December 9, 2013
Trapped on a roller-coaster
For the Herald
In most parts of the world, opposition candidates do their best to win votes by drawing attention to their countries’ economic woes, especially when they can blame them squarely on the government, and by predicting the worst. In Argentina, they prefer to make out that, despite the thuggish antics of individuals like Trade Secretary Guillermo Moreno, things are not really that bad and could easily get better. In their view, a few minor reforms, plus a large dose of good will, should be more than enough to ensure a prosperous future.
Their at first sight strange reluctance to let themselves be unduly impressed by such trifling concerns as an annual inflation rate of almost thirty percent, Central Bank reserves that could vanish entirely by the time Cristina’s allotted term in the Pink House ends, a looming energy crisis, the spectre of yet another default and all the rest, is easy to explain. If they say Cristina and her friends have already spent all the country’s money so hard times are fast approaching, people might suspect they are in favour of some belt-tightening, and that would never do. Hereabouts, euphemisms like “adjustment” or in-your-face words such as “austerity” are taboo. Should a politician dare to pronounce them in public, he or she will be condemned by intellectuals as a heartless “neoliberal” and then cast into outer darkness by an irate populace.
For years now, Cristina has been waiting to pounce on any rival foolish enough to hint that a few minor cutbacks might be in order. It has been a long wait: they all understand the rules of the game. The president herself spelled them out when she announced that she would rather quit and go back to deepest Patagonia than make Argentines suffer by reducing public spending. She is not the only one who assumes that proposing even a mild bout of austerity would be tantamount to committing political suicide. When economics are concerned, almost all Argentine politicians speak like a engine driver who proudly announces that, as a matter of principle, he would never dream of using the brakes. If such an individual ever existed, his short life surely came to a sudden end.
Argentina’s economy may still have some life left in it, but by most standards it is a sickly, bed-ridden affair. Many years ago, futurologists who took a quick look at it thought that, providing its managers did what was expected of them, it would soon develop into the equivalent of an Olympic athlete. Their up-beat predictions had the unfortunate effect of convincing one generation after another of Argentine politicians that, seeing their country was rich by nature and “condemned to succeed,” in the encouraging words of a Brazilian savant, Helio Jaguaribe, that were eagerly picked up by Eduardo Duhalde when he was running the show -, they might as well get down to the enjoyable business of sharing out the loot. As a result, for most of the past century, it has been pretty much downhill all the way.
Unless senior politicians wake up soon, Argentina will continue to sink into the mire for years to come. To judge from the lackadaisical mid-term election campaign that has just ended, they have no intention of doing so. Their approach is fatalistic. Like spectators watching a dreary farce, they clap whenever Cristina or one of her more loquacious cohorts comes a cropper and then ask opinion pollsters if the public is getting tired of her performance. It may be that, somewhere out there, teams of hard-headed experts are putting together emergency plans for the day everything falls apart; if so, they have been meeting in secret.
The country’s surprisingly rapid macroeconomic recovery from the meltdown that followed the collapse of Domingo Cavallo’s currency board arrangement did little to help. Instead of heaving a sigh of relief and promising to turn over a new leaf, far too many politicians assumed that, at long last, the world economy had learned its lesson and henceforward would pay a decent price for soybeans and other agricultural products and that China would remain a highly profitable market for decades to come. Néstor Kirchner attributed the bounce back to his willingness to tell the IMF to get lost and creditors they should never have been so foolish as to lend money to those dreadful Menemites. Along with Cristina, he insisted that, in the future, Argentina should never again have anything to do with economic “orthodoxy”.
That is one promise the president has done her best to keep; for years she made a practice of breaking just about every rule in the “orthodox” book, on occasion just for the fun of it, though before getting knocked on her head she seemed to have come to the conclusion that she might as well be nicer to the financial markets. As a notorious bandit once said when asked why he insisted on robbing banks; that is where the money is.
How all this will end is anyone’s guess. There are plenty of Nobel prizes waiting for economists who come up with a way to halt inflation in its tracks without inconveniencing anybody, persuade investors to pour billions of dollars into the pockets of the world’s best-known serial defaulter and all the other things that will be necessary to keep Argentina on life-support for a few more years. Opposition leaders smile smugly when questioned about their plans for the future. Perhaps they know something nobody else does. Unless they do, we are in for yet another roller-coaster ride.