Economist Mark Weisbrot on Argentina’s Javier Milei
Janine Jackson, author, program director, and producer/host of FAIR’s (Fairness and Accuracy in Reporting’s) syndicated weekly radio show Counterspin, interviewed Mark Weisbrot, economist and co-director of the Center for Economic and Policy Research on Monday, on the Argentine presidential election. This interview covers some of the context of the election, including some of the more important economic history of the past 20 years, which has led to the current juncture. One important part of the story is the role of the United States, as well as the International Monetary Fund – including its most recent agreement under the right-wing government of President Mauricio Macri (whose support was crucial to the victory of Javier Millei). This was the largest loan ever given by the IMF ($57 billion), and the conditions attached to it, as well as the debt itself, was perhaps the most important contributing factor to the current economic crisis, and therefore the election result. A transcript follows.
Janine Jackson
Many people are hearing the name Javier Milei for the first time about now. Milei has just been elected president of Argentina. Fifty-six percent to 44 percent are the numbers we’re hearing right now — over the country’s economic minister, Sergio Massa. Fox News trumpeted “Javier Milei crushes Argentine left, becomes world’s first libertarian head of state.” Donald Trump announced that Milei would “truly make Argentina great again,” and Elon Musk declared “prosperity is ahead for Argentina”. That reception gives you some indication of where this is going and what it could mean. Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington, D. C. He’s author of the book “Failed: What the Experts Got Wrong About the Global Economy” and co-author with Dean Baker of “Social Security: The Phony Crisis.” He joins us now by phone. Welcome back to Counter Spin, Mark Weisbrot.
Mark Weisbrot
Thanks, Janine. Great to be here.
Janine Jackson
Well, lest there be a lot of mystery, to start with, Javier Milei carried around a chainsaw as a prop on the campaign trail, and that was about cutting public spending. And he described the state as a “pedophile in a kindergarten.” And yes, don’t think he’s done, because he went on to say “the state is a pedophile in a kindergarten with the children chained up and bathed in Vaseline.” And it reminds me of Duterte saying he’d be happy to slaughter 3 million drug addicts in the Philippines. And of course, it reminds folks of Trump and his current pledge to “root out the communists, Marxists fascists, and the radical left thugs that live like vermin within the confines of this country.” And that’s just from this week. It’s histrionic. We have politicians saying things you hear supervillains in the movies say. And I guess the concern is that they will be underestimated as merely colorful and over the top, and not considered in terms of the actual real-world things that they want to do and are capable of. So there, that’s my setup. What are the material things that listeners need to know about Javier Milei and his election?
Mark Weisbrot
Well, the material craziness of Milei is an important part of the story. And, as you mentioned or hinted at by the examples you gave, the media has been comparing him to Trump, and he likes it. And so it is part of that phenomenon which I think is — we could talk about for hours about crazy people getting elected in situations and ways in which they wouldn’t have in the past. And of course, that’s the big anthropological, sociological question: how does this happen? But I won’t get into that. What I’d rather talk about is what his craziness means and I think that’s more interesting to your audience as well. His craziness is partly a coherent, extreme right libertarian view. He says “every time the state intervenes, it’s a violent action that harms the right to private property and in the end, limits our freedom.” And he applies this to fixing the problem of hunger, fixing the problem of poverty or employment. So he’s really as extreme as you get in that right-wing libertarian set of ideas. So the question is, in terms of policy, what does that mean? First, he wants to abolish the central bank, which of course would be a disaster, and hardly any economists would support even thinking like that.
And he wants to also dollarize the economy, which would probably also be a disaster. Most economists would say that they don’t even have the reserves for that at this point, but it wouldn’t be a good idea anyway. So he has big ideas. He would get rid of some ministries, and certainly the chainsaw — the guy walks around in a Batman costume with chainsaws and he got elected president. He wants to cut public spending at least 15 percent, has no attachment whatsoever to anything like public education, health care and everything. So he would cut anything he can, and the economy would probably go into recession, and who knows where it would stop.
Janine Jackson
Well, he seems to have a definition of socialism. And this is what I feel like US media are going to pick up on, because as you and I both know, they will have a lot of quotes from him and they will have quotes from some people who disagree with him, but I don’t think they’re going to dig deep into the rhetoric. And so he talks about everything that happened from previous administrations in Argentina as socialism. How do we unpack that?
Mark Weisbrot
Yeah, that’s right, he says “Argentina has embraced socialist ideas for the last hundred years.” Of course, that’s crazy, too. I don’t know what he’ll actually be able to do. That’s the first thing. I mean, he has only 39 seats out of 257 in the lower House, and even eight out of 72 in the Senate. Now he does have a party aligned with him, the former president’s from 2015 to 2019, and that was Macri. And so that’s how he got elected, partly because Macri and his party supported him. So with all of this, he could possibly get a majority in the House, but it’s not clear that these representatives are going to support him— these are right-wing people, but they’re not as crazy as him. So it’s not clear what he’ll get done. This is going to be what we’ll see.
You have to remember too, that the government that he’s succeeding, the Peronists, they have a real movement and they’ve gotten in the streets before when terrible things have happened. In 2001, four presidents resigned within less than two weeks, that was because of protest.
And I think this is maybe where to start the story, because you guys focus on what the media is kind of missing or getting wrong. So we should start with what you don’t see in the media. You don’t see for example, that in these last 20 years, the Peronists actually did very well. We can start with Nestor Kirchner in 2003. And you’ve had in the twelve years that followed — before Macri —you had a 71 percent decline in poverty, 81 percent decline in extreme poverty, and GDP or income per person grew by 42 percent, which I compared it to Mexico, it’s three times as fast. So this was a very successful set of policies, but I haven’t seen that in any of the coverage. I wrote it in the New York Times in an op ed a couple of years ago. But you don’t really see that kind of part of the story. And that’s unfortunate because people need to know that. And of course, it’s partly because people don’t know that, the Argentine media is no better than here, the major media, that somebody like this could get elected.
The other part of the story — first let’s start with the depression from 1998 to 2002. That was caused overwhelmingly by the IMF. And you can go back to the New York Times and read that. At the time, they actually reported on the IMF’s role. And so that was a huge part of the story, because as you know, as most of your listeners know, the IMF is primarily dominated in its decision making by the US Treasury Department.
Janine Jackson
Right.
Mark Weisbrot
Then you had the Kirchners and the Peronists and you had this long period where they did very well. And Macri himself, who was the president from 2015 to 2019, he wouldn’t have gotten to power, actually, if it weren’t for more things that came from the United States. And I can tell you that as well, depending on how much time you have.
Janine Jackson
Please do, because I think folks want to know where the US role is here.
Mark Weisbrot
Yeah, I think it’s really important, especially for people here to know because this was such a big thing. I mean, Argentina is obviously one of the largest economies in South America. And during this period in Latin America as a whole, in the first decade of the 21st century, it wasn’t just Argentina that had this great rebound. All of Latin America as a whole, reduced poverty from 44 percent to 28 percent after having two decades of increasing poverty before that. That was 2003 to 2013, the decade I’m looking at. That was a decade in which the majority of the hemisphere was governed by left governments for the first time ever. And then the United States, of course, played this role — which we’ll focus right now on Argentina — in trying to get rid of almost all of them and making their lives difficult so that they would be ousted, a number of them, by coup d’états.
And so what happened in Argentina? Well, first of all, they had this terrible debt, they had to default to the IMF in 2003, and the IMF backed down. And they defaulted on their private debt. They did that before they defaulted to the IMF, but the IMF rolled over the debt. So they had this big fight with the IMF and the private creditors just to stabilize the economy. But they did that successfully and they grew.
And then in 2012, a New York judge decided that Argentina should not be able to pay its creditors — over 70 percent of its creditors, the ones who had accepted the restructured debt. This was Thomas Griesa, a New York judge, and he did this on behalf of the “vulture funds.” These were funds that bought up the debt when it was very cheap in the 2000s, and wanted to collect the full value of it. So he was trying to force the Argentine government to pay these US vulture funds, and he was doing it by cutting off the Argentines’ ability to pay all other creditors until they would pay the vultures. And so, that is part of what pushed Argentina into a downturn and hurt the Argentine economy in 2014. And just to show you how political this was, in 2016, the same judge actually made a decision where he lifted the injunction on paying this debt. That is, he reversed the decision. And he said he did it because, and this is an exact quote from him, “President Macri’s election changed everything.”
Okay? So that’s partly how we got Macri, the US court was harming the Argentine economy right before that, and then of course, reversing that tremendous harm as soon as Macri was elected. So there you go, there’s a big change, and it leads to another big change in Macri’s term. Because okay — so Macri gets elected because of action that came from the US. And there are other actions as well, which I’ll describe, but then Macri goes and gets — and this is because of Trump that it happened, Trump’s influence on the IMF — he gets the largest loan that the IMF ever gave to anybody, any country in the world; $57 billion in 2018. And the conditions on that loan were terrible, and they forced the economy into recession. And then of course, when things started to go sour, which they did right away because the big loan that they got just financed capital flight out of the country, that led to all kinds of problems. And they doubled down, the IMF doubled down and had more austerity, both fiscal policy and monetary policy. And so things got worse.
That actually leads you, really, to the situation you have today. That’s what created it. The economy, the 140 percent inflation that you have now, the whole mess that got this guy elected was really created by the Macri government and that IMF agreement. And also other measures that the US took to deprive Argentina of dollars before Macri came to power as well.
Janine Jackson
Well, when you hear about having to make vulture funds whole and the impact that that has, I’m thinking Puerto Rico. I know that there’s lots of other places in the world that are coming to people’s mind, but then when you set that situation — so now I’m reading The Washington Post, which is trying to explain why Milei got elected and it’s saying, quote, “voters in this nation of 46 million demanded a drastic change from a government that has sent the peso tumbling, inflation skyrocketing, and more than 40 percent of the population into poverty. ” So they’re saying, well, Milei’s against this, the poverty and the problems that they’re having. He’s coming before the people and saying, “I’m going to shake that up.” And I don’t think, at least in this explanation, I’m not getting anything of the longer term history that you’re giving me. I’m getting Milei. Things were bad, Milei is there to fix them. Right?
Mark Weisbrot
Yeah, although, I mean, I don’t think the media here likes Milei. It’s just like Trump.
Janine Jackson
Right.
Mark Weisbrot
It’s this irony that you have in a lot of these situations where the media doesn’t like these people because they’re too extreme, or the US didn’t even want Bolsonaro, for example, in Brazil, who, by the way, was one of the first calls, a video call that Milei made when he won this election. Know, the mainstream consensus here is that these guys are too crazy, but they still do help them win.
Janine Jackson
Yeah, exactly.
Mark Weisbrot
This is a paradox that probably you all can figure out better than me.
Janine Jackson
I can’t. But you do see the interviews, and we’re seeing them now, and folks who are listening will be seeing them. You know, folks on the street in Argentina saying “Well, there’s just too much inflation, there’s too much corruption.” Very sort of Trump voter things of “Well, I don’t like his social ideas, but his economic plans make sense.” People want change, and I think that we can acknowledge that people want change. And then folks come along and say “You know what I am? I’m different. I represent change.” But where media don’t, to my mind, exercise their role is, well, why do people want change? And what does that have to do with the failure of existing systems, including economic systems? Instead, media just say, “I guess people just deep down want a kind of fascistic guy,” rather than — even if they’re opposed, they still don’t dig deep enough, to my mind, into why folks were willing to do this Hail Mary play. Right?
Mark Weisbrot
Yeah, and I think part of the media story is that most people in Argentina, as well as your audience, don’t know this historical record. I mean, imagine if all the voters knew that in the past 20 years, the majority of that time when the Peronists were in power — people did the numbers that I just told you — people did quite well in terms of reducing poverty enormously. And the real wage growth was 34 percent under the Kirchners, for example, over that period. And all these things happened, increased spending on cash transfer programs, everything. And they did extremely well. Some people remember it, and that’s why they still got 44 percent of the vote, right? But not everybody is old enough or even would necessarily understand the whole situation, not having seen it in print or heard it on radio or television. And so, yeah, it’s easy for this guy to come in here, he’s almost literally a clown, and come in and say and — even though probably a lot of people, even who voted for him think his ideas are crazy or that he’s crazy, you do see quotes like that in the press. “Yeah, he’s crazy, but I’m voting for him anyway.” But they don’t have a way of seeing that there actually have been successful alternatives.
And if we can go into the economics a little bit, I think part of the problem here is that the IMF loan is huge and they have to pay that back. And of course, they got some debt relief on the private debt, but the IMF doesn’t give any — they can postpone the payment of something, but it’s still going to come due. And of course, you have capital flight because of that situation. And you have a situation where you have what’s called an “inflation depreciation spiral.” So if the confidence in the currency is undermined by a variety of things, including the inflation itself and including the debt problems that the IMF left them with — pretty soon it’s going to be the anticipated, including real policies of the IMF that are going to cause capital to flee the country, as they did in 2018. So all these things, what happens is that capital flees the country and that causes the currency to depreciate. And when the currency depreciates, then the price of imports goes up. And then that causes more inflation, and then the increased inflation causes the currency to depreciate more.
And that’s why it was so hard for this latest government before Milei to resolve this problem, because it’s a self-perpetuating spiral, something you don’t want to get into. And of course, there are ways. It is possible. But again, that’s a very hard problem. And that was a result of the policies that came in overwhelmingly with the Macri government and the IMF agreement that he followed. And he even said it at one point, I don’t have the exact quote, but it was something like, “I did everything that I agreed to in this agreement and the economy went down the toilet.” So even he realized that. But again, you’re not seeing that in the public discussion. All you saw up to the election is “the party in power must be responsible for what’s happening, and they have to go.” And then you see this guy, Milei, come in with really crazed ideas and nobody even cares so much how crazy they are. It’s just different. That’s kind of how Trump won as well.
Janine Jackson
Absolutely. Well, I could end there, and I might. But I would ask you if you had any final thoughts about folks, frankly, who are listening or thinking where are the people in this? Where are the Argentinian people? Which even folks who are critical about media recognize we’re hearing top down coverage, but did the people say they want this guy? If people are concerned or trying to make connection or trying to think about ways to get alternative stories on this. You know, what should folks be looking out for in media, questions to keep in mind, that sort of thing. Final thoughts on this?
Mark Weisbrot
Well, of course, we work a lot with the Congress here because they’re the most, or the least unaccountable, I should say, branch of government that we have. And I think that’s important to pay attention to because you do have a group of members of Congress now in the Progressive Caucus —in fact, five of them just took a delegation to Brazil, Colombia and Chile; this was just within the last couple of months, and so they’ll be paying attention. I think that’s very important because Congress, especially the Progressive Caucus, can act as a check on bad things that our government might do in the ensuing events that happen. And one of them I didn’t even mention, but I should, is that you’ve had 40 years of democracy there in Argentina now, in spite of economic crises and depressions and everything else in the things that I described. And that’s at risk too, because Milei, and especially his vice-presidential candidate, have made statements indicating that they have a certain admiration for the military dictatorship that ruled that country from ’76 to ’83. And I think that that’s a real threat. And so that’s one of the things we have to look out for, but also any role that the IMF might play because, again, the US Treasury has the overwhelming voice in that organization.
Janine Jackson
All right, then. We’ve been speaking with Mark Weisbrot. He’s co-director of the Center for Economic and Policy Research. You can find their research and analysis online at cepr.net.
