Soft Thinking In The Pampas

Reading the Financial Times on the Milei administration

1.

Honest to God, when I started this substack I didn’t think I would end up paying such close attention to the Financial Times’s coverage of Spain and Argentina but here we are and here it has a piece on the political and economic turbulence surrounding Javier Milei’s government. It’s full of soft thinking and credulous source selection

2.

The piece’s most revealing moment comes buried near the bottom. With reference to the accusations of illicit enrichment levelled at Milei’s Cabinet Chief Manuel Adorni we are told that “privately, analysts and officials suggest some of the irregularities may be related to Argentines’ extremely widespread practice of hiding money from tax authorities rather than government-specific corruption.”

This is an extraordinary thing to say. The fact that many people commit a crime does not reclassify it as a lifestyle choice.

More to the point, Milei’s entire political project was constructed on the premise of cleaning up precisely this sort of thing. He did not come to power promising incremental reform or a slightly less enthusiastic approach to institutional decay. He came to power promising to clean the Augean stables of kirchnerista corruption, and to be a fearless champion of clean government.

3.

The article is at pains to reassure readers that the current government’s scandals are, all things considered, rather modest when set against the heroic theiving of the Kirchner years. Cristina Fernández de Kirchner’s serving a six year sentence under house arrest for her role in siphoning hundreds of millions of USD from public infrastructure funds is dutifully invoked as a kind of calibrating reference point.

This framing deserves considerable scepticism. Consider what we already know. There is the crypto scam involving the president himself, in which a token was enthusiastically promoted to his vast social media following before collapsing, with the customary efficiency of such schemes, shortly afterwards. Milei has denied wrongdoing, which is the thing one says in such circumstances. There is also the matter of the 3% Karina Milei appears to have skimmed off or be still skimming off the top of the disability budget

And then there is the case at the centre of the FT’s own story: the suspicion that Manuel Adorni’s sudden and unexplained accretion of wealth may reflect a widespread government system of rewarding loyalty through means not contemplated by the legal public payroll. These are called “sobresueldos” in Argentina, which can be translated both as “overpayments” and “envelope payments”, the latter referring to wads of cash placed in them

4.

The FT describes Santiago Caputo as Milei’s “star political adviser,” which is rather like describing the engine room as a pleasant feature of a cruise liner. Caputo is not merely a political adviser. He is the de facto director of the state intelligence apparatus, with loyalists embedded throughout the government’s institutional infrastructure. He is, by most serious accounts, the man who made Milei’s candidacy viable in the first place, which gives him a claim on the present administration that goes well beyond the advisory.

Regardless of the infighting the article correctly notes between the Caputo faction and the Karina Milei faction, the practical effect is that Argentina is governed by a triumvirate: the president’s sister, his political svengali, and the president himself. A weird arrangement even by Argentine standards

5.

As is customary in FT coverage of emerging market governments, the article furnishes itself with two consultants: one for the politics, one for the economics. This is fine, as far as it goes. The problem is structural rather than personal.

Economic consultants and financial services professionals occupy one of the very few sectors of the Argentine economy that has performed well under Milei. The deregulation agenda, the peso stabilisation, the fluid relationship with the IMF and other multilateral lenders, and with the US Treasury, all of this is highly congenial to the world in which economic consultants operate and are remunerated.

The best one can reasonably hope for from such sources is a critique of implementation not of what is being implemented. This is exactly what the article gets. What it does not get, and what it does not appear to have sought, is any substantive questioning of whether the underlying model makes sense for an economy in which the great majority of the population is employed in sectors that are visibly suffering. The vox pops it offers don’t fill this gap.

The article, in line with a familiar journalistic shorthand, describes Milei as a “right-wing reformer” and also refers to his libertarian credentials elsewhere. Yet the government’s record sits uneasily with that label. It has increased rather than reduced the state’s stake in major companies. It relies heavily on financing from multilateral institutions, which are associations of sovereign states, in order to fund itself. Its principal economic success to date, the reduction in inflation, has been achieved through direct intervention in the currency market.

6.

Readers may reasonably wonder what authority sits behind these observations, given that they are being offered in disagreement with a prestigious international newspaper staffed by trained professionals. The answer is, not much.

I am a random arsehole on the internet who lived for many years in Argentina, has family there and who has maintained a very unhealthy appetite for Argentine political and economic coverage across a wide range of sources for decades now.

This is, admittedly, not the same as being a foreign correspondent for a prestigious newspaper. It does, however, appear to be somewhat more than the FT’s Buenos Aires correspondent has managed to bring to bear on the Milei administration.

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