also got into the habit of attributing all economic woes to the misdeeds of selfish farmers and businessmen who proved reluctant to collaborate with their corrupt schemes. Not surprisingly, as time went by, the gap between public expenditure and the money available to pay for it became so wide that inflation took off and headed for the stratosphere.
Milei insists that unless spending gets drastically reduced very soon, Argentina will be overwhelmed by another bout of hyperinflation in which “95 percent” of the population will find it all but impossible to make ends meet. If the statistics that are going the rounds are anything to go by, his dire warning is not at all far-fetched. During the election campaign, the well-known US-based economist Guillermo Calvo saw Argentina drifting towards somewhere between hyperinflation and a hyper-recession, the implication being that she could get hit by both. However, there is a big difference between plunging into the future without anything approaching a “plan” and getting ready to take advantage of an onrushing disaster by carrying out the long delayed “structural reforms” that, according to most economists both here and abroad, would clear the way so the country could finally emerge from decades of stagnation. This is what Milei proposes to do.
By and large, those who take an interest in the now almost century-old Argentine anomaly agree that the country has everything needed for it to become enviably rich but that for mysterious reasons it chose poverty by electing a succession of spendthrift and, in many cases, grotesquely corrupt governments. Is the long-awaited “change of mentality” already taking place? We should soon know the answer to that particular question. Much will depend on how people react to the hard times that are barrelling towards us. If an overwhelming majority continues to blame them entirely on the crass irresponsibility of a discredited political “caste” whose members are more interested in their own welfare than in anything else, Argentina could finally do what so many other countries have done and start leaving mass poverty behind. But if she refuses to change her economic ways, before the year is out she could join another country that was once regarded as unfairly rich, Venezuela, down there near the bottom of the international heap.