Tuesday, May 21, 2024

OPINION AND ANALYSIS | 28-05-2022 01:00

Not getting the hang of it

The Kirchnerite wing of the Frente de Todos coalition has come to the final conclusion that the “war on inflation” is irreversibly lost, leading to a refusal to have any official of its kidney attached to that failure.

In a relatively uneventful week neatly bisected by the public holiday celebrating the birth of Argentine nationhood, the biggest news splash was (until our press time at least) the resignation of Domestic Trade Secretary Roberto Feletti – even if the closure of the presidential quarantine violation case would be the main scandal (extending beyond political privilege or even the hypocrisy of the rules being broken by the person so self-righteously making them to setting an alarming precedent of impunity for sale, a far-reaching consecration of venal justice). Since this column was designed to relate past and present on the basis of over three decades of newsroom memories, price watchdogs would seem the most suitable topic for today with Feletti not the first Domestic Trade secretary I can recall – and nor would his successor (Central Bank director Guillermo Hang) even be the first official with that name in my memory since his namesake Moreno springs to mind almost immediately.

Feletti’s exit came just one working day after transfer from the Productive Development to the Economy Ministry but while no coincidence, this would be an incomplete explanation. The real reason is that the Kirchnerite wing of the Frente de Todos coalition has come to the final conclusion that the “war on inflation” declared by President Alberto Fernández 10 weeks ago is irreversibly lost in the short and medium term, leading to a refusal to have any official of its kidney attached to that failure. This is not how Feletti would phrase it, of course – his previously voiced objections were more along the lines of the impossibility of fighting micro-economic battles when the macro-economic strategy was defined elsewhere.

Not that either his micro-economic tactics of price controls, nor the Kirchnerite macro-economic strategy of spending all the money there is (and more besides) would have been a solution, quite the contrary. Price controls have a record of failure stretching back almost four millennia to the Babylonian Hammurabi. Easy enough for President Fernández and other Frente de Todos voices to blame rising prices glibly on greedy businessmen as if they were a uniquely Argentine species. In reality the profit motive is universal but its guiding principle is “whatever the market will bear.” In Argentina “whatever the market will bear” is unusually flexible because of an inflationary currency in which the public and private sectors alike have a huge vested interest for the liquidation of debts and costs.

In this context blaming monopolistic greed is all very well for leading government figures but Feletti’s brief extended beyond sermonising – very hard to berate businessmen for not holding the line on price restraints when he cannot draw that line because it is written in sand nor prevent them from factoring the future into pricing, given the uncertainty of expectations (where businesses will almost always give themselves the benefit of the doubt).

Turning to the past and my 1983-2017 Buenos Aires Herald newsroom experience, the first Domestic Trade secretary of democracy was Ricardo Campero with the short-lived heterodox Economy Ministry under Bernardo Grinspun but the first to make a name for himself was Ricardo Mazzorín – still remembered today for the “Mazzorín chickens” or the legend of the foul fowl imported from Hungary in 1988. While at least some of that poultry might indeed have been excessively well hung, my own view is that this was a canard (yes, multilingual readers, I do know that “canard” is French for “duck,” not “chicken”) exploited by those with a protectionist axe to grind, confirming an anti-import prejudice already fed by the enthusiasm of junta minister José Martínez de Hoz for “Made in Taiwan” products to tame prices. Imported competition has such potential for countering rising prices that making bad names out of both Mazzorín and Martínez de Hoz does not seem entirely fair.

No memories of any Domestic Trade secretary during the 1991-2001 convertibility years because the post was superfluous with inflation taking a back seat. Prior to the Moreno years (2006-2013) I vaguely remember the pharmaceutical lobbyist Pablo Challú being named to that post in 2002 by the Eduardo Duhalde caretaker presidency – a curious case of a poacher being made gamekeeper. Néstor Kirchner did not even have a separate department for domestic trade until creating one for Moreno in 2006.

The truculent Moreno modus operandi could fill an entire column. While not necessarily the mastermind behind such extremes of state intervention as purging the INDEC national statistics bureau to fiddle the figures and the beef export ban, he was their driving-force and public image. In 2013 (the first year of Pope Francis) he was made trade attaché at the Rome Embassy and replaced by Augusto Costa, a sidekick of then-Economy minister Axel Kicillof.

Mauricio Macri’s appointee to the post in 2015, Miguel Braun, was a competent enough economist but the Cambiemos government never regarded that area as an answer to inflation. Fernández kicked off in 2019 with La Cámpora’s Paula Español, one of many officials dumped in the wake of last year’s electoral defeats after her price ceilings failed to halt inflation even in the most recessive months of pandemic. Then Feletti and now Hang whose surname invites endless wordplays but we will spare the reader. 

Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.


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