Milei Chronicles (8) Are we really supposed to believe this sh!t?

Milei claims to be a follower of the Austrian School of “economic” philosophy developed in Vienna before World War One. This quasi-religious doctrine has never been implemented in its pure form (as described by Milei in his rambling incoherent speeches) because to do so eliminates much of the state upon which people depend for their transport, their health, their currency etc… This may seem advantageous for Milei, even as presidential candidate, but it so clearly is not so for so many Argentinians. It is particularly damaging for those who rely on the state for certain human needs as their incomes are insufficient to provide for their private health, private homes and private transport (to mention just a few of the public services Milei wants to privatise).

It is difficult to find other presidential candidates that follow the dictates of the Austrian school but Ron Paul was one, albeit unsuccessful, US Presidential candidate and there is a long but largely inactive list of Libertarian Parties all across the world, none of whom ever seem to be elected to power democratically. Ron Paul did claim to support the Austrian school of economics and stood as a candidate for the US Libertarian Party in 1988. When this didn’t work he also stood twice for the Republican party, again unsuccessfully. Could this be Milei’s plan too to sell out and go inro the JxC alliance? The Brexit party did this with the conservative Tory party in the UK to hang onto power too.

Ron Paul never proposed closing the Federal Reserve Bank like Milei suggests closing the Argentinian Central Bank (BCRA) while dollarising the economy. To be honest the BCRA has a lousy track record, especially when one considers that it is designed to preserve the value of the peso (a currency that has collapsed various times since the BCRA was founded in 1890), but don’t take my word for it. In mid september a letter was signed by hundreds of esteemed economists that explains what a bad idea it really it would be to dollarise the economy. Also Milei’s extreme proposal to eliminate the BCRA and replace the local currency with the US dollar is counterproductive and unconstitutional. Even if Mr. Milei insists that Argentina would be better without the weak peso, even Ecuador (which did dollarise its economy) kept its central bank. Has Milei really thought this through? His work as an economist has been in microeconomics (within firms) does he even have the macroeconomics background or training to know what the side effects of his policies could be? Does he care?

El Loco

The Austrian school is market economics on steroids with an fundamentalist interpretation of property rights (an fluvial example is discussed below). Its most famous economist is Ludwig von Mises which has a US thinktank in Alabama no less and a few sorry overpaid and undertaxed kids from South America in the CATO institute that love Milei and the US dollar. The Mises institute have had their interest piqued by Milei’s speeches. Podcasts on the Mises institute website show evident surprise that Milei takes their theoretical viewpoints literally and that he somehow thinks that such policies could be implemented in Argentina.

The idea that a person like Javier Milei is standing as a presidential candidate so that he can run the very state he wishes to govern into the ground, while at the same time asking the Argentine people to trust him, is horrifyingly reminiscent of Carlos Saul Menem in the late 1980s and the 1990s. The destructive legacy of the late President Menem and of his clownish Minister for Economics Domingo Felipe Cavallo (another heroe of Milei who is regularly booed out of universities in Argentina) was to literally break the back of the Argentine economy. Christmas 2002 left a trail of deaths, bankruptcies, ineptitude and corruption. Menem and Cavallo caused a major destructive economic collapse. Does Argentina really want to go there again? Mile doesn’t seem to care.

Milei wants to throw the baby out with the bathwater.

Why? Oh Jesus, Why?

Let’s take a step back to try to understand why a majority of any national electorate would vote in such a suicidal manner for the destruction of their State by electing an unviable Presidential candidate like Javier Milei.

There are many approaches to to try to understand such a phenomenon. In particular one can look at global analogies (Bolsonaro, Trump, Nigel Farage’s Brexit party) which demonstrate similar traits to the Argentine-Milei phenomena. Look at the anger behind this and see who is stoking this, then take a deep dive into new (social) media manipulation of voter preferences as has been happening on Telegram, WhatsApp, Twitter and Facebook along with others. I shall attempt to address this in a separate article.

Also one has to look at local specifics by analysing today’s realities in Argentina and South America. These include nasty levels of state corruption. Milei focuses on a carefully chosen selection of this reality amping his rhetoric to create social anger to fire up his voters. Patricia Bullrich, the JxC candidate, does this too. By focusing on the activities of corrupt politicians and poor people while ignoring huge corruption in the corporate sector both Milei and Bullrich avoid alienating their beloved markets (who are also their financial backers).

Gnocchis: invisible state employees

As an example of small-scale corruption in Argentina we can look at policy assistants and researchers assigned to political deputies and senators and paid for by the taxpayer. These assistants are often named to their positions for nepotistic reasons or as political favours.  Many such appointees don’t ever turn up to work and if they are fired for not doing their job they can sue the state for false dismissal.

Such state appointees are locally referred to as “ñoquis” after the italian food which is typically eaten only at the end of the month. In the days before direct deposit of salaries Gnocchi employees would also only turn up at the end of the month (for a paycheck) being otherwise absent from the office. This still happens, it is corrupt and the state turns a blind eye.

As to nepotism a corrupt state requires that political appointees are chosen for their loyalty, thereby assuring complicit silence for example on overpriced state contracts. Curiously these liberal market rules do not seem to apply in LLA. Milei works with his sister and while this may not be corruption, it is clearly nepotism.

Milei states that as president he would eliminate not just BCRA and the currency but also State control of pretty much everything including the state oil company YPF, the state airline Aerolineas Argentinas and AySA the state water services company (most of which have recently been taken back under state control, with significant costs after being sold in Menemism). In september 2023 the US southern district court (Wall Street) added a sixteen billion dollar fine levied on the Argentine state by Repsol due to the reversal of their corrupt buyout of YPF in the 1990’s most of which was interest. All three were privatised and ransacked by Menem and Cavallo.

Milei also says he will eliminate whole ministerial departments such as health, education, womens issues, controls against racial discrimination (INADI), and state supports for communications like cinema production (INCAA) and scientific investigarion (CONICET). Milei also has a “cuasi-religious” sanctification of private property and a virulent hatred of public ownership or any state support for the unfortunate, the disabled, the unemployed etc… In Milei’s world poor women can be left to give birth in the street if they can’t pay for an ambulance or a hospital bed. It’s dog-eat-dog out there in Milei’s chilling distopic efficient Argentina.

A river story

As an illustrative example of Milei’s churlish and doctrinal arguments on the role of the state in Argentine “society” (a concept which Milei like Margaret Thatcher, eschews), Milei gave a talk in early September 2023 where he discussed river pollution and the rights of factories to pollute rivers at will.

From a little background perspective one of Buenos Aries’ most popular tourism destinations is La Boca (river mouth in Spanish). The barrio of La Boca is famous for its wooden and corrugated iron buildings painted with the remains of cans of paint used to repair visiting vessels, for its art galleries, its football and even tango. The Riachuelo river enters the River Plate in La Boca, the city’s first port (hence the name). Factory effluent poisoned the Riachuelo for centuries. This was historically responsible for yellow fever outbreaks which forced the abandonment of the oldest city center in San Telmo. In 2023 the Riachuelo is a black fetid dead river flowing through the southern suburbs. It was highlighted in a recent study as one if the ten most polluted places on the planet and most of this pollution comes from industry so maybe Milei’s example is not so hypothetical? True to Milei’s right populist angry-little-man rhetoric he has zero interest in the environment. He even commented that climate change, like the Argentine Pope Francisco the first, is a “Communist plot”.

But back to Milei’s fabulous theories on river pollution. In the case of a company that pollutes a river, what is not well defined, argues Milei, is the right to property. By this he means ownership of the water in the river. The Austrian school is all about property and money, until pollution affects the owner of a resource it does not exist and the state can’t own anything and has no rights to private property (of course, nor can the state tax same).

“This company can pollute the river as much as it wants because [Argentina] is a society which has plenty of water and the price of water is zero”, explained Milei, and in the event of a water shortage, he adds: “someone will take care of appropriating the river” because the water “would cease to be worth zero and the pollution would end”, but until then “A company can pollute a river as much as it wants”..

Even a child swimming downstream from Milei’s hypothetical factory (with it’s Austrian school market freedoms to pollute) can see these arguments are flawed. Maybe Milei is trying to work out how to privatise the rain? But his arguments make even less sense the closer one looks at them they just fall apart.

Buenos Aires is not Argentina

Milei bluntly argues that Argentina “is a society which has plenty of water”. Which Argentina is this?

Buenos Aires does sit on the coast of the world’s widest river (the 37Km’s of the River Plate) which is indeed frequently poisoned by factories and untreated effluent (so much so that it is illegal to swim off the Buenos Aires coast for health reasons).

But this does not mean that Argentina “is a society which has plenty of water”. In some Argentine provinces there are extreme shortages of water. For example the province of Santiago del Estero has many towns where inhabitants have to buy drinking water in plastic containers to survive. 

Also for the two years that Milei was a deputy in Argentina’s national parliament the huge powerhouse that is Argentina’s agricultural sector suffered a major drought ( don’t mention climate change! ) which has cost the economy tens of billions in expected exports that failed to grow due to lack of water. 

Did Milei not notice the drought? Surely if he claims to be an economist he must have seen its effects for example on the goverment budget? But when it comes to the climate change, there are none so blind as those who will not see. Maybe Milei is trying to work out who owns the rain?

Extreme Market Fundamentalism

Protecting clean river water, even if not profitable, still makes sense. Making a decision like allowing the pollution of a river should never be made on purely economic grounds (though rhis is often done). Pollution does cause damage to the river and to those who depend on its clean water, economic damage and otherwise. Downstream human communities and non-human lifeforms are affected. This is true whether there is an economic cost, such as a fine, or the cost of operating a filtering plant, or not.

Milei’s viewpoint of nature, rivers, water, wildlife (dare I use a long word that he might not understand: “biodiversity”?) is so extreme, it is borderline psychotic. Milei does come out with these ridiculous outrages rather too frequently. Such is his infantile debating style. He must have had an unhappy childhood and he wants to take it out on fish.

Rivers and pollution exist in the real world but, thankfully there are no elected Presidents advocating Austrian economics (at least not yet!). Mises is just a dead theoritician, his theories stank back then when he wrote them and they still do. If a factory pours poisons into a river, in the real world, fish, wildlife, people and land get poisoned too concentrating these poisons in their bodies or in the soil. Its bad policy, it always has been.

How can Milei’s outburats even be considered a public policy by a public representative who wants to be president?

Javier Milei is not the smartest kid on the block but he is an excellent manipulator of right of media channels, like the populist rightwing channel LN+ where Milei appears almost daily on bully-pulpit programs like Jonatan Viale’s purile show called “Reality” that sadly, passes for political analysts in Argentina.

When Milei speaks to the press they listen, very often without criticism. They don’t even call foul of his inviable policy. He is allowed to laud abolishing public health after a global pandemic or ignoring climate change in a climate emergency. This is not just allright; it’s better, maybe because its cheapee for tge rich? Don’t worry Argentina: uncle Mises says it’s all good!

Interviewers barely discuss the fact that his policy suggestions have never been successfully implemented in any nation. Why would they not question whether Milei can’t be expected to be successful in Argentina with a two year-old party and a completely inexperienced group of failed civil servants left over from the horrors of Menem coupled with the inexperience of his neophyte La Libertad Avanza party.

Will the Argentine electorate see that Milei is just a different hairdo advocating nonsense ideas, a charlatan, and a very dangerous one at that? Or will they have to learn the hard way? A lot of this will be decided by how he comes over in the press. For now the same press that love JxC love LLA, the question which will decide the election is how long will this last?

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