Martín Lousteau's fall, a sign of the times?

Martín Lousteau resigned from the Ministry of Economy yesterday. This looks like one more step towards a catastrophic failure of the economy. It's not that Lousteau was our last hope, but he seemed at least flexible enough to admit his mistakes and propose alternatives. His resignation, after he spoke publicly of the inflation problem and supposedly presented the president with a set of proposals to cool the economy, followed a vitriolic speech by Néstor Kirchner as the new chairman of the Justicialist Party. What happens confirms the generalized suspicion that Néstor K continues to pull all the strings in the government.

The new minister is Carlos Fernández, a pure technician whose only political cachet is that he's very close to Néstor Kirchner. One has to guess that he'll be as weak as all the Kirchnerist economy ministers have been after Lavagna. Miceli, Peirano and Lousteau never did anything without presidential prompt; Peirano's suggestion that the INDEC's figures shouldn't be tampered with earned him his exclusion from Cristina's cabinet, and Lousteau was practically stillborn, excluded from important matters, a dummy doll used to fill in a position.

Guillermo Moreno, Secretary of Domestic Commerce, is as powerful as, or more than, the economy minister. Moreno is a brute, a blunt instrument who may have been useful to deal with an emergency situation, but who is now an obstacle to the negotiations with the agricultural producers, and a liability. He won't be fired, because Néstor Kirchner wants him there — he needs enemies, and Moreno is ideal to induce conflict.

Regrettably, outside of Néstor Kirchner's partisan island, Argentina has problems. A sensible government must avoid turning serious technical issues into politico-ideological wars. The Kirchners are political warmongers, and stubborn to boot. They refuse to hear their own subordinates' warnings, and they're alienating their allies. And they're losing this war, bringing all of us down with them.

Inflation is clearly out of control; it's not the ten or twelve percent that you can expect from a burst of economic expansion and which most businesses can manage, but more like thirty or forty percent, enough to set off all the alarms on the Argentine psyche, more than enough to make long-term planning impossible. With high inflation and a government that seems lost and in denial, you don't save; you spend your money as quickly as possible before it loses its value, or else you rush to the exchange house and buy dollars or euros. Every Argentinian above a certain age has seen this happen before; it's terrifyingly familiar to us. I'm old enough to remember the end of the 1980s, when prices started to climb at a steady pace, then accelerating, and then it came to a point when supermarkets rewrote the prices two or three times in one day. Things like that eventually resolve themselves in a catastrophe; and after the crisis, even after things have quieted down and some form of economy recovery has reached us, we are a bit worse than before.

Insisting on an expansive policy and branding everyone who opposes it as the enemy while inflation eats away all the economic achievements of the last four years, while basic items become unaffordable to the poor, while a food crisis looms over the whole world, while oil prices break records every day and you have no way to supply yourself, while your farmers are ready to stop delivering food to your big cities, and refuse to acknowledge you need to change — it's madness.

The neoliberal governments of the 1990s insisted on the orthodox economic recipe of "adjustment": cooling the economy, removing money from circulation, increasing interest rates, and (in the background) "shrinking the state". Not only did their policies harm the poor and bring more inequality to Argentina; they wrecked the whole economy, and yet they continued to apply them with almost religious zeal. They even ruined their political careers! The Kirchners have an equal and opposite ideological bias — they have an ideal structure of power in their heads, and they'll fight to impose it on reality even as the whole country is crumbling around them. Do they stop to think, "maybe we're doing something wrong and that's why so many people are angry at us?" Do they ever wonder, "what will people in the future think about our government?". I don't think so.

Well, Lousteau and the question of whatever will become of Argentina's economy is all over the news today, so I'll say no more for now. For my own good I should stick to reviewing books... but I couldn't pass this up.