November 27, 2014
An easy way out
Many Argentines agree that, while too much inflation can be bad for you, austerity measures will be even worse
Scott Fitzgerald was of the opinion that “the test of a first-rate intelligence is the ability to hold two opposing ideas in the mind, and still retain the ability to function”. That particular knack may have seemed impressive to a North American novelist who lived many years ago, but these days most Argentines simply take it for granted. The country’s political and intellectual elites are full of men and women who routinely play with dozens of at first sight incompatible ideas, somehow manage to fit them together, gift wrap them, and then sell the package to an eager public that keeps asking for more. Like gamblers who lose time and time again, Argentine voters cling to the belief that, sooner or later, some charismatic genius will come up with a system that will enable all of them to hit the jackpot.
One such optimist is the staunchly Peronist lorry driver Hugo Moyano. Along with other trade union bosses, he has declared war on inflation. He has also declared war on anyone who is rash enough to make a serious attempt to bring it to heel by using the only methods that actually work. This may seem a bit contradictory to those who are unfamiliar with the ins and outs of Argentine populism but, as Moyano and his henchmen are well aware, many people hereabouts agree that, while too much inflation can be bad for you, austerity measures will be even worse.
For them, it is not a question of choosing the lesser evil. Fighting inflation must be painless. In other parts of the world, governments would rather risk a recession that let the annual rate approach six percent because they know that restoring stability can be terribly difficult. Here, they wait until it edges towards forty percent before it occurs to them that the time has come to do something about it by telling the culprits they had better mend their ways.
Firm believers in conspiracy theories, local populists assume that if prices keep rising at an alarming rate it is because grasping businessmen and their political cronies have decided to steal more money from honest workers like themselves. That settled, they say the police, political activists and trade union heavies should deal with the matter. They insist that slashing government spending is bound to prove useless, especially if it prevents decent people from buying what they need to feed, clothe and house themselves.
Conspiracy theorists know that if anything unpleasant happens it is because some nasty individual wanted it to. In their world, there is no room for accidents or honest mistakes, so both inflation and the belt-tightening sadistic economists think is needed to rein it in must the work of a gang of ruthless plotters who, for their own wicked purposes, are determined to impoverish Argentina.
Why did Cristina unleash inflation? According to her more cynical adversaries, she did it because she thought it would help her get re-elected and enable her to stuff her war chest with more dollars, not because she overestimated her own ability to handle her country’s famously restive economy. As for those unpleasant “orthodox” measures she has recently favoured, they can be attributed to her desire to make friends with rich foreigners. Moyano says the Keynesian Marxist Axel Kicillof has sold out to the IMF because it has lots of money he wants to get his hands on, not because he has reluctantly come to the conclusion it would be in Argentina’s interests to get on speaking terms with an institution whose staff, according to Cristina, are a bunch of incompetents who, unlike her, know nothing about economics, but which, despite its innumerable failings, seems to be respected by the leaders of the world’s richest countries.
Were it not for the unfortunate fact that she is still in charge of Argentina’s ramshackle economy, Cristina would agree with Moyano. Like him, she would easily pass Scott Fitzgerald’s “test of a first-rate intelligence.” Until the Central Bank reserves seemed to be about to disappear down a financial plughole, she too assumed that, as inflation had nothing to do with things like the money supply or overspending by the government, she could tell her underlings to print huge numbers of pretty hundred-peso bills starring Evita that, as well as being useful for buying things, helped spread the Peronist gospel. It may be assumed that she remains as convinced as ever that greedy businessmen are responsible for all price increases and that, if she punishes them severely enough, inflation will cease being a problem. That is why she keeps sending squads of youthful enthusiasts into supermarkets to make sure they do her bidding and keep prices in check.
Over the years, Cristina has delivered dozens of speeches telling the world that in her view austerity measures are not just immoral but are also counterproductive because, as everybody knows, consumption is what drives economies onwards and upwards.
On many occasions, she has pointed out that the only Argentines who could possibly think cutting state spending may be necessary are rightwing extremists or bourgeois economists who have been mentally colonized by neoliberal propagandists from abroad. Did she really believe her own trenchant words to that effect? No doubt she did, and is currently only pretending to have let herself be beguiled into obeying the standard economic rule because she knows that if she persists in flouting them nobody would dream of lending her the large sums of money she so desperately needs.