Over seven months after the start of this political experiment which is shaking up the country, it’s time to draw a balance of its results, setting aside the yells, tweets and insults hurled to distract us. While the focus here will be the economic and social results of Milei’s programme, I am fully aware that this government is provoking a profound damage spilling beyond the economic sphere – the ideas promoted by the President place federalism, social rights, industry and national sovereignty at risk.
Having explained this, let us examine the results of the Javier Milei administration in the area where, according to him, they will be giving him a Nobel Prize in Economics.
Within the broad spectrum of indicators exhibiting the social, labour and productive catastrophe, one stands out which illustrates the magnitude and direction in which the country is supposedly “advancing” – an authentic and unprecedented record. It has taken Milei only a few months to increase inequality, as has never happened before. This means that, quite apart from the economic contraction, wealth has changed hands with some gaining and others losing. Thanks to Milei, the rich are richer and the poor poorer while the middle class is in free fall.
With increasingly fewer people asking: ‘And what if it turns out well?,’ it is becoming clear that the Milei model is tearing things apart at unprecedented speed. The causes of the failure are invisible for a president blinded by his fanaticism for himself. Let us then go over the reasons why this model is producing the catastrophic results which we are observing.
Within days of taking office, Milei deliberately induced the biggest devaluation in our history: 118 percent, accompanied by a decreed deregulation of the concentrated economic sectors. The result was an inflationary conflagration which destroyed the purchasing power of incomes. Due to the dramatic reduction of wages and pensions, consumer spending plunged. The fall in sales triggered, of course, a reduction of production, causing closures, lay-1offs and dismissals in the private sector and hence increased unemployment. Meanwhile the fiscal austerity applied to public-sector investment and employment with dismissals has deepened the recession. Private-sector investment on its side has also plunged because nobody, logically enough, wants to expand production if nobody is buying. The only viable investment within this scheme of destruction of the domestic market is dedicated to extracting natural resources for placement abroad, leaving nothing in the country – the objective of the recently approved RIGI (Régimen de Incentivo para Grandes Inversiones) investment incentive scheme.
The economy has entered into a vicious circle because unemployment decreases consumption yet further, producing a second round of less sales, lower production and more unemployment. Economists call this mechanism the “multiplier effect,” which explains the mechanisms of both growth and recession. Of course, for the Austrian school and its models of general balance, everything we are seeing today should never have happened. For Milei, everything with no place in his theoretical model directly is not really happening although it is Argentina’s everyday experience.
Exhibiting a disturbing sadism, Milei takes pride in what is, according to him, the deepest adjustment in universal history. He further maintains that in the elections society voted for this austerity but that is a lie. In his campaign, Milei presented his austerity as a battle against privilege but never explained that the chainsaw would be used to slash pensions, jobs, incomes and rights savagely.
Let us go over the reality which Milei denies - the fiscal adjustment was not against political spending but 35 percent hit pensions, 23 percent interrupted public works and 13 percent increased public service billing with seven percent each in shortfalls in payments to provinces and diverse social programmes for food, medicine, etc. These items explain 85 percent of Milei’s “savings.” The suspension of public works, apart from leaving the country without the roads, housing, sewage and the infrastructure which it needs so much, threw thousands of workers into unemployment.
The economic data are all disastrous. In these months of Milei, wages have fallen 20 percent and pensions 14 percent. As mentioned above, the brutal reduction of incomes affected consumption – according to the INDEC national statistics bureau, there were 18 percent less purchases in supermarkets last April and 24 percent less in shopping centres than in the same month last year. It can thus be seen that Milei’s austerity is not paid by “the caste” but by those who have the least, the middle class and the workers. The official data show the earnings of the poorest segments to have fallen 33 percent in real terms so that they have lost a third of the little which they had. According to recent statistics, inequality has risen ferociously and the Gini index (which measures inequality) has retreated to levels of 16 years ago. Private estimates based on these data place poverty at 55.7 percent for the first quarter of the year (it was 38.7 percent last year) and destitution at 18.3 percent (against 8.9 percent). Another historic record, worthy of the creation of a new prize: the anti-Nobel.
‘And what if it turns out well?’ asked some hopeful voices. It is turning out badly, very badly, unfortunately. Production fell by 5.5 percent of gross domestic product in the first quarter as against the same period last year. And that profound recession is reflected in a leap in unemployment, passing from 5.7 percent at the end of 2023 to 7.7 percent in the first quarter while 6.9 percent on the same date last year. The ‘industricide’ unleashed by Milei naturally hits Argentina’s main productive and industrial province the hardest: namely, our Buenos Aires Province. Since Milei arrived, 155,000 of our region’s citizens have fallen into the despair of unemployment.
In summary, while the President celebrates imaginary successes, the results of his plan to destroy the state begin to be seen: more privileges for a few and less rights for many. His confessed aim “to destroy the state from within,” apart from bordering on the unconstitutional, is totally untimely with the global context leading political leaders of the most diverse orientations to propose a state which protects its peoples. As Pope Francis pointed out, at this stage of history, “the state is more necessary than ever.”
As could have been foreseen, the anarcho-capitalist plan is definitely failing and will continue to do so to the degree that it does not change its policies of reducing earnings, opening up to imports, the deregulation of monopolies, steeply increasing public service billing and leaving middle-class and popular sectors absolutely unprotected.
Within this dark panorama, there are more optimistic signals. An important sector of society is ready to defend itself. In these months the trade unions, the feminist movement, human rights organisations, scientists, the student movement, artists and social movements have come out in the street to claim their rights.
Within this framework, as the country’s biggest provincial government and main opposition political force, we have two tasks: to create a shield and a network to protect the rights which President Milei proposes to dissolve, attenuating the social damage caused by his policies and the abandonment of its obligations on the part of the national government. And, at the same time, we must reinvent, together with the popular and democratic forces of Argentina, an alternative which in the future permits us to revert the ongoing destruction and place our country on the road to development and inclusion. We will not be demoralised nor lower our arms but organise ourselves to fight for the vision of a country which our people deserves.
* Axel Kicillof is the governor of Buenos Aires Province. He served as economy minister from 2013 to 2015, during the presidency of Cristina Fernández de Kirchner.
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by Axel Kicillof
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