The president looks in the mirror of the Riojan, but reality gives him something else. Editorial of “El Círculo Rojo”, a program on La Izquierda Diario that broadcasts on Thursdays from 10 p.m. to midnight on Radio Con Vos, 89.9.

  • The level of success of the Government is directly proportional to the size of the difficulties it faces. What do I mean?: that when he celebrates himself the most or overvalues ​​their “achievements” is because greater are the contradictions that lie ahead.
  • We saw it these days with two events: one was the celebration of 8.8% inflation April (with a photo of a hug between Javier Milei and “Toto” Caputo, and a goal shout included, posted by the President on his networks). The Government celebrates that it “achieved” the same inflation that Sergio Massa left behind when he left the Ministry of Economy. Very high.
  • The other event was a “tribute celebration” regarding the placement of the bust of Carlos Menem in the Casa Rosada. A Milei, moved to tears, repeated that he was the best president in history and that Thanks to Menem, he himself is president.
  • About the first point: How is this decline in inflation sustained? Essentially, in a huge decline in economic activity with the certain prospect not only of a recession, but of a depression. I take some data from a very good article that Pablo Anino published last Sunday in La Izquierda Diario that shows the complicated economic panorama.
  • Let’s look at some data on activity in general: statistics on cement shipments, an indicator of what is happening in construction, showed a contraction of 36% in year-on-year terms (versus April 2023). Another general fact: in March, the manufacturing production index fell 6.3% compared to February and 21.2% compared to March of last year.
  • In terms of salary: according to the INDEC Salary Index, in the period November 2023-March 2024the drop is 12% among formal workers in the private sector and 21% among formal workers in the public sector. Among the informal workers the decline is 27%. This is an “anchor” for inflation: liquefy salaries and income and no one buys anything.
  • In terms of the need to get dollars: far away and the promise of obtaining foreign currency for “dollarization” was truncated a long time ago, but Caputo also did not get the famous US$15 billion that he had promised to get out of the exchange trap. In meetings with lenders, investors or with the IMF they say “very good, everything is very nice,” but the program still has many inconsistencies and lacks political consensus.
  • On the “success” of fiscal adjustment: he good results in terms of deficit in the first months of the year are not sustainable and this is a consensus of practically the entire ideological spectrum of economists. Why? because These successes were achieved thanks to the liquidation of retirements and other items of the social budget, to the paralysis of public works and the shipments of fiscal resources to the provinces. But also thanks to the payment postponement, as occurs in the case of energy generation companies to which they want to issue debt securities to kick forward the cancellation of debts. That is, this cannot be maintained over time.
  • One last thing about the economy, the issue of the dollar and the monthly increase or devaluation of 2% that the Government set (the famous crawling peg), while inflation comes from 12-15 to 9%. This generates the famous “exchange delay” and devaluation pressures (for example, among rural exporters). However, if the government devalues, it immediately affects prices and one of the successes falls apart: the reduction in inflation. If you keep it like this you lose all the “advantages” of devaluation. Miguel Ángel Broda said that in June, if this pace continues, all those “advantages” of the December devaluation will have been lost.
  • In summary: The program is leaking everywhere and is unsustainable over time in the same terms in which it is proposed today.
  • Now, let’s go to the other point: Me too. Milei wants to see himself reflected in that mirror and, probably, his goal is the same, which The conditions are different. In this case, Marx’s phrase in The 18th Brumaire of Louis Bonaparte applies: “History happens twice: the first time as a tragedy and the second as a farce.”.
  • Because first of all, the world is very different: in the ’90s the USA, country to which Menem had allied himself through “carnal relations,” was an undisputed power (end of the Cold War and collapse of the USSR); Neoliberalism was still booming (after Reaganism-Thatcherism prevailed in the ’80s), with capitals seeking investment around the world They even came to Argentina to buy “grandmother’s jewels” (privatizations) that Argentina had and in abundance. Nothing to do with today’s worldwith the emergence of the trade wars, protectionism and the crisis of globalization, and North American hegemony challenged perhaps like never before since the second post-war period.
  • In it internal terrain (along with hyperinflation as a disciplining factor) Menem imposed a qualitative change in the relationship of forces, inflicting defeats on strategic sectors of the working class. For that it had the political muscle of the PJ and as a close ally of the union bureaucracy.
  • Today Milei has many collaborators wanting to “go to the aid of the winner” between the traditional political leadership and the union leadership, but far from the volume that Menem conquered. Because, among other things, Milei’s program does not have the same social endorsement. I take only one fact that certifies it: The first general strike against Menem was on November 9, 1992 (more than three years after his assumption), Milei has already had two in five months and the possibility of a third is being discussed.
  • Finally: the question of consensus. Most opinion studies reflect that Milei maintains general supportamong other things because “it is just beginning” (and because it continues to show anger and rejection of all of the above), but when asked about specific measures, clear majorities oppose Milei’s proposals (in privatizations, retirements, etc.) It is only a matter of time before these contradictions become evident. Among other things, why? Because unlike the Menemist consensus, today the rejection is not only against a “semi-statist” or “dirigiste” model that failed, is also rejected (or many people reject) the neoliberal model that left the results it left in the 90’s and had a very frustrated reissue attempt with Mauricio Macri in 2015.
  • So, contrary to the bilardism to which he claims to adhere (which would indicate that goals are celebrated when the referee orders a kick out of the way), Milei is celebrating goals that are not and may dream of being the new Menem, but for now, the mirror continues to show Milei.
  • Politics / Depression / Neoliberalism / Carlos Menem / Fiscal adjustment / Luis Caputo / Javier Milei


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